Company Law. Case Study Essay Example | Topics and Well Written Essays - 2500 words

Company Law. Case Study - Essay Example Background: Alison Belfield (AB) is a minority shareholder in Commercial Chemical Applications Limited (CCA). Based on AB’s concerns regarding the activities of directors of CCA and the company operations the following facts have come to light. Tom Stockley is a director in CCA who also owns 3% of the shares in Amalgamated Property Holdings Ltd (APH). He introduced the transaction to CCA and is helping in negotiations to buy out APH. AB feels that CCA is not faring well commercially, being burdened with an overdraft of  £3 million, excessive capacity and the need to close down five smaller plants around the country. Any move to acquire APH could push CCA into insolvency. AB, having a financial and property background also feels that the proposed price of APH is too high and in her opinion the financial director, Rachel Nash has over-estimated the worth of APH by  £500,000 to  £600,000. But since Rachel is a chartered accountant by profession, all other directors, who do not have a financial background, rely upon her judgement. APH also has a poor track record of environmental issues, already having being convicted twice for allowing chemicals to leak into the nearby river and under close scrutiny of environmental authorities. The factory too is fairly old and requiring substantial expenditure for its refurbishment which may never happen. The acquisition of APH will inevitably result in the closure of the CCA’s other small plants located in rural areas thereby causing loss of several hundred jobs with very little possibility of being re-employed.