In: Accounting
Question 2 (18 marks)
Rachel is the sole executive director in a small local limited
liability...
Question 2
Rachel is the sole executive director in a small local limited
liability company Splendid Kitchen Limited that sells all sorts of
electric appliances. Elisa, the only supervisor of Splendid Kitchen
Limited, was informed by Daisy, who held 5% of equity interest in
the company, that Rachel had been engaged in a similar business
competing with Splendid Kitchen Limited for a while.
Required:
- Based on relevant legal authorities, discuss
whether Daisy can bring an action against Rachel and her possible
concerns, if any.
- It was found that Rachel and Ally (Rachel’s sister) had
incorporated a company Wonderful Goods Limited two years ago, and
each held 50% of equity interest in this limited liability company.
Upon Elisa’s further investigation, it was found that there was a
transaction concluded between Wonderful Goods Limited and Splendid
Kitchen Limited. There was no record indicating that Rachel had
disclosed her interest when the relevant resolution was put
forwarded for discussion in the shareholders’ general meeting.
Critically analyze, by citing
relevant legal authorities, on whether Rachel
breached her duty as director, and the associated consequence, if
any.