Jupiter Publication Ltd: Director's Duties and Liabilities

This case study examines Jupiter Publication Ltd, a publishing company facing financial difficulties due to breaches of fiduciary and administrative duties by its directors. The directors, holding 15% of the shares, are found liable for failing to fulfill their responsibilities, including a failure to adequately review an insurance contract and a director secretly engaging with a writer. The analysis highlights the directors' duties, including acting within their powers, promoting the company's success, exercising independent judgment, and avoiding conflicts of interest. The assignment explores the consequences of these breaches, such as director removal, interim injunctions, shareholder proceedings, and financial repercussions. The document also provides recommendations for a minority shareholder, Mark, outlining potential actions against the directors. The study emphasizes the importance of corporate governance and the legal framework surrounding director responsibilities, drawing from the Companies Act 2006 and other relevant legislation. The case concludes by suggesting necessary actions to address the company's losses and improve its performance, promoting reformation with the involvement of all stakeholders.

Law of Business
Organisations

INTRODUCTION...........................................................................................................................1
QUESTIONS...................................................................................................................................1
Part (a) Breaching of any fiduciary and administrative duties as directors of Jupiter
publication Ltd............................................................................................................................1
Part (b) Suggestion given to Mark (minority shareholder) possible action against directors.....5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Law is a cluster of distinct norms, acts, legitimate orders, amendments, rules and
regulations which is framed by legal bodies in order to facilitate society as well as corporate
world with best services (Allen and Kraakman, 2016). Basically, their main objective is to
prevent community from getting misused and trying to recognize significant people about their
indispensable rights or duties. However, number of sections are falls under companies act of UK
law which helps an enterprise while handling distinct complicated situations by imposing
suitable act. Thus, assignment is going to highlight the case study of Jupiter Publication Ltd. In
which company is gone through a major financial crisis because of various reasons. Moreover,
main motive of this project is to outline the fiduciary and administrative duty of board of
directors towards company success and development. Furthermore, throw some lights on giving
suggestion to shareholder for taking action against directors for showing their roles towards
company.
QUESTIONS
Part (a) Breaching of any fiduciary and administrative duties as directors of Jupiter publication
Ltd
In given case study Jupiter publication Ltd. Is an organization which was established in
around 1998 in order to facilitate consumers with publication facilities. Their main objective is to
engaged in publishing novels, reports, stories and so on. Thus, four of directors are handling this
organization in proper manner and holding almost 15% of company shares. It means, shares of
enterprise is equally distributed between four directors named as May, Belinda, Harry and Tim.
On the other hand rest of the shares are belongs to some other investors which are not having
much more connected with company (Matsushita and et. al., 2015). Furthermore, Peter Higgins
is one of the successful writer and offering best opportunity to all the four directors but they are
rejecting the proposal. But at the same time May is believing in decision of Peter and engaging
with him silently without sharing it with any of her partners. As a result, Peter get succeeded in
generating maximum revenue with his outstanding stories and attract high range of clients in
minimum time frame.
Twist came in the story when Harry is going through a major financial problem due to
which company get ready for paying loan to Harry for overcoming this issue. After that, few
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days ago printing press of Jupiter Publication Ltd. Get burgled due to which they are facing
major problem because Tim who is in charge of insuring the assets of an organization.
Unfortunately, he wasn’t checked the overall paper of insurance company while signing contract
with them in which it is clearly mentioned that insurance organization is not liable for burglary
and did not pay in this case. Thus, claim is useless because Tim was not done his work in proper
manner due to which they get involved in a serious financial problem. As a result company is
encountering a major trauma all because board of directors get failed in fulfilling their job role in
proper manner.
Throughout the study it has been understood that all the four directors are liable for this
loss because they are not fulfilling their job in proper manner neither performing any of business
activities due to which company is going through this issue. According to law, board of directors
are liable for all the major decision because they are having some major responsibilities and
liable for administrative in order to run all the organization in proper manner. Fiduciary duties of
directors highlights the major relationship of trust or loyalty between company and its members
as well as other stakeholder (LAW and COOPER, 2015). Top most expectation is that person
who is liable for directing an organization must perform all the activities in a faithful way
without doing any discrimination amongst staff members. Along with this, they need to keen
interested in management of an association as all the responsibilities are depend upon them only.
Mainly, all the duties are interconnected with each other with common one as well as statutory
which is laid down in companies act 2006. Apart from this, new concept emerges for clarifying
the wide ranging duties of director that is named as “Enlightened Shareholder value”. Main
motive of this term is to show the consideration of employees and other shareholders opinions
while decision making process of directors as well as all the other staff members. Hence, some of
the major duties of directors are discussed as follows:-
Duty to act within powers:- According to this element, some of the main or foremost
powers are described in organization “articles of association” and these authorities are only use
for some special purposes. For instance; betterment of an enterprise instead of director benefits
(Aghion, Bloom and Van Reenen, 2013).
Liability to promote success of an enterprise:- It means, directors needs to consider
some of the major factors while making final judgment such as; initially forecast potential long
term outcomes of an association; secondly, interest of entire staff members; need to maintain
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company goodwill or reputation at marketplace. Thirdly, requisite to promote positive
connection with employees and suppliers. Last but the not least, directors needs top treat all the
members equally either having minimum shares or maximum without discriminating amongst
them. It means, all these elements must be consider by director of company while promoting
company as whole.
Authority to exercise independent decision:- It means, ethics says that high authority of
an association needs to consider opinion and viewpoints of all the members connected with
company in order to make collective decision. It shows the unity as well as aids in making
correct judgement and supports in maintaining a healthy relationship with employees or
employers (Teubner, 2018).
Duty not to acquire advantages from third party:- It shows the loyalty of director
towards company and all the other members. For example; in given scenario May is not
following this duty as she get engaged with contract of Peter in silently. Hence, it means
directors of Jupiter Publication Ltd. Are not following necessary obligation due to which the get
involved in a major problematic phase.
After analysing all the necessary duties and obligation of director it has been identified
that success and development is totally depend upon them only because overall control is under
them. Hence, if they get failed in fulfilling the necessary obligation them company might go
through major trauma and consequences are really dangerous. Some of them are described as
follows:-
Removal as director:- It means, if firm is not attaining their set objectives as per
company terms and conditions then other members have the authority to removed person from
the post of director. For example; if around 50% of shareholders are voting in against the
appointed director then he/she get removed from his/her position. Hence, as per company
constitution whole process is going to carried out but removal might be temporarily pending in
order to conduct further investigation for accomplishing it on a permanent basis (Serra, 2011).
Interim injunction:- This procedure is conducted by tribunal of UK with the motive of
halting any continuing action in breach of director obligation. It is conducted for reducing the
potentiality of any upcoming financial loss as well as trying to protect any damage of an
association. In fact, director is involving in a major questioning process such as; asking question
for harming goodwill of company and so on.
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Shareholder proceedings:- Stakeholders is taking litigation initiatives on their behalf if
they are scaring for their rights but it is seen as most complex process.
Recovering financial damage:- If there is any loss in terms of monetary then director is
liable to fulfil it through the court which might in the form of major financial repercussions like
loss of house or any personal bankruptcy.
It means companies act of English legal system says that board of directors are circulated
with various types of major duties and obligations. For instance; all the above obligation are set
out in various acts such as; companies 2006, insolvency act 186, insolvency act 2000 and the
new bribery act 2010. According to given case study, all the four directors are liable for
company losses because they are failed in fulfilling all of their assigned duties in proper manner.
As a result, company is not able to claim amount for its loss to insurance company because Tim
wasn’t read the agreement correctly. Thus, other shareholders of an association have the
authority to take action against these directors as they are responsible for this situation of an
association. Basically, it is understood that they have breached all of their fiduciary and
administrative duties as well as none of the activities are fulfilled by them. Meanwhile, all of
them is going to encountered issues in various terms such as; financially, legally, socially
henceforth (Betts, 2011).
Instead of all these things, shareholders are also involving in taking some action against
board of directors of Jupiter Publication ltd. As they get failed in accomplishing business
operations due to which various losses are faced by company such as; in monetary terms, plant
or machinery, might be interest of investors are also dissolved, employees are losing their
interest due to minimum profit, image of an association is getting affected and so on. However,
number of things are getting change at workplace because of which company is encountering
various issues. Hence, number of actions must be taken by governing bodies for resolving these
kind of problems in order to offer best opportunities to overcome emerging issues so that
company can rebuild their enterprise. For example; fire the board of directors, remove all the
powers of directors, charge fine for losses and so on. It shows that legal bodies are involving in
framing number of rules and regulations for preventing staff members as well as overall
company from getting misused (Garoupa, Gomez-Pomar and Grembi, 2013). Corporate
companies are following all the necessary terms and conditions while running their business
entity in order to attain their set objectives or targets. After analysing the situations other
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authority and shareholders of association needs to take necessary actions for controlling
company loss in appropriate manner. It is essential to punish the directors as per companies act
as well as considered various other laws and acts which is applicable on particular situations for
overcoming distinct issue. Board of directors are liable for number of job role which shows that
almost entire company is liable on them due to this changes is becoming mandatory at workplace
for improving the circumstances.
Last but not the least one thing is determined that alteration is necessary part of an
organization because time changes due to fluctuation in various other factors such as; consumer
choices or preferences, exchange rate, currency rate, economic condition of nation henceforth. It
means, company needs to run as per situation instead of following the previous procedures of
running business. It means, don’t depend fully on directors for every business activities. In fact,
it is essential for employees to make decision as per situations and demands in order to cope up
with numerous complicated situations. Thus, if all the staff members are involving in managing
entire institutions as well as involving in judgment process then it become easy for company
while attaining their set of targets in proper manner (Schermers and Blokker, 2011). Jupiter
publication Ltd. Also needs to focus on reformation by taking help from their whole staff
members and other investors whomsoever are partially involved in an organization. As a result
they get succeeded in overcoming business problems in a defined time frame by satisfying needs
of clients.
Part (b) Suggestion given to Mark (minority shareholder) possible action against directors
In given case study Board of directors are identifies as a faulty in every situation as they
get failed in accomplishing their business activities due to which company was going through
major problem in various manner. All the other shareholders come closer for organizing a
meeting in order to discuss each or every aspects for understanding hidden matters in effective
way. Their main motive is to control loss of selected firm by taking some major initiatives which
is beneficial for overall company. Mainly, shareholders are involving in distinct activities for
acquiring correct information and data in order to identify the real culprit which is liable for
entire loss (Leeson, 2012). After understanding that board members are responsible for all the
activities as well as their careless behaviour then shareholders have the authority to take action
against directors in various manner so that loss might get recover and protect company from
getting dissolved. Thus, minority shareholders are having numerous of rights in case majority
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shareholders are conducting wrongful activities or might be failed in fulfilling their objectives.
Basically, they are falls under quasi-partnership because minority shareholders are having
limited number of shares which are either employees or any other trustable member of an
association. Hence, it has been understood that minority shareholder of Jupiter publication ltd.
Must have right to take legal action board of directors because they have done mischief which is
really not acceptable due to high level of complexity. Thus, some of the necessary steps that
might be took by minority shareholders are described below:-
 Authority to sue:- Initial step is to involved legal bodies in organizational matters for
clearing doubts in proper manner by hiring legitimate members for understanding each or
every aspect in best manner. However, it helps an enterprise by highlighting all the
necessary terms and conditions which is applicable on particular situations. It means,
minor shareholders are also having their shares due to which they are also consider as a
part of an organization. Hence, right to sue board of directors whomsoever are more
liable for loss (Burley ,2017).
 Conduct meeting:- As per this element, shareholders might have option to conduct a
conference of all the major or minor directors for acquiring opinion of all the members in
order to make correct decision at workplace. However, it helps in giving final judgment
in proper manner so that chances of any partiality or mistake get controlled. Basically,
meeting is also another best technique to identify the matter in better by asking the direct
questions to board of directors.
 Investigation programme:- it means company needs to identify the hidden matters for
understanding the reason behind careless behaviour of directors in order to make sure that
it will not repeat again. Along with this, supports in clarifying each or every aspects in
best way so that confusion will not present between any staff members.
 Remove the power of directors:- It means snatching of authority of higher level in order
to make them realise about their big mistakes as well as transfer all the shares to other
member. It means, punish them by recovering amount by sealing their house, personal
properties and so on.
However, as per companies act 2013 minority shareholders are not having that much of
power because they are having limited shares as they are not able to control overall company.
But still around 10 to 15% authorities are still under minor shareholders. Thus, as per that
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authority they are having right to take action against major shareholders if they are not
performing their assigned job role in appropriate manner. Along with this, must demand
recovery by them in order to minimize organizational losses which is influencing overall
turnover of the firm. Jupiter publication ltd. Needs to take actions for improving their current
situations by managing things in best manner. It has been understood that legal bodies are
indispensable for success of every enterprise because they are coming with unique norms and
restriction which is applied at workplace so that every individual can accomplish their business
activities in better way. Along with this, manger requisite to focus on specific elements while
taking initiative against board of directors. For example; must have proof of every mistake,
turnover of company, highlight the difference that is identified in between project performance
and actual. Comparison process is playing eminent role in understanding the each or every
aspects in order to implement changes at workplace (Stewart and Sanchez Badin, 2011).
Hence, in the entire case study companies act and law is playing crucial role because it
helps an association in various situations such as; showing the major administrative duties of
directors that aids in understanding their power and so on. However, these necessary
information or data is helpful for company while making final decision that is taken by minor
shareholders while punishing them for their major mistakes. It’s all about management so that
chances of losses get controlled and managed in proper manner. As a result current situations of
an association get improved in suitable manner without harming other rate of interests.
CONCLUSION
From the above report it has been concluded that running or handling of business
organization by considering necessary terms and conditions is not an easy task due to the
presence of maximum complexity in legal policies. Main motive of this assignment is to suggest
company to how to overcome business problems with the help of legal acts by showing
necessary rights and duties of specific organizational members. For example; board of directors
are having full authority to control entire association and need to be very attentive by taking
necessary steps. Along with this, project was showing that minor shareholders is also having
numerous of rights and authority to sue major one if there is identification of any wrongful
activities because they are also having some amount of shares in an enterprise. Hence, project
helps in understanding the fiduciary rights of directors and responsibilities towards company
success.
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REFERENCES
Books and Journals
Allen, W.T. and Kraakman, R., 2016. Commentaries and cases on the law of business
organization. Wolters Kluwer law & business.
Matsushita, M and et. al., 2015. The World Trade Organization: law, practice, and policy.
Oxford University Press.
LAW, J. and COOPER, R., 2015. Organization: Distal and proximal views. In For Robert
Cooper (pp. 207-243). Routledge.
Aghion, P., Bloom, N. and Van Reenen, J., 2013. Incomplete contracts and the internal
organization of firms. The Journal of Law, Economics, & Organization, 30(suppl_1), pp.i37-i63.
Teubner, G., 2018. Substantive and reflexive elements in modern law. In The law and society
canon (pp. 73-119). Routledge.
Serra, D., 2011. Combining top-down and bottom-up accountability: evidence from a bribery
experiment. The journal of law, economics, & organization, 28(3), pp.569-587.
Betts, A. ed., 2011. Global migration governance. Oxford University Press.
Garoupa, N., Gomez-Pomar, F. and Grembi, V., 2013. Judging under political pressure: an
empirical analysis of constitutional review voting in the Spanish constitutional court. The journal
of Law, economics, and organization, 29(3), pp.513-534.
Schermers, H.G. and Blokker, N.M., 2011. International institutional law: unity within diversity.
Martinus Nijhoff Publishers.
Leeson, P.T., 2012. “God Damn”: The Law and Economics of Monastic Malediction. The
Journal of Law, Economics, & Organization, 30(1), pp.193-216.
Burley, A.M.S., 2017. International law and international relations theory: a dual agenda. In The
Nature of International Law (pp. 11-46). Routledge.
Stewart, R.B. and Sanchez Badin, M.R., 2011. The World Trade Organization: multiple
dimensions of global administrative law. International journal of constitutional law, 9(3-4),
pp.556-586.
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