Company law

Order Description In 2014, when David retired, his friend Eric, suggested that he use his lump sum retirement payment to buy shares in a company called Bioport Research Ltd. This company had acquired premises to carry out important research into new drugs led by his friend, Fredo. David took up the suggestion and he was allotted 20% of the company’s shares on condition that he was appointed as a non-executive director with a seat on the board. The other directors are Fredo, who is also the managing director, Eric and Eric’s ex-wife, Greta. The other shares in the company are held by Fredo, who owns 30%, Eric, who also owns 30% and Greta who owns the remaining 20%. The company’s articles provide that board meetings should be held every month and at least one week’s notice should be given of the date, location and agenda of the meetings. In 2015, the board resolved by a majority, that in future the notice given for board meetings would be 24 hours. The change was also approved by a shareholders’ vote at the following annual general meeting. The change has made it impossible for David to arrange to attend board meetings. Recently, David has discovered that the premises acquired by Bioport in 2010 were purchased from Fastfeeder Ltd, a company whose shares are wholly owned by Fredo. Bioport is still paying Fastfeeder the purchase price in instalments and David has a valuer’s report suggesting that Bioport paid £100,000 more than market price. David has also discovered that the facilities and laboratories in the premises are being used, free of charge, to develop a drug for CoughChem Ltd, a company whose shares are owned by Fredo and Eric. When questioned about this Fredo replied that David “really did not know much about the biochemical research industry, of course you have to share facilities and develop goodwill between companies”. When David indicates his current dis-satisfaction with the company’s affairs, Eric says that David wants to make trouble because he regrets investing in Bioport and simply wants to get his money out so he can retire to Spain. Advise David about the above matters.