Question 1
The articles of St Neots Leisure Ltd state:
the board of directors may delegate all or any of its powers;
any transaction above £80,000 must have the prior approval of the company in general meeting;
all company cheques must be signed by two directors.
The board, recognising that the company is in need of a new
business, appoints Stephen to the board of directors, with
responsibility for marketing and promotions, he is told to ‘be
dramatic’. Without reference to the rest of the board, Stephen
immediately organises a ‘sales conference’ for potential clients in a
luxury hotel in the Isle of Man, at a total cost of £98,000. Stephen
pays a deposit of £10,000 to the hotel by means of a company cheque
which he alone signs, having forged the signature of a second director,
since he is keen to book the conference.
Stephen has just reported his actions to the board. The board are
somewhat surprised by his actions and are keen to dismiss him and
terminate his directorship. They also hope to cancel the conference.
Advise Stephen and the luxury hotel.
Would your answer differ at all if the board had organized the
conference without reference to the shareholder and the shareholders
objected to the cost?
(edited to clean up formatting problems)