What Causes Compliance and Violation of Memorandum of Association and Articles of Association - Case Study Example

? Effective organizational structure has five basic attributes related to it, leadership, decision making, people, work processes and systems and culture. Leadership of any organization must have clear vision and priorities and cohesive leadership team. All the leading heads of company should have common goals to achieve. Second phase is decision making, keeping objectives of the company in mind, decisions should be made by governing body of organization. A good leadership provides a sense of inspiration for the employees. Phrase leading from the fronts implies that leader of an organization is as keen as common employee of the organization when it comes to achieve the objectives of the company or organization. People as individuals also help in making an organization achieve its goals, self-motivated people and people who can work with each other as a team are preferred employees of the companies, with employees having exceptional skills long term relationship between company and employee will be achieved facilitating both employee and company (Sklar& Bongiovanni, 2000). . Loyalty and honesty should be the key factors of an employee should have for his/her organization. Moreover to gain expertness in the work; there is a continuous need of hard work and knowledge building. Work processes is manufacturing of product/products or in some cases providing services, major operations of an organization are measured according to principles defined by governing body and monitored by laws made for companies by authorities (Mintzberg et al, 2010). Terms like quality control and customer feedback are commonly used terms when talking about significance of work process and overall quality of organization. There are some international standards also set by organizations consisting of guidelines from documentation to production. ISO 9001 is a documentation standard. ISO 14000 is an environmental standard to be achieved by industries all over the world (International Organization For Standardization, 2013). Last one culture of organization refers to the environment in which there is a healthier atmosphere for the work of employees. Security of moral and ethical values, discrimination on the basis of sex, religion and race are a great challenge for managers of organizations. Day care center for the children of working women, maternity leave and work load on women are also create debates. Guidelines provided by WHO (World Health Organization) and UNESCO (United Nations Economic and Social Corporation) provide guidelines for organizations both public and private in this regard (UN 2013). There is a great difference between public and private sector organizations. Public organizations are more employee friendly as compared to private ones regarding issues of job safety and moral protection. Given case that is of Skull Brewery Ltd, products of company are real-ale products. Decisions were made by Janes and later Nina also joined by investing € 50,000 in the company. Both are directors of Skull Brewery Ltd. The constitution or set of laws defined for proper functioning of the partnership between Nina which owns 30% of shares and Janes owner of remaining 70% bound Janes to offer rest her shares for sale to Nina at first and other major law is that Nina is director of company for life. Janes on the other hand wants to sell her shares to a third party. Janes has also informed Nina, Microbrewers the party which wants to buy Jane’s shares also intends to remove Nina as director of company. From organizational structure view problem is occurring at the first step that is leadership of organization resulting in disturbance in overall organization, as both leaders are not agreed on the point of selling shares. Nina requires legal help over the entire situation that is created in order to stop her business loss. Before 2009 companies were bounded to have two constitutional documents that would provide all the basic legal information about the company known as Memorandum of Association (MOA) and Articles of Association (AOA). MOA contains information such as company name, situation of registered office in England or Northern Ireland, the objects of the company, liability of its members and their capital share in the company. Objects define the powers company. A company is not allowed to work outside its object. MOA revised version enforced from 1st October MOA consists of information regarding, statement of capital and initial share holdings, statement of guarantee, formation of assent for registering of limited as unlimited and form of assent that is required for public sector company to private limited or unlimited (Companieshouse.gov.uk. 2013). Another document named as Articles of Association (AOA) defines the role of shareholder and family of shareholders. Freedom available to directors of companies, rules regarding general and board meetings of the company (Companies Act, 2013). Generally companies setup their AOAs from company registration agents. Such documents have a standard set up and are very useful for single person companies, when two or more people are going to do business together they must ensure that their agreement is under a shareholder’s agreement. If not done accordingly it will be more difficult to resolve disputes in case of any miss-understandings or conflict of interest occur in the future (Companylawclub.co.uk. 2013). The role of company registration agents is of great importance as major deals of money transactions are done by them. To keep the respect of the profession, agents should have proper knowledge of all the legal affairs related to their profession to protect and earn trust of their clients (Stobbs, 2011). The case under study Nina the director having problems due to decisions of other director having dominant share in the company she should study both articles available to assist her. If the decision taken by Janes is violating the laws and guidelines that are provided by MOA (Memorandum of Association) and AOA (Articles of Association), she might able to get a solid legal help over the situation that she is facing. The company as argued by Nina the company is intended to make products that are well defined in MOA lager is excluded from that list of products. Now the other director is going into the contract with a local hotel or company to sell them lager. A company according to MOA is not intended to go beyond agreed manufacturing products. This argument gives a strong chance for legal action for Nina to take. Also in the description of the case Nina is the director of the company for life. This means Nina has the power to take decision regarding company issues. MOA also enables Nina to challenge Janes on the clauses such as liability of members and shareholders. Also if the agreed MOA by Janes and Nina contains the clause like statement of guarantee Nina should be able to challenge the safety of her investment in to the company. Also if the agreed Articles of Association that exist between both parties if present in the share holder agreement than it empowers Nina more to make a firm decision regarding the future of the company. Stated in the description of assignment that both parties Nina and Janes could not agree or reach a decision in their meeting and Janes is really interested in selling her shares without making an offer to Nina. It is going against the constitution agreed by the parties. Nina can also raise this point in front of authorities and she can also inform local hotel that selling of lager is against MOA of company. Authorities have full authority to take legal actions against both local hotel and Skull Brewers. These legal points can be used as a weapon by Nina in order to save her investment. Also if there is a failure of agreement between Nina and Janes meaning Skull Brewers start selling lager to the local hotel. By proper Articles of Association (AOA) implementation board meeting should be documented. AOA is implied in Skull Brewers effectively than Nina also has an extra advantage in the case of legal action taken by authorities on the object clause of agreed MOA. A copy of MOA can also be sent to local hotel in order to stop them from making any deals with the company. Violation of Memorandum of Association (MOA) leads to legal action taken against organizations and personals that are involved in the violation. Clauses in the law and corresponding punishments regarding miss use of authority and fraud with the stake holders of the agreement are used. This is happened all over the world in United States district court of Maryland found Swift Investment and Development Company, Limited accused Ekram. J Miller of miss using of company funds as these funds were used by Miller for his personal use resulting in a direct violation of MOA. Miller having 50% shares in the company and in control of accounts was found guilty. Miller defended himself arguing that he is not a part of MOA that exists in his personal capacity. When found guilty he was fined, he tried to defend himself by saying the things he purchased were delivered on the office address not on personal so the purchasing is done on official business purposes. He was found guilty nevertheless of using company funds and fined accordingly (Bircham, 2010). In the case of agreement happening between Brecon and Skull Brewers neglecting the position or argument Nina has for it she can sue Janes. The primary contracts of MOA and AOA are between Nina and Janes not with Brecon. So she should sue Janes same as Swift Investment and Development company sued Miller of breaking the MOA and miss use of authority. The constitution followed by Skull Brewers gives Nina power to challenge the intended sale of shares between Janes and Brecon. Janes can defend herself with the argument that she informed Nina about the intended sale of shares in the meeting both had. But the other clause that Nina is a director of the company for life cannot be challenged by both Janes and Brecon. Basic issue that Janes is having a good price of her shares from Brecon is understandable from business point of view as Nina has lesser price to offer for Janes shares. But the reality of initial capital that is Janes having 70% investment and 30% is owned by Nina cannot be neglected according to MOA guarantee statement (Legislation.gov.uk. 2013). AOA has also an extra protection for Nina and she has edge as she can inform the court or concerned authorities about the whole situation. Organizational structure and product that are manufactured by Skull Brewers exclude lager as its product and Janes intend to sale lager to local hotel according to her a deal which is too good to be neglected. This entire if done according to guidelines provided by Articles of Association (AOA) will provide an extra legal Strength to Nina. Janes already told Nina if the sale of her share really happens with Brecon. Brecon also intend to remove Nina as director of the Skull’s Brewers. This situation was much easier for Nina if she had signed all the partnership agreements with the organization Skull Brewers; not with an individual Janes. Job or position is much secured if the commitment or agreement is between an individual and company. In such a case an individual is a share holder of a company not a share holder of individual’s company. It is commonly known phenomenon all over the world that job is much safer if the contract exists between the individual employee and company. From government point of view legislation regarding job security has been done on the basic scale. Employment Rights Protection Act 1986 and Shareholder Protection Laws provide legal origins and guidelines for shareholders in companies, corporations and stock markets (Sarkar, 2007). A report also concludes that share holder protection law varied in U.K with the time as more vote power came into effect more protection is offered to share holders in company. Mostly after 1980 rights development in this regard are great (Amour et al, 2009). Shareholders given more protection by governments improved situation greatly in countries like US and UK. Nina own 30% shares of the whole company and is a director at Skull Brewers having the constitution of the company declaring her as a director for life at her back. All these facts aid for Nina in order to protect her investment and job in worst condition such as sale of Janes shares to Brecon. Nina had its contract with company Skull Brewers not with an individual Janes. By law and moral point of view, Nina is not responsible for the action that is taken by Janes as an individual. To counter the decision taken by Janes as director of Skull Brewers; Nina cannot be blamed of anything as she had an agreement and commitment to protect her. She can challenge the decision taken by Janes or Brecons at her will. The constitution of the company also provides protection to Nina in this regard as Janes was first supposed to offer her shares to Nina not to any third party. As a concluding advice to Nina; Nina has total protection according to the constitution of company as well as law of England and Wales to have full value of her investment and job at Skull Brewers. MOA and AOA provide basic protection laws for Nina, also employment safety rules and share holder protection laws are also available for help. All she needs to inform Janes, Brecons and authorities about the entire situation and her concerns over them. 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