NATIONAL ECONOMICS UNIVERSITY BUSINESS SCHOOL

MODULE TITLE:

Business Law See below

TITLE OF ASSESSMENT : COURSE(S): E-BBA

SUBMISSION DATE: TIME:

26th April 2013

No later than 12:00 noon

SUBMISSION LOCATION:

An, Binh, Chuong and Dong are founding members of Phuong Dong Co. Ltd, a company established in February 2007 with charter capital of 1 billion VND. As agreed by the members, An contributed VND 200 million in cash (20%). Binh contributed a van that was valued by all founding members at VND 200 million (20%). Chuong contributed a store, equipment valued at VND 500 million. Dung contributed VND 100 million in cash. Following the Charter of the company, Chuong was appointed as Chairman of Members' Council, Binh was appointed as Director and An was appointed as Deputy Director. One year after registration, the dispute between Chuong (Chairman of Members' Council) and Binh (Director) arose. As the Chairman of Members' Council and holding more contributed capital, Chuong decided to remove Binh from office and appointed An as the company's new Director. Not agreeing with the above decision, Binh still kept the company's seal. As a legal representative of the company, Binh entered into a contract with Truong Xuan Co. Ltd to borrow VND 800 million (the total asset of the company at that time was 1,2 billion). Truong Xuan Co. Ltd had transferred VND 300 billion to Phuong Dong Co. Ltd as

agreed in the contract. However, Binh had sent this VND 300 million to his personal bank account. Chuong sued Binh to the court for claiming VND 300 million and damages. Truong Xuan sued Phuong Dong to collect VND 300 million and damages for breach of the contract.

Questions: 1. Is Chuong's decision of dismissing and appointing Director lawful? 2. Is the contract signed by Binh enforceable? 3. Who are liable for paying VND 300 million to Truong Xuan Co. Ltd and who are liable for damages for breach of the contract?

Instructions for completion and submission of assessment You must submit your assessment in accordance with the following requirements: Your assignment must be word-processed. Failure to comply WILL result in a maximum mark of 40%; You must complete a assignment front cover sheet and attach it to your work; The maximum number of words permitted is 1,500. There is no permitted excess. Any part of your assessment which exceeds 1,500 words will not be marked; The number of words must be declared on the front sheet and at the end of the submitted script. Failure to do so WILL result in a maximum mark of 40%; Footnotes will not be included in the word count and should be reasonable and you may exclude words in the bibliography; You need not include cases or legislation in the bibliography, provided they have been properly referenced in the text or in footnotes; Books, journals, reports, etc. should be included in the bibliography, using OSCOLA http://denning.law.ox.ac.uk/published/oscola_2006.pdf;

Any websites referred to must be properly referenced (i.e. the URL alone is not sufficient cf. OSCOLA, p.23) The text of your assessment must be displayed using 12-point (or larger) and 1.5 spaced; Attention is drawn to the rules on plagiarism (including un-attributed citations from textbooks etc).

Assessments not submitted in accordance with the above requirements will not be marked. This means that you be deemed to have failed this assessment. Case Summary Phuong Dong Co Ltd is a Limited Liability Company with more than one member. Question 1: Is Chuongs decision of dismissing and appointing Director lawful? Chuongs decision of dismissing Binh as the current Director and appointing An as the new Director is against the law because such actions are out of Chuongs jurisdiction. It is stated in Article 47 of the Law on Enterprises 2005 that only the Members Council has the rights to dismiss or appoint directors (Article 47(2)(d)). Chuong, as Chairman of Members Council, alone cannot make such decisions without the request for calling out a Members Council Meeting (Article 41 (2)). When such meeting occurs, Chuong would need the agreement from members owning at least 65% of the charter capital (more than Chuongs 50% contribution) to pass the decision of removing Binh from the Board and appointing An. (Article 52 (2)) In short, Chuongs decisions are not lawful and Binh is still legally considered as the Director of Phuong Dong Co Ltd. Question 2: Is the contract signed by Binh enforceable? Binh as the legal General Director of the company has the rights to sign contracts on behalf of the company (Article 55, s2 (g)). However, the contract here is to borrow 800 million VND or 75% of the total assets of the company at that time which is only 1.2 billion VND. Such decision to borrow more than 50% of the company asset should be approved by the Members Council (Article 47, s2 (c)). In this case Binh goes against the law by signing the

contract without the Members Councils approval and uses the contract for personal gain by transferring the money to his personal account. The contract is therefore invalid