Case comment coursework Essay Example | Topics and Well Written Essays - 1000 words

Case comment coursework - Essay Example Through the privatization, the government was allowed to retain a special share. This entitled the government, according to the company’s constitution, to appoint two of the eight directors but with no voting rights (Patterson, 2001). History Belize privatized its telecomm network in 1989. Under the privatization, the government was to gradually sealed off its shares and, in the process, retained a special share (Redfem, 2004). According to the company’s constitution, 8 directors would be appointed as per the shareholding in the following manner: The special share holder can appoint 2 of the 8 directors. In this case the government had a special share which entitled it to appoint two directors. Class â€Å"B† shareholders comprising private investors could appoint two directors. Class â€Å"C† shareholders could appoint four directors. The government also owned Class â€Å"C† shares. A further provision for the election directors was made, stating t hat if a special shareholder possessed over 37.5% of the share capital in total, it would appoint two of the 4 Class â€Å"C† directors. The government in 2003 completed the privatization process. A law was passed to this effect to enable the completion (Richardson, 2004). In 2004, Belize Telecommunications bought the special share and the Class â€Å"C† shares from the government. To enable Belize Telecommunications to purchase the shares, the government changed its shares into a loan to enable Belize to finance the transaction. Since this was a loan from the government, it needed security from Belize. Belize gave the government a ‘pledge’ on the shares that it had just sold, i.e. the Class â€Å"C† shares, but not on the special share until the debt was repaid (Robertson, 2006). In February 2005, Belize defaulted in the loan repayment and the government’s pledge under the loan agreement was enforced. The government now had more than 37.5% o f the class â€Å"C† shares but without the special share. Belize now had less than 37.5% of shares. The main issue of the case is on whether the directors subject to appointment by the special shareholder with over 37.5% of class â€Å"C† shares could be removed. In this instance, there was no shareholder who held both the special share and over 37.5% of class â€Å"C† shares. Belize Telecommunications argued that the two directors were not removable whereas the Attorney General argued otherwise. The argument was that the articles of association regarding the appointment of directors should be made to provide that vacation of office by a director should happen if the shareholding specification that brought him there ceased existing. The Belize Supreme Court’s Chief Justice agreed with the government. With its 37.5% shareholding, the government should be given power to dismiss the two directors and recruit new ones (Olivelle, 2005). Analysis Court Analysi s. The Chief Justice in the Belize Supreme Court agreed with the Attorney General that the government may be allowed to remove the directors in question and appoint new ones. The Privy Council’s advice through Lord Hoffman came up with the principles of interpreting the company’s articles of association. The interpretation principles apply, whether it is an act of Parliament or company contract. A search for the meaning of the