Section B - Scenario 4
HarvestYield plc is a large agricultural company. The board of directors decides to close a profitable local farm to consolidate operations in a mega-farm 100 miles away. This decision will devastate the local rural economy and cause 50 redundancies. The directors made the decision solely to increase the annual dividend for shareholders.
Under s.172 of the Companies Act 2006, have the directors breached their duty to promote the success of the company?
ACCA · Question 56 · Management, administration and the regulation of companies
Section B - Scenario 4
HarvestYield plc is a large agricultural company. Director Thomas wants to sell his privately owned tractor to HarvestYield plc for £150,000. The company's net asset value is £2 million.
What is the legal requirement for this transaction under the Companies Act 2006?
Answer options:
It only requires approval by the board of directors.
It requires approval by an ordinary resolution of the shareholders because it is a substantial property transaction.
It requires a special resolution of the shareholders.
The transaction is strictly prohibited by law.
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