Saudi Electronic University Limited Liability Company Case Study

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User Generated

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Nqana7

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Law

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Saudi electronic university

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1. Case Study John, Lesa, and Trevor form a limited liability company. John contributes 60 percent of the capital, and Lesa and Trevor each contribute 20 percent. Nothing is decided about how profits will be divided. John assumes that he will be entitled to 60 percent of the profits, in accordance with his contribution. Lesa and Trevor, however, assume that the profits will be divided equally. A dispute over the profits arises, and ultimately a court has to decide the issue. What will be the result? How could this dispute have been avoided in the first place? Action Items 1. Read the case study above. 2. By the due date, submit your answers to the case study questions. Justify your answers.
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500 words

Tags: Profitability shareholders Limited Liability Company

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Case Study

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Case Study
If the dispute is taken to court, it should be noted that all shareholders hold the right to
sue for wrongful acts. These rights will protect John from being exploited by Lesa and Trevor
since he is the one who contributed the most capital to the business. The court will determine that
all common shareholders hold the right to enjoy the company's profitability as long as they own
shares in the company. Based on the law, shareholders have some rights regardless of whether
the company is public or private (Harper James Solicitors, 2021). Moreover, different
shareholders can enjoy different rights as provided in the company’s articles. The special rights
of shareholders include weighted voting rights, a right to be informed before the company
decides to take a particular action, and the right that relates to the appointment of directors.
These rights can ...

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