Case Study: Momcastle Museum Ltd.

Course Code: EM 555 Course Title: Corporate Governance and Diplomacy Submitted By: Nahid Rijwan [ID: 3-09-17-033]

As found from the literature, Momcastle Museum is fictitious; this case is based on a true incident in the governance of a real heritage-based company. So we shall consider this company as a non-profit organization as we proceed to find the solutions to the facts arisen in this case. 1. Was it reasonable for a shareholder to be expected to know what was in the company's articles of association? We found that MomCastle Museum Ltd. was a community based local company. It kept its shareholders to belong to the local community by a term included in its article of association. Likewise Companies and corporations can be structured in various ways to make them more relevant to the needs of community based groups. The incident shows the importance of taking advice on governance matters from the company secretary, auditor, or the chairman. The governing body of the organization should have drawn attention to the limit on transferring shares. They should have been disseminate the terms of the article of the company and rights and liabilities of shareholders to them in proper and timely manner as of at the time of purchasing and selling the shares or through the company general meetings among the directors and shareholders over the year. In a non-profit company, the Shareholders are protected to their liabilities to the company
unless they signed personal guarantees. So the shareholders needed to be properly acknowledged about their liabilities to avoid such circumstances.

2. Are most shareholders aware of the contents of the articles or the memorandum of companies in which they invest (consider both private and public companies)? How can a shareholder obtain a copy of a company's articles of association? Most shareholders do not know what is in their company's articles. In most cases the detailed rules in the articles have little direct effect on shareholders. But in this case they did, and the shareholder should have confirmed that the shares could be transferred before offering them

to a business colleague. A copy of the articles can be obtained from the company and is filed as part of the company incorporation procedure for both private and public ltd. companies. 3. Would your answers be different if the shareholder was also a director of the company? In general observations, many directors do not know what is in the articles of their company. They should. The Directors, managers and employees have no personal responsibility for
debts unless they caused recklessly, negligently or fraudulently. So they should be responsible for taking the liability of the incidence occurred in this case, as such kind of consequence was occurred due to their negligence of communicating the terms of article to the respective shareholders. If the directors were responsible on their duties and aware of the terms of the article of association, this kind of incident should not have happened. The induction programme or in training programs for any new director should

include a review of the terms in the articles, particularly where they differ from standard company terms.