ABSTRACT
Upon advice by an accountant, Colin duly formed Cornice Ltd and its shares were divided equally among the three participants, who all became directors. The articles of the company provide that: ‘Any person who has incurred expenses in connection with the formation of the company shall be entitled to reimbursement of those expenses by the company.’ After formation, Brian signed a cheque, bearing the name ‘Cornice’, in favour of the accountant for his advice in connection with the formation; this cheque has not been paid. It has also emerged that Archie made a profit from the incorporation, which he did not reveal to Colin. Colin protested about the failure to pay the accountant and Archie’s undisclosed profit and Archie and Brian then resolved not to reimburse him for his expenses and agreed to take no action to recover the profit from Archie.
