Clean Ltd was established some five years ago to manufacture industrial solvents and clean

ing solutions, and Des was appointed managing director.

The company’s main contract was with Dank plc a large industrial conglomerate.

In the course of its research activity, Clean Ltd’s scientists developed a new super glue. Des was very keen to pursue the manufacture of the glue but the board of directors overruled him and decided that the company should stick to its core business.

The managing director of Dank plc is a friend of Des’s and has told him that Dank plc will not be renewing its contract with Clean Ltd as he is not happy with its performance. He also told Des that he would be happy to continue to deal with him, if only he was not linked to Clean Ltd.

Following that discussion Des resigned from his position as managing director of Clean Ltd and set up his own company, Flush Ltd which later entered into a contract with Dank plc to replace Clean Ltd. Flush Ltd also manufactures the new glue discovered by Clean Ltd’s scientists, which has proved to be very profitable.

Required:

In the context of company law, advise the board of Clean Ltd as to whether they can take any action against Des or Flush Ltd.(10 marks)