FLOW Charts - assignment prep PDF

Preview

Summary

assignment prep...

Description

YES

Can Kevin transfer his shares to Ashley?

There is no way for there to be restrictions on transfer of shares

Is it listed on the ASX?

Public (Ltd)

NO What type of company is Maribel’s Grill?

Proprietary (Pty Ltd)

Are there any constitutional rules regarding directors’ powers?

NO

Replaceable rule: 198A  Directors manage the company Replaceable rule: 198C  Directors can confer on a managing director any of the powers a director can exercise As Maribel has the power to make directors decisions

Is there a constitution?

YES

YES

The rules of a constitution must be followed – s1070A

NO

Replaceable Rule: section 141  Replaceable rules are used to set out the rules of the management of a company

When were these provisions added to the constitution?

A restriction on transferability must be a part of the constitution at the time shareholder obtained the shares

Refusal of transfer must be given in notice of 2 months to the transferee – s1071E

There are standards to be met if there is a refusal of register

A transfer of shares may be subject to decline in the constitution – s1070A ONLY FOR PROPRIETRY CO. Replaceable rule: s1070G  Directors of a proprietary company may refuse the transfer of shares for any reason

Or, Replaceable rule: s1072F(3) Directors may refuse to register a transfer of shares in the company if a) The shares are not fully paid

There must be ‘just cause’ for the refusal of register of transfer – or the court may order the transfer – s1071F Here, it is unlikely the court will find it unreasonable for the refusal – as Ashely is attempting to overthrow the management of the company

Can Kevin transfer his shares to Ashley?    

If the company is proprietary and Allows managing directors to make directors decisions And there is no constitutional rule dictating the transfer of shares It is possible for Maribel to decline the transfer of shares from Kevin to Ashely through the replaceable rule: s1070G o Refusal of transfer must be given in notice of 2 months to the transferee – s1071E o There must be ‘just cause’ for the refusal of register of transfer – or the court may order the transfer – s1071F  Here, it is unlikely the court will find it unreasonable for the refusal – as Ashely is attempting to overthrow the management of the company

   

If the company is public and Isn’t listed on the ASX And there is no constitution rule regarding transfer The replaceable rule: 1072F(3) can apply o Directors may refuse to register a transfer of shares in the company if a) The shares are not fully paid b) The company has a lien on the shares

 If the company is public and  Is listed on the ASX  Then there is no way of restricting the transfer of shares

The fundamental principle of corporate law is that there is separation between ownership (the shareholders) and the management (the directors) Dependent on what the constitution states will show who has the power to make management decisions for the company Yes No

caseonlaw A meeting may be called, or a resolution attempts to be added to an existing meeting– however, as the purpose of this would However, be to impede the management owners of the directors- this is of an improper purpose and therefore can be refused by the directors – NRMA v Parker (Automatic self-cleaning v Cunninghame) has shown that the passing of a resolution that interferes S249D(1): a directorthat must However, it is important Maribel be aware of how Kevin and Ashley may try to get their vegan diet discussed call and arrange a meeting with the management There must be a properdecisions purpose of forthe theboard calling is of a on the request of the meeting – or the addition of a to resolution – members holding 5% of entitled be ignored An extraordinary general meeting may  It is unlikely that the disruption of the Shareholders can exercise the voting shares be called if there is no powers AGM at culture of Maribel’s will be considered a decision-making proper purpose members meetings Public company? Shareholder’s request

Replaceable rule 198A is applied – this gives the directors broad power and discretion to manage the company

Annual General meeting - mandatory for public companies, optional for proprietary companies

Public companies must have an AGM 18 months after registration – and annually ever since

S249N - For a resolution to be added Kevin and Ashley must - Have 5% of the votes or - 100 members to agree with the vegan diet If this is met, the resolution can be added

Is there a constitution regarding the management decisions?

Shareholder call

S249F – shareholders with 5% of the vote can call a meeting without requesting with the directors

Requestion must be  Written, and state the resolutions – s249D(2)  The meeting must be called with 21 days of the request and held rule: withins198A: 2 months – Replaceable s249D(5) Management power is given to the directors

Shareholders will be liable for cost of meeting

Members cannot tell directors how to manage Automatic Self-Cleaning Filter v Cunninghame

Can a Vegan diet be implemented by the shareholders?

If the meeting is not called with 21 days – then members with 50% of the vote making the request can call for the meeting – s249E(1)  The expenses of the meeting will be on the company

Members cannot override any action of the board

Annual General Meeting (AGM)

Public Companies - Must have AGM o 18m after reg o Annually – within 5 months of end of financial year Proprietary companies - Do not need to have one - Unless the constitution says otherwise

However, members might attempt to call a meeting to pass a resolution to implement the vegan diet Extraordinary general meeting (EGM)

Directors – Replaceable rule s249C

Any meeting that isn’t and AGM is an EGM

Any director can call a member meeting

Court – s249G Shareholders – s249D

Listed companies: s249CA: director of a listed company can always call a members meeting – w 28 days notice

Shareholders – s249F

Directors of a company must call and arrange a meeting on the request of members holding 5% of the voting shares – s249D(1) Request must; - Be in writing - State resolution - Signed by requesting - Given to company



Executive / Non-Executive Directors

Shareholders with 5% of the vote to call a meeting without first requesting the directors to call a meeting

Meeting must be called in 21 days If not called within 21 days, members with more than 50% of the votes of the members making the request may call arrange to the meeting themselves

Company pays

Court can order a meeting is it is impractical or impossible to call a meeting another way HOWEVER, common law shows that if the members meeting is being called for a improper purpose then the directors do not need to call it NRMA v Parker (1986) 6 NSWLR 517;

Also, a meeting cannot be called just for the shareholders to tell the directors their opinions Australasian Centre for Corporate Responsibility v Commonwealth Bank of Australia [2016] FCAFC 80. It is unlikely that the meeting be called as the resolution to change the integrity of the company is improper – and the company does not need to call a meeting to share opinions

o Non-executive directors = don’t work at the company full time, and you’re a director in your free time o Executive director = people who have a job working for the company full time  

Executive directors have more knowledge about the company as they are a part of the internal functions of the company

Managing Director / CEO (s 201J). o Managing directors = don’t need a full board meeting for all management decisions 



Day to day managing decisions

Chairperson of the board (s 248E). o The chair must sign the minutes of the meeting (s 251A(2)) and has a casting vote (s 248G(2)). o Often a non-executive member – in order for them to stand-up to executive directors – a third party o At a dead lock – the chairperson is the swing vote



Alternate Directors (s 201K(1)).



Nominee Directors o Someone who is a part of the directors board because the directors wanted their interests protected...