Laws Tutorial 8 PDF

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Summary

Commercial Applications of Company Law 2019Tutorial 8 held in week 10 of semesterTutorial 8 Tutorial Building on content from Lecture 8Consequences of breach of duty and members' remediesFor this week tutorial please read chapters:15 Consequences of breach of duty16 Members’ remediesTutorial questio...

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Commercial Applications of Company Law 2019

Tutorial 8 held in week 10 of semester Tutorial 8 Tutorial Building on content from Lecture 8 Consequences of breach of duty and members' remedies For this week tutorial please read chapters: 15 Consequences of breach of duty 16 Members’ remedies

Tutorial questions

1. At AMGL, Adderson and Eager are concerned that the significant stake in AMGL acquired by XYZ Limited means that they might end up frozen out of the business they started. For some time, Eager has been in discussion with another finance industry figure about a highly prospective investment play in Europe. Eager suggests to Adderson that AMGL issue 500,000 shares to this person as a means of creating ties with AMGL that might help it to secure access to the project in the future. Adderson and Eager bring the proposal to the AMGL board. Mr Xu is furious as he sees it as a ploy to entrench further their control of the company, by putting shares in the hands of a person who is likely to support Adderson and Eager in the future. Assume for the purposes of this question that the board of AMGL issued 500,000 shares in breach of its duty to exercise the share issue power for a proper purpose. What action, if any, can ASIC take against the directors who voted in favour of the share issue? See HRS [¶13-180] – [¶13-300], [¶15-140] and s1317E of the Corporations Act

2. What action, if any, can Mr Xu and XYZ Ltd take in relation to the improper share issue? See HRS [¶15-210], [¶16-240] and [¶16-400] – [¶16-420] Law Application of law

3. Patricia Henry attends an industry conference at which she meets an agricultural scientist who is working on a process to extract value from the waste products of feedlots. The scientist is very keen to enter into a joint venture with a significant producer to test and hopefully commercialise the technology. At Patricia’s suggestion, the scientist prepares a proposal and © 2019 Oxford University Press This material is for use only by lecturers/tutors prescribing Commercial Applications of Company Law 2019 and should not be further distributed.

Commercial Applications of Company Law 2019

presents it to the board of SAFPL. SAFPL is impressed by the technology and the opportunity it presents for the business, but because of the significant investment it is making in the organic farm in the Riverina, is not in a position to take it up. After the meeting, Patricia phones the scientist and says that she would like to invest her own money in the project. Patricia does not tell her fellow SAFPL directors of her decision. Assume Patricia makes the investment and it is highly profitable. What action, if any, could SAFPL take against Patricia? See HRS [¶15-140], [¶15-210], s1317H of the Corporations Act and Regal (Hastings) v Gulliver Law Application of law 4. What action, if any, could Jason take against Patricia? See HRS [¶16-210]

Law Application of law

5. The constitution of SAFPL allows for the directors to pay a dividend to holders of A Class shares at their discretion. Over many years, the company had paid a dividend which, although not sizable, was sufficient for the shareholders who chose to do so, to live on. However, David and his siblings are angry about the discontent that Jason has been stirring up among the Henry grandchildren, some of whom they see as lazy and undeserving. So the board of SAFPL resolves not to pay a dividend to the A Class shareholders this year, and instead, to retain earnings to fund the development of the organic farm in the Riverina. What action, if any, can the Henry grandchildren take in respect of non-payment of the dividend? See HRS [¶16-210], ss232 and 233 of the Corporations Act and Thomas v H W Thomas Ltd Law Application of law End tutorial

© 2019 Oxford University Press This material is for use only by lecturers/tutors prescribing Commercial Applications of Company Law 2019 and should not be further distributed....