Question
1. Explain to Julian why Retrofit Pty Ltd needs rules. He reminds you that he is the only director and shareholder, but that he would
1. Explain to Julian why Retrofit Pty Ltd needs rules. He reminds you that he is the only director and shareholder, but that he would like to add his mother Bev and Tom the office manager as directors in the future. He will remain the only shareholder. Also does the company need to specify in the rules the actual activities of the company ie waste recycling, ownership of a warehouse and running a food business or not? 2. Julian is the driver of the business, and he wants to retain control. He always wants to be employed as the CEO. Also, he wants the person who holds the position of CEO to always be the chairperson on Board meetings. Required: a. Should the company put a rule in the constitution employing Julian for life or not and why? b. How can we make the person that holds the position of CEO always the chairperson and that rule never be changed? 3. The constitution of a company affect the directors, the shareholders and the company. However many actions are taken by senior staff of the company who are not directors or shareholders. Would the constitution apply to them or not? If they breached the company's internal procedures what actions can the company take against them? Required: Explain to Julian if the senior staff who are not directors did something wrong what actions the company can take if any?
4. Julian is currently the holder of all the ordinary shares issued by the company. Given his ambitions for the company he acknowledges that the company will need more money. He is aware therefore that there may be other shareholders in the company and his 100% will dilute. Required: a. How much should Julian reduce his shareholding to? Is there a certain % he should not go below and why? b. If he issues say 5% of the shares to a new shareholder and later on he is not happy with them and wants to either buy back their shares at say cost or dilute their 5% interest by issuing shares to someone else, can the company do this and what legal issues does the company need to be aware of. 5. Rules need to change in a company because of various circumstances. Given that Retrofit Pty Ltd may in the future expand their operations there is a set process set out in the CA on how the rules have to be changed. Required: a. Explain to Julian the process the company has to follow when it wants to change the rules. b. At the moment he owns 100% of the shares. When he votes as a shareholder to the change does he have to care about anyone else or can he just look after himself? c. If Bev, Julian's mother who owns 5% of the company is not happy with the proposed rule change can she do anything about it? 6. Companies today do not need an objects clause see clause 5 of Retrofit Pty Ltd's constitution. Understanding the concept of separate legal entity, you suggest to Julian that rather than put all three activities in the one company, you consider a group company structure. a. Explain to Julian why a group corporate structure rather than just 1 company is a better option. b. Should you have an objects cluse in each company since they are set up for a single purpose only? c. If you did out in an objects clause in each company and one of the companies did something outside of its object clause, what would happen? 7. The company Retrofit Pty Ltd has been operating for some time. The directors are Julian, and Bev, his mother. Julian feels it is time to add another director, Tom the office manager. Review the constitution of the company and explain how the company will go about appointing Tom. You need to advise Julian of the relevant rules in the constitution.
8. In the constitution there is clause 13 about the transfer of shares and clause 17 about the transmission of shares. See also Clause 15 which states: "The Directors may refuse to register a transfer of Securities, without giving any reason for such refusal." Explain the purpose of clause 13 and clause 17 and how does clause 15 impact these?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started