Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Alisha and Diva are the directors and shareholders in Flowers First Pty Ltd.They have been having cash flow problems with respect to acquiring a third

Alisha and Diva are the directors and shareholders in Flowers First Pty Ltd.They have been having cash flow problems with respect to acquiring a third vehicle (with equipment) to expand their business.They approach Ali to invest in Flowers First Pty Ltd.Ali has offered to invest $100,000 into Flowers First Pty Ltd on the basis that he will be issued with 50 Ordinary shares in the company (equating to 20% of the Company).At a general meeting of shareholders Ali is appointed non-executive director of the company.

Flowers First Pty Ltd's cash flow position has improved as a result of the investment from Ali, and substantial profits are earned in the following two years. Ali becomes aware that Alisha and Diva have increased their salaries as executive directors (CEO and CFO) and have also declared bonuses to themselves.Ali becomes concerned that no dividends have been declared and at the next board meeting raises his concerns including his objection to the increase in directors' salary.Alisha and Diva took offence to this an actioned the following:

  • At a directors meeting (no notice provided to Ali) a resolution was passed to assign a recent RSPCA contract to a new company formed by Alisha and Diva as the sole shareholders.
  • Alisha and Diva then called a General meeting with shareholders (no notice provided to Ali) and resolved that Ali will be removed as director of the company.
  • At the General Meeting of shareholders, the director's decision to assign the RSPCA contract was ratified by the shareholders with a vote of 80% (Ali not being present).

Ali comes to you with the following questions. You are required to answer:

a)Can Ali bring a personal or derivative action against Alisha and Diva, and what should Ali consider in making this decision?

b)If Ali brings a personal action, should he bring it under the general law or make an oppression claim under s 232Corporations Act 2001(CTH)?

c)What remedies should Ali seek?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Law

Authors: Mark Elliott, Robert Thomas

4th Edition

0198836740, 978-0198836742

More Books

Students also viewed these Law questions

Question

5. It is the needs of the individual that are important.

Answered: 1 week ago

Question

3. It is the commitment you show that is the deciding factor.

Answered: 1 week ago