Carborundum Pty Ltd (Carborundum) is a company that was incorporated in July 2014. The main business of the company is the manufacture of drilling machinery for the mining industry.

The company has issued 50,000 shares as follows:

Alan, Ben, Colin and Eric Sanders have 4,000 shares each;

Donald Thump, a wealthy industrialist, has 12,000 shares; and

Inventions Pty Ltd ("Inventions") has the remaining 22,000 issued shares.

The directors and shareholders of Inventions are Hilary and Bill Winton. All the Carborundum shares are fully paid up.

Hilary is the managing director of Carborundum and she is also its chief engineer. The other directors are Ben and Colin. Colin is the Chairman of the Board. Alan is the Company Secretary for Carborundum.

Carborundum's Constitution is made up of the Replaceable Rules and the following clauses:

" Clause 1. Hilary Winton shall be director for life.

Clause 2. The company agrees to employ Hilary Winton as its chief engineer. "

Part A Advice to Hilary(15 marks)

Hilary seeks advice on the following matters:

(i)How secure is her position as Managing Director of Carborundum?In particular, discuss what would be the procedure the Company would have to take to remove her as a managing director. (4 marks)

(ii)Only in this part, assume that Hilary issues 50,000 Carborundum shares at a price of $1 each to Inventions with the requirement that only 1 cent needs to be paid initially. The issue of shares to Inventions was listed down in the Member's Register of Carborundum. When Ben and Alan find out, they declare the share issue void. Discuss whether the issue of shares is valid and Hilary's potential liability under the Corporations Act. (8 marks)

(iii)Can Carborundum remove Hilary as its chief engineer? If so, explain how this may be done. If not, explain why not. (3 marks)

Part BAdvice to Donald (5 marks)

Assume in this part that the share issue of the extra 50,000 Carborundum shares was held to be void. Donald has heard that the other shareholders want to get rid of him by holding a General Meeting to insert a clause in Carborundum's Constitution that allows "Inventions Pty Ltd to compulsorily acquire the shares of any member for 10 cents per share". Discuss the likely success of such an amendment.

Part CAdvice to Alan (7 marks)

Alan found out that Ben has entered into the drilling machinery business. He has set up a company called Bendrill Pty Ltd ("Bendrill") to sell drilling machinery to Carborundum's existing customers. Alan has been told that Ben approached two of Carborundum's customers and offered them Bendrill's products, which are 30% cheaper than Carborundum products. Upon checking in ASIC's database, Alan finds that Bendrill made a profit of $500,000 in the previous financial year.

Based on the above, Alan wants to know the likelihood of ASIC and/or Carborundum successfully pursuing criminal and/or civil remedies against Ben and/or Bendrill.

Part DAdvice to Eric (3 marks)

Eric has a farm that he claims has silver deposits. The land was valued at 1 million dollars in June 2017. He incorporates a company called Silver Pty Ltd ("Silver") on 2 July 2017. On incorporation, he is Silver's sole director and shareholder. On 3 July 2017, he then sold the land to Silver for 2 million dollars.In August the company raised 2 million dollars from 30 investors, which was then paid to Eric. In October, a detailed report by an independent geologist established conclusively that there is no silver in the land. Eric is now being sued by Silver after the shareholders removed him as director and appointed two new ones. Discuss the remedies that would be available to Silver.