Chamberlin Ltd is an unlisted company with three directors: Seraphina, Brad and Kyle. At a recent board meeting the directors passed a resolution that Chamberlin Ltd would purchase $1,000,000 worth of stock from Alpha Pty Ltd. Alpha Pty Ltd’s sole director and shareholder is Jonathon, Seraphina’s husband. The majority of Chamberlin Ltd’s shareholders are not happy with the directors’ decision and they wish to insert a clause into Chamberlin Ltd’s constitution that all stock must be purchased from Red Cabbage Ltd.

REQUIRED:

With reference to the provisions of the Corporations Act 2001 (Cth), advise Seraphina, Brad and Kyle the other directors of Chamberlin Ltd of the procedures they are required to follow when considering the contract with Alpha Pty Ltd.