Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Colour Paints Ltd (Paints) is a public company of which Black, White and Brown are the directors. Each of these directors controls a 10% shareholding

Colour Paints Ltd (Paints) is a public company of which Black, White and Brown are the directors. Each of these directors controls a 10% shareholding in Paints. No other single shareholder holds more than a 5% shareholding in the company. Paints was established some time ago in order to improve the buying power of a number of smaller retailers of paints so that they might meet the competition of larger retail chains. For 6 years the company has actively pursued the object of purchasing paint from manufacturers on behalf of members at a price comparable to that paid by the large retail chains. However, in the last year, the present directors, who are among the largest of the small retailer members of Paints, have considered introducing scaled benefits for members according to the volume of purchases that they make. They say that the smaller members of Paints will still remain better off than if they were to purchase alone, and that to meet increasing administrative costs, some recognition should be paid to the fact that a small number of Paints' larger members have really been responsible for the benefits received by all members. At various meetings over the past year the directors have continually raised these points. Last week, the board passed a resolution establishing a new members' buying list, by which the larger members of Paints will continue to buy at prices comparable to those paid by the retail chains and the smaller purchasing members will pay 15% more. George Brush, a member holding a 2% shareholding wishes to challenge the directors' actions.

REQUIRED:

On what legal grounds might George Brush proceed to challenge the actions of the directors and what legal remedies might be available to him? (20 marks)

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

Step: 3

blur-text-image

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

Intermediate Accounting

Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones

10th Edition

324300980, 978-0324300987

More Books

Students also viewed these Accounting questions