Question
Ella has been a minority shareholder of Crack Ltd, a specialist whip manufacturer whose market is predominantly Australian farmers, for many years. She holds 15%
Ella has been a minority shareholder of Crack Ltd, a specialist whip manufacturer whose market is predominantly Australian farmers, for many years. She holds 15% of the shares in Crack Ltd. The balance of the shares are held by the three directors of Crack Ltd, Manny, Amy and Phillipe. For the past five years, the directors of Crack Ltd have refused to declare a dividend or even consider declaring a dividend.
The whips manufactured by Crack Ltd were featured in an episode of a home renovation television show as a unique piece of home dcor in 2015. This lead to a dramatic increase in demand for the whips and Crack Ltd made a large profit in both the 2015/16 and 2016/17 financial years. In August 2017, the directors had a meeting and voted themselves large increases in their salaries as well as company cars. The directors also passed a resolution that Crack Ltd purchase a large farm property for use by the directors. At another directors' meeting in February 2018, the directors pass a resolution that the farm property should be sold to Manny personally for less than market value. The directors then call a members' general meeting of Crack Ltd at which a resolution of the general meeting approving the sale of the farm property to Manny is approved.
What advice do you give Ella about what options she may have in this situation?
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