Question
ExcelCorp Ltd is a company involved in international trade. It was originally formed by a group of import and export traders operating in Sydney and
ExcelCorp Ltd is a company involved in international trade. It was originally formed by a group of import and export traders operating in Sydney and while they remain a majority of members in number and votes, many non-traders have become members over the years so that trader-members make up just over 60% of the membership and votes.
The board of ExcelCorp decides that they want to reduce the influence of non-trader members in the company. They propose to change the constitution by creating a new class of shares that will carry 5 votes per share. The new class of shares will only be available to trader-members and will be issued for a price of $1 per share (which is much lower than the current valuation of the shares in its accounts). The meeting will also vote on a special resolution to change the constitution so that directors can only be voted for or against by members holding preference shares. Lastly, a further resolution is proposed that will allow the board to impose a levy on non-trader members to provide for the maintenance of the company's plant and equipment.
The board announces a members' meeting for 21 days later at the company's headquarters. This is inconsistent with the company's constitution, which provides for a minimum of 28 days' notice. The notice of meeting says that several special resolutions will be proposed and the notice contains the draft resolutions. 50 non- trader members, with 5% of the voting rights in the company send a notice to the company board requesting that a document be distributed to all members prior to the meeting. The document is highly critical of the company's management and board of directors. The board refuses to distribute the document to members.
You are a lawyer retained by a group of non-trader members. Advise them as to their rights under the Corporations Act 2001 (Cth) and at general law.
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