Hi!

This is my business law question. however I am confused with what issues and rules are applied. Could you please advise me?!

Question:

Sam and Kate are the directors and shareholders of Fantastic Graphics Pty Ltd

(Fantastic). Recently, the company began to suffer cash flow problems and needed

additional capital. Kate persuaded Bob to invest $100,000 in Fantastic. Sam and Kate

held a directors' meeting and decided to issue Bob with 100 shares in the company.

A general meeting of shareholders also appointed Bob as a director of the company.

At the shareholders' meeting, Bob said that he would not be attending board meetings

and wanted to be treated as a 'silent partner'.

The company's financial position improved as a result of Bob's $100,000 investment.

Despite the company's increased profits, Sam and Kate decided not to declare a

dividend for the current financial year. Instead, they gave themselves pay rises and

arranged for the company to lease two new Mercedes-Benz cars for their personal

use.

Bob began attending directors' meetings and made several suggestions to improve

the profitability of the business. He also questioned Sam and Kate about their pay

rises. Sam and Kate resented these questions and took the following actions:

They formed another company, Sam and Kate Graphics Pty Ltd, in which Bob was not

involved, and diverted a valuable government design contract that they had been

negotiating to their new company.

They also called a shareholders' meeting at which they will propose that Bob be

removed from his position as a director.

What legal actions can be taken by Bob as a shareholder of Fantastic in these circumstances?