Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need help with these questions, for corporate law. This the HYPOthetical scenario... Affairs Pty Ltd (APL) enjoys being a family-owned real estate company with

I need help with these questions, for corporate law.

This the HYPOthetical scenario...

Affairs Pty Ltd (APL) enjoys being a family-owned real estate company with revenues over $300 million in its last financial year and it has 35 employees.

There are 190 ordinary shares on issue, all held by members of the Green family:Dan Green (50 shares), Nevin Green (40 shares), Pamela Green (40 shares), Nav Green (30 shares), Jill Green (15 shares), John Green (15 shares).

There are also 50 A class shares on issue. The A class shares have limited voting rights but gets dividends at the discretion of the board. Currently 5 family members (Kate Green, Stacey Green, and three of their cousins - Ned, George, Sam) have 10 A class shares each. Holders of A class shares have 1 vote for each 10 shares held on a resolution to amend the constitution of the company or to wind up the company. They are entitled to share pro rata in any dividend the board decides in any financial year.

The directors of FAPL are Dan, Nevin, Pamela, and Robyn. Robyn is the wife of Dan. Robyn is also the director and the sole shareholder of another company, Happy & Rich Pty Ltd. She has a good reputation in business and the Green family trusts her.

The constitution of FAPL incorporates all of the replaceable rules in the Corporations Act (2001) and includes the above stated terms of issue of the A class shares.

Late last year, John met Cindy, the controlling shareholder and the CEO of Cindy Sports, at an end-of-year social event. Cindy was fascinated to learn that John had a successful real estate business. She suggested to John that they should explore the possibility of doing business together by assisting companies to find their new office space at the city centre.

John mentions this to idea to one of the directors of FAPL, Robyn, and raises his concerns that Nevin and Sam may not want John's active involvement in the business. A few days later Robyn calls John and suggests that together they can incorporate a new company and this way John can take on the new venture with Cindy. Robyn thinks Happy & Rich Pty Ltd. can help with initial incorporation funds and that John can work with Cindy on expanding the business.

Soon after that, the new company CJR Pty Ltd. is incorporated, and its shareholders are Cindy (40 shares) Happy & Rich Pty Ltd. (30 shares) and John (30 shares). Robyn, Cindy, and John are all directors of this new company. The business goes well and is soon operating profitably. Cindy and John get on well, but they frequently disagree with Robyn. They make several operating decisions about the business with which Robyn disagrees, and hold a number of directors' meetings without giving her sufficient notice to attend. They reinvest all the profits in the business and decide not to pay dividends.

QUestion 1

Robyn is angry about the way Cindy and John are managing the company. Advice Robyn whether there is any remedy available to Robyn. What action, if any, can Robyn take in respect of non-payment of the dividend?

Question 2

FAPL has two classes of shares on issue - ordinary shares and A Class shares. Under the terms of the FAPL constitution, each A Class share currently carries an entitlement to vote on any resolution to amend the company's constitution. The directors of FAPL would like to have the constitution amended so that A Class shareholders cannot vote on constitutional amendments. Is this possible? If so, what would be required to ensure that the amendment of the constitution is valid?

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

Company Law

Authors: Brenda Hannigan

6th Edition

0198848498, 978-0198848493

More Books

Students also viewed these Law questions