LAW$2452$ ASSESSMENT TASK $1($INDIVIDUAL ASSIGNMENT$)$

Semester $2,2024$

General Instructions:

Due date before $5$ pm on $29$ July $2024.$ Please note that an assignment

submitted later than the deadline will receive a penalty. For more information, please see the instructions on Canvas.

On an assignment cover sheet, you must identify your name, a student ID$,$ a

lecturer's name, and the time of your tutorial $($e$.$g$.,$ Tuesday $15\mathrm{.}00$ class$).$

Electronically submit the assignment through the Turnitin link on Canvas.

The assignment must also contain appropriate referencing in the form of footnotes and bibliography in conformity with normal scholarly standards. The bibliography must include all of the material that you have cited.

The word limit is $1200\frac{+}{-}10\%.$ The word limit should exclude footnotes and bibliography.

IRAC is required.

QUESTION

XYZ Tech Ltd$.$ is a publicly listed technology company at the forefront of artificial intelligence development, particularly in healthcare applications. Despite the company's robust profitability and market success, minority shareholders have expressed concerns about management decisions relating to dividend distributions and the handling of significant asset transactions. The company is governed by a detailed constitution that specifies the rules for management, shareholder rights, and financial distributions. Specifically, the constitution mandates that:

A minimum of $40\%$ of annual profits must be allocated for dividend distribution unless a greater percentage is decided upon by a supermajority vote $-90\%.$

Major asset sales require approval from at least $75\%$ of voting shareholders during a specially convened meeting.

Any conflict of interest involving board members must be fully disclosed in the shareholders' annual general meeting.

Emma Clark is a minority shareholder who owns $2\%$ of XYZ Tech Ltd$.$ John Doe is a CEO of XYZ Tech Ltd$.,$ with a noted tendency toward aggressive expansion strategies. The Board of Directors consists of five members, including John as the Chairman.

Emma Clark, who has been with XYZ Tech for over ten years, has grown increasingly frustrated with the company's dividend policies. Despite the company posting a record profit of $$120$ million last fiscal year, only a small fraction of this profit was returned to shareholders as dividends. This decision contravenes the company's constitution, which states that at least $40\%$ of profits should be distributed as dividends. The rest of the profits were redirected into speculative projects in emerging markets without securing a supermajority approval.

Emma Clark, besides being a shareholder, was also designated as a Sales Executive within XYZ Tech's constitution. Despite no independent contract being signed due to the constitutional provision recognizing her role, Emma was recently terminated from her position. The termination occurred shortly after she raised concerns regarding the company's handling of dividends and asset sales, which might suggest retaliatory motives.

Additionally, a highly controversial asset sale was conducted, where the company sold a patented AI diagnostic tool to MedTech Innovations, a startup owned by the CEO's brother. This sale was undervalued at $$30$ million, despite an independent valuation of $$50$ million. Crucially, the sale did not receive the constitutionally required $75\%$ shareholder approval, and it was not adequately disclosed at the last annual general meeting, violating the transparency required in cases of board member conflicts of interest.

REQUIRED:

Advise Emma about her all rights and remedies for Emma as a minority shareholder based on relevant Australian law.

Evaluate the transaction of the Al diagnostic tool sale considering the company's status as a separate legal entity.

Relevant topics from weeks $1$ and $3$ are examined. IRAC is required.