Question 6(7 marks)

Ross Tanner is an investor and entrepreneur. He holds a large number of shares in Seaway Security Pty Ltd. Ross has been quite unhappy about the management of the company, particularly as it seems that directors have had pay increases each year and seem to have significant benefits in the form of cars, trips and various other expenses paid on their behalf. Ross suspects that the directors are acting generally for their own benefit, and not in the interests of all shareholders. He is particularly interested in how certain shareholders have increased their holdings, and whether the company has been assisting a particular group of shareholders at the expense of the shareholders in general.

While Ross has asked various questions at company meetings, he is not satisfied with the answers he has received. He believes there may be a case for bringing an action against the directors under some part of the Corporations Act. Ross needs to gather some information so that he can determine whether to bring an action for oppression or perhaps a statutory derivative action against directors who are misusing their position.

Explain with reference to specific sections of the Corporations Act 2001 (Cth):

a)What methods can Ross attempt to use to gather information about the company, in order to consider his options in taking action? (3.5 marks)

ANSWER:

b)If Ross does find that the company is acting unfairly or prejudicially against some members, what type of action can he instigate? (3.5 marks)

ANSWER: