Question One:

Richie, Fonzie and Ralph form a company called Big Als Pty Ltd to own and operate a fast food franchise business. Each of the founders own 10 shares. The directors of Big Als Pty Ltd are Richie, Joanie and Chachi.

Analyse the following:

1. Richie has used money from the company's bank account to purchase a new car for himself. Joanie has just discovered this and wants to bring an action under section 232. Can she?
2. Assume Joanie and Chachi are the nominee directors of Fonzie and Ralph, respectively. Richie has a fight with Fonzie and Ralph. At a shareholders meeting they pass a resolution voting him off the board. Can Richie assert a cause of action under section 232? What remedy would he be seeking?
3. Ralph has learned that the directors negotiated for the purchase of some land for a new restaurant. Apparently the price negotiated was so good, that the directors formed a new company and purchased the land themselves. Ralph has complained, but the directors just ignore him. He wants the company to sue the directors to get land and/or profit they made on the transaction. Advise Ralph on whether he could peruse a derivative claim against the directors.
4. Fonzie is concerned that the directors are overstating the profits in the company's financial accounts in order to meet their full bonus criteria. Fonzie wants a forensic accountant to review the company's books and records. How should Fonzie proceed?
5. Fonzie has also discovered that the directors want to enter into a transaction to purchase a number of service stations from a company owned by Joanie at above market prices. Fonzie wants to stop this transaction from proceeding. What should he do?