Take Home Exam 8 - Shareholder Remedies

Michael is the managing director and sole shareholder of ModelYou Pty Ltd, which runs a personal training business. In order to obtain ideas to improve his business, Michael takes a 4% shareholding in his competitor BetterYou Ltd. This shareholding enable him to gain a seat on the board as a non- executive director of BetterYou. Thus Michael is able to gain information about their strategic future planning. This gives ModelYou a substantial commercial advantage.

BetterYou are concerned about one of their directors and shareholders actively competing against the company, so the other directors propose to change the BetterYou constitution such that all shares issued to directors in the past three months must be acquired by BetterYou for fair compensation. Only Michael has received shares in the past three months.

Michael is furious at this proposal, however the vote at the general meeting passes with 96% approval.

Advise Michael as to his rights in this situation.