THESE ARE THE FACTS:

FACTS Additional Instructions The following facts, while inspired by true events, are a fiction designed to test your knowledge of company law. Do not research or refer to facts other than as set out below. The facts also refer to anti-money laundering regulation. Again, you do not need to know anything about this area of law other than what is explained in the facts. Royal Commission into Stellar Crest Casino Ltd Stellar Crest Casino Ltd ("SCC") operates a casino in Melbourne under licence from the Victorian Government. SCC was the subject of a Royal Commission inquiry that found, amongst other things, that the company had engaged in illegal money laundering and partnered with junket operators who had links to organised crime groups. Money laundering is the process of making dirty money look clean, that is, converting the proceeds of criminal activity so that the dirty money appears to be derived from legal activities. Casinos are often used to launder money, for example, a person can buy gambling chips at a casino with dirty money, play for a while, and then cash in the chips. This cleans the dirty money because the person can then explain the proceeds as gambling winnings. Junket operators are also a known problem area for money laundering. These operators are used by casinos to organise gambling holidays to their casino by 'high roller' punters from overseas. These punters carry large amounts of cash and use the junket operators to purchase casino chips for them. Overseas crime groups use these junket operators to launder their dirty money. The links between money laundering, junket operators and casino gambling are well known. AUSTRAC is Australia's anti-money laundering regulator and is responsible for monitoring compliance under anti-money laundering legislation. This legislation imposes obligations on casino operators to develop and maintain an anti-money laundering program and to verify customer identities and report suspicious transactions involving more than $10,000.

The Royal Commission was very critical of the role played by the SCC board and its weak corporate governance practices that enabled illegal money laundering to take place in its casino. The Victorian Government is yet to respond to the Commission's report, but it is possible that the Government will cancel SCC's gaming licence that it needs to operate its Melbourne casino. This decision would be devastating for SCC and its many stakeholders, including SCC shareholders.

QUESTIONS:

QUESTION 1 James Kinchloe is a 5% shareholder of SCC. After the Royal Commission handed down its findings, Mr Kinchloe called a general meeting of SCC shareholders to demand that the current directors stand down. Mr Kinchloe also proposed a resolution that SCC improve the odds on its poker machines to attract more customers to the casino. Discuss whether Mr Kinchloe was able to call the meeting and propose these resolutions. (worth 10 marks

QUESTION 2 UniSuper Ltd is a superannuation fund that holds 2% of the shares in SCC. UniSuper is convinced that the SCC directors are responsible for the money laundering breaches committed by the company, that the directors have breached their duties and SCC has and will continue to suffer significant loss and damages as a result. Discuss what remedies are available to UniSuper under the Corporations Act 2001 (Cth) that may allow it to bring proceedings against the directors for any breach of their duties. (WORTH 10 MARKS