Question XXXXXXXXXXmarks) Truth Enterprises Ltd (Truth) is a company that was incorporated in 2008....

Question

Question XXXXXXXXXXmarks)
Truth Enterprises Ltd (Truth) is a company that was incorporated in 2008. The constitution of Truth has the following stated object:
“the business of the company is to invest in online retail fashion stores”.
Truth has three directors, Rhonda, Maria and Miranda, who together own 20% of the company’s shares. The remaining shares are split equally between four investors: Mr JJ, Mrs Cale, Mr Giuseppe and Dr Rice.
Since incorporation, Truth has not returned a great deal of profits to members. Mrs Cale, Mr Giuseppe and Dr Rice think they have an idea to greatly enhance the profitability of Truth. They put forth a proposal at a members’ meeting that Truth should purchase a number of high-end retail fashion stores (i.e. “
icks and mortar” businesses).
Rhonda, Maria and Miranda are not keen on the members’ proposal. However, the three directors are informed that they will be removed from the Board if they do not comply with the proposal of Mrs Cale, Mr Giuseppe and Dr Rice. Although Mr JJ does not support them, Mrs Cale, Mr Giuseppe and Dr Rice have sufficient voting power together to action the removal of the three directors. Therefore Rhonda, Maria and Miranda feel compelled to act in accordance with the wishes of the 3 shareholders.
Question 1: Answer all parts A, B, C and D
A). Identify which section of the Corporations Act 2001 (Cth) gives members the power to remove directors in a company such as Truth Enterprises Ltd (1 mark).
B). Identify which section of theCorporations Act 2001 (Cth) gives members the power to appoint a new director in a company such as Truth Enterprises Ltd (1 mark).
C). What are the requirements to be appointed as a director? Refer to the relevant sections of the Corporations Act 2001 (Cth) in your answer (3 marks).
D). Discuss the consequences of a
each of constitutional objects for Truth Enterprises Ltd and its directors and shareholders, making reference to the relevant sections of the Corporations Act 2001 (Cth) (20 marks).
Question XXXXXXXXXXmarks)
Fenner Fashions Ltd designs fashion items, including clothing, accessories and cosmetics. Fenner Fashions has three directors on its Board, and these directors are also directors of a subsidiary company of Fenner Fashions called Mean Beanies Pty Ltd (Mean Beanies). The three directors are majority shareholders in both Fenner Fashions and Mean Beanies.
During August of 2019, Mean Beanies contracts with another company, No Sale Pty Ltd, for the purchase of goods to the value of $250,000. In due course, No Sale Pty Ltd fails to deliver the goods to Mean Beanies, and the company does not refund any money to Mean Beanies.
The three directors of Mean Beanies decide not to commence legal action to recover the $250,000 from No Sale Pty Ltd. They simply advise: “it would not be an advisable course of action”. This decision results in a major loss for Mean Beanies that also has a serious financial effect on Fenner Fashions.
The minority members of both Fenner Fashions and Mean Beanies are concerned with the way the company is being run by the 3 directors, and so they seek legal advice.
Question 2: Answer both A and B
A). Outline the liability of the directors in terms of their duties under the Corporations Act 2001 (Cth). Have the directors
eached their duties to either Fenner Fashions or Mean Beanies? (10 marks).
B). Identity the possible remedies that the minority members could seek against Fenner Fashions and Mean Beanies. Consider whether the minority members are likely to be successful (15 marks).

bus-200-ans-durrv3gb.docx

Jose · Accepted Answer

The University of Queensland
1
Management  
Management   
      Business Law
          Individual
Lecturer:
Student Submitting:
Due Date: 13/06/2020
Question No 1
A). Identify which section of the Corporations Act 2001 (Cth) gives members the power to remove directors in a company such as Truth Enterprises Ltd 
As per the Corporation act, 2001 directors play an important role in the overall functioning of the organization. If the directors are not performing better the members have the power to remove the directors of the company. While analysing the case we can understand that members submitted a proposal for improving the profitability of the organization, but the directors rejected the proposal. From the case, we can understand that two members have the voting power to remove the directors (Lidstone 2020). Therefore, the directors are forced to obey the law and they have to accept the proposal submitted by the members. 
Section 203 (D) Corporation act 2001 provides the power to the members for removing the director from the position. Section 203 (D) provides the power to the members who have veto power. While analysing the case we can understand that “Mrs Cale, Mr Giuseppe and Dr Rice have sufficient voting power together to action the removal of the three directors”. From all these aspects we can understand that the directors have to implement the proposal given by the members. 
B). Identify which section of the Corporations Act 2001 (Cth) gives members the power to appoint a new director in a company such as Truth Enterprises Ltd/
While analysing the case study we can understand that if the directors are not interested to implement the proposal submitted by the members. By using the veto power and following Section 203 (D) Corporation act 2001 they can easily remove the directors (Mire 2018). For conducting the meeting or other procedural aspects the company required the director while analysing the Section 201 (G) Corporation act 2001 the members can appoint the director by using their power. By the passing resolution in the general meeting, the members can appoint the new director. While appointing the director they have to follow some rules and regulations such as;

Question XXXXXXXXXXmarks) Truth Enterprises Ltd (Truth) is a company that was incorporated in 2008. The constitution of Truth has the following stated object: “the business of the company is to invest...

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