HA3021 CORPORATIONS LAWTRIMESTER 2, 2012ASSIGNMENTInstructions: Address each of the questions,...

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HA3021 CORPORATIONS LAWTRIMESTER 2, 2012ASSIGNMENTInstructions:   	Address each of the questions, clearly indicating which question your answer relates to. 	Maximum 2,000 words in total. 	Marks will be awarded or deducted for quality of presentation, e.g. format, structure and referencing. 	Students are expected to use legal referencing system - – see additional reading on blackboard for a copy of Melbourne University Law Review Association Inc., Australian Guide to Legal Citation (2010, 3 ed). 	Figure out the issues, rules, apply and give conclusion on your assignment. 	By corporations law in principle 8th edition , Tony ciro and Christopher symes  Question 1Cotton Limited holds 89.5% of the shares in Satin Co Limited. The remaining shares are held by Silk and several other small investors. The Board of Satin wants the company to become a wholly owned subsidiary of Cotton Limited as they expect this will result in both taxation benefits and a saving on accounting fees and administration charges of about $230,000. Cotton Limited offers to buy the shares held by Silk and other minority members but they refuse. Arrangements are made to hold a members meeting to pass a resolution changing the constitution of Satin by inserting a new clause 53 “any member entitled to 80% or more of the issued shares may compulsorily acquire all the remaining shares”. Silk and other minority members receive written notice of the company meeting together with a proxy form and a valuation certificate stating the shares were worth $2.50 each. Although the offer is fair Silk does not want to sell her shares and wants to start legal action to prevent the proposed alteration to the constitution.Discuss whether she may succeed in her action.Would your answer be different if the real reason for compulsorily acquiring the shares from Silk was that she discovered operating a business in competition with Satin Co and was using information gained as a member to take away some of Satin’s business?Question 2Identify and explain how some parts of the Corporations Act allow certain business conducted at company meetings to stand notwithstanding that the meeting has not strictly complied with all the legal requirements of the Act. Please refer to any relevant case law that supports your answer.Question 3Polyester is a director of Style Pty. Limited involved in making women’s clothing. Has she breached any duties under the Corporation Act in the following situations?Situation 1. She arranges with the company’s bank to transfer an amount of $65,000 from the company account into a personal bank account held by her in her own name. She uses the funds to finalise some outstanding personal debts.Situation 2. As a director she receives information that the company is in a serious financial position. She arranges to transfer a larger amount of the assets of the company over a new proprietary company that she formed with the intention of caring on the same business.Situation 3. Contrary to a resolution of the Board and notwithstanding established business practice that limits credit to $20,000 she allows a trade debtor (who has a history of bad debts) to exceed its credit limits by $25,000. The debtor fails to pay the outstanding amount of $45,000. Can she rely on the business judgment rule in this situation?

David · Accepted Answer

In the given situation majority shareholder is Cotton Limited as they are holder of 89.5% in Satin 
Co Limited. There are other minority investors also like Silk etc. minority shareholders are those 
shareholders which do not have less stake in a company.  These shareholders don‟t have the right 
to interfere in the working of the company and cannot comment on their day to day working also. 
They have less control over and enjoy that only as compare to rest of the shareholders. Company 
on whole is a legal corporation that requires people to manage the business activities and take 
decisions for welfare of the company. Company is managed by group of people who have loads 
of power in their hands but many times people tend to misuse their powers in wrong terms, too 
much power to an individual can corrupt people‟s mind. A person or group of people misuse 
their powers and take benefit of having full control over the company. These people take 
majority shareholders for guaranteed and use them for their benefit which doesn‟t go well with 
minority shareholders (Tomasic, 2002). This kind of behavior sometimes doesn‟t go well with 
the shareholders because the people misusing their power are selected by them only. The 
Corporations Act states that for minority shareholders and provisions have been made. The 
Corporations Act is a law which deals with the business companies in Australia. This law works 
on national and state level everywhere. The main objective of this law is to focus on those 
companies who are involved in business transactions and its main helpful to companies which 
have number of partners and are dealing with schemes related to investments. The Corporations 
Act is must for every company to fellow while following any business necessities(Harris, 2012 ) 
 It adapts matters such as development and construction of companies regarding duties of 
officers etc. this act has various provisions such as the oppression remedy, which allow for 
various types of reliefs that can be ordered by a court on the grounds of oppression or unfairness 
(Bird, 2012 ) 
. Some sections are made on special grounds in which an order from court is required. An 
application should be prepared looking for order of court of conduct of the affairs or the actual or 
proposed act or on behalf of the company regarding this resolution has to made or proposed by 
the members of the group. In some cases the person who has approached the court for a trial 
needs to prove the existence of proposal which is either different to the interests of members or is 
repressive to or unfair discrimination against any person or group of persons(Bird, 2012 ). The 
range of section 232 has been a matter of concern for intense concentration and according to the 
courts it had the occasion to consider it in the case of judgments. It has been specified that the 
complaints may relate to the affairs of the company as defined in some of the Act. The law has 
been made up  in a manner which not includes  the acts, or resolutions which have already 
occurred but it also includes the proposed acts (Harris, 2012 ) It gives power to an angry person 
to start corrective action after the conduct has occurred or to prevent harmful action before its 
occurrence. Section 232 (c) also states that a resolution approved or planned by a group of 
members can be the subject matter of an concern under the Act(brown, 2012 ) 
. It may also be a said that the directors are acting constantly within the constitution of the 
company but their conduct may be cruel to other members. It can be said that code of conduct 
should be illegal.

HA3021 CORPORATIONS LAW TRIMESTER 2, 2012 ASSIGNMENT Instructions: Address each of the questions, clearly indicating which question your answer relates to. Maximum 2,000 words in total. Marks will be...

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