Harry, Minh and Jackson have been appointed by the general meeting as directors of Mobile Technology Ltd (MTL), an unlisted public company limited by shares. When MTL was formed it adopted an objects clause as part of its constitution; this clause restricts the company to the manufacture, purchase and sale of plasma televisions and DVD players. The company was incorporated in Melbourne where its head office is situated, and it has manufacturing facilities in Shanghai China. Shareholders in MTL are unhappy with the way in which the directors are running the business and are critical of the low level of dividends that they have declared and the unresponsive attitude of directors to the concerns of shareholders. The directors justify their approach, and point to the stable and slowly increasing share price of the company to the disgruntled shareholders.
- James and Jenny Lee are husband and wife (who together hold 60% of the shares in MTL) and they seek to take a bigger role in the management of the company. They advise the directors that they should change their business strategy and pay more attention to their wishes as majority shareholders. They threaten to sack the directors if they do not comply with their wishes. They also threaten to take over the management of the company.
- Martin Lu is a minority shareholder in MTL (holding 5% of the shares) and he is concerned that the directors will run down the company and drain it of its assets. The directors have not shown themselves to be troubled by Martin’s concerns and say that the minority shareholders like Martin should mind their own business. Martin seeks an extraordinary general meeting of shareholders to discuss these concerns, but the board is reluctant to call a meeting.
- In response to the shareholders’ concerns, and without consulting the shareholders, the directors of MTL seek to change the business of MTL to focus on manufacture and distribution of Smart phones and I Pods as they believe that the television and DVD market is saturated and demand will start declining if it has not done so already. The directors propose to enter into contracts for MTL to acquire a mobile phone manufacturing firm in Shanghai with a view of implementing their strategy.
- The directors seek to avoid these pressures from the shareholders by setting up another company (Stan Mobile Pty Ltd) that they control and plan to sell the television business of MTL Ltd to their new company. At the same time, a Chinese company has come to the directors with a generous offer to buy the television assets of MTL at a significantly higher price than the amount that Stan Mobile Pty Ltd is prepared to pay MTL for these assets. The shareholders are not advised that this major asset is to be disposed of in this way or that the directors’ private company is involved.
Advise what are the various legal issues and causes of action that are available to the shareholders arising from the directors conduct in the above circumstances. Students should answer this question with reference to the relevant provisions of the Corporations Act 2001 and the relevant case law.
(Total of 30 marks)
Lipton, P., and Herzberg, A., Welsh, M, Understanding Company Law, 18 edition Thomson Reuters 2016.
Students should remember to look at the Lipton and Herzberg website. www.lipton-herzberg.com.au
Harris, J. Hargovan, A. Adams, M. Australian Corporate Law LexisNexis Butterworths 5th edition, 2015.
Austin R.P. & Ramsay, I., Ford’s Principles of Corporations Law, Butterworths, Australia, 15th edition, 2012.
Baxt, R., and Fletcher, K.L., Fridman, S., Corporations and Associations Cases and Materials on, Butterworths, Australia, 10th edition, 2008.
Parker, Clarke, Veljanovski, Posthouwer, Corporate Law, Palgrave 1st edition 2012
Hanrahan, P., Ramsay I., Stapledon G., Commercial Applications of Company Law. CCH 14th edition 2013
Redmond, P., Companies and Securities Law – Commentary and Materials, Law Book Co., Sydney, 5th, 2009.
Ciro T, Symes C, Corporations Law in Principle LBC Thomson Reuters, Sydney, 9th edition 2013
Li, G, Riley, S. Applied Corporate Law: A Bilingual Approach LexisNexis 1st Edition 2009.
Cassidy, J. Corporations Law Text and Essential Cases. Federation Press, 4th edition Sydney 2013
Harris, J. Corporations Law, LexisNexis Study Guide 2014
Harris, J. Butterworths Questions and Answers Corporations Law:, LexisNexis, 4th Edition Sydney 2013.
Fisher S, Anderson C, Dickfos, Corporations Law – Butterworths Tutorial Series, 3rd Edition Butterworths, Sydney 2009
Tomasic,R.,Jackson,J.,Woellner,R., Corporations Law – Principles, Policy and Process4th Edition Butterworths., Sydney, 2002.
Tomasic, R. Bottomley,S. McQueen,R. Corporations Law in Australia, 2nd Edition Federation Press, Sydney 2002.
Latimer, P, Australian Business Law CC, 2016 Edition.
Vermeesch,R B, Lindgren, K E, Business Law of Australia Butterworths, 12th Edition, 2011.
Pentony, Graw, Lennard & Parker, Understanding Business Law 5th ed Butterworths, 2013.
Davenport, S and Parker D, Business and Law in Australia, Thomson Reuters, 2012
Fitzpatrick, Synes, Veljanovski, Parker, Business and Corporations Law; LexisNexis 2nd edition 2014
Crosling G M, Murphy H M, How to Study Business Law 4th Edition, Butterworths, 2009.
- S See chapters 13 and 17 in particular and other chapters such as chapters 10 and 14 as may be suggested by the facts of the question.
- Also see articles at the end of Chapters 13 and 17 of Lipton, Herzberg & Welsh 18thEdition
Submission: Essays must be submitted on or before Friday 22nd April 2016 by 5.00pm. No extensions will be considered unless a request is made in writing, before the due date, stating the reason for the request. Marks will be deducted for essays that are submitted after the due date.
The assignment should be written in your own words. A hard copy must be submitted. As well an electronic copy is to be submitted via the Turnitin link on Collaborate page for the subject. The Turnitin copy will be the ‘time mark’ for the purpose of the confirmation of the date and time of submission.
Student must put their tutor’s name on the assignment and must not attach the Turnitin report to their assignment.
All assignments must be in print form and submitted with a signed School of Law cover sheet to the assignment box located outside the School of Law Office, Level 3, Building A by 5.00 pm on the due date. Students must also submit an online copy of the assignment via WebCT by the due date. The online submission will be regarded as verification of submission by the due date. However, only the hard copy assignments that are submitted will be marked. Students on the Flinders Street campus will be advised by their lecturer about assignment submission.
Readable connected prose NOT point form summaries
Accurate spelling, grammar, punctuation, paragraph construction. Proofreading
Effective use of HEADINGS
Consistent and accurate acknowledgment of sources using a recognised style – both in relation to in-text referencing and bibliography (Note the warning about plagiarism below).
The papers will be marked on the following basis:
Percentage of marks awarded
|1. Depth of understanding of the topic and identification of relevant issues.2. Awareness accuracy of the nature and content of relevant law.3. Clarity and coherence of the analysis and quality of discussion and argument.||50 per cent|
Writing and communication skills
|30 per cent|
|20 per cent|
In law, the preferred referencing style is footnoting. Students are reminded that they will lose marks if they merely reproduce passages copied word for word from texts and other references without attempting to convey information and express ideas in their own words. Of course this does not preclude the intelligent use of relevant quotations in respect of which proper references are given.