Alana and David are the directors of Chocolate Cleaning Products Pty Ltd (“CCP”), a small company that manufactures biodegradable and environmentally friendly cleaning products that smell like chocolate. The shareholdings of CCP are as follows:
15% Sol (an investor and mentor who has significant experience in the cleaning products industry)
Max was engaged by Alana and David when they set up the company in order to draft the constitution and advise on the initial business structure. In exchange, he received a 5% shareholding in CCP. When drafting the constitution, Max included a clause in the constitution appointing himself as the company’s solicitor and that he cannot be replaced except for negligence.
Relations between Max and Alana and David have been strained of late because Alana and David are taking Sol’s advice in regards to proposed expansion activities. Max thinks that Sol’s recommendations are generally shady, but Alana and David are unswayed. Eventually Sol recommends that they fire Max as company solicitor and engage someone with more experience.
In addition, David and Alana call a general meeting and pass a special resolution to alter CCP’s constitution, inserting a new clause giving the board the right to expropriate the shareholdings of members owning less than 10% of the total shares issued.
Q1: Advise Max as to whether he is able to:
a) enforce the clause in the constitution making him the company solicitor, and what type of remedy he would need to seek if he could; and
b) prevent the inclusion of the clause allowing the directors to expropriate his shares, even though the other shareholders have passed a special resolution.
Please see the attached for all other questions to be answered.
The goal of the hypothetical assignment is for you to demonstrate your knowledge and understanding of Associations Law by correctly identifying the legal issues and applying the relevant legal principles to given hypothetical case scenarios.
Law of Business Association task 2
This needs to be well researched with case law and legislation applied to facts to give a logical answer. Thorough analysis, deals with effectively complexity. The client has attached the marking rubric and assignment question.
Legislation is referral material for the writer to use if required.
Australian Corporations & Securities Legislation (2017, CCH)
Corporations Act 2001 (Cth)