Company Law
Facts: Mick, Keith, Charlie, Bill and Brian were directors and equal shareholder of Big Lips Music Pty Ltd. Brian resigned his directorship as a result of differences with Mick, Keith, Bill and Charlie. The others wanted to get rid of Brian as a shareholder. However, Brian told them that he would never sell his shares in Big Lips Music. A general meeting of Big Lips Music’s shareholders is called at which there is a motion to insert a new clause in the company’s constitution that gives Mick, Keith, Bill and Charlie the right to compulsorily acquire Brian’s shares for their issue price. What is the process for inserting a new clause in the company’s constitution? Can Brian prevent the new clause being inserted even thought the others shareholders passed a special resolution that that effect? Required: Student 1 ‐ Advise the other shareholders of Big Lips Music (the Plaintiffs) what is the process for inserting this new clause in the company’s constitution. If they insert this new clause can they acquire Brian’s shares for the issue price? Student 2 ‐ Advise Brian (the Defendant) whether he can prevent the new clause being inserted by the other shareholders and if so how? If he can not prevent it will he have to sell his shares for their issue price? Parties The Majority Mick – Director and shareholder Keith – Director and shareholder Charlie – Director and shareholder Bill – Director and shareholder The Minority Brian – Shareholder Issues
1
BFA241
2010
What is the process under the Corporations Act (2001) for inserting new clauses into a company’s constitution? Is Brian able to prevent the new clause being inserted into the constitution and enforced given that Brian is considered to be a minority interest in Big Lips Music Pty Ltd and the majority wish to insert the clause? If a new clause is inserted into the
1
BFA241
2010
What is the process under the Corporations Act (2001) for inserting new clauses into a company’s constitution? Is Brian able to prevent the new clause being inserted into the constitution and enforced given that Brian is considered to be a minority interest in Big Lips Music Pty Ltd and the majority wish to insert the clause? If a new clause is inserted into the