CORPORATE LAW BLAW20001
SEMESTER 1, 2014
COMPULSORY SKILLS ASSIGNMENT


Important notes for students:

1. Please make sure you follow the instructionsin the 2014 Reading Guide on page 22 for preparing and submitting your assignment. Your attention is particularly drawn to its warnings about cheating and plagiarism on page 23 of the 2014 Reading Guide.

2. The mark awarded will be 25% of your final grade in this subject, and the assignment is marked out of 25.

3. The maximum word limit for the assignment is 1,200 words. Code 1 applies. This means that any excess words will incur a penalty. Headings are not included in the word count. See the reading guide page 22 for further information about the word limit and legal writing.

4. Your answer should deal only with matters covered in Lectures 1 to 4.

5. The assignment is due at 9.30am on Monday 14th April, 2014. Follow the electronic submission instructions in the 2014 Reading Guide.This assignment is compulsory.

6. Extensions and special consideration: You should contact the law student centre (not the subject co-ordinator or your tutorial leader) regarding extensions and special consideration. This should be done as soon as it becomes evident that an extension or special consideration is required. Every application must be supported by relevant documentation.

7. Late Submission: Penalties apply for late submission. Code 1 applies, meaning that an assignment handed in late will incur a penalty of 5% of marks available for every day or part thereof that it remains not submitted.

8. No bibliography is required. Case citations (eg Salomon v Salomon &Company [1897] AC 22)can either be in the body of the answer or in footnotes. Section numbers of legislation should be in the body of the answer, and no further footnoting is required.




Question

REMEMBER – only answer this question based on the material in Lectures 1 – 4.
Do not discuss directors’ duties or the oppression remedy.

Bedrock Industries Ltd is a company which quarries stone and marble for kitchen benchtops. There is one class of ordinary shares in the company. Fred, Barney, Betty and Wilma each hold 20% of the shares. Fred and Wilma are also directors of the company, and the third director is their accountant, Lee, who does not own any shares in the company. The remaining 20% of shares are owned by numerous small shareholders, with each owning no more than 1%. One of those small shareholders is Mel. At annual general meetings, Mel often asks probing questions about the company’s profitability and its plans for the future. The three directors find this annoying and embarrassing.

Assume that the company relies on the replaceable rules in the Corporations Act 2001. Fred, Barney, Betty and Wilma seek your advice on the following proposals:

1. Can the company in general meeting pass a resolution to adopt a constitutional term that would allow it to compulsorily acquire the shares of anyone holding less than 5% of the company’s share capital?

2. What procedure would the company have to follow if it wanted to decrease the rights of some shareholders to vote at annual general meetings?

3. Assume now that Barney and Betty are tired of Fred and Wilma dominating the decision making of the company’s board. Many of the small shareholders agree. Can Barney and Betty call an extraordinary meeting of shareholders and put a resolution that Fred and Wilma be removed as directors of the company? If so, explain the procedure for this to take place.