Law Assignment

Assessment 3

Question 1

The main issue in this question is whether the member has the rights to grant a remedy if the affairs of the company have contravenes the corporation act.

Section 232 of Part 2F.1 allows the court to provide a remedy to a member where the court finds that the conduct of the company’s affair is contrary to the interests of the members as a whole or oppressive to, unfairly prejudicial to, or unfairly discriminatory against a member. In some circumstances, a member can apply to the court to compulsorily wind up the company if the directors act in their own interest. Under section 461(1)(e), the court may wind up a company if the directors have acted in their own interests rather than in the interest of the member as a whole, or in any other manner that is unfair or unjust to other members. For example, in Re William Brooks & Co Ltd (1962), the managing director of a prosperous company used his position as a director to acquire options to buy shares that had been issue to the company’s employees. This arrangement was entered into to enable him to control majority of votes at a general meeting of members. The managing director also managed the company’s business without consulting the other directors. The court held that in these circumstances the managing director had committed serious and persistent breaches of his fiduciary duty. As he acted in his own interests and in a manner that was unfair or unjust to members, the court ordered that the company be wound up under the predecessor to section 461(1)(e). It is not necessary oppressive or unfair just because the controllers of a company are pursuing management or dividend policies with which a minority shareholders disagree. For example, in Re G Jeffrey (Mesn Store) Pty Ltd (1984),a member of a family, R controlled the majority of the of the votes on the board of the family companies as well as at their general meeting of the members. R had a conservative approach...