Brierly Ltd is a very profitable and wealthy listed company which operates several bars and restaurants across Victoria and New South Wales. Alex, Henry, Beatrice, Sara and Eugenie are the company's five directors. There is a clause in the constitution stating that Alex is to be a director for life. Alex, Henry, Beatrice, Sara and Eugenie are also five of the company's forty members. The company uses a constitution to govern its internal operations.

For the last six months the operations of the company have been very turbulent because Alex and Henry's marriage ended on very bad terms after months of fighting. Henry, Beatrice, Sara and Eugenie are all related and have taken sides against Alex because they are furious with him for ending the marriage and they no longer want to associate with him. As a result, Henry and Beatrice and the other directors decide to call a members' meeting to pass three separate special resolutions to amend the constitution to include the following new clauses:

1. That Alex be removed as a director of Brierly Ltd within two days of this special resolution being passed;

2. That Alex be made to give up 80% his shares in Brierly Ltd and in exchange receive 1 cent payment per share within six months of this special resolution being passed;

3. That if Alex decides to sell the rest of his shares, he cannot sell them for one year after the passing of this special resolution and he cannot transfer them to any person or entity not approved by the majority of the company's directors.

Please answer the following questions using IRAC:

(a) Alex does not want to be removed as a director of Brierly Ltd. If the constitution is changed to include Clause 1, can he enforce the clause in the constitution stating that he is to be a director for life? Explain using the law to support your answer.

(b) If the constitution is changed to include Clauses 2 & 3, are either of them enforceable? Explain using the law to support your answer.

Answer rating: 100% (QA)

a Alex cannot enforce the clause in the constitution stating that he is to be a director for life if the constitution is changed to include Clause 1 T... View the full answer