Rechelle is the Managing Director and CEO of Addit Ltd, a public company that provides accounting services and tax advice.

Addit Ltd is facing fierce competition from a competitor called Addplus Ltd. Rechelle decides to hold a board meeting to resolve that $100,000 be spent on an advertising campaign to make the public more aware of their services.

Coco is one of the other Directors of Addit Ltd but is opposed to this strategy and voted against it at the Board Meeting. Coco claims it will affect the companies’ ability to pay its debts when they fall due. Unfortunately, Coco is the only Director to oppose the motion.

Rechelle claims that Coco is a "spy" for Addplus Ltd and is not acting in the best interests of Addit Ltd

Rechelle decides to take the opportunity before the Board Meeting closes, to pass a motion for Addit Ltd to compulsorily acquire all of the shares that Coco owns for $7.00 a share. Coco had bought the shares for $2.00 so she would score a healthy profit but the stock market price on that day was $10.00.

The other directors agree and pass the motion. They claim this is urgent and necessary to prevent Coco from causing trouble for the company. They also pass a motion to remove Coco as a Director as she no longer holds shares in the Company.

Required:

1. Advise Coco on what grounds, if any, she could challenge these decisions of the Board of Directors to remove her and to acquire her shares.

2. Advise whether any director has breached their duties.

Answer rating: 100% (QA)

1 Grounds for Challenging the Decisions a Removal as a Director Coco may challenge her removal as a director on various grounds depending on the applicable laws and the companys articles of associatio... View the full answer