a) Roger Rogue owned an Electrical Products business. Roger sold his business to Roger Electrical Pty Ltd, which he incorporated because he was worried about a decrease in sales and an escalation of trade creditors. Roger was the only shareholder and director of the company. He took out a debenture for $100,000 over the shares in Roger Electrical Pty Ltd. The company’s creditors were owed $1,000,000 over the value of the business assets. The company went into liquidation. Roger’s home was valued at $1,500,000 but he transferred it into his wife’s name when the business was in trouble. Can the liquidator sue Roger for the debts owing to the company? 

(b) The constitution of Big Hopes Pty Ltd contains a clause that enables the majority shareholders to buy the minority shareholders’ shares at market value. The clause goes on to provide that this power is given to the majority shareholders so that the company would not have the added taxation and administrative costs associated with having such holdings on its share register. Is this legal? Explain whether it would be possible to alter the constitution. If so, how? 

Answer rating: 100% (QA)

a A director of a company can be held liable for the companys insolvency if they were aware that the ... View the full answer