Solve in regards to Australian Corporations Law and the Corporations Act:

10 shareholders came together 5 years ago to form a company called “Making Noise Pty Ltd”. Making Noise Pty Ltd has a constitution which explains that it aims to provide facilities to train musicians and to produce high quality music recordings. Making Noise Pty Ltd has land, musical equipment, and other assets valued at $6 million.

The company made $300,000 after tax in 2020. The Current shareholders of Making Noise Pty Ltd are:

• Mr. A. Angklung

• Ms. B. Bock

• Mrs. C. Charango

• Sir D. Didgeridoo

• Professor G. Gayageum

• Dr. N. Nyatiti

• Judge O. Oud

• Captain R. Rubab

• Miss. S. Saraswati veena

• Mr. V. Violão

Each family has one share in Making Noise Pty Ltd

The board of Making Noise Pty Ltd consists of A as chair, and B, C, D and G as directors.

Much of the profits in 2020 was from renting out musical instruments and holding one-on-one lessons.

A, B and C pass a resolution at the August meeting of directors to borrow $1 million to buy more vehicles and advertising to grow the one-on-one music component of the business.

D objects, noting that there is no market research demonstrating that there is market interest in one-on-one musical lessons beyond their current market share.

D is also concerned about the size of the loan and interest repayments.

After the meeting of directors in August, D contacts N, O, R, S and V to express his concerns.

N asks A to call an extraordinary general meeting. A refuses.

V decides to call a EGM themselves.

The notice of meeting is sent to 9 of the shareholders. The notice to R was sent to an incorrect address accidentally.

The notice of meeting contains 3 resolutions to be voted upon:

The first shareholder resolution orders the directors of Making Noise Pty Ltd to return the $1 million loan and to stop expanding one-on-one music lessons.

The second proposed shareholder resolution places a limit on the money that directors can borrow without first obtaining shareholder approval.

The third proposed shareholder resolution proposes that the constitution is altered so that each shareholder has the right to appoint a director to the board of Making Noise Pty Ltd. This proposed resolution provides that each shareholder can sit on the board themselves or appoint another person.

At the meeting A, B and C each vote no for each of the 3 resolutions and the other shareholders all vote in favour of them.

A, B and C say they are going to ignore the resolutions and storm out of the meeting.

After the meeting V contacts R to apologize for failing to give them notice. R says they would have voted in favour of each resolution anyway.

V asks you to advise him on

(a) Was V able to call a EGM in the above circumstances?

(b) Were the resolutions passed in the EGM legally binding on directors?

(c) The impact of any defective notice on the meeting outcome?

Solve regarding Australian Corporations Act 2001

Answer rating: 100% (QA)

a Was V able to call an EGM in the above circumstances In this case the issue was to determine wheth... View the full answer