Consider the constitution of Cochlear Ltd or Woolworths (attached below).

• What are the three main differences between these constitutions and the replaceable rules?
• Why might companies choose to have a constitution?

Question 2 - Gambotto and Compulsory Acquisition

The Corporations Act was amended after the Gambotto case to provide for the general power of compulsory acquisition (Ch 6A). Why was this done? Apply the theoretical perspectives examined in the Lectures (Week 1) and Tutorials (Week 3) and critically assess this statutory power.

Question 3 - Just In Time and Creation of a Corporation

Andrew, Betty and Chris have been friends since university. They share an entrepreneurial spirit and even at university they wanted to organize a business together. They spent a slab of their time at university brainstorming about business opportunities that beckoned. Andrew was the livewire of the group always sparking ideas about possible ventures. Betty was very savvy in the area of business skills. She had done a major in Commerce at university and had a sharp business mind. Chris had developed an expertise in marketing and advertising. Following university he had a spell in the advertising industry before switching to marketing For four years Andrew, Betty and Chris have been operating a partnership called Just In Time. It specializes in developing hi-tech solutions to supply chain issues. Apart from their current customer base large supermarkets have been in exploratory talks over strategies to reduce the levels of inventories they carry and revolutionize the delivery pattern of products coming from the farm gate to the supermarket. Just In Time is on the cusp of a great leap forward. Andrew, Betty and Chris are contemplating using a corporate form as the vehicle for carrying out the activities of Just In Time. Chris has always felt the minor player in the business. He is conscious that his skill set is not as vital as his two partners. He loses sleep thinking that the day may dawn when Andrew and Betty restrict his role and take total command of the business.

Chris speaks to you about how he can protect his existing equal role in the business. Advise him about a possible solution. Inform Chris about the nature of a company constitution and how that instrument can be utilized to buttress the position of Chris. The replaceable rules are a component part of the Act and Chris is eager to know if they can help him.

Question 4 - Organic and Fair Trade Pty Ltd and Corporate Purpose

Organic and Fair Trade Pty Ltd was incorporated in 2011 and has two shareholders: One World Pty Ltd, a not for profit company that is promoting fair trade, and Single Origin Coffee Pty Ltd, a for profit venture committed to promoting quality coffee production and sales. The Constitution restricts the company's activities to 'organic, fair trade agricultural products and other activities reasonably incidental thereof'.

Organic and Fair Trade Pty Ltd imports coffee primarily from the Highlands of Papua New Guinea and supplies it by bulk to coffee shops in the inner city of Sydney, sells it through their chain of retail outlets in New South Wales, and through other speciality stores across Australia. Although slow to get going, the company has sourced its coffees, packages it in eye-catching boxes (using graphics of the Papua New Guinea Highlands), and grown its market share. It is now seeking to diversify its activities to further increase its profits.

Two potential opportunities to diversity have fortuitously presented themselves. First has been a request by the inner city coffee shops to supply disposable coffee cups with the eye catching designs. The second has been from two local councils, that are seeking sustainable businesses to contract with. They want Organic and Fair Trade Pty Ltd to undertake its glass and paper collection service for an area that covers approximately 30 square kilometres. The Managing Director Ms Aga Hagan, agrees to both these requests and signs the necessary contracts.

Single Origin Coffee Pty Ltd feels this is outside its remit and is against such expansion. Advise Single Origin Coffee Pty Ltd.

Answer rating: 100% (QA)

ANSWER Question 1 Differences between Company Constitutions and Replaceable Rules Customization and Flexibility Company constitutions are tailored documents that outline the internal governance struct... View the full answer