David and Demi are shareholders of the Youth Accountability Group Pty Ltd (known as YAG). The company buys shares in Australian companies in order to pressure the company to act properly according to community standards. YAG has focused on companies that produce and market tobacco products, particularly Tobacco Products Ltd. Tobacco Products Ltd has been accused of marketing its products to underage smokers, which has resulted in substantial fines for the company. YAG believes that the directors knew of the illegal activities, or at least should have known. The company is refusing to take any action against the directors. David and Demi intend to go to the forthcoming general meeting. They seek your advice on the following: 

1. What are the legal rules that govern their right to question the Board on the above matter? 2 marks 

2. Can they put a resolution to the meeting condemning the inaction by? the Board? 2 marks 

3. Advise whether the directors have breached any of their required directors’ duties and if so whether they can rely on any defense? 2 marks 

4. What other actions might the group be able to undertake in order to have the company and the directors brought to account? 2 marks 

5. Can David and Demi bring an action against the managing director if you believe he is in breach of his duty?

Answer rating: 100% (QA)

1 It must be brought in a representative form even though it is the company rather than the other sh... View the full answer