This is a Corporation Law task which I need help in

1) Scenario Brendan, Kevin and Ryan meet each other on the first day of their innovation and entrepreneurship course. They soon discover that they all follow the same organic, Low-FODMAP ("Lo-Fo") diet because it promotes digestive balance, and according to them improves overall well-being. They become good friends, and upon completion of their course they decide to start their own business which responds to the growing demand for Lo-Fo eating options. Brendan, Kevin and Ryan struggle to make up their minds about whether to open a restaurant in the city, or whether to conduct a catering business. They are not sure about committing to a commercial lease and therefore initially decide to open a home-based catering business. Brendan, Kevin and Ryan decide to conduct their catering business through the following company which they register with ASIC: Name: Lo-Fo Friends Pty Ltd ACN 123 123 123 Share Information: 12 Ordinary shares (ORD) issued. Members (ie shareholders): Brendan - 4 Ordinary shares (ORD) - Kevin - 4 Ordinary shares (ORD) - Ryan - 4 Ordinary shares (ORD) Directors: Brendan Kevin Ryan The company is registered without a constitution. The catering business grows slowly and after 12 months has a steady flow of customers with a modest income stream. At this point, Brendan, Kevin and Ryan reconsider their Lo-Fo restaurant idea, and soon realize they will need some outside investment to get the restaurant up and running. Brendan's neighbours, William and Matilda, are experienced restaurateurs and express their interest in investing in the company as shareholders. Brendan, Kevin and Ryan are very happy when they hear about the opportunity to raise some much-needed capital, as they have been struggling to get a loan from the bank. However, Brendan, Kevin and Ryan wish to retain control of the company by holding a majority of the shares. William and Matilda agree to this so long as they are appointed to the board of directors. Brendan, Kevin and Ryan all agree to William and Matilda becoming directors, on the proviso that contracts over a certain amount are approved by the company in general meeting. Brendan, Kevin and Ryan also wish to make it clear that the company will only provide Lo-Fo dishes. William and Matilda agree to this. For these reasons, Brendan, Kevin and Ryan register the following company with ASIC, as a new entity for operating the restaurant business: Name: Lo-Fo Dining Pty Ltd ACN 321 321 321 Share Information: 20 Ordinary shares (ORD) issued. Members (ie shareholders): - Brendan - 4 Ordinary shares (ORD) Kevin - 4 Ordinary shares (ORD) - Ryan - 4 Ordinary shares (ORD) William - 4 Ordinary shares (ORD) - Matilda - 4 Ordinary shares (ORD) Directors: - Brendan Kevin - Ryan - William Matilda The Constitution for Lo-Fo Dining Pty Ltd comprises the following three clauses only: 1. The company is committed to fostering community-wide digestive health and well- being. 2. The main object of the company will be to conduct the business of a restaurant with an exclusively organic and Low-FODMAP menu. 3. Any contract exceeding $10 000 requires the approval of the company in general meeting. The new restaurant business goes ahead as planned; however, it doesn't take them long to realise that running a restaurant requires skills that are very different from those that are needed to run a catering business. They feel very fortunate, however, to have William on board. William is a shrewd businessperson and does not mind assisting with business decisions. Over time William takes on more and more responsibility insofar as the managing of the restaurant is concerned, much to the relief of Brendan, Kevin and Ryan who prefer to focus their time and attention on creating new Lo- Fo dishes. It becomes apparent after a while that the trendy restaurant is operating quite successfully. Part of the restaurant's financial success can be attributed to the fact that Brendan, Kevin and Ryan decided to not exclusively use organic produce, as this was too expensive. This increased profit significantly. However, they did not immediately update their menus, external sign, or advertising material to reflect this, and the restaurant is still held out as providing the 'best in organic, Low-FODMAP dining'. The directors of Lo-Fo Dining Pty Ltd hold a meeting to discuss this issue, but do not agree on any particular course of action. Although the restaurant had some moderate success, profits begin to decline after the novelty of a Lo-Fo restaurant runs off. In fact, a number of customers begin to inquire about more traditional options (which are high in FODMAPs). William and Matilda realise that the 'Lo-Fo only' restriction is causing them to miss out on a wider clientele, and therefore is limiting Lo-Fo Dining Pty Ltd's profits. William decides to 'expand the menu to include a range of options and enters into a contract with Admania Pty Ltd (a marketing company) for $10,000 to update all signage, advertising material and to promote the new menu. William signs the agreement on behalf of Lo-Fo Dining Pty Ltd. William is very excited about the new menu and cannot wait to share the good news with Brendan, Kevin and Ryan. Unfortunately, Brendan, Kevin and Ryan do not think the new menu is good news. Brendan, Kevin and Ryan are adamant about sticking to their principles about Lo-Fo eating, digestive health and well-being. Brendan, Kevin and Ryan are disappointed with what they call William's "rogue" decision making and make it clear to Admania Pty Ltd that their company did not approve the new menu and associated marketing campaign. However, Admania Pty Ltd wish to enforce the contract and threatens to sue Lo-Fo Dining Pty Ltd. Consequently, Brendan, Kevin and Ryan start having second thoughts about William and Matilda's involvement in Lo-Fo Dining Pty Ltd, especially in light of their different opinions about the menu options. Brendan and Ryan propose removing William and Matilda as directors. To add to the woes, Kevin thinks too much time is being spent on the restaurant and that the catering business is being neglected. Kevin is fed-up with the restaurant saga and is seriously considering selling his shares in Lo-Fo Dining Pty Ltd to William, so that he (Kevin) can focus all his attention on the catering business. Brendan and Ryan are very distressed when they hear about this, as this would give William and Matilda controlling shareholding in Lo-Fo Dining Pty Ltd. Brendan and Ryan wish to alter Lo-Fo Dining Pty Ltd's constitution to insert a clause that provides that existing shareholders wishing to sell their shares can only sell their shares to Brendan or Ryan. 2) Questions You are to provide advice on the scenario above by addressing the following issues: A. Whether Lo-Fo Dining Pty Ltd ACN 321 321 321 is a subsidiary of Lo-Fo Friends Pty Ltd ACN 123 123 123. B. Whether the contract made with Admania Pty Ltd will be enforceable. C. The proposal to remove William and Matilda as directors of Lo-Fo Dining Pty Ltd. D. The extent to which cl 1 and cl 2 of Lo-Fo Dining Pty Ltd's constitution protect Brendan, Kevin and Ryan's desire that Lo-Fo Dining Pty Ltd only sells Lo-Fo food options. E. Brendan and Ryan's plans to alter the constitution to prevent Kevin from selling his shares to William. All questions are weighted equally. 3) Tips and Guidelines - The "Issues have been broadly identified for you in the questions. However, each of these issues may have sub-issues which you need to identify or involve multiple steps or options which you need to clearly explain. Before attempting to answer the questions, identify the relevant sections of the Corporations Act. You should start with the relevant legislation. Do not quote large sections of the legislation. As a guide, only quote the most pertinent aspects. You should keep long quotations (four lines or more) to a minimum. Please focus on applying the law, as opposed to merely describing it. You must provide authority for legal principles. Word Limit Breakdown Guideline: o Each question should be given roughly equal coverage, however, need not be exactly the same. o As a guideline each question should be answered in 300-400 words. o Please remember that references in the footnotes are not included in the word-count. Please have a look at the marking criteria on the following page. Your assignment will be marked in accordance with these criteria. 1) Scenario Brendan, Kevin and Ryan meet each other on the first day of their innovation and entrepreneurship course. They soon discover that they all follow the same organic, Low-FODMAP ("Lo-Fo") diet because it promotes digestive balance, and according to them improves overall well-being. They become good friends, and upon completion of their course they decide to start their own business which responds to the growing demand for Lo-Fo eating options. Brendan, Kevin and Ryan struggle to make up their minds about whether to open a restaurant in the city, or whether to conduct a catering business. They are not sure about committing to a commercial lease and therefore initially decide to open a home-based catering business. Brendan, Kevin and Ryan decide to conduct their catering business through the following company which they register with ASIC: Name: Lo-Fo Friends Pty Ltd ACN 123 123 123 Share Information: 12 Ordinary shares (ORD) issued. Members (ie shareholders): Brendan - 4 Ordinary shares (ORD) - Kevin - 4 Ordinary shares (ORD) - Ryan - 4 Ordinary shares (ORD) Directors: Brendan Kevin Ryan The company is registered without a constitution. The catering business grows slowly and after 12 months has a steady flow of customers with a modest income stream. At this point, Brendan, Kevin and Ryan reconsider their Lo-Fo restaurant idea, and soon realize they will need some outside investment to get the restaurant up and running. Brendan's neighbours, William and Matilda, are experienced restaurateurs and express their interest in investing in the company as shareholders. Brendan, Kevin and Ryan are very happy when they hear about the opportunity to raise some much-needed capital, as they have been struggling to get a loan from the bank. However, Brendan, Kevin and Ryan wish to retain control of the company by holding a majority of the shares. William and Matilda agree to this so long as they are appointed to the board of directors. Brendan, Kevin and Ryan all agree to William and Matilda becoming directors, on the proviso that contracts over a certain amount are approved by the company in general meeting. Brendan, Kevin and Ryan also wish to make it clear that the company will only provide Lo-Fo dishes. William and Matilda agree to this. For these reasons, Brendan, Kevin and Ryan register the following company with ASIC, as a new entity for operating the restaurant business: Name: Lo-Fo Dining Pty Ltd ACN 321 321 321 Share Information: 20 Ordinary shares (ORD) issued. Members (ie shareholders): - Brendan - 4 Ordinary shares (ORD) Kevin - 4 Ordinary shares (ORD) - Ryan - 4 Ordinary shares (ORD) William - 4 Ordinary shares (ORD) - Matilda - 4 Ordinary shares (ORD) Directors: - Brendan Kevin - Ryan - William Matilda The Constitution for Lo-Fo Dining Pty Ltd comprises the following three clauses only: 1. The company is committed to fostering community-wide digestive health and well- being. 2. The main object of the company will be to conduct the business of a restaurant with an exclusively organic and Low-FODMAP menu. 3. Any contract exceeding $10 000 requires the approval of the company in general meeting. The new restaurant business goes ahead as planned; however, it doesn't take them long to realise that running a restaurant requires skills that are very different from those that are needed to run a catering business. They feel very fortunate, however, to have William on board. William is a shrewd businessperson and does not mind assisting with business decisions. Over time William takes on more and more responsibility insofar as the managing of the restaurant is concerned, much to the relief of Brendan, Kevin and Ryan who prefer to focus their time and attention on creating new Lo- Fo dishes. It becomes apparent after a while that the trendy restaurant is operating quite successfully. Part of the restaurant's financial success can be attributed to the fact that Brendan, Kevin and Ryan decided to not exclusively use organic produce, as this was too expensive. This increased profit significantly. However, they did not immediately update their menus, external sign, or advertising material to reflect this, and the restaurant is still held out as providing the 'best in organic, Low-FODMAP dining'. The directors of Lo-Fo Dining Pty Ltd hold a meeting to discuss this issue, but do not agree on any particular course of action. Although the restaurant had some moderate success, profits begin to decline after the novelty of a Lo-Fo restaurant runs off. In fact, a number of customers begin to inquire about more traditional options (which are high in FODMAPs). William and Matilda realise that the 'Lo-Fo only' restriction is causing them to miss out on a wider clientele, and therefore is limiting Lo-Fo Dining Pty Ltd's profits. William decides to 'expand the menu to include a range of options and enters into a contract with Admania Pty Ltd (a marketing company) for $10,000 to update all signage, advertising material and to promote the new menu. William signs the agreement on behalf of Lo-Fo Dining Pty Ltd. William is very excited about the new menu and cannot wait to share the good news with Brendan, Kevin and Ryan. Unfortunately, Brendan, Kevin and Ryan do not think the new menu is good news. Brendan, Kevin and Ryan are adamant about sticking to their principles about Lo-Fo eating, digestive health and well-being. Brendan, Kevin and Ryan are disappointed with what they call William's "rogue" decision making and make it clear to Admania Pty Ltd that their company did not approve the new menu and associated marketing campaign. However, Admania Pty Ltd wish to enforce the contract and threatens to sue Lo-Fo Dining Pty Ltd. Consequently, Brendan, Kevin and Ryan start having second thoughts about William and Matilda's involvement in Lo-Fo Dining Pty Ltd, especially in light of their different opinions about the menu options. Brendan and Ryan propose removing William and Matilda as directors. To add to the woes, Kevin thinks too much time is being spent on the restaurant and that the catering business is being neglected. Kevin is fed-up with the restaurant saga and is seriously considering selling his shares in Lo-Fo Dining Pty Ltd to William, so that he (Kevin) can focus all his attention on the catering business. Brendan and Ryan are very distressed when they hear about this, as this would give William and Matilda controlling shareholding in Lo-Fo Dining Pty Ltd. Brendan and Ryan wish to alter Lo-Fo Dining Pty Ltd's constitution to insert a clause that provides that existing shareholders wishing to sell their shares can only sell their shares to Brendan or Ryan. 2) Questions You are to provide advice on the scenario above by addressing the following issues: A. Whether Lo-Fo Dining Pty Ltd ACN 321 321 321 is a subsidiary of Lo-Fo Friends Pty Ltd ACN 123 123 123. B. Whether the contract made with Admania Pty Ltd will be enforceable. C. The proposal to remove William and Matilda as directors of Lo-Fo Dining Pty Ltd. D. The extent to which cl 1 and cl 2 of Lo-Fo Dining Pty Ltd's constitution protect Brendan, Kevin and Ryan's desire that Lo-Fo Dining Pty Ltd only sells Lo-Fo food options. E. Brendan and Ryan's plans to alter the constitution to prevent Kevin from selling his shares to William. All questions are weighted equally. 3) Tips and Guidelines - The "Issues have been broadly identified for you in the questions. However, each of these issues may have sub-issues which you need to identify or involve multiple steps or options which you need to clearly explain. Before attempting to answer the questions, identify the relevant sections of the Corporations Act. You should start with the relevant legislation. Do not quote large sections of the legislation. As a guide, only quote the most pertinent aspects. You should keep long quotations (four lines or more) to a minimum. Please focus on applying the law, as opposed to merely describing it. You must provide authority for legal principles. Word Limit Breakdown Guideline: o Each question should be given roughly equal coverage, however, need not be exactly the same. o As a guideline each question should be answered in 300-400 words. o Please remember that references in the footnotes are not included in the word-count. Please have a look at the marking criteria on the following page. Your assignment will be marked in accordance with these criteria