Veronica, Mary and Josephine each own 30% of the shares of a sewing company, Silver Threads Pty Ltd, while Elizabeth owns 10%. They elect Catherine, who is an expert in textile production and tailoring, as Managing Director. She asks you for advice about the following: The company’s constitution states that all the company’s IT requirements must be sourced from a company called Wagga Electronics Pty Ltd. Silver Threads has not yet set up its IT system, but the board members note that a very competitive service is being offered by Bathurst IT Services Ltd, and has decided to enter into a contract with that company rather than with Wagga Electronics. The company’s constitution also specifies that five named individuals will be directors of the company for 10 years at a salary of $ 10 000 per annum. Each director also has an individual contract of service with the company specifying the same terms. Five years has elapsed since the company was founded. One of the directors, Margaret, has consistently failed to attend board meetings. At a shareholder meeting in May, a special resolution, conforming to all the requirements of the Corporations Act 2001(Cth) was agreed to by all four shareholders removing Margaret’s name from the list in the constitution and dismissing her as director. Another meeting of shareholders was held in August. Due to an administrative error, Veronica did not receive notice of the meeting. At the meeting two resolutions were passed: The first was to change the company logo from a silver sewing machine to blue scissors. The second resolution was to change the company’s constitution so as to prohibit it from purchasing elastic from Brazil because rubber trees there are grown in an environmentally-harmful manner. Both resolutions were agreed to by all three sisters who attended the meeting. Wagga Electronics is threatening legal action, saying that it says a right to a contract to supply IT services, Margaret is threatening legal action over her dismissal, and Veronica is contesting the validity of proceedings at the shareholders’ meeting held in August.

Required

Advise Catherine on the company’s legal position, citing statutory and case law authority.

Answer rating: 100% (QA)

The company s legal position on the issues raised will depend on the provisions of the Corpor ations Act 2001 C th and any other relevant legislation ... View the full answer