>> Business Law and Ethics
Tweedle Pty Ltd is a company that lays down railway track in newly developing countries. A, B, C and D are the 4 directors of the company. The directors are the sole shareholder of the company, each director holding 25% of the shares.
A, B, and C have decided that for personality reasons they cannot continue to work with D. They have set up a new company, Needle Pty Ltd, from which D is excluded. When Tweedle Pty Ltd was approached by the South African government to build a new railway line, A, B and C secretly negotiated to have the government contact referred to Needle Pty Ltd.
D is now aware that the government contract has been referred to Needle and approaches you for advice.
(a) Have the 3 directors breached any duty they may have had to Tweedle?
(b) What remedies, if any, does D have in regard to the actions of A, B and C in taking work from Tweedle and transferring it to Needle?
S, E and R are shareholders and directors of Z Pty Ltd (Company Z). Company Z owns a holiday house which it uses to rent out. Company's constitution states that:
- S is to be appointed as the company secretary for life
- Each shareholder can use the property for 2 weeks. For S, it will be from 1-14 January.
It was found that January is usually the busiest month and therefore E&R voted (through special resolution) to change S's usage to June. Constitution also requires users to keep the home clean after use. E does not clean the home and S always has to clean up. S complains to R about this.
E & R are getting annoyed with S. They called an extra ordinary shareholder's meeting and voted to change the constitution by requiring appointment as company secretary to be appointed by directors. They then called a directors' meeting to remove S as a secretary and director of the company.
Nong Pty Ltd held its annual general meeting on 6 November 2009. The notice of the meeting sent by Nong Pty Ltd includes the following item of special business:
"To consider and, if thought fit, pass the following resolution as an ordinary resolution:
'That commencing on 1 December 2009 the total amount that may be provided to the non-executive directors by way of remuneration for their services as directors in respect of each financial year be increased by the amount of $750,000 to the amount of $2,250,000 per financial year.'
Vince is a shareholder in Nong Pty Ltd. He thinks the non-executive directors are already overpaid and opposes the resolution. He attends the meeting and makes a long speech opposing it. After 20 minutes, David (a director) asks him to stop speaking and sit down. Is this allowed?