Question 1

Only members can bring an application under section 237 of the Corporations Act 2001 (Cth) to seek leave to bring an action on behalf of the company.

Accepted Answer

Under section 237 of the Corporations Act 2001 (Cth), not only members but also the company's directors, officers, or any other person (with the court's permission), who can demonstrate a good faith concern for the company's interests, can apply for leave to bring a derivative action on behalf of the company.

Question 2

Jackie is a director of Bingo Ltd. Michelle and Barack own all the shares of Bingo Ltd between them. At the time Bingo Ltd was formed, Michelle and Barack told Jackie that he could stay on the board of Bingo Ltd for as long as he wanted to be a board member. At all material times Jackie had an expectation that he would be a board member. Michelle and Barack back out of their assurances and vote Jackie off the board. Jackie would be successful in pursuing an oppression claim under section 232 of the Corporations Act 2001 (Cth).

Accepted Answer

An oppression claim under section 232 of the Corporations Act 2001 (Cth) requires conduct that is oppressive, unfairly prejudicial, or unfairly discriminatory against a member. Jackie, as a director and not a shareholder, may not have standing to claim oppression unless he can demonstrate that the conduct affects his rights as a member or shareholder.

Question 3

Shareholders can potentially rely on section 1324 to obtain an injunction.

Accepted Answer

Section 1324 of the Corporations Act allows shareholders to apply for an injunction or declaration if a company's affairs are being conducted in a manner that is oppressive or unfairly prejudicial to them.

Question 4

An officer or former officer of a company can seek to bring a statutory derivative claim.

Accepted Answer

An officer or former officer of a company can seek to bring a statutory derivative claim on behalf of the company. This is because statutory derivative claims are designed to allow individuals closely associated with a company, such as officers or directors, to initiate legal action on behalf of the company for wrongs done to it, even if they are no longer officially associated with the company.

Question 5

The only people who have standing to seek an injunction under section 1324 are ASIC and any person whose interest have been or would be affected by conduct that contravenes the Corporations Act 2001 (Cth).

Accepted Answer

Section 1324 of the Corporations Act 2001 (Cth) allows both the Australian Securities and Investments Commission (ASIC) and any person whose interests have been, or would be, affected by conduct contravening the Act, to seek an injunction. This provision is designed to protect the interests of individuals or entities directly impacted by violations of the Act, as well as enabling ASIC to enforce compliance with the law.

Question 6

Members' personal rights are sourced from a number of places including the company's constitution, the Corporations Act 2001 (Cth) and any agreements between a member and the company such as a shareholders' agreements.

Accepted Answer

Members' personal rights in a company are indeed derived from various sources including the company's constitution, statutory provisions found in legislation such as the Corporations Act 2001 (Cth) in Australia, and any specific agreements between the member and the company, such as shareholders' agreements. These sources collectively define and protect the rights and obligations of members (or shareholders) within the company.

Question 7

Which of the following could potentially form the basis of a successful winding up application under section 461(1)(k) Corporations Act (Cth) 2001:

Accepted Answer

Section 461 (1)(k) covers a variety of possible grounds. All of these circumstances have been considered by the court at various times as sufficient grounds.

Question 8

Lulu, Bucky and Mookie are directors of Baseball Pty Ltd. Mookie also holds 1% of the shares issued by Baseball Pty Ltd with Lulu and Bucky holding the balance of the shares. Lulu and Bucky vote Mookie off the board, increase their directors' fees, cease all dividend payments and take certain corporate opportunities belonging to Baseball Pty Ltd for their own benefit. Which of the following is correct:

Accepted Answer

Answer (d) is the best answer, as s 233 sets out the variety of orders that a court can make if there has been oppression. There is no law to support answers (b), (c) & (e). Answer (a) misinterprets the facts as Mookie is a member as well as a director, so would be applying for the remedy in her capacity as member.

Question 9

Members in a company have a number of statutory rights. Which of the following is NOT a right of members in the Corporations Act 2001 (Cth)?

Accepted Answer

There is no statutory support to permit members to overrule the decisions made by directors.

Question 10

Roch, Paco and Talbot are the directors of Mountain Breeze Pty Ltd ("Mountain Breeze"). Roch and Paco hold all the shares issued by Mountain Breeze between them. Mountain Breeze has a significant amount of debt. Roch and Paco pass a directors' resolution approving the sale of certain assets held by Mountain Breeze to another company they control at below market prices. This is clearly a breach of Roch and Paco's duty to avoid a conflict of interest and also a breach of sections 182 and 183 of the Corporations Act 2001 (Cth). Which of the following is correct:

Accepted Answer

Answer (a) is incorrect as s 237 allows officers r former officers to bring a derivative action; answer b is incorrect as only the company or ASIC can directly enforce the duties owed to the company; answer c is correct as creditors may be able to establish that they are persons whose interest have been or would be affected by conduct that contravenes the Corporations Act 2001 (Cth); answer (d) is incorrect as only members can bring an oppression action and Talbot is a director; answer e is incorrect as one director cannot can directly enforce the duties owed to the company.

Question 11

Why do company members need specific remedies?

Accepted Answer

The answer of Why do company members need specific remedies?...

Question 12

Who is entitled to apply for an oppression remedy?

Accepted Answer

The answer of Who is entitled to apply for an...

Question 13

What is 'oppressive conduct' within the meaning of s 232 of the Corporations Act?

Accepted Answer

The answer of What is 'oppressive conduct' within the meaning...

Question 14

Discuss five remedies available for an oppression action under section 232 Corporations Act 2001 (Cth).

Accepted Answer

The answer of Discuss five remedies available for an oppression...

Question 15

In what circumstances can a member seek to have the company wound up? Why would a member do this?

Accepted Answer

The answer of In what circumstances can a member seek...

Question 16

What elements need to be satisfied under section 237(2) of the Corporations Act 2001 (Cth) before a court must grant leave for an applicant to bring a proceeding on behalf of a company?

Accepted Answer

The answer of What elements need to be satisfied under...

Question 17

What are some examples of members' personal rights?

Accepted Answer

The answer of What are some examples of members' personal...

Quiz 6: Members Remedies