Case: Carrefours Pty Ltd is a large private company in Victoria that runs exclusive supermarkets.The company has the following clause in its constitution.Article 77 of the constitution states the following:“(1) The business of a company is managed by or under the direction or supervision of thedirectors.(2) The directors may exercise all the powers of a company except any power that the Actor this Constitution requires the company to exercise in general meeting.”The majority of the board of directors believe that just being an exclusive supermarket is not the way to go and they believe that the company should be involved in the production of sustainable shopping bags.Therefore, the company wishes to spend $2,500,000 on developing this new business activity.Venture Capital Ltd is a significant shareholder in the company. It owns 30% of the shares inthe company.They are not happy about this change of business direction and want to have the matter voted on by the shareholders as per clause 2 above.The board of directors want to ensure that the shareholders do not interfere with the operations of the business and wish to amend the constitution and change Article 77 above. REQUIRED:1. Advise Venture Capital Ltd whether they can stop the company from entering into thenew business activity and can the shareholders decide the matter? 2. Advise the board of directors if they can change the above rule. If they cannot whatother alternative or option is there, if any?
Case: Carrefours Pty Ltd is a large private company in Victoria that runs exclusive supermarkets.The company has the following clause in its constitution.Article 77 of the constitution states the following:“(1) The business of a company is managed by or under the direction or supervision of thedirectors.(2) The directors may exercise all the powers of a company except any power that the Actor this Constitution requires the company to exercise in general meeting.”The majority of the board of directors believe that just being an exclusive supermarket is not the way to go and they believe that the company should be involved in the production of sustainable shopping bags.Therefore, the company wishes to spend $2,500,000 on developing this new business activity.Venture Capital Ltd is a significant shareholder in the company. It owns 30% of the shares inthe company.They are not happy about this change of business direction and want to have the matter voted on by the shareholders as per clause 2 above.The board of directors want to ensure that the shareholders do not interfere with the operations of the business and wish to amend the constitution and change Article 77 above. REQUIRED:1. Advise Venture Capital Ltd whether they can stop the company from entering into thenew business activity and can the shareholders decide the matter? 2. Advise the board of directors if they can change the above rule. If they cannot whatother alternative or option is there, if any?
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Question
Case:
Carrefours Pty Ltd is a large private company in Victoria that runs exclusive supermarkets.
The company has the following clause in its constitution.
Article 77 of the constitution states the following:
“(1) The business of a company is managed by or under the direction or supervision of the
directors.
(2) The directors may exercise all the powers of a company except any power that the Act
or this Constitution requires the company to exercise in general meeting.”
The majority of the board of directors believe that just being an exclusive supermarket is not the way to go and they believe that the company should be involved in the production of sustainable shopping bags.
Therefore, the company wishes to spend $2,500,000 on developing this new business activity.
Venture Capital Ltd is a significant shareholder in the company. It owns 30% of the shares in
the company.
They are not happy about this change of business direction and want to have the matter voted on by the shareholders as per clause 2 above.
The board of directors want to ensure that the shareholders do not interfere with the operations of the business and wish to amend the constitution and change Article 77 above.
Carrefours Pty Ltd is a large private company in Victoria that runs exclusive supermarkets.
The company has the following clause in its constitution.
Article 77 of the constitution states the following:
“(1) The business of a company is managed by or under the direction or supervision of the
directors.
(2) The directors may exercise all the powers of a company except any power that the Act
or this Constitution requires the company to exercise in general meeting.”
The majority of the board of directors believe that just being an exclusive supermarket is not the way to go and they believe that the company should be involved in the production of sustainable shopping bags.
Therefore, the company wishes to spend $2,500,000 on developing this new business activity.
Venture Capital Ltd is a significant shareholder in the company. It owns 30% of the shares in
the company.
They are not happy about this change of business direction and want to have the matter voted on by the shareholders as per clause 2 above.
The board of directors want to ensure that the shareholders do not interfere with the operations of the business and wish to amend the constitution and change Article 77 above.
REQUIRED:
1. Advise Venture Capital Ltd whether they can stop the company from entering into the
new business activity and can the shareholders decide the matter?
1. Advise Venture Capital Ltd whether they can stop the company from entering into the
new business activity and can the shareholders decide the matter?
2. Advise the board of directors if they can change the above rule. If they cannot what
other alternative or option is there, if any?
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