SEMESTER 1 2013
AROPA ASSIGNMENT 1 – Submission due 25 March 2013
The issue regarding these circumstances is weather Ali can do anything to prevent the company from opening the four new bars? Referring to the rules of attribution all directors can act as agents of the company therefore Rick McCraw and Dan Trucker were acting as agents for Footy Club ltd so they have the right to sign a contract for the company under section 180. This means Ali cannot do anything about the signing of the contract because they were acting as agents. Referring to the Hely-Hutchison v Brayhead Ltd case, it shows that the directors have every right to enter into major contracts as they have actual authority to bind the company just like chairman in this case. In S16 it talks about a company acting in full capacity and as the bars are the same sort of business that Footy Club Ltd are used to then the transaction is fair and the company therefore has an obligation to pay the third party. In S 129 of the companies act it is titled Major Transactions. The purchase of the 4 new bars will be considered a major transaction as there is a contingent liability being used to purchase the 4 bars. The bars are worth more than half of the companies entire assets which is stated to be the definition of a major transaction in S 129 2(a). Under the special resolution rule 75% of shareholders must vote in favour of the Major transaction. I am assuming Ali was the only one who did not want to buy more bars, but we are not told if Frankly Owen is interested or not therefore we will assume that he is. There is 75% support in the company and therefore they are able to enter into a major transaction through the special resolution rule. As for the bank, section 18(1) also does not apply as the bank had no reason to doubt the 2 directors so the bank has no actual or constructive knowledge. They have all rights to assume that the 2 directors of the company have the authority to borrow the...
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