Case Study
COMPANY LAW
CASE STUDY
Case Study:
AgChem Pty Ltd is interested in acquiring a factory owned by Black Pty Ltd. Black Pty Ltd is a wholly owned subsidiary of Grains Pty Ltd. Black is proposing to sell the land to AgChem at a 10% discount to its market value.
Question: a) Is the approval of Agco’s shareholders required under chapter 2E of the Corporation Act? b) Is the approval of Grains Ltd’s shareholders required?
ISSUE OF THE CASE:
Whether or not Agco’s should require approval from shareholder to acquiring a factory from Black Pty Ltd.
RELEVANT LAWS:
In this case the following sections of Corporation Act 2001 should use:
Section 210
Section 228
Section 229
ASIC v ADLER 2003 NSWCA 131
APPLICATION OF FACTS
The major facts be required to be demonstrated to qualify whether or not shareholder approval required, the below diagram classified certain questions
IS THERE A FINANCIAL BENEFIT? YES
“NO” Chapter 2E does not apply
Is it being given by a public company or an entity that a public company controls?
YES
“NO” Chapter 2E does not apply
Is it being given to a related party of the public company?
“NO” Chapter 2E does not apply
YES
Does one of the statutory exceptions in Division 2, Part 2E, 1 apply?
“NO” Shareholder approval is required under section 208
“YES” Shareholder approval is not required
The procedural requirements in Division 3 of Part 2E. 1 must be followed
Is there a financial benefit?
Financial benefit is not strictly defined in the corporation Act. Instead, section 229 contains instructions about how the expression should be interpreted. It states that the expression should be interpreted broadly and with regards to the commercial effect of what is done,
CASE STUDY
Case Study:
AgChem Pty Ltd is interested in acquiring a factory owned by Black Pty Ltd. Black Pty Ltd is a wholly owned subsidiary of Grains Pty Ltd. Black is proposing to sell the land to AgChem at a 10% discount to its market value.
Question: a) Is the approval of Agco’s shareholders required under chapter 2E of the Corporation Act? b) Is the approval of Grains Ltd’s shareholders required?
ISSUE OF THE CASE:
Whether or not Agco’s should require approval from shareholder to acquiring a factory from Black Pty Ltd.
RELEVANT LAWS:
In this case the following sections of Corporation Act 2001 should use:
Section 210
Section 228
Section 229
ASIC v ADLER 2003 NSWCA 131
APPLICATION OF FACTS
The major facts be required to be demonstrated to qualify whether or not shareholder approval required, the below diagram classified certain questions
IS THERE A FINANCIAL BENEFIT? YES
“NO” Chapter 2E does not apply
Is it being given by a public company or an entity that a public company controls?
YES
“NO” Chapter 2E does not apply
Is it being given to a related party of the public company?
“NO” Chapter 2E does not apply
YES
Does one of the statutory exceptions in Division 2, Part 2E, 1 apply?
“NO” Shareholder approval is required under section 208
“YES” Shareholder approval is not required
The procedural requirements in Division 3 of Part 2E. 1 must be followed
Is there a financial benefit?
Financial benefit is not strictly defined in the corporation Act. Instead, section 229 contains instructions about how the expression should be interpreted. It states that the expression should be interpreted broadly and with regards to the commercial effect of what is done,
References: * Professor Robert Baxt AO, Law Book Co, 2011 Edition, Thomson Reuters, Corporation Legislation. * Julie Cassidy, 3rd Edition, Federation Press, 2010, Corporation Law Text and Essential Cases. * Professor Robert Baxt AO, Law Book Co, 2008 Edition, Thomson Reuters, Corporation Legislation. * Commercial Applications of Company Law, CCH Publishers Australia, 2012, 13th Edition, Pamela Hanrahan, Ian Ramsay, Geof Stapledon. [ 2 ]. Commercial Applications of Company Law, CCH Publishers Australia, 2012, 13th Edition, Pamela Hanrahan, Ian Ramsay, Geof Stapledon [ 3 ] [ 4 ]. Julie Cassidy, 3rd Edition, 2010, Federation Press, Corporation Law, Text and Essential Cases. [ 6 ]. Professor Robert Baxt AO, Law Book Co, Thomson Reuters, 2011, Corporation Legislation