ASSESSMENT
Learning Outcomes -
1. Develop an understanding of relationship between the law, corporations and legal regulation in commerce.
2. Explore the various legislative provisions and its relevant case law in relation to the broad areas of Corporation Law.
3. Explain the roles and responsibilities of the directors and officers of the corporate structure, the extent of their accountability to various stakeholders and the ethical framework under which they operate.
Question 1 -
The constitution of FWPL allows for the directors to pay a dividend to holders of A Class shares at their discretion. Over many years, the company had paid a dividend which, although not sizable, was sufficient for the shareholders who chose to do so, to live on.
However, Mario and his siblings are angry about the discontent that Jason has been stirring up among the Galli grandchildren, some of whom they see as lazy and undeserving.
So, the board of GML resolves not to pay a dividend to the A Class shareholders this year, and instead, to retain earnings to fund the development of the organic vineyard at Robinvale.
What action, if any, can the Galli grandchildren take in respect of non-payment of the dividend?
Question 2 -
At FWPL, Mario and Nick Galli are concerned about the level of dissatisfaction among the A Class shareholders. They would like FWPL to be able to buy out the A Class shareholders at a value to be fixed by an independent expert. They seek your advice on doing a share buy-back under the Corporations Act.
What are the benefits of doing a share buy-back? What is required?
Question 3 -
Alternatively, could FWPL get rid of the A Class shares by way of a reduction of capital? What would be required, and whose consent is needed?