ASSIGNMENT QUESTION
Tramp Industries Ltd is a company which runs a chain of hotels and golf courses. There is one class of ordinary shares in the company. Dan, Melanie, Jarrod and Eva each hold 20% of the shares. Dan is managing director, and the other two directors are Eva and Sarah, their accountant, who does not own any shares in the company. The remaining 20% of shares are owned by numerous small shareholders, with each owning no more than 1%. One of those small shareholders is Steve. Steve is upset by Dan's racist and sexist comments at annual general meetings, so Steve often asks probing questions about the company's profitability and its plans for the future at those meetings. All three directors find this annoying and embarrassing.
Assume that the company relies on the replaceable rules in the Corporations Act 2001. Dan, Eva and Sarah seek your advice on the following proposals:
PROPOSALS
1. Explain whether the company in general meeting can pass a resolution to put a new term into the company's constitution that would allow it to compulsorily acquire the shares of anyone holding less than 5% of the company's share capital.
2. What steps would the company have to take if it wanted to decrease the rights of some of the small shareholders to vote at annual general meetings?
NOW ASSUME THAT
3. Eva always agrees with everything Dan says. Assume now (ignoring Proposals 1 and 2 above) that Jarrod and Melanie are tired of Dan dominating the decision making of the company's board. Many of the small shareholders agree. Can Jarrod and Melanie call an extraordinary meeting of shareholders and put a resolution that Dan be removed as director of the company? If so, explain what has to happen for this to take place.