Whackit Ltd is a successful retail business supplying tennis equipment. Its directors are Kei, Roger, Serena and Angelique. It only has ordinary shares, and these 1,000 ordinary shares are held in the following percentages: Kei (20%), Roger (30%), Serena (35%) and Angelique (15%). The company has a constitution with the following clauses:
1. Roger shall be the company's managing director and chair of its board, and can only be removed with a vote of 60% per cent by the ordinary shareholders of the company in general meeting.
2. If the company intends to vary the class rights of any shareholders, it must hold a combined meeting of all of its shareholders. At such a meeting, every shareholder has one vote per share. The vote must be carried by a majority of 70%.
3. Apart from these rules, the company's internal governance shall be determined in accordance with the replaceable rules in the Corporations Act 2001 (Cth).
The company plans to expand and needs capital. Roger suggests that the company issue a class of 250,000 preference shares and he will buy all of them.
With reference to the Corporations Act and general law where necessary:
What procedures, if any, must the company follow should it proceed with Roger's suggestion to issue the proposed class of preference shares?
What effect, if any, will the issue of the preference shares have on decision making within the company?
NOW ASSUME THAT
Serena, Angelique and Kei are sick of Roger's domination of the company's affairs. Can they:
Remove Roger as managing director of the company? If so, how?; and
Remove Roger from the board? If so, how?