Question

1. Bindi and Terri think this would be a very profitable endeavour and set up a new company called Potatoes Sellers Pty Ltd to sell Potato Ltd’s potatoes.
   Can they do this?

2. Bindi and Terri present the Potato Ltd proposal at the board meeting of Banana Ltd.

   Bindi, Terri and Steve reject the idea on the basis that selling potatoes is inconsistent with Banana Ltd's primary business of selling bananas.

   Can Bindi and Terri now enter into a transaction with Potato Ltd?
   How should Terri and Bindi proceed if they want to act upon Potato Ltd’s proposal?

3. Bindi and Terri start Potatoes Sellers Pty Ltd using Banana Ltd’s confidential list of distributors to sell potatoes. Advise Banana Ltd.

4. Steve has a Banana farm that has been owned by his family for several generations. Steve wants to sell the farm to Banana Ltd for $1 million. Can he do this? Advise Steve.

5. Assume Terri and Steve form Potato Sellers Pty Ltd. Potato Sellers Pty Ltd has ten shareholders who are mostly friends and family of Terri and Steve. The board is comprised of Terri, Steve and Dan. Potato Sellers Pty Ltd owns a large potato sorting machine that it no longer needs. Steve wants to enter into a contract with Potato Sellers Pty Ltd to buy the machine.

   Advise Steve what he should do before entering into the contract.

Answer 1

Answer :

1. No they could not do that. Even if its 2/3 of the directors, you would have to make the other director away of decisions and contracts.
2. Since majority won, yes they can move forward with this. They would still have to include Steve in decisions on how to proceed.
3. It would be a different brand under the parent company, you could explain that to consumers and use Banana Ltd to promote Potato Sellers Pty Ltd.
4. This would be conflicting. He can technically do so, but at the cost of the farm. If the farm is worth a million he can sell it, but he should not provokingly sell the farm to the company for a higher price. This would seem taking advantage of his title
5. He would have to cast a vote with the shareholders. They will determine whether to buy the machine or not. 51% must agree for it to be approved.