Question

Colour Paints Ltd (‘Paints’) is a public company of which Black, White and Brown are the...

Colour Paints Ltd (‘Paints’) is a public company of which Black, White and Brown are the directors. Each of these directors controls a 10% shareholding in Paints. No other single shareholder holds more than a 5% shareholding in the company. Paints was established some time ago in order to improve the buying power of a number of smaller retailers of paints so that they might meet the competition of larger retail chains. For 6 years the company has actively pursued the object of purchasing paint from manufacturers on behalf of members at a price comparable to that paid by the large retail chains. However, in the last year, the present directors, who are among the largest of the small retailer members of Paints, have considered introducing scaled benefits for members according to the volume of purchases that they make. They say that the smaller members of Paints will still remain better off than if they were to purchase alone, and that to meet increasing administrative costs, some recognition should be paid to the fact that a small number of Paints' larger members have really been responsible for the benefits received by all members. At various meetings over the past year the directors have continually raised these points. Last week, the board passed a resolution establishing a new members' buying list, by which the larger members of Paints will continue to buy at prices comparable to those paid by the retail chains and the smaller purchasing members will pay 15% more. George Brush, a member holding a 2% shareholding wishes to challenge the directors' actions. REQUIRED: On what legal grounds might George Brush proceed to challenge the actions of the directors and what legal remedies might be available to him? austrlian law

Homework Answers

Answer #1

Answer:-

  • George Bush (Minority Shareholder) wishes to challenge against Directors' activity.
  • For this situation, George Bush can persecute alternate investors activity as a 'right implemented against other investors' under the statutory and customary law of the state in which the organization is joined (Delaware General Corporation Law - DGCL).
  • DGCL and Court causes the minority investors to authorize their privilege and furthermore ensures them.
  • For this situation, George Bush may give appeal to for goals which go to building up another individuals' purchasing list.
  • This is an onerous direct and the rupture of obligations by the Major investors.
  • As Legal cures, Delaware law gives minority investors cures against controlling investors for ruptures of guardian obligation like a mistreatment case or trustee obligation guarantee.
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