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Business and Corporation Law Assignment

   

Added on  2020-03-16

10 Pages3341 Words60 Views
Running head: BUSINESS AND CORPORATION LAWCase of North v Marra Developments Ltd Name of the student:Name of the university:Author note

1BUSINESS AND CORPORATION LAWCase introduction: The present case is based on the company securities and defence of illegality and attracts theprovision of the Corporation Act 2001 and Securities Industry Act 1970. It has been appeared fromthe case that the appellant of the case is running a stockbroker firm and the respondent runs adevelopment business within the provinces of Australia. The company of the respondent wasincorporated in the year 1954 and engaged themselves in the purchasing of pastoral properties in theprovinces of New South Wales. The share of the company was enlisted under the stock exchange ofSydney. An allegation was made in the year 1974 regarding the right valuation of the asset of thecompany and the appellants of this case had been discussed about it with the bodies of the respondentcompany (Anderson et al. 2017). The then Chairman and Director of the company, Mr. GeoffreyKillen told to the appellant that it is true that the company is facing certain dilemmas regarding thetakeover of certain shares, but that does not mean that the company is a vulnerable one. However, the appellant had told to the respondent that the shareholders of the company shouldhave a clear idea regarding the position of the company in the market and therefore, it is the duty ofthe company to reconstruct the capitals of the company and the company should take over anotherScottish company in this regard. The suggestion was accepted by the directors of the company. It hasbeen stated by the Director of the company that the income of the company is gradually increased daytoday and therefore, the company has decided to provide bonus to the shareholders. A discussion overthe re-purchase of shares by the company had been done in between the appellant and the respondentand an approach regarding the takeover had been made with a dividend rate of fifty percent on thenew shares (Considine et al. 2014). In the year 1974, a proposal was made regarding the reconstruction of market values and it wasalso stated that the company will review the bonus issue so that it may be getting increased. Anegotiation process was done in between the respondent and one Scottish company. It was decidedthat the valuation regarding the shares of both the company will assess regarding $1.35 for the sharesof $2.00 share regarding the company named Marra and $1.35 for the share value of $0.50 share

2BUSINESS AND CORPORATION LAWregarding the Scottish company. A financial adviser of the Scottish company had suggested that theshare value of the Scottish company should be increased at $1.50 and according to such process; therespondent company had gained much profit. The aftermath effect of the negotiation process bringsthe respondent in a material position in the share market (Crase et al. 2014). An offer has been madeat the Stoch Exchange and it was suggested that the terms of the offer regarding the shares of therespondent has been accepted by the Scottish company and it was decided that the 50 ordinary sharesof the respondent’s company will be valued at 55 per cents. It has been observed that the appellant had bought lots of shares of the respondent’scompany and the respondent had paid only $35,000 to the appellant where the appellant alleged thatthe sum will be $175,000. It was also alleged by the appellant that the respondent did not pay for thecorporate fees regarding the advice given by the appellant during the negotiation process (Davison etal. 2015). It has been observed that there is no documentary proof regarding the price of therespondent’s shares in the market. Therefore, it can be presumed that the appellant had takencommission from the purchasers of the shares of the respondent’s company. The claim of the appellants was of three fold. The first one is that the appellant asked therespondent to pay reasonable fees for the advice and the negotiation process. The second demand is tosue the respondent as against an amount of $140,000 and the third claim of the appellant was based onthe pact made between the appellant and respondent regarding the five instalments having $35,000each. However, it was contended by the respondent that the provision of the first claim made by theplaintiff is contradict the provisions of section 70 and section 71 of the Security Industries Act 1970.It was also stated by the defendant that the demand regarding the five instalments are illusory innature and therefore, is required to be set aside. Breach of duties or responsibilities: It was alleged by the appellant of the case that respondent is engaged in the breach of dutyregarding the payment and the bonus that they had promised to give to the shareholders. The subjectmatter of the case has attracted the provisions of the Corporations Act 2001, the Securities Industry

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