Corporations Act 2001: Duties and Remedies in Case of Breach of Contract and Director's Obligations

Corporations Act 2001
1
Corporations Act 2001

Corporations Act 2001 2
Answer 1
In this case, Sammy and Huw decide develop a new app which give entertaining podcasts and
interviews, and in this context they start new company. They register this company with the
name Oh My Pty Ltd. For starting their business, they hire Gracey for the exclusive supply of a
weekly podcast to their new company, and in this term they sign contract with the Gracey for
paying him $4000 in exchange of his services. They also hire Amaya for giving accounting
services, and in exchange they offer 10% shareholding of the company to the Amaya. Later, she
also sign the contract to provide the services to the Gosh, and this action of Amaya can cause
great loss to the organization or it can also become the huge risk on the survival of the
organization. She also provokes Gracey to give his services to the competitors.
Because of this, Sammy and Huw expropriating the shares of Amaya and cancel contract with
Gracey. In this, provisions related to the expropriating the shares and contractual remedies will
discuss.
Part A
Company hold the authority to make modifications in the constitution adopted by them, but there
is condition that such changes must be done in terms of the section 136 of the Corporations Act
2001.
Section 136 of the act defines the regulations which need to be fulfilled by the organizations
while making the amendments under the company’s constitution. This section further states that
any modifications made in the company constitution required the special resolution passed by the
company. In other words, it is possible for the organization to make modification in the
constitution of the company only if such modification gets the 75% favourable votes in lieu of
the special resolution passed by the company. As if organization is able to attract almost 75%
votes in the favour then only this section allow the company to make modification in the
constitution of the company. It can be said that, section 136 defines the procedure through which
company can made modification in its constitution.
It is important to note that any change occurred in the constitution of the company is applicable
on all the members, directors, and officers in similar manner. Therefore, it can be said that these

Corporations Act 2001 3
changes are applicable on both minority and majority shareholders of the company in equal
manner. The main aim of this regulation is to make the thing clear that these changes are
applicable on those minority shareholders also who cast their vote put their vote against the
resolution passed by the company in terms of the changes made in the constitution of company.
However, some protections are given to the minority shareholders of the company in case
directors and majority shareholders make such changes in the constitution which cause harm to
the minority shareholders of the company. Section 232 of the Act defines the regulations which
reflect the rights hold by the shareholders of the company in context of the position of the
member of the company. This section gives the power to the shareholders to seek the courts
intervention if they believe that actions and conduct of the directors and majority shareholders of
the organization cause oppression and unfairness on art of the minority shareholders of the
organization. In other words, this section gives the authority to the minority shareholders of the
organization to make request to the court to seek the intervention of the court if any action of the
directors and majority shareholders cause disadvantage for them.
This can be understood in this way, in case directors an majority shareholders take any such
action which cause unnecessary disadvantage to the those shareholders who hold minority share
in the organization then such minority shareholders can request the court to intervene and
provide such orders through which such action and conduct of the directors and majority
shareholders can be set aside. Orders in this context include different types of remedies for
minority shareholders such as-
 Order in terms of the winding up of the company.
 Order which set aside any action or conduct which is directed by the directors and
shareholders holding majority shareholding in the company.
 Court can also order the confirmation in terms of the modifications made in the
constitution of the company.
 Any other reasonable order which Court thinks fit.
It must be noted that, minority shareholders of the company cannot seek any such order through
which modifications can be made in the structure of the share capital of the company or restrict
the majority shareholders in making the amendments in the company’s constitution. Corporation