Assignment on Corporations Law
Added on - 29 Apr 2020
Running head: CORPORATIONS LAW0Corporations Law
CORPORATIONS LAW1Answer 1.As per the constitution of FWPL, the directors take the decision of paying a dividend to AClass shareholders, which was sufficient for many years. Now, GML did not want to issuedividend instead they wish to retain their earning for organic vineyard’s development becauseJason was stirring the Galli’s grandchildren, many of which are lazy and undeserving.IssueThe primary issue is that whether the Galli’s children can take action against the directors’decision of non-payment of the dividend.RuleThe shareholders invest in a corporation to earn dividend and increasing their value. As perthe section 254W (2) of Corporations Act, 2001(Cth), the company has right to decidewhether or not they distribute a dividend (Austlii 2017). In order to issue a dividend, thecompany is required to have profits, or they have fulfilled the obligations of their creditors.Section 232 protects the minority shareholder from company’s oppressive conduct. The courthas right to issue remedies against any operative misconduct by the company against itsshareholders in section 233 (Cannavan, Finn and Gray 2004).The remedies include amending/modifying corporation’s constitution, winding up the order,buyback of shares, ceasing management from performing any specific action, and enforcingdirectors to performing specific actions. In the Thomas v H W Thomas Ltd (1984) 1 NZLR686 case, the court provided three remedies for the oppressive conduct by a company(Gardyne 2007). The first condition was that the oppression was unfairly prejudiceddiscriminatory against the shareholders. The second term provides that the directors did notmeet the reasonable expectation and the final condition was that providing the remedies isjust and fair for the party.ApplicationAs per the section 245W (2) of the Corporations Act 2001, the directors have right to decidewhether divided should be distributed or not. In this case, Galli has right to deny thedistribution of dividend to the A Class shareholders. As per the decision provided in Thomasv H W Thomas Ltd (1984) 1 NZLR 686 case, the court provided three conditions which arenecessary to be fulfilled to constitute a conduct as oppressive. Galli decided to use the profits
CORPORATIONS LAW2to develop the operations of the business also there is lack of any oppressive behavior by thecompany. It would be unfair and unjust if the court awards the remedies which are providedunder section 233 of the act.ConclusionIn conclusion, the non-availability of any oppressive conduct by the company will dismiss theaction taken by the Galli’s grandchildren, and the court cannot force the company todistribute a dividend.