Legal Regulation of Business Structure and Liability of Contracts

RUNNING HEAD: LEGAL REGULATION OF BUSINESS STRUCTURE
Legal Regulation of Business Structure
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LEGAL REGULATION OF BUSINESS STRUCTURE
Part A:
There are two issues that can be emerged in the seen amendments of the company’s
constitution. The primary issue in the provided case of AMAZE Ltd is that whether the main
change made in the company’s constitution is valid legally. The next issue that can be focused in
this case is that whether the second change in the constitution of the company for the
expropriation for the shares of the minority stockholders would be lawfully valid or not.
In this provided case, AMAZE Ltd is a public listed company having a specialism in
landscaping, and they have huge monopoly over the sculpture and landscaping market and very
few of the companies do these type of work. All total there were six stockholders in the
organisation where there were two directors of the organisation. Bob and Ada are considered as
the directors of the organisation and they hold 40 per cent of the company’s share. The
remaining shareholders are Elle, Otto, Kanak and Hannah hold 5 per cent of the company’s
share.
At the incorporation’s time of the organisation, it developed its own constitution where
the certain rule and regulation was inserted. There were also certainly provided that were
included during creation of the constitution. Rule 12 is one of the provision of the organisation’s
constitution where it is explained that for contract and any transaction that amounts up to $1
million or further. In this situation the approval is necessary from the stockholders for the
transaction to take place and there was a restriction in the director’s power.
Rule 15 of the company’s constitution clearly explains the facts that if the shareholders
vote in a resolution if they are tied in the motion cannot be re-vote or cannot be passed in a
meeting that will be held separately. According to the Rule 40 of Company’s constitution any
member of the company selling the shares should be offered with the share to the stockholders

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LEGAL REGULATION OF BUSINESS STRUCTURE
before selling to the public. As there was a negotiation in between Sunshine Botanical Gardens
and Ada for the services of the sculpturing, gardening and landscaping, where the price of the
contract for the mentioned services would be above 1 million AUD, AMAZE Ltd conducted a
general meeting with the stockholders of the organization for voting and discussing on the topic
of transaction. Hannah is a stockholder amounting to 5% of the total shareholder in the
organisation and Chief Executive Officer who was the actual AMAZE’s competitor, decided in
postponing by bribing Kanak, Elle and Otto for voting against the made deal. Therefore as the
vote tied up two times Hannah has taken the opportunity and helped her organisation Hedge Fun
Ltd for getting the contract with SBG.
Relating to the provided case the result for the conduct, Bob and Ada decided to conduct
a special meeting where the amendment of the organisation’s constitution was proposed. In the
primary amendment there was a revoke in the right to vote for the stockholders having a stock of
share that is amounting to less than ten per cent .of the total share of the organisation. The very
next amendment was to provide the directors of the organisation to expropriate the stock of any
minor stockholders involved in administering the company’s competitor.
Rules under the provision of CA:
The rules stated in section 140 of the CA provides for relates related to the constitution.
The section is related to the rules regarding the effect on the constitution and the replaceable
rules of the company. As per the rules of the section there is a contractual relationship between
the parties to the constitution of the company. These include the members and the company and
the members and the members.

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LEGAL REGULATION OF BUSINESS STRUCTURE
Further the rules in connection to the alteration of constitution have been given through
the provisions of section 136 of the CA. Under this section it has been stated that the company
has right to alter the constitution of the organisation through the passing of a special resolution.
This means that at least 75% of the total members of the company must give voted in favour of
the constitutional amendment. Besides, it has been stated by the section that a clause can only be
changed of a further condition concerning the change of the clause has been complied with by
the change process. Besides the section also provides that the clause which acts as a further
situation for the change of another clause can also only be altered or amended if the clauses itself
have been complied with or any further clause concerning the clause is complied with. Members
have been provided with the option of claiming oppressive remedy. This means that under
section 232 there is a provision of claiming against the company for any unfairly prejudicial
action taken against the interest of the minority shareholders.
Validation of the Primary Amendment:
Under the provisions of the CA Section 136 can be applied in this provided case it is
clear that the primary amendment of the company was taken into the scenario by the method of a
general meeting that was special and therefore Subsection 2 of the above mentioned section.
If the case of the Bailey v New South Wales Medical Defence Union Ltd (1995)1 it is
easily considered that if it is not approved in writing the stockholders cannot be bounded by the
amendment of the constitution u/s section 140 of the Corporation Act 2001. Applying section
232 of the Corporation Act 2001, in this provided case it is observed that the primary amendment
for revoking the right to vote for the stockholders having a share of less than ten per cent would
1 Bailey v NSW Medical Defence Union Ltd (1995) 132 ALR 1