BLO5540 Semester 2 Case Study: Pure Nature Sydney Pty Ltd Analysis

This report analyzes the case of 'In the matter of Pure Nature Sydney Pty Ltd,' focusing on the legal issues surrounding the company's winding up. The case involves shareholder disputes and the application of the Corporations Act 2001. The report examines the background facts, relevant laws (including sections 233 and 461), the court's verdict, and its reasoning. The court ordered a winding up, providing an opportunity for share purchase or liquidation. The case highlights the importance of maintaining healthy relationships among shareholders and partners in a quasi-partnership to avoid business dissolution. The report emphasizes the significance of understanding legal frameworks in business operations and the potential consequences of shareholder conflicts.

Running head: BUSINESS AND COMPANY LAW
Business And Company Law

BUSINESS AND COMPANY LAW
Table of Contents
a) Major Legal Issues.................................................................................................................3
b) Background facts...................................................................................................................3
c) Relevant Law Used In Case Of Making Decision by the Court............................................3
d) Actual Verdict of the Court and its Reasons..........................................................................4
e) Importance Observed from the Case and its Uses for people in Business.............................4
Bibliography...............................................................................................................................5
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a) Major Legal Issues
The legal issues that were evident in the case named ‘In the matter of Pure Nature Sydney Pty
Ltd’ were regarding the purchasing order of the shares. It was found in this case that the
overall shares of the company were owned by two parties and it was not clear whether the
other party will grant the permission of selling shares to another party. This was because the
relationship between the members of the company was broken down and was not confident
enough to operate the business further. Thus, they were seeking to wind up the company
under section 461(1) (k) of the Corporations Act. Section 461(1) (k) of the Corporations Act
states the general rules that are to be enforced for winding up companies (Supreme Court of
New South Wales, 2018).
b) Background facts
The case was based upon the company named Pure Nature Sydney Pty Ltd, which was
formed based on quasi-partnership. There were different parties (partners of the company)
involved in the case, whereas the plaintiff of the case was Ms. Song A Chae, who was the
shareholder of the company. In this case, the first defendant was ‘Pure Nature Sydney Pty
Limited’ and the second defendant was Ms. Nan Ae Moon, who was the director of the
company, and the third defendant was Ms. Kwang Soon Hong, who was one of the
shareholders. In this case, the plaintiff claimed for the transfer of shares from Ms. Hong in
the name of Ms. Chae as ordered by the court (Supreme Court of New South Wales, 2018).
c) Relevant Law Used In Case Of Making Decision by the Court
While making a judgment about the case, the court considered different sections, which are
233(1)(j), 233(1)(d), 461(1)(k), and 461(1)(f) of the Corporations Act 2001 (Cth) (Supreme
Court of New South Wales, 2018). The Corporations Act 2001 dealt with the operation and
formation of companies (Commonwealth Consolidated Acts, n.d.a). On the other hand, the
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section 233(1)(d) and 233(1)(j) involved the law that the court can pass any kind of order,
under these sections, which are related to the winding up of an existing company. These are
to be modified and regulations of the company are to be set in the future. This can be done
“for the purchase of any shares by any member or person to whom a share in the company
has been transmitted by will or by operation of law” (Commonwealth Consolidated Acts,
n.d.b). The sections 461(1)(f) and 461(1)(k) especially emphasized that the court can give the
decision of winding up a company, if there are no members left in it or if “the company has
by special resolution resolved that it be wound up by the Court”. Besides, if the company
could not be able to regulate any business within a year then also the court can give the
verdict of winding up (Commonwealth Consolidated Acts, n.d.c).
d) Actual Verdict of the Court and its Reasons
The court gave the order of winding up the company but only after a certain interval of time
given to the parties to liquidate the company. One can also give both the partners an
opportunity to buy the shares of the company. However, Mr. Steven Nicols was appointed as
a liquidator if the winding up of Pure Nature Sydney Pty Ltd takes place.
e) Importance Observed from the Case and its Uses for people in Business
The case signifies that being in business it is essential to maintain a healthy relationship with
the shareholders, the partners especially in the case of quasi-partnership, and the members of
the company in order to avoid the winding-up of a company such as in the case of Pure
Nature Sydney Pty Ltd. Besides, if the members involved in the company have a personal
relationship among them, it has the possibility of creating conflict and complexity in the
successful operation of the business in the long run.
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Bibliography
Commonwealth Consolidated Acts, n.d.a, Corporations Act 2001, Austlii, viewed 30 August
2019, <http://www.austlii.edu.au/cgi-bin/viewdb/au/legis/cth/consol_act/ca2001172/>.
Commonwealth Consolidated Acts, n.d.b, Corporations Act 2001 - sect 233 orders the court
can make, Corporations Act 2001 - Sect 233, viewed 30 August 2019,
<http://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/ca2001172/s233.html>.
Commonwealth Consolidated Acts, n.d.c, Corporations Act 2001 - sect 461 general grounds
on which company may be wound up by court, Corporations Act 2001 - Sect 461, viewed 30
August 2019,<http://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/consol_act/
ca2001172/s461.html>.
Supreme Court of New South Wales, 2018, In the matter of Pure Nature Sydney Pty Ltd
[2018] NSWSC 914 (19 June 2018), Supreme Court of New South Wales, viewed 30 August
2019, <http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2018/914.html?
context=1;query=%20[2018]%20NSWSC%20914;mask_path=#>.
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