[meteor_slideshow slideshow=”adssa” metadata=”height: 126, width: 630″]
Chris is the founder and managing director of Media Trends Pty Ltd (MT). Amongst other clauses, MT’s constitution also contains the following clauses:
Clause 6 Chris is to be the Managing Director appointed for life of MT, removable only upon death, retirement or misconduct.
Clause 9 MT’s constitution may only be altered by a vote of 80% or more of the shares in the company.
Clause 12 That MT can only borrow money with the approval of the Board where the borrowings exceed $350,000.00.
In addition to the constitution, MT also has a separate employment contract with Chris which expires in two years.
In February 2012, Chris arranges a loan for MT of $500,000.00 with his friend Albert, the manager of BankEast Ltd. Albert and Chris are childhood friends and while Albert knows the money is for Chris’s personal business purposes, he is satisfied that Chris will get the Board’s approval as he has done in the past. Chris returns the signed loan documents signed by him and apparently by Betty the company secretary. It transpires that Chris intends to use $300,000 of the funds borrowed to purchase a restaurant business for his son Jack who has just returned to Australia after running a successful restaurant in London.
When the directors and shareholders of MT find out about Chris’s actions they seek to have Chris removed as the managing director.
It also transpires that the board refuses to approve the loan because of Chris’s total disregard for proper procedure and the fact that the loan documents were not signed by Betty, and it appears that her signature may have been forged. Accordingly, MT denies any liability under the loan with BankEast Ltd.
(i) Advise Media Trends Pty Ltd whether it can remove Chris as the managing director.
(ii) Advise whether BankEast Ltd can enforce the loan contract against Media Trends Pty Ltd.
(iii) Advise whether Chris has breached his duties as a director to Media Trends Pty Ltd and, if so, what actions it can take an action against Chris for breaching his common law and statutory duties to the company.
[meteor_slideshow slideshow=”best” metadata=”height: 126, width: 630″]