ththiACC220 Assignment - 2019 AltV 1 ACC220 Law of Business Associations Semester 2, 2019 ...

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ththiACC220 Assignment - 2019 AltV  1  ACC220	Law	of	Business	Associations	Semester	2,	2019	 Assessment	Task	2	–	Written	Hypothetical	Assignment	 	 DUE	DATE:		5pm,	Monday	Week	10	 TOTAL	MARKS:	40	marks	(40%	of	overall	assessment)	[Each	Question	is	worth	20	 marks]	 WORD	LIMIT:	2000	words	 SUBMISSION:		Electronically	in	Black	Board	under	the	Assessment	tab.	Ensure	 that	you	include	a	cover	page	with	your	name,	the	name	of	your	tutor	and	day	and	 time	of	your	tutorial.	 NOTE:	There	are	two	(2)	questions.	You	must	submit	answers	to	BOTH	questions	 (including	sub-questions).	Submissions	should	be	in	a	single	document.	In	preparing	 your	responses	you	should	focus	ONLY	on	Modules	3	to	7.	 	 QUESTION	1:	 Unique	Victorian	Arts	and	Crafts	Ltd	“UVAC”	is	a	company	that	sources	and	distributes	 unique,	hand-made	arts	and	crafts	products	from	creators	throughout	Victoria.	The	 company	was	set-up	initially	as	a	joint-enterprise	by	a	number	of	local	craft	creators	in	 order	to	distribute	products	for	sale	in	cafes	and	gift	stores.	 The	constitution	of	UVAC	provides	for	two	classes	of	shareholders:	Class	A	and	Class	B.	 Whilst	both	classes	hold	equal	voting	rights,	Class	A	shares	can	only	be	acquired	by	 those	engaged	in	the	business	of	hand-made	craft	creation	in	Victoria.	Class	B	shares	are	 open	to	acquisition	by	anyone.	The	only	other	difference	between	the	two	classes	is	that	 the	constitution	requires	that	any	appointment	of	a	director	can	only	occur	after	a	 report	and	short-listing	process	completed	by	an	independent	consultant	appointed	by	 majority	vote	of	the	Class	A	shareholders.	 There	are	currently	7	Class	A	shareholders	and	26	Class	B	shareholders	(who	include	a	 number	of	competitors	to	UVAC	based	in	New	South	Wales).	The	board	of	directors	is	 made	up	of	Georgiana	Baird,	Yasmin	Farrell	and	Norah	Lawrence.	Each	of	the	directors	 hold	Class	B	shares,	whilst	Norah	also	holds	Class	A	shares	(consisting	of	a	12%	stake	in	 the	company).	 Norah’s	term	as	director	is	due	to	expire	in	September	2019,	but	Georgiana	and	Yasmin	 do	not	want	Norah	to	be	re-appointed.	This	is	in	large	part	because	Georgiana	and	 Yasmin	want	to	see	UVAC	expand	beyond	Victoria	and	source	a	greater	range	of	 products.	Norah	thinks	that	the	focus	should	remain	with	the	local	creators	that	the	 company	was	set-up	to	serve.	 In	July	2019,	Georgiana	and	Yasmin	(without	discussing	it	with	the	Class	A	 shareholders)	appointed	Seek-Easy	Consultants	to	conduct	the	review	and	shortlisting	 process	for	the	appointment	of	director	at	the	Annual	General	Meeting	in	September.	 They	explicitly	instruct	the	consultant	not	to	include	Norah	on	the	short-list.	 	  2  At	a	directors’	meeting	on	the	2nd	of	September	2019,	a	resolution	is	passed	approving	 the	issue	of	the	notice	to	call	an	Annual	General	Meeting	to	be	held	on	the	13th	of	 September	and	giving	notice	of	resolutions	dealing	with	the	following	matters:	 - That	the	short	list	of	directors’	(which	does	not	include	Norah)	be	put	to	the	 shareholders	for	consideration	and	the	appointment	of	a	new	director	from	the	 short-list;	 - That	the	constitution	be	amended	to	allow	for	the	buy-back	of	Class	A	 shareholdings	in	excess	of	10%	of	the	shares	of	the	company,	at	the	discretion	of	 the	directors	and	at	a	price	determined	by	the	directors.		 Advise	Norah	as	to:	 A. Whether	she	can	prevent	Unique	Victorian	Arts	and	Crafts	Ltd	from	acting	 on	the	shortlist	prepared	by	Seek-Easy	Consultants	because	it	was	not	 prepared	by	a	consultant	approved	by	the	Class	A	shareholders;	and	 B. What	the	requirements	for	amending	the	constitution	are,	and	whether	she	 can	prevent	the	amendment	allowing	for	the	buy-back	of	Class	A	shares.	 	 QUESTION	2:	 Lovely	Teas	Pty	Ltd	is	a	company	involved	in	the	importing	and	distribution	of	a	range	 of	herbal	teas	throughout	Australia.	The	business	returns	a	modest	profit	each	year	 which	are	generally	distributed	to	shareholders	in	the	form	of	dividends.	The	directors	 of	the	company	are	Leigh,	Anastasia	and	Rebekah	who	each	own	25%	of	the	shares	in	 the	company.	The	remaining	25%	of	the	shares	are	owned	as	follows:	 - 5%	each	by	two	past	employees	of	Lovely	Teas	Pty	Ltd,	Elizabeth	and	Joan;	 - 5%	each	by	three	outside	investors:	Boyd,	Zander	and	Kymani.	 Throughout	2019,	Lovely	Teas	has	been	in	a	legal	dispute	with	Elizabeth	over	a	claim	 for	wrongful	dismissal	and	appropriate	payments	in	relation	to	a	bonus	that	she	had	 been	promised	for	developing	a	successful	marketing	campaign	for	Lovely	Teas.	In	July	 2019,	the	court	handed	down	a	decision	in	Elizabeth’s	favour	ordering	Lovely	Teas	to	 pay	her	compensation.	 At	a	board	meeting	on	the	1st	of	August	2019,	Rebekah	proposes	a	resolution	to	 incorporate	a	separate	company,	Terrific	Teas	and	Coffees	Pty	Ltd	and	to	transfer	the	 business	of	Lovely	Teas	to	it.	The	resolution	is	passed	unanimously.	 On	the	10th	of	August	2019,	Terrific	Teas	and	Coffees	Pty	Ltd	is	incorporated,	the	assets	 of	Lovely	Teas	are	transferred	to	it	and	all	the	customers	and	suppliers	are	updated	 with	the	new	details.	The	shareholders	of	Terrific	Teas	and	Coffees	are	its	directors,	 Leigh,	Anastasia	and	Rebekah,	along	with	Boyd,	Zander	and	Kymani.	The	directors	left	 enough	funds	in	Lovely	Teas’	bank	account	to	pay	the	outstanding	debts	to	their	 suppliers	(with	the	exception	of	the	amount	owed	to	Elizabeth).	 Advise	Elizabeth	and	Joan:	 A. Whether	the	directors	of	Lovely	Teas	Pty	Ltd	have	breached	s181	of	the	 Corporations	Act	2001	(Cth)	or	their	equivalent	equitable	duties	and	what	 penalties	or	remedies	might	be	applicable;	and	 B. Elizabeth,	whether	a	Court	would	hold	Terrific	Teas	and	Coffees	Pty	Ltd	 liable	for	the	outstanding	debt	owing	to	her	by	Lovely	Teas	Pty	Ltd.	  3  ASSIGNMENT	GUIDELINES	&	INSTRUCTIONS	 	 The	following	guidelines	are	based	on	a	review	of	common	errors	made	in	assignments.	 Students	are	asked	to	read	these	guidelines	carefully	as	they	will	be	taken	into	account	in	 marking	your	papers.		 	 ASSESSMENT	CRITERIA	 	 As	noted	in	the	course	outline,	the	assessment	criteria	for	this	assessment	task	are:	 1. Demonstration	of	knowledge	of	the	law,	as	evidenced	by	accurate	statement	of	 relevant	legal	principles;	 2. Demonstration	of	understanding	of	the	law,	as	evidenced	by	cogent	and	coherent	 application	of	legal	principles	to	the	fact	situation	as	stated;	 3. Demonstration	of	requisite	academic	communication	skills,	as	evidenced	by	 logical	structure	of	arguments,	appropriateness	of	conclusions,	accuracy	of	 citations	(legal	referencing)	and	academic	referencing	and	use	of	accurate	and	 appropriate	expression.	 	 CONTENT	AND	ANALYSIS	 	 The	focus	of	the	assignment	is	on	clear,	accurate	and	concise	application	of	the	law	to	the	fact	 scenario.	You	should	make	direct	reference	to	the	relevant	sections	of	the	legislation	(the	 Corporations	Act	2001	(Cth)),	as	well	as	the	relevant	case	law	(such	as	that	discussed	in	the	 lectures	and	textbook).	Make	sure	you	clearly	and	directly	answer	the	question	that	is	asked.	 Whilst	there	may	be	a	range	of	issues	that	arise	on	the	facts,	focus	on	the	key	issues	required	to	 respond	to	the	question.	 	 In	terms	of	addressing	the	assessment	criteria:	 • In	order	to	demonstrate	knowledge	of	the	law	for	this	assignment,	you	need	to	state	the	 relevant	legal	principles	accurately	and	reference	them	appropriately	by	citing	case	law	 and	legislation;	 • In	order	to	demonstrate	understanding	of	the	law,	you	need	to	apply	the	relevant	legal	 principles	to	the	facts	of	the	case	study	in	order	to	reach	a	conclusion;	 • You	need	to	adopt	a	logical	structure	(it	is	recommended	you	use	headings),	avoid	 spelling	and	grammatical	errors	(see	further	under	‘Structure	and	Style’	below)	and	 present	your	arguments	in	a	coherent	and	convincing	manner.	 	 Your	assignment	must	make	relevant	reference	to	case	law	and	legislation.	Whilst	you	are	 welcome	to	use	your	preferred	referencing	style,	footnotes	are	the	recommended	referencing	 format	for	legal	writing	(use	the	“Insert	>	Footnote”	function	in	Word).	 	 Guidelines	and	Recommendations:	 	 • DO	NOT	merely	reproduce	the	facts	given	in	the	problem.	This	WILL	NOT	attract	marks	(this	 problem	often	occurs	in	written	introductions,	where	it	would	appear	that	the	student	is	not	 sure	where	to	start).	 • DO	NOT	use	headings	such	as	‘issue’,	‘law’,	‘application’.	Your	focus	rather	should	be	in	 structuring	your	response	around	the	legal	issues	themselves	(based	on	the	questions	and	 sub-questions).	As	such,	focus	to	start	with	on	identifying	the	relevant	legal	issues.	You	  4  should	then	move	on	to	both	outline	and	apply	the	relevant	law	to	the	fact	scenario.	In	 doing	so	you	should	note:	 • It	is	not	enough	to	state	relevant	legal	principles	without	explicitly	applying	those	 principles	to	the	facts	 • It	is	not	enough	to	discuss	the	facts	in	general	without	any	reference	to	the	law/legal	 principles	 • Make	sure	you	come	to	a	conclusion	on	each	legal	issue	 • Statements	of	legal	requirements/	principles	must	be	accurate.	Use	of	your	own	words	is	 encouraged	but	must	convey	the	substance	(meaning	of)	the	legal	principle/s.	 • Your	application	and	analysis	should	include:	 • Statements	of	the	relevant	law	including	the	elements	requiring	proof	(from	the	 legislation)	and	interpretation	of	those	elements	(from	legislation	and	case	 authorities	as	appropriate)	 • An	application	of	the	legal	requirements	(elements)	and	their	interpretation	to	the	 facts	in	question	–	after	correctly	identifying	the	relevant	legal	issues,	this	is	the	 most	important	aspect	of	your	answer	 • A	consideration	of	legal	remedies	available	to	the	injured	party	should	the	action	be	 proven.	 • Accurate	and	full	reference	to	cases	and	legislation	must	be	used	(see	further	below).	 	 STRUCTURE	AND	STYLE	 The	following	guidelines	reflect	the	requirements	of	formal	academic	writing	generally	and	 those	more	specifically	relevant	to	law.	 	 • Executive	summaries	or	abstracts	should	NOT	be	included.	 • Headings	may	be	used	(and	are	recommended).	 • Headings	should	reflect	the	legal	issues	raised	by	the	problem	 • Do	NOT	use	headings	such	as	IRAC	(issue,	rule,	application…)	 • Do	NOT	use	headings	‘introduction’,	‘analysis’,	‘conclusion’	 • Avoid	abbreviations-	eg	use	‘has	not’	instead	of	‘hasn’t’.	 • Avoid	informal	language-	eg	use	‘Therefore..’	instead	of	‘So..’	or	‘Well..’.	 • Avoid	use	of	emotive	language-	eg	use	‘I	argue..,	“I	would	argue..’,	‘I	assert..,	or	‘I	contend..’	 instead	of	‘I	believe..’,	‘I	feel..’	or	even	‘I	think..’.		 • Be	mindful	that	legal	analysis	is	about	logical	argument	based	on	principles	as	applied	to	the	 facts	and	not	about	personal	responses-	emotional	or	value-laden.	 • Avoid	use	of	‘slang’	(or	poor	grammar	generally)-	eg	use	‘should	have’	instead	of	‘should	of’.	 • An	opinion	may	be	stated	but	must	be	based	upon	an	application	of	legal	principle	to	the	 facts.	 • Ensure	you	proof	read	your	submission,	checking	for	accurate	spelling	and	grammar	(and	 make	use	of	the	spelling	and	grammar	checks	available	in	your	word	processing	software).	 • Full	sentences,	containing	a	subject,	verb	and	object	must	be	used.	 • When	beginning	a	sentence	with	a	reference	to	a	section	of	legislation	use	‘Section..”	 • When	referring	to	a	section	of	legislation	mid-sentence	use		‘s.…’.	 • When	referring	to	a	court’s	finding	or	judgement	use,	for	example,	‘It	was	held	in	that	case	 that..’	or	‘The	court	held	that..’(Note	third	person	and	past	tense	used).	  5  • When	first	referred	to	in	a	sentence	cite	legislation	in	full,	and	the	full	name	of	cases	plus	the	 year	of	reporting.	For	example;	 • It	was	found	in	Smith	v	Jones	(1986)	5	CLR	98	that..	 • Section	67	of	the	Town	Planning	Act	1987	(Cth)	requires	that…	 • Subsequent	references	may	be	summarised	or	truncated	to,	for	example;	 • In	Smith’s	Case…	 • The	Town	Planning	Act…;	or		 • The	Act…	 • Care	should	be	taken	in	the	use	of	quotations	and	reproduction	of	sections	of	legislation.	 • Generally	a	quotation	should	only	be	used	when	the	author	being	quoted	conveys	her	 own	very	specific	idea	that	you	are	referencing,	or	when	the	author	conveys	an	idea	in	a	 manner	that	is	convincing	and	that	you	cannot	adequately	paraphrase.	 • Reproduction	of	provisions	of	legislation	should	be	limited	to	very	brief	sections	or	 parts	of	sections	 	 REFERENCING	 • Whilst	you	may	(consistently)	use	any	referencing	style,	 the	most	accepted	style	 in	law	 is	 footnoting.		 • The	standard	law	reference	guide	is	the	Australian	Guide	to	Legal	Citation	(AGLC)	(4th	ed)	and	 is	available	at:	http://www.law.unimelb.edu.au/mulr/aglc.	There	is	a	great	deal	of	detail	 in	this	guide.	For	our	purposes,	please	note	the	following	and	refer	to	further	instruction	in	 the	lectures:	 • Use	footnotes	by	using	the	‘insert’	icon	in	Word	and	scrolling	down	to	footnote	or	endnote.	 Footnotes	will	appear	at	the	bottom	of	the	page	you	are	working	on.	 • Your	footnote	should	contain	references	to	cases	and	legislation.	 • Accurate,	complete	references	to	cases	and	legislation	must	be	given	(and	may	be	found	 in	your	text).	 • References	to	legislation	must	contain	the	relevant	section	to	which	you	are	referring.	 • References	to	either	legislation	or	cases	must	NOT	contain	spelling	errors.	 • Case	names	and	legislation	should	be	presented	in	italics	or	underlined.	 For	a	short	cut	to	the	AGLC	giving	examples	of	how	to	format	the	most	common	types	of	 references	and	bibliography,	see	http://libguides.usc.edu.au/aglc.	 	 FORMATTING	 • An	assignment	cover	page	should	be	attached	to	your	work.	 • The	name	of	your	tutor	and	the	day	and	time	of	your	tutorial	MUST	appear	on	the	 assignment	cover	page.	 • Appropriate	margins	should	be	provided	on	each	page	of	your	work.	 • A	copy	of	your	paper	should	be	retained	for	your	reference.	 • Use	Times	New	Roman	12	font	and	1.5	line	spacing.	 	 	 	 	 	  6  Marking Rubric  Assessment  criteria  Outstanding (HD) Very Good (D) Good (Credit) Satisfactory  (Pass)  Unsatisfactory  (Fail)  1. Knowledge of  the law Very thoroughly  researched,  effective use of  materials;  comprehensive  identification and  discussion of  issues  Well researched,  appropriate use  of materials;  good  identification and  discussion of  issues   Competently  researched, good  use of materials;  majority of  relevant issues  identified and  discussed.   Some relevant  materials  overlooked; some  use of research  materials;  possibly some  misunderstanding  of issues or  materials  Limited research,  relevant materials  overlooked or  misunderstood;  failure to identify  and discuss relevant  issues  2.Understanding  of the law  Thorough analysis,  deals effectively  with complexity of  issues;  persuasively  argued throughout,  contrary arguments  anticipated, good  critical evaluation  of materials  Good analysis,  argument well- developed and  supported, some  critical  evaluation of  materials  Some analysis of  issues; argument  may be under- developed or  unpersuasive,  synthesis of  materials with  limited critical  evaluation  Mainly  discursive with  little analysis of  issues; basic  argument is  unclear or  undeveloped or  not well  supported, some  reference to  relevant material   Insufficient  analysis, argument  is lacking or  unsound, failure to  use relevant  materials, may  indicate confusion  or  misunderstanding  3. Academic  communication  skills  Clear and logical  structure. Minimal  errors in  expression,  grammar, spelling  or punctuation; full  and accurate  citation of  authorities and  sources;  thoroughly edited.  Generally well  written.  Occasional minor  flaws in  expression,  grammar,  spelling or  punctuation;  authorities and  sources are  generally cited  correctly; well  edited  Reasonably well  written. Some  flaws in  expression,  grammar,  spelling or  punctuation;  may have some  missing,  incomplete or  incorrect  footnote  citations; some  oversights in  editing  Writing may be  difficult to follow  in parts. Flaws in  expression,  grammar,  spelling or  punctuation; a  number of  missing,  incomplete or  incorrect footnote  citations; editing  with little care  Poorly written,  difficult to follow.  Frequent or  repeated flaws in  expression,  grammar, spelling  or punctuation;  inadequate citation  of sources; poor  editing

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Question 1:
Every company in Australia is governed by the Corporation Act, 2001 (Cth). As per Section 136 of the act it is absolutely necessary for companies to have their own constitution before or after the company is actually registered. The rules set in the constitution must be followed. The case has been presented on Unique Victorian Arts and Crafts Ltd “UVAC”. The company facilitates supplies and sells hand-made arts and crafts products from Victorian creators. Initially the company was organized by local craft creators to promote local products. There are two classes of shareholders: Class A and Class B.  Class A shares were possessed by only those directly involved with Victorian business where as class B shares can be hold by anyone. There are currently 7 Class A shares and 26	Class B shareholders.  	
In this case, there are three directors of the company, Georgiana Baird, Yasmin Farrell and Norah Lawrence. Norah holds class A and class B share where as Georgiana and Yasmin holds only class B share. Norah’s term is about to expire and Georgiana and Yasmin does not want to reappoint her since they want to expand the business beyond Victoria and expand their range of products but Norah want to maintain the focus on local market as was the original purpose of the company. The directors should avoid conflict of interest but in this case conflict of interest is arising (O’Sullivan et al. 2008). 
(a) Georgiana and Yasmin appointed a consultant without taking advices from class A shares. The consultant was directed to prepare a shortlisted name for the appointment of new director since Norah’s term was towards end. The consultant was directed not to include Norah’s name in the list of shortlisted candidate. A notice was circulated on 2nd September to hold an annual general meeting on 13th September and from the two resolutions, in one of the resolution it was mentioned that a new director will be appointed from the shortlisted candidate by the consultant where Norah’s name was not included in the list.  
Now Norah has the right to stop such activity since the constitution of the company specifically mentions that directors will be appointed from the shortlisted name of candidates which will be prepared by an independent consultant appointed by the vote of the majority of the shareholders of Class A group. But the other two directors Georgiana and Yasmin have violated the constitution since they appointed the consultant without even consulting the Class A shareholders. As per section 136 of the Corporation Act, 2001 (Cth), the constitution of the company should be specifically followed by the members of the company (Gustavson 2008). Georgiana and Yasmin are just class B shareholders and they do not even have a say in the matter of appointing a consultant to prepare list of names to appoint a director. 
Corporation Act, 2001 (Cth) mentions that only those shareholders can take control of appointing the directors fully, who hold more than 50% of the shares of the company (Beder 2012). It is not clearly evident as to the shareholder percentage of each of the shareholders. But Norah holds a 12% stake in the company. But is clearly evident that a single shareholder does not hold 50% alone and so no single shareholder is in the power to appoint director. Another factor can be considered that if the powers were executed by the directors in the best interest of the company then the actions can still be hold (Van Der Laan and Dean 2010). But in this case there is no clear evidence regarding the fact that the powers were exercised by the rest of the two directors, Georgiana and Yasmin in the best interest of the company. 
So, Norah can actually stop Unique Victorian Arts and Crafts Ltd from appointing a new director in the annual general meeting based on the shortlisted name of candidates since the consultant who prepared the list of names was not appointed by the Class A shareholders where as the constituency of the company specifically state so.

ACC220 Assignment XXXXXXXXXXAltV 1 ACC220LawofBusinessAssociationsSemester2,2019 AssessmentTask2–WrittenHypotheticalAssignment DUEDATE: 5pm,MondayWeek10...

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