QUESTION 2 [Total = 15 marks] Sports-R-Us Ltd runs a highly successful retail sporting business with...

QUESTION 2 [Total = 15 marks]

Sports-R-Us Ltd runs a highly successful retail sporting business with stores in major shopping centres in metropolitan areas throughout Australia. It has come to the attention of Hannah, a substantial shareholder in Sports-R-Us that the company is sourcing merchandise produced in Erewhon, a developing country recovering from a civil war. She also learns that labour practice relied on in Erewhon is low wages, forced labour and low standards of workplace health and safety, but that there are otherwise limited employment opportunities. Nonetheless, she would like a members’ meeting to be held and a resolution to be passed by the shareholders at that meeting instructing the Board of Sports-R-Us to cancel any contracts they have for the purchase of merchandise produced in Erewhon.

(a) Can Hannah call such a meeting and can the shareholders pass such a resolution?

(b) Would you answer be different if the resolution was to remove the directors?

Expert Solution

(a)First of all, if a shareholder wants to call the meeting, he/she should hold at least 5% share of the issued capital of the company. the other thing is that if Hannah has 5% shares and calls the meeting, the expenses of calling and holding the meeting will be borne by Hannah. This type of resolution which is related to opening a new business or expand a busienss or to cancel a contract will fall under the category of special resolution and to pass for this resolution atleast 75 % votes should be in favour of the resolution for example if 25 people say no, 75 people shold vote yes so that the resolution is passed and proposal is implemented.

(b)yes, if the resolution was to remove the directors, it would be an ordinary resolution. it would have been passd by a simple majority it means if the vote in favour of the resolution is more than the votes cast against the resolution, the resolution will be passed in favour of motion.

for example - if 200 shareholders vote in favour of the resolution and 198 shareholders vote against the resolution, the resolution will be passed in favour of the motion.

ekkarill92 answered 1 year ago

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