Al Gorey owned a profitable farm growing organic food. He arranged for a new company called Fresh Pty Ltd (“Fresh”) to be set up to purchase his business and the land which it occupied.

Al Gorey owned a profitable farm growing organic food. He arranged for a new company called Fresh Pty Ltd (“Fresh”) to be set up to purchase his business and the land which it occupied.

On 3rd May 2017, Fresh was incorporated and its constitution is a combination of all the replaceable rules and the following provision:

“Clause 1

Al shall be director and Chairperson for life.”

The company issued 10 shares each to Tipper and Bud (Al’s wife and son) and 80 shares to Kelly (Al’s daughter). In the application for registration, the directors were listed as Al, Tipper and Bud. As Kelly did not like being involved in management, she declined the position of director. Tipper was appointed as Managing Director and Al was appointed the Chairperson of the Board.

1) On 10th August 2017, Kelly requested the Board for an extraordinary general meeting, which was refused. Without giving any notice to Al and Tipper,¬†Kelly conducted a General Meeting on 20th August 2017, which was attended by Bud and herself. She named herself Chairperson and proposed and declared that three resolutions were passed at the meeting. Bud did not vote on any of the proposals. The first resolution deleted Clause 2 from Fresh’s constitution, and the second dismissed both Al and Tipper as directors. The third resolution appointed Kelly to the Board of Directors.

Advise Al and Tipper on their dismissals.

2) Also, as Managing Director she sought legal advice as to the propriety of the 5th May contract to purchase Al’s business and land. Tipper argued with Kelly and said that the family should not begrudge Al from receiving extra money as he had worked hard all his life for his family. Kelly told Tipper that if she did not keep quiet she will get the lawyers to sue her as well.

Advise Al of any liability he may have incurred.

Al Gorey owned a profitable farm growing organic food. He arranged for a new company called Fresh Pty Ltd (“Fresh”) to be set up to purchase his business and the land which it occupied.
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