Reference no: EM131516066

Nimit, Deepa, Shang and Libo propose to create an insurance company, "Australasia Insurance Glory Ltd" (Glory). For this purpose, Nimit and Deepa were in charge of registering the company with ASIC, while Libo was asked to find suitable premises for the business. Shang is not involved in the creation of the company. However, there is an understanding that Shang will receive $6,000 from the creation of the company.

Before the registration of the company is completed, Libo entered into a contract to lease the premises from Landlord Ltd for $4,000 a month. The contract was signed by Libo, on behalf of Glory Ltd. Two weeks later, the company is formed and the board of directors of the company consists of Nathan (as Managing director), Nimit (as non-executive director), Max(as chairman) and Mitra (as non-executive director). Libo presents the contract to the board. However, the board does not wish to be bound by the contract because the company can lease the same premises for $1,000 a month.

Further the board of directors discovered that Shang and Deepa made a profit of $50,000 each from the creation of the company. This amount was not declared to the board of directors. The board would like to know if they can recover this amount.

The company's constitution also states that Joseph, the brother of Nimit, is the company's solicitor. Joseph is not a member in the company. After a dispute between Nimit and her brother, the board of directors decides to remove him from his position. However, Josep wants to stop them from doing this by enforcing the constitution.

Kushmani and Bill are members in Glory who hold respectively 2% and 3.5% of the shares. They discover that the company lost $7 Million as a result of the financial crisis and she wishes to call for a members meeting to :

1. Remove Nathan from his position even though he is working very hard to improve the position of the company;

2. Remove Nimut from her position as Bill does not like her;

3. Force the board of directors to sell certain assets that are causing the company to lose money ; and

4. Change the constitution to provide the members with more powers.

The board would like to know if they need to call for the meeting especially when they know that the proposed resolutions will not pass

Questions

A. Advise all parties on their rights and obligations.

B. Would the answer change if Joseph was a member of the company?