Corporate law Law Case Study Research Paper Coursework (Case Study Sample)

Week 8 – Question 3 (10 marks)
Borisda Builder Pty Ltd has five (5) directors: Vesna, Sergey, Ilyych, Mikhail and Zviad. Mikhail and
Zviad are working directors. They manage the day-to-day operations of Borisda Builder Pty Ltd. The
company is engaged in all aspects of home building.
Ilyych is an accountant and he helps out with the production of monthly financial reports for all the
directors.
(This question is continued over the page)
3
Week 8 – Question 3 (10 marks) (Cont’d)
Vesna has attended University and holds an engineering degree and a Masters of Business
Administration (MBA). She has a good knowledge of the building industry and the way company
finances work.
SergeLJ iƐ Zǀiad͛Ɛ broƚher and haƐ had a long hiƐƚorLJ of depreƐƐion and lack of Ɛelf-esteem. Zviad
ƐƵpporƚed SergeLJ͛Ɛ ǁiƐh ƚo become a board member eǀen ƚhoƵgh he offered little by way of expertise.
Zǀiad ƚhoƵghƚ ƚhaƚ iƚ ǁoƵld help SergeLJ͛Ɛ perƐonal deǀelopmenƚ bLJ giǀing him a differenƚ focƵƐ͘
BoriƐda BƵilder PƚLJ Lƚd had a record LJear in ϮϬϭϬ͘ The goǀernmenƚ͛Ɛ firƐƚ home bƵLJer͛Ɛ grant meant
that the company had many building contracts. The directors met in July and decided to pay a dividend
of 9c per share.
The company has experienced a severe decline in new contracts in the last two months. This is due in
part to a number of cut-price builders offering cheap building contracts. This has placed the company
in financial difficulties. Mikhail and Zviad have been with the company since day one and are attached
to the company. It is their main focus and provides them with emotional and financial wellbeing.
Sergey has never read any financial statements that have been sent to him. He did not check the
companLJ͛Ɛ financial reƚƵrnƐ for anLJ of ƚhe LJearƐ before he ǁaƐ appoinƚed and he haƐ neǀer read anLJ
reports since he was appointed.
Shareholders of Borisda Builder Pty Ltd number 15 and include the directors and members of the
founding family who have held onto shares but take little interest otherwise.
VeƐna͛Ɛ broƚher DoƵg haƐ a bƵilding deƐign companLJ͕ DoƵg ƚhe DeƐigner PƚLJ Lƚd͕ and VeƐna aƚƚendƐ
its Board meetings and gives advice. Because of her education and experience the Board of Doug the
Designer Pty Ltd follows her directions. Recently, Borisda Builder Pty Ltd contracted with this
company. It was Vesna that convinced the rest of the Board of Borisda Builder Pty Ltd to enter this
contract. It was Vesna that had collected all the quotes for this work and they all exceeded the Doug
the Designer Pty Ltd quote. This was due to the fact that Doug the Designer Pty Ltd had put in a quote
below the cost price of the work because Vesna had promised more work from Borisda Builder Pty Ltd
in the future.
Ilyych attended a Board meeting a few months ago and brought with him what he believed was a great
idea. His proposal was that the company become involved in constructing cubby houses for children
out of the leftover materials from around their building sites. The other Board members were not so
convinced but Ilyych being an accountant produced some very impressive figures based on
informaƚion from ƚhe companLJ͛Ɛ fileƐ͘ The board ǀoƚed against the proposal after Vesna, with her MBA
training, argued the company should focus on its main game of house building.
Ilyych is disappointed but yesterday signed a deal with another building company known as
Canweafixdat? Pty Ltd. The deal involves Ilyych being paid a commission of 10% for every cubby house
sold and a place on their Board.
Borisda Builder Pty Ltd is having financial problems yet the Board continues to allow the company to
trade without considering the consequences.
Required:
Discuss the statutory and common law positions of the directors in the case study above.
4
Week 9 – Question 4 (10 marks)
Joe is a company director in a proprietary company. He is proposing to put a resolution to his company
that it buy out the smaller holdings. Joe reasons that there are a number of quite large shareholdings
and many of the smaller members have little interest in the company. Joe does not want to force any
member ƚo Ɛell ƚheir ƐhareƐ bƵƚ ǁoƵld like ƚo ͚clean Ƶp ƚhe regiƐƚer͛ bLJ bƵLJing oƵƚ ƚhe Ɛmaller holdings.
Required:
Advise Joe on the legal implications of his plan.