BUSN2101 LAW OF BUSINESS ENTITIES MID-SEMESTER ASSIGNMENT
Due: 4 pm 27 April
The assignment is to be placed in the assignment submission box which is located in the ABIS office Hanna Neumann 2037 under the main counter. Do not hand your assignment to your tutor or lecturer. Do not submit electronically.
Word limit: 2,000 words (10% tolerance either way acceptable)
Please include a word count on the cover sheet of your assignment. The cover sheet has been posted to wattle (Footnotes and bibliography are not included in the word count but do not include lengthy commentary in the footnotes).
Ensure that your tutor’s name and your tutorial day and time are on the cover sheet.
Marks: this assignment is worth 30% of your final mark.
Please refer to the course outline for details on how the assignment will be assessed and further details on submission and presentation. Note that late penalties apply.
Note that referencing can be according to the Harvard system https://academicskills.anu.edu.au/resources/handouts/referencing-harvard
http://w2.vu.edu.au/library/infolink/webref/styles/files/Harvard.pdf
or the Australian Guide to Legal Citation
http://mulr.law.unimelb.edu.au/files/aglcdl.pdf
For general information on referencing see
https://academicskills.anu.edu.au/resources/handouts/referencing-basics
Have fun!
Company information
Ausgolf Limited is an unlisted public company.
The directors of Ausgolf are:
Bob (Chair)
Sam (son of Bob)
Frank (also chair of Karri Golf Course Ltd)
Yukiko
Angela
Paul
Edwina (also company secretary and daughter of Bob)
The shareholders of Ausgolf are:
Bob 40%
Sam 11%
Karri Golf Course Ltd 15%
Golf Wholesalers Ltd 5% (Sam is a director and controlling shareholder)
Yukiko 5 %
Angela 5%
Paul 5%
20 other investors totalling 14%
There are 3 subsidiaries which are not wholly owned:
Ausgolf Brisbane Pty Ltd
The directors of Ausgolf Brisbane are:
Bob
Sam
Yukiko (she is also the manager of the Brisbane store)
The shareholders of Ausgolf Brisbane are:
Ausgolf Ltd 60% and
Yukiko 40%
Ausgolf Sydney Pty Ltd
The directors of Ausgolf Sydney are:
Bob
Sam
Angela (also manager)
The shareholders are:
Ausgolf Ltd 60%
Angela 40%
Ausgolf Melbourne Pty Ltd
The directors of Ausgolf Melbourne are:
Bob
Sam
Paul (also manager)
The shareholders are:
Ausgolf Ltd 60%
Paul 40%
Scenario
The board of directors of each subsidiary company resolves to enter into exclusive importing agreements with Golf Wholesalers in relation to Fairways golfing equipment. The terms of the exclusive importing agreement are not the same in each case. The agreement with Ausgolf Brisbane gives Ausgolf Brisbane a 15% discount on list prices. The agreements with the subsidiaries in the other 2 states, gives them a 5 % discount on list prices. Golf Wholesalers currently has no retail arrangements in Brisbane and it is keen to get into the lucrative Brisbane market. As a consequence it was prepared to offer a bigger discount on price to the Brisbane subsidiary. Golf Wholesalers has existing arrangements in the other states to supply retail outlets. The decision of the board of the Brisbane subsidiary was unanimous but in the cases of the other boards only Bob and Sam voted in favour of entering into the exclusive importing agreement.
Angela and Paul consult you because they are unhappy about the exclusive importing agreement with Golf Wholesalers. They want to know if there have been any breaches of the Corporations Act or general law by any parties and whether there is any action which they can take and if so what remedy might apply. Advise them.
The lease of Ausgolf Melbourne’s premises is due to expire at the end of the month and the landlord has plans to redevelop the site and has told Ausgolf Melbourne that it will not be offered a renewal of the lease. The directors of Ausgolf Melbourne believe it is important to maintain the location of the shop in the same general area so as not to lose customers. A slightly larger shop on a more prominent site with more parking has recently been listed for sale for $1million. Ausgolf Melbourne agrees to buy it and pays $200,000 cash and borrows the remainder from ABC Bank, which takes a mortgage over the property. A condition of the loan is that each of the other subsidiaries gives a guarantee to the bank to support the loan to Ausgolf Melbourne. These guarantees are signed. Meetings of the boards of directors are held of the other subsidiaries and in each case only Bob and Sam voted in favour of giving the guarantee.
(b) Yukiko and Angela consult you unhappy about the guarantee given to ABC Bank to support borrowings by Ausgolf Melbourne. Angela, in particular is very concerned as, at the time the guarantee was given, her Sydney store had been struggling. She had creditors who were waiting for payment and she had to delay payment by 60 days in many cases. Yukiko and Angela want to know if there have been any breaches of the Corporations Act or general law by any parties in relation to this transaction and whether there is any action which they can take and if so what remedy might apply. Advise them.