question

John, Paul and Ringo and George are musicians who operate out ofa garage in Melbourne. They initially form a partnership, but thendecide to incorporate, and register a company called New BeatlesPty Ltd of which John, Paul and Ringo own 30% each and George owns10%. The business of the company is to play music, hold concertsand record CDs. All four brothers are also directors. Things gowell for a year, but then disputes occur. Ringo comes to you andasks you advice in relation to the following:

Ringo has found out that a meeting of shareholders was heldwithout giving notice to him and that at the meeting an ordinaryresolution to change the company logo from a silver guitar to a redtrumpet was agreed to by all his brothers. Ringo tells you that heobjects to this step.

By another resolution – also agreed to by the other threebrothers - the actual constitution of New Beatles Pty Ltd waschanged so as to insert a provision which limits the company’sactivities to Australia. Ringo tells you that he objects to this,as he believed the company should start touring overseas.

Ringo also discovered that over the past couple of years Paulhas been giving his (Paul’s) girlfriend Sarah $ 500 per week fromcompany funds, and that in total the company has suffered a loss of$ 50 000 because of these payments. When Ringo raised this at aboard meeting and proposed that the company’s lawyers be asked toinitiate action against Paul and Sarah to recover the money, theother three directors voted against the proposal.

Finally, Ringo tells you that since he confronted his brothersabout Paul’s conduct, they have begun holding board meetingswithout telling him (Ringo).

Advise Ringo as to what remedies he can obtain in relation tothe above, citing legal authority. [You should assume, andtherefore do not need to prove, that the payments by Paul to Sarahare a breach of the duty to act in the best interests of thecompany under s 181 of the Corporations Act 2001(Cth).]