Companies and Securities Law Assignment - Law Assignment

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Questions: Case Study: Aussieair Ltd is a company that was originally formed in late 2009 to provide charter air services to a limited range of clients; one of these clients is the Australian Federal Government. The services provided included charter flights for military and the Department of Immigration (therefore transporting illegal immigrants around Australia). The revenues derived from these activities were regular but not profitable. The Board of Aussieair, and its senior managers, had a meeting in January 2011 and decided to attempt to diversify their operations by applying for a commercial aviation licence; therefore, a licence to transport the general public on a fare paying basis. In June 2011 Aussieair obtained a licence from the Australian Aviation authorities that enabled Aussieair to provide normal commercial passenger services both interstate and overseas. As Aussieair is intending to target the discount passenger area it realised that to be successful in the Australian aviation market it must keep the salary structure of the pilots and the senior managers at a minimum, only then would its staff unit costs be competitive in the air travel industry. The pilots and senior managers of Aussieair were approached and asked to take a 25% pay and conditions cut to ensure that Aussieair staff unit costs were lower than their competitors. The pilots and staff declined to take the 25% cut in pay and conditions. In light of this refusal, the Board met in July 2011 and decided to form and register a new company in Papua New Guinea. This company would be called PNGair it would have six directors three appointed from Aussieair and three directors appointed by the PNG Government. The capital to run the company would be provided by Aussieair, directions and guidance for running the company would be provided by Aussieair and all of the profits and or losses were to be remitted to Aussieair in Australia. Aussieair would account for them as either dividends or as a reduction in the value of their investment. The Aussieair Board also passed a resolution that the Australian aviation commercial licence; therefore, a licence to transport the Australian general public on a fare paying basis, be transferred to PNGair and that aircraft and facilities owned or leased by Aussieair be sold to or subleased to PNGair as required. The aviation commercial licence transfer to PNGair was approved by the Australian Federal government in August 2011; this meant that PNGair from that date could operate within Australia as a domestic and international carrier; therefore, a licence to transport the Australian general public on a fare paying basis. Pilots and senior managers of Aussieair were made redundant in September 2011 and they were paid in full their redundancy entitlements. They were immediately offered employment in PNGair (but they were to be based in Australia and not in Papua New Guinea) under the new salary and conditions applicable to PNGair (the salary and conditions payable by PNGair was based on the exchange rate and comparable salary rates in PNG); however, the new salary and conditions meant that all of the Aussieair pilots and senior managers received, on average, 25% less than the salary and conditions formerly paid by Aussieair. All of the Aussieair pilots and senior managers begrudgingly accepted the new employment wages and conditions of employment. The employee associations, representing the former pilots and the senior managers of Aussieair, are concerned that their members are being disadvantaged at having to accept these new reduced salary and conditions, whilst still living and operating out of Australia. They were even further upset to find out that the Board of Directors, who participated in the cost-cutting exercise and the enforced redundancy, at the October 2011 Aussieair AGM awarded themselves substantial remuneration increases and share bonuses.