MLC203: Sumo Ltd company registered in Australia - Corporations Law

Internal Code: MAS6508

Corporations Law:

Sumo Ltd is a company registered in Australia manufacturing and selling replica antique furniture. It proposes to expand its business to include either the manufacture of the country- style timber floorings or the manufacture of Scottish tartan looking rugs and carpets. Before making any decision about the expansion, Sumo Ltd conducts surveys into the feasibility and marketability of the two projects above. The board subsequently meets and decides on the matter. Juliette is not very keen on the topics being discussed as she has no knowledge of the floorings or the texture of the carpets, so she is playing with her latest mobile phone during the entire meeting. It is only towards the end of the meeting that she provides a convincingly passionate speech as to why the board should vote on the rugs and carpets project. The board simply agrees with her given that she has been “right most of the time”. Hence the board resolves to take on the rugs and carpets business and rejects the timber flooring project. There was very little research being conducted on the popularity of the Scottish tartan rugs and carpets. Questions: (a) What duties have been breached by Juliette? Your discussion should include the relevant provisions of the Corporations Act 2001 (C’th) and the common law position. (b) A major shareholder is considering in bringing either a statutory derivative action or an oppression action against the board of directors of Sumo Ltd for failing to proceed with the timber flooring project. Can the shareholder do that? Explain fully.