Business Law Discussion

Based on the article analyze the questions given: 400-500 words

Computeq Ltd is a listed company incorporated in NSW with an issued capital of $20 million. It is mainly a computer hardware company which produces computer equipment and supplies the parts to globally renowned and branded computer companies. Mints Ltd holds 40 per cent of the issued capital of Computeq. Miles Ltd holds 35 per cent and the remaining 25 per cent is held by a diverse group of shareholders. All of these shares are ‘ordinary’ shares, holding same rights, privileges, burdens and liabilities to all members. The company is located in North Ryde due to its proximity to the Macquarie University Research Park and the fact that the business advice they received suggested that the area is good for Computeq’s type of business. Other than the directors, there are 56 employees at Computeq.

Very recently Computeq tendered for the construction of a large hardware production plants in Parramatta and is likely to be the successful bidder. It will need an injection of funds to construct the production plant. The directors of Computeq are concerned that Mints Ltd, which also owns a different hardware production plant in Perth, will launch a takeover of Computeq.

At a board meeting, the directors of Computeq resolve to allot a substantial number of shares to Miles in consideration for a promise that Miles will arrange finance for the construction of the Parramatta hardware production plant. The allotment to Miles varies the shareholding power of Computeq such that, after the allotment, Mints Ltd will only command 10 per cent of voting power in Computeq.

On the basis of the facts outlined here, you are REQUIRED to:

Advise the directors of Computeq about the possibility of any legal challenge to their actions and describe all possible legal consequences. What laws and procedures may apply in this case? [10 marks]

Use some example case the support idea if possible (provided in file below)


Use the IRAC structure method to provide the answer.

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