CLAW6002 Question 2.doc - CLAW6002 Corporate Structures in...

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CLAW6002 Corporate Structures in Practice Semester 1, 2017 Lecture Question 2 Lecture 3 (WEEK 3 commencing 20 March 2017) Company Constitution, Corporate Governance and Financial Reporting Facts: James, Rowan, Elise and Lauren are the directors of Halcyon Computer Graphics Pty Ltd (“HCG”), a company that produces and distributes sophisticated computer games hardware and software. The directors also are the only members of HCG in which they have the following shareholdings: James: 30% Rowan: 30% Elise: 30% Lauren: 10% Accountant HCG has a constitution (sec 134 where company should be managed by replaceable rule/constitution; according to law, contract among three parties-shareholders, directors and the company ) which provides, among other things, that Lauren is to be the company’s accountant. Accordingly, she now occupies that position. At a recent board meeting , a resolution was proposed by Lauren that HCG should seek to capitalise on its graphics expertise by expanding into the development and production of augmented reality systems for applications such as medical and aviation simulation and education, 3D modelling for vehicle and building design and construction as well as for personal use. This idea was embraced by James and Rowan but Elise argued against the proposal on the basis that the leap from the company’s established business into the unfolding realm of augmented reality was too risky at this stage. In response, Lauren, James and Rowan considered that now is precisely the time to be entering that market in order for the company to secure an early lead in the latest area of technological advancement.
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