Shaw sons v shaw per greer lj it follows that o the

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{Shaw & Sons v Shaw per Greer LJ} it follows that: o The board of directors and general meetings are seen in theory as equally important organs of the company , autonomous in the fields in which they are associated in making decisions o Courts will give effect to constitutional documents or replaceable rules in the allocation of power between the corporate organs o Shareholders who are unhappy with the allocation or use of power need either to remove the directors or change the constitution Effectively Greer LJ says that the general meeting cannot interfere with the exercise of powers (such as the power of management) vested by the constitution in the directors A.5 Director’s Power of Management (and where they cannot act) In general the business of a company is to be managed by or under the director of the directors {s 198A Replaceable Rules} The general meeting CANNOT be used to override decisions of the board of to usurp the powers of the directors {s 249Q Corporations Act} and this was also emphasised in {Shaw & Sons} Accordingly the directors may exercise all of the powers of the Company except where {s 198A(2) Corporations Act} o The Corporations Act requires a matter to be decided by a resolution of the shareholders o The Company’s constitution requires an act to be done or approved by shareholders There may also be scope for the general meeting to act where there are not enough directors in office to form quorum o Replaceable Rule {s 248F Corporations Act } sets the quorum for director meetings at two directors unless the directors determine otherwise o Also {s 201H Corporations Act} allows the one director to appoint an additional director to make quorum A.6 Member’s Decision Making Power Generally shareholders cannot interfere in the management of the Company or usurp the powers of the Board However some circumstance where the Shareholder can use reserve or residual powers (1) Where the Board is Absolutely Unable to Act (Deadlock) Courts have taken a narrow view of this power and will not permit this power to be used unless all other Shareholder powers (eg. Appointing another directors to break deadlock) have been exhausted In deadlocks in the Board’s voting there is some uncertainty in general law as to whether the shareholders have a residual power to appoint someone to director to resolve the deadlock o However in {Massey v Wales } the NSW Court of Appeal acknowledged that there was no scope for general management power to reside with shareholders (2) To Commence and Prosecute Legal Proceedings Against on of the Directors where Board refuses to Act Shareholders can bring a Statutory Derivative Action (3) Ratification of Director’s Acts Finally where directors have a conflict of interest, or where they have breached their director’s duties their conduct could be ratified or prospectively authorised For more information see “Shareholder remedies” as this can be a barrier to shareholders (4) Express Powers for Members
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