If each of these factors was found then a fiduciary

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If each of these factors was found then a fiduciary duty to individual shareholders will exist Additionally under {Glavanics v Brunninghausen} Bryson J noted that there were two facts which indicated a fiduciary relationship as well o (1) Directors dealt directly with shareholders o (2) There were very few members, very few directors and their relationships were not impersonal but close Additionally even if these factors are not there, if the shareholder was entitled to expect that he would be told of such a basic alteration in the company’s affairs then this could give rise to the personal fiduciary duty (2) Allotment of Shares for Improper Purpose An allotment of shares made for an improper purpose amounts to a breach of directors’ duties o As such one would expect that any action to complain about the allotment would be brought by the either the company or by shareholder in a SDA However unlike other breaches which affect shareholders indirectly, an allotment of shares for an improper purpose can have a direct effect on shareholders by diminishing their voting power o This meant that breach of this duty is treated differently and may give rise to an personal action under equity In {Residues Treatment} the court gave an unequivocal recognition to the existence of a personal right in a shareholder (founded in equity) to have the voting power of their shares undiminished by improper actions on the part of directors o Further ratification would be ineffective to deprive shareholders of standing to bring personal action if the shareholders were motivated by an improper purpose in passing the resolution {Residues Treatment per King CJ} Therefore where there had been an issue of shares for an improper purpose which affects some but not all shareholders, and therefore the shareholders could bring a personal action {Residues Treatment per King CJ} a member’s voting rights and the rights of participation which they provide in the decision making of the company are a fundamental attribute of membership and are rights which the member should be able to protect by legal action against improper diminution. The rule in Foss v Harbottle has no application where individual membership rights as opposed to corporate rights are involved” This could also be brought under oppression remedy (see below) (3) Alteration to the Constitution Finally the third means of personal action under general law, is for alteration to the Company constitution This is considered below under “Equitable Limitations on the Power of Majority Shareholders” E.2 Personal Actions under Contract (1) Express Contract Firstly a personal right may arise under an express contract between the members or between the members and the company (eg. A Shareholder Agreement) (2) Company Constitution Secondly a personal right may arise under the company constitution as a statutory contract Under {s 140(1) Corporations Act}
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