Morris. John and Paul are directors and shareholders of blocsa Property Developments Fty Ltd {NPD}. a property development company which owns and...
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Explain the relevant issues in Practice Question- what are 

Morris' rights? 

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Morris. John and Paul are directors and shareholders of blocsa Property Developments
Fty Ltd {NPD}. a property development company which owns and operates a
restaurant. Morris and John are brothers. John and Paul are fi'iends and partners in an
accounting finn. Morris is an unemployed artist and sole parent of three young
children. The total number of issued shares in EDP is l(€1,000 ordinary shares. Each
shareholder has 2,000 shares. All the shares are fitlly paid. NH} has been very
successfill but has not paid any dividends to its members for the last two years. Profits
have instead been invested in further development projects. Monis’ wife has recently
died and he is very short of money to look after his family. He approaches John and
Paul and asks them to consider whether NPD could begin to pay dividends again to its
members. John and Paul refitse to consider Mcrris’ request as it would upset the “long-
term goals of RFD.“ Morris is upset by this response and announces that he wants to
sell his shares. John and Paul refuse to buy him out and demand that Morris resign as a
director because he has lost his objectivity. Morris resigns reluctantly. He asks to see
NPD’s most recent set of financial statements. John and Paul refuse to provide the
infonnation. Morris discovers accidentally that HFD has been paying large
“management fees“I to John and Paul’s accounting firm. Morris consults you as his
legal adviser. He wants to lmow: (i) Should he bring a derivative or personal action against John and Paul? What
factors should he take into account in making this decision? ldentifiy whether there is a derivative action [proceedings on behalf of the company) and explain the relevant
law applicable. (ii) If he brings a personal action, should he bring it under the general law or make an
oppression claim under 5.232? What factors influence your recommendation? What
evidence in the question is relevant to deciding if oppression exists? (iii) What orders should he seek?

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