In the matter of 3E Steel Pty Limited [2013] NSWSC 666

In the matter of 3E Steel Pty Limited [2013] NSWSC 666

A resolution at the directors' meeting of 3E Steel Pty Limited on 2 May 2013 accepting the offer from Eastern Iron Limited was validly passed because only the votes of properly appointed directors counted; alternate directors' votes were disregarded due to lack of approval for their appointments in accordance with the company's constitution. Accordingly, the declaration sought was proper to be made, with consent of the affected parties.

Parties
First Plaintiff: Edward Lee; Second Plaintiff: Francis Xiao; First Defendant: 3E Steel Pty Limited; Second Defendant: Yingkin Wong; Third Defendant: Fung Wa Wong; Fourth Defendant: Xinning Wang; Fifth Defendant: Neo Resources Investment Pty Limited
Jurisdiction
Australia
Judgment Date
09 May 2013
Procedural Posture
Interlocutory Applications / Declaration on Agreed Terms (consent Orders)
Outcome
Declaration granted by consent, with orders substantially as sought by plaintiffs and second and third defendants.
Legal Topics
Meetings of Directors, Valid Passage of Directors' Resolutions, Service of Process on Company and Directors, Derivative Proceedings, Acceptance of Pre Emption Offers
Corporations Law Meetings of Directors Valid Passage of Directors' Resolutions Service of Process on Company and Directors Derivative Proceedings Acceptance of Pre Emption Offers

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Parties

Edward Lee

First Plaintiff

Francis Xiao

Second Plaintiff

3E Steel Pty Limited

First Defendant

Yingkin Wong

Second Defendant

Fung Wa Wong

Third Defendant

Xinning Wang

Fourth Defendant

Neo Resources Investment Pty Limited

Fifth Defendant

Procedural Posture

Interlocutory Applications / Declaration on Agreed Terms (consent Orders)

Legal Issues

  1. 1 Whether the Court may make a declaration that a resolution at a directors' meeting was validly passed and binding based on the consent of the parties
  2. 2 Whether service on the company by delivery to directors' solicitors can be deemed effective
  3. 3 Whether invalid appointment of alternate directors affects the outcome of a directors' meeting resolution

Ratio Decidendi

A resolution at the directors' meeting of 3E Steel Pty Limited on 2 May 2013 accepting the offer from Eastern Iron Limited was validly passed because only the votes of properly appointed directors counted; alternate directors' votes were disregarded due to lack of approval for their appointments in accordance with the company's constitution. Accordingly, the declaration sought was proper to be made, with consent of the affected parties.

Court Disposition

Declaration granted by consent, with orders substantially as sought by plaintiffs and second and third defendants.

Orders

  • Declaration that the resolution passed at the 2 May 2013 directors' meeting to accept the offer from Eastern Iron Limited at $200,000 is valid and binding upon the company.
  • Order that service on 3E Steel Pty Limited is deemed effected by service on second and third defendants.