In the matter of BG Iron and Steel Pty Ltd [2014] NSWSC 1283

In the matter of BG Iron and Steel Pty Ltd [2014] NSWSC 1283

The Relevant Resolutions, considered cumulatively and in context, would have enabled the removal of a BG Resources nominee director from the 3E Steel board without a contemporaneous appointment of another BG Resources nominee, thereby undermining the equality of representation contemplated by the Cooperation Agreement and conferring potential control of the 3E Steel board on Nanyang. That was a "major decision" of BGIS within cl 10 and required approval by at least five of seven BGIS directors; because the resolutions were approved by only four directors, their passage breached cl 10. A declaration had utility because a real and continuing controversy existed and the relief operated...

Jurisdiction
Australia
Judgment Date
19 September 2014
Procedural Posture
Equity Division Corporations List Proceeding by Further Amended Originating Process / Principal Judgment on Claims for Declaratory and Injunctive Relief
Outcome
Declaration made that the purported Relevant Resolutions were passed in breach of cl 10 of the Cooperation Agreement; parties to be heard as to the specific form of injunctive relief and as to costs.
Legal Topics
['company Management and Administration' 'shareholders Agreement' 'contract Construction' 'major Decisions of Company Board' 'director Removal' 'declaratory Relief' 'injunctive Relief']
['corporations' 'contract Law' 'equity'] ['company Management and Administration' 'shareholders Agreement' 'contract Construction' 'major Decisions of Company Board' 'director Removal' 'declaratory Relief' 'injunctive Relief']

Case Brief

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Procedural Posture

Equity Division Corporations List Proceeding by Further Amended Originating Process / Principal Judgment on Claims for Declaratory and Injunctive Relief

Legal Issues

  1. 1 ['Whether the purported resolutions of BG Iron and Steel Pty Ltd appointing Stephen Chan as representative to vote at a 3E Steel Pty Ltd general meeting and directing him to vote for Edward Lee\'s removal were "major decisions" requiring agreement by at least five of seven BGIS directors under cl 10 of the Cooperation Agreement.' 'Whether declaratory relief should be granted that the Relevant Resolutions were passed in breach of cl 10 of the Cooperation Agreement.' 'Whether injunctive relief should be granted restraining steps to remove or facilitate the removal of Edward Lee as a director of 3E Steel.']

Ratio Decidendi

The Relevant Resolutions, considered cumulatively and in context, would have enabled the removal of a BG Resources nominee director from the 3E Steel board without a contemporaneous appointment of another BG Resources nominee, thereby undermining the equality of representation contemplated by the Cooperation Agreement and conferring potential control of the 3E Steel board on Nanyang. That was a "major decision" of BGIS within cl 10 and required approval by at least five of seven BGIS directors; because the resolutions were approved by only four directors, their passage breached cl 10. A declaration had utility because a real and continuing controversy existed and the relief operated...

Court Disposition

Declaration made that the purported Relevant Resolutions were passed in breach of cl 10 of the Cooperation Agreement; parties to be heard as to the specific form of injunctive relief and as to costs.

Orders

  • ['Declaration that, if otherwise validly passed, the purported resolutions were passed in breach of cl 10 of the Cooperation and Investment Agreement dated 2 December 2010.' 'Parties to be heard as to whether injunctive relief should be granted reflecting the qualification that Mr Lee may not be removed without the...