Biodiesel Producers Ltd v Stewart

Biodiesel Producers Ltd brought an action against its former Chief Financial Officer, Anthony Stewart, seeking various declarations and orders, including that a resolution of the Board of Directors of the company made on 30 November 2004 be rescinded. This resolution involved the issue of performance shares to certain individuals, including Mr Stewart, subject to the receipt of subscription money. The company also sought an order that the issue of performance shares to Mr Stewart be set aside, subject to the return of subscription money, and that the company's register of members be corrected. Mr Stewart cross-claimed, seeking declarations and orders relating to the assignment of dividend income.

The primary legal issue for the court to determine was whether the resolution of the Board of Directors was valid and binding on the company. The court needed to consider whether the resolution was properly passed and whether the terms of the resolution were in accordance with the company's constitution and applicable law. Additionally, the court had to assess whether the issue of performance shares to Mr Stewart was valid and whether any subscription money paid by him should be returned. The court also needed to decide on the validity of the cross-claim brought by Mr Stewart.

The court found that the resolution of the Board of Directors was not valid and binding on the company. It determined that the resolution was not properly passed as it did not comply with the company's constitution and applicable law. The court held that the resolution was not valid because it was not properly circulated to all directors and did not provide adequate notice of the meeting. Furthermore, the court found that the terms of the resolution were not in accordance with the company's constitution. The court also concluded that the issue of performance shares to Mr Stewart was not valid as it was not properly authorised by the company's constitution. Consequently, the court ordered that the resolution be rescinded, the issue of performance shares to Mr Stewart be set aside, and the company's register of members be corrected. The court further dismissed Mr Stewart's cross-claim.

The final orders of the court were that the resolution of the Board of Directors made on 30 November 2004 be rescinded, the issue of performance shares to Mr Stewart be set aside, the company's register of members be corrected by deleting any reference to the issue of performance shares to Mr Stewart, and the cross-claim be dismissed. The court also ordered that the issue of performance shares to Mr Stewart be set aside subject to the return of subscription money paid by him.