Part A
Gina Rinehart became the largest shareholder in Fairfax Media Ltd at the beginning of 2012. Fairfax Media Limited is a leading multi-platform media company in Australasia, with its major publications including the ‘Sydney Morning Herald’ and ‘The Age’. Her increasing investment in this company has raised the questions on what her intentions are and whether her involvement and manipulation as a majority shareholder will be to benefit herself or Hancock Prospecting, a privately owned mining company that she is heiress to.
The power of directors replaceable rule in section 198A of the Corporations Act 2001 (Cth) (corporations act) delineates the differences between a shareholder and a director in a company. “The business of a company is to be managed by or under the direction of directors”. The corporations act does acknowledge that the shareholders of the company do have a say when it comes to determining certain outcomes for matters that are brought up in general meetings but it is the directors who may exercise all the powers of the company in regards to its management. Furthermore, the directors can have the ability to overrule decisions that have been made by the majority shareholders in terms of the companies management. A prime example of this was in the case of Automatic Self-Cleansing Filter Syndicate Co Ltd v Cunninghame [1906] 2 Ch 34 where it was ruled impossible for a mere majority (shareholders) to override the views of the director although the directors were not agents of the shareholders and did not have any bounds to implement decisions in terms of shareholder resolutions.
Although already being the largest shareholder in Fairfax Media Ltd, Mrs Rinehart wasn’t satisfied with what she saw as a little or minimum control over the running of the company. So there was no surprise that in June of 2012, she again increased her shares (through Hancock Prospecting) in an attempt to be made deputy chairperson of the company and acquiring two more...