NSW Allocation of Shares in Australian Private Company

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firsttimefounder

Well-Known Member
7 November 2017
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71
Australia
Can the director of a private company issue himself ordinary shares without:

a) notifying his other directors
b) approval or resolution by the Board

We have adopted a standard constitution.
 

Rob Legat - SBPL

Lawyer
LawTap Verified
16 February 2017
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Gold Coast, Queensland
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A director may issue shares, but the issue must be recorded in the company's records and notified to ASIC.

Directors are under specific duties to the company and to the shareholders, such as the duty of good faith. Issuing shares to themselves in an attempt to defraud the company is an offence.
 

firsttimefounder

Well-Known Member
7 November 2017
16
0
71
Australia
Thanks so much Rob. This manoeuvre was one of many attempts by a rogue director to increase their shareholding and part of an attempt to jostle for majority control and to get control of the board. So I am left questioning the duty of faith element here, that together with many other breaches.