Legal Advice to Shareholder Regarding Refusal of Transfer of Shares by Management

Question

Stone You Go Pty Ltd has the following provision in its constitution:

The right of the members to transfer shares in the Company is restricted in that the directors may at any time in their absolute discretion decline to register any transfer of shares.

Tom is in financial difficulty. He approaches his sister Marcia, and asks if she is interested in purchasing his shareholding of 2,000 shares in Stone You Go Pty Ltd. Marcia pays $40,000 to Tom and a duly executed and stamped transfer is forwarded to Stone You Go Ply Ltd with a request for registration.

The board of directors refuse to register the transfer and promptly send Marcia notice to this effect. The notice gives no reasons for their decision. Tom’s brother Robert was at the board meeting in his capacity as a director and company secretary. He says that the board were concerned that “Marcia is an interfering, emotional female”.

Required:

Please advise, does Marcia have any remedy under the Corporations Act?

Summary

This question belongs to business and corporate law and discusses about advice to a shareholder regarding refusal of transfer of shares by board of directors.

Total word count: 300