(1) A company that has only 1 member may pass a resolution by the member recording it and signing the record.
(2) If this Act requires information or a document relating to the resolution to be lodged with ASIC, that requirement is satisfied by lodging the information or document with the resolution that is passed.
8 While I accept that LNQ was a company that had only one member, Vesudi Investments, I do not accept that the notice is compliant with 249B. Section 249B contemplates the passing of a resolution by the sole member of a company by recording that resolution and signing the record of the resolution. In the context of s 249B, the resolution contemplated is a resolution of the company as if in general meeting. The notice of 25 February is not expressed to be and does not purport to be an act or resolution of the relevant company, LNQ. Rather, it purports to be an act of LNQ giving notice of removal of a director. It appears to have been a purported exercise of a non-existent power under a non-existent article of LNQ, which was mistakenly thought to contain a provision equivalent to Article 62 in the Articles of Vesudi Investments. A resolution is a formal decision of a meeting or, in some cases where no meeting is convened, of the persons entitled to attend the meeting. This notice does not evidence a formal decision of LNQ; it evidences a unilateral act of Vesudi Investments as sole shareholder of LNQ, purporting to remove by notice, but not making a decision of LNQ such as is contemplated by s 249B. Accordingly, in my view there was no valid and effective resolution of LNQ to remove the applicant and replace him with Mr Sidney Londish. The applicant remained at all material times a director of LNQ, and Mr Sidney Londish was not a director.
9 The next step in the process was that on the following day, 26 February 2009, Mr Sidney Londish and Mr Bowman in their purported capacities as directors of LNQ signed a notice in the following form:
Notice of Removal of a Director and Replacement of a New Director for Valofo Pty Ltd.
Please be advised that the following shareholder of Valofo Pty Ltd who holds all of the shares in the company and has the right of voting at all general meetings now gives notice of the removal of Peter Gregory Londish as a Director and Secretary of the company and the appointment of Sidney Londish as a Director of the company.
The articles of Valofo contain no provision equivalent to clause 62 in the Vesudi Investments articles. For exactly the same reasons as apply in respect of LNQ, that notice was not a valid exercise of the power under s 249B for a single member company to make a resolution in the manner therein prescribed. Moreover, Mr Sidney Londish was not a validly appointed director of LNQ and could not in any event have authenticated such a notice, if one were permitted. Accordingly, the notice was not effective to remove the applicant as a director of Valofo or to replace him with Mr Sidney Londish. The applicant at all material times remained a director of LNQ, and Mr Sidney Londish was not a director.
10 The next and culminating step was that, on 16 July 2009, Mr Sidney Londish and Mr Bowman, purporting to be the directors of Valofo, resolved to appoint Mr Sheahan and Mr Lock to be the company's joint and several Administrators pursuant to Corporations Act, s 436A. But, as Mr Sidney Londish had never been appointed validly as a director that was not a valid and effective act on the part of the company. It follows that the administrators were not duly appointed.
11 The appointors made an oral application for relief under Corporations Act, s 447A (and, alternatively, under s 1322) to overcome this defect in the purported appointment.
12 Section 447A provides that the court may make such order as it thinks appropriate about how Pt 5.3A is to operate in relation to a particular company. There is no doubt that that section is of potentially wide application, but what is in question here ultimately is not so much the appointment of the administrators, but the purported removal of the applicant as a director and his replacement with Mr Sidney Londish. Section 447A would not authorise an order which validated that act, that not being anything to do with how Pt 5.3A is to operate. Even if Pt 5.3A authorises an act that the Part operate in respect of Valofo as if the administrators had been duly appointed, I do not think it would be appropriate, as a matter of discretion, to invoke s 447A in those circumstances.
13 So far as s 1322 is concerned, it was not suggested that s 1322(2) was attracted. The appointors relied on s 1322(4)(a) to seek an order declaring, in effect, that the purported removal of the applicant and his replacement with Mr Sidney Londish as a director of Valofo was not invalid by reason of the circumstances to which I have referred.
14 There are at least obstacles to this course. First, it was said that the relevant "act … purporting to have been done" for the purposes of s 1322(4)(a) was the notice; but the notice was not an act, matter or thing or proceeding "under this Act" or in relation to a corporation in contravention of a provision of the Corporations Act or the corporate constitution; it was something entirely unauthorised and uncontemplated by the Articles or the Act. It was an act which proceeded with irrelevance to the Constitution, the Act, and without any effect.
15 Secondly, and more significantly, s 1322(6) provides that the court must not make an order under s 1322(4)(a), unless it is satisfied that the act, matter or thing or the proceeding is essentially of a procedural nature. The removal of a director and his replacement by another director cannot be passed off as something essentially of a procedural nature. It is manifestly substantive.
16 Accordingly, I would not make an order under s 1322(4).
17 As the Administrators have not been duly and validly appointed it follows that they are not entitled to conduct the proposed examination of the applicant nor to have issued the orders for production made in connection with the examinations, which should also be set aside.