Constitution Rule The Board of Directors are required to obtain members approval for borrowings over $10 million.

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Constitution Rule

The Board of Directors are required to obtain members approval for borrowings over $10 million.

Mary has become the managing director of the company and has borrowed $11million from Sydney Bank without obtaining shareholders approval.

The other directors reject the loan as the interest rate appears too high and, in any case, Mary has not complied with the company's constitution.

Discuss: Mary's authority to obtain the loan from Sydney Bank; the different ways in which she could have executed the loan agreement with Sydney Bank; and whether Contrary Ltd is likely to be bound by the loan agreement with Sydney Bank.

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