Can Directors issue themselves shares during raise?

Question

I was wondering if it is legal for company directors that also work and operate the business to gift themselves shares during a capital raise in order to retain their controlling interest in the company? The rationalisation being that they aren't earning enough.

As a founding member and now minor share holder (as a result of this already occurring once before) should I be questioning the legality of this? The first time this happened was to intentionally dilute me as the feeling was I had too many shares for someone no longer active in the business.

Dheer · Answer

Not sure of specific company laws in Australia.
In general board of directors can decide the compensation of CEO/founding member and others roles in cash and stocks. This is generally how the smaller share holders get squeezed out. Unless you can establish gross injustice and take it up with company law board there isn't much that can be done to stop the board resolution.

Can Directors issue themselves shares during raise?

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