Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1. Eiffel Towers Ltd, a listed company, was a builder and property developer specialising in projects in Melbourne's central business district. It has five directors.

image text in transcribed
1. Eiffel Towers Ltd, a listed company, was a builder and property developer specialising in projects in Melbourne's central business district. It has five directors. Giscard (Eiffel Towers Ltd's managing director) and Henri (the company's chief finance officer), were the only executive directors do the board. The others, all experienced business people, were non-executive directors and attended the monthly board meetings. 20 Over the past two years Eiffel Towers Ltd's financial position had worsened. Apart from Henri, the directors were unaware that Eiffel Towers Ltd's liabilities vastly exceeded its assets and that it had difficulties paying its subcontractors and suppliers on time. Henri made sure the other directors were kept in the dark about this and did not give them meaningful or accurate financial information. The directors were satisfied with Henn's false assurances that the company's finances were satisfactory. Several months ago at an Eiffel Towers Ltd's board meeting Giscard asked the board to approve the acquisition of a development site owned by Blue Sky Pty Ltd for $90 million, to be borrowed from Eastpac Bank. He explained that this site was suitable for a SO-storey office building. The board agreed with his suggestions, notwithstanding that Giscard provided only sketchy details. In particular, the directors were unaware that Blue Sky Pty Ltd was controlled by Henri's wife and the company had been trying unsuccessfully to sell the development site for $20 million. The board was also unaware that the zoning laws did not permit the construction of a 50-storey building on the site, Not long ago the non-executive directors ordered an investigation of Eiffel Towers Ltd's finances and for the first time became aware of the woning laws. They forced Giscard to resign and reported the matter to ASIC Henri was last seen at the airport boarding a plane to Brazil Advise ASIC whether there have been breaches of the Corporations Act in the above circumstances in your answer consider the positions of each of the directors

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Essentials Of Finance And Accounting For Nonfinancial Managers

Authors: Edward Fields

3rd Edition

0814436943, 9780814436943

More Books

Students also viewed these Accounting questions

Question

List the three main HRM activities and their objectives.

Answered: 1 week ago

Question

=+vii. Bullet points to emphasize important ideas.

Answered: 1 week ago