AccountCo Ltd is a successful computer software company in Sydney, which specialises in accounting and business management software and maintains roughly 20 per cent of the market. Managemart Ltd is a large competitor of AccountCo Ltd, with 50 per cent of the market in Melbourne for business management software applications. Managemart Ltd is interested in acquiring AccountCo Ltds market share to create the dominant player in the Melbourne market.

Managemart Ltd announces on 1 January 2019 that it has acquired 19 per cent of the shares in AccountCo Ltd and is making a full takeover offer for AccountCo Ltd because in its opinion the current management of AccountCo Ltd are not providing value for shareholders.

In the takeover offer, Managemart Ltd proposes to:

a. remove the entire management team of AccountCo Ltd

b. fully integrate AccountCo Ltds management software business into Managemart Ltds business structure, which will involve significant redundancies in AccountCo Ltd;

c. allow AccountCo Ltds accounting software business to remain in its current state with a view to a possible sell-off in the future.

The directors of AccountCo Ltd, who are also shareholders in AccountCo Ltd, are extremely worried by the proposed takeover, as they fear for their positions and the future direction of the company. On 5 January 2019, AccountCo Ltd announces a new share issue proposal that will only apply to shareholders that were registered on 31 December 2017 or before (which specifically excludes Managemart Ltd).

The proposal is in the form of a bonus issue that will provide three free shares for each existing share that a member holds. The effect of the issue is that Managemart Ltds shareholding will be substantially diluted and will make it very difficult to mount a successful takeover. All eligible shareholders will receive a substantial benefit by accepting the free shares. The proposed share issue will cost the company $500 million to implement and is likely to eliminate the companys profit for the financial year 20162017. Advise whether the directors of AccountCo Ltd have breached their common law and statutory duties under the Corporations Act.