Advanced Solar Ltd designs, manufactures and installs solar electricity cells. The company's directors are Mary, Derek and Edward. Mary is the Managing director owning sixty per cent of the company's issued share capital, whereas Derek and Edward are non-executive directors of the company and each of them own twenty per cent shares in the company. At a recent board meeting, the following resolutions were passed:

a) To shift the company's manufacturing facilities to China. Derek and Edward were concerned at the meeting that sufficient feasibility study had not been undertaken on the quality of the manufacturing standards in China. However, Mary was confident and keen to make the move to China to save costs and save the company from further financial ruin.

b) To reject a proposed contract with Riverside University to install 100 solar electricity cells on the roof of the university library. The board did not feel that there was enough profit in the contract to make it commercially viable. After the meeting, Mary and Derek have approached Riverside University and have been offered the contract in their personal capacity which they intend to accept. Mary and Derek have also called a members meeting where they successfully passed a resolution permitting them to take on the Riverside University contract. Edward feels helpless and wants to recover the profits made by Mary and Derek through this contract. Edward is concerned that the majority rule will prevail and the courts may be reluctant to interfere with the company's internal affairs.

REQUIRED:

a) Advise the company on any potential breaches of directors' duties.