Advise Ms Brown of the legal situation and her chances of success. This problem is reproduced from Jonathan Barrett Understanding Company Law (4th ed, LexisNexis Wellington, 2019) at 2546. QUESTION FOUR [20 MARKS] Alina and Pete are the directors and shareholders of Cool Reads Ltd, which carries on business as a book retailer. The company is just breaking even financially. They meet Boris, a well- known media figure, who hasjust published his rst novel. Boris persuades them to have the company purchase 100,000 copies of the novel. The copies are purchased using the company's credit facility at GNZ Bank. The book is poorly reviewed in a national newspaper and does not sell. The lessor of the company's shop contacts Alina and Pete because rental has not been paid on time. The company's main supplier of books has also not been paid and Pete and Alina are expecting a call any day about that unpaid acc0unt. Alina and Pete have been drawing small salaries as directors, but have not received any dividends. They wish to declare a dividend now. Advise Alina and Pete on whether they, as the board of directors of Cool Reads Ltd, will be able to satisfy the requirements to properly declare a dividend. QUESTION FIVE [20 MARKS] 993W Ltd runs a business which supplies commercial cookware to restaurants. Shares in 993% Ltd are held equally by two cousins, Simon and Rebecca, who are also the company's directors. Neither holds the title of managing director although in practice, day today decisions on running the business are left to Simon. Simon's ex-wife, Debra, was appointed as the company's accountant. Recently, Simon saw an acrylic painting by a wellkn0wn New Zealand artist for sale for $150,000. He thought the painting was particularly suitable for the board room and that the price being asked was a bargain. There was no time to contact Rebecca so Simon decided to go ahead with the purchase without informing her. The vendor insisted that Simon sign a written agreement. Rebecca, on learning ofthe purchase, is upset and seeks your legal advice. a) Advise Rebecca whether mum! can refuse go ahead with the purchase IF 0 Simon signed the agreement as 'director of Mud with 599mm stated to be the purchaser; and o Wusconstitution contains no special provisions dealing with corporate capacity. (5 Marks} b) Now assume that WWconstitution has a provision in it requiring all contracts over $100,000 to have board approval and to be executed by both directors. lf Simon and Debra both signed the purchase agreement, as directors of mm, but did not tell Rebecca of the purchase, would the company be bound by the agreement? Explain why or why not. (10 Marks) c) What difference, if any, would it make to your answer to (b) if, prior to entering into the contract. the vendor overheard Simon telling Debra that Rebecca was unaware of the purchase? (5 Marks}