At AMGL, Adderson and Eager are concerned that the significant stake in AMGL acquired by

XYZ Limited means that they might end up frozen out of the business they started. For some time,

Eager has been in discussion with another finance industry figure about a highly prospective

investment play in Europe. Eager suggests to Adderson that AMGL issue 500,000 shares to this

person as a means of creating ties with AMGL that might help it to secure access to the project in the

future. Adderson and Eager bring the proposal to the AMGL board. Mr Xu is furious as he sees it as a

ploy to entrench further their control of the company by putting shares in the hands of a person who

is likely to support Adderson and Eager in the future. If the share issue goes ahead, have the

directors breached their duty to exercise their powers for a proper purpose?