Australia Law Question

Advanced Digital Technologies Pty Ltd (ADT) is a Brisbane based company established in 2009 to provide internet services for customers and businesses. The company has 4 directors, Jimmy who is the executive of the company and Sharon, Rebecca, and Rose; all appointed as non-executive directors.

Jimmy is also the founder and the major shareholder with 57% of the shares issued by ADT. The remaining shares of the company are owned by Sharon (21%), and Rebecca and Rose each own (11%) of the shares.

In November 2019, a dispute arose between the directors in relation to expanding the business activities of ADT. Jimmy and Rebecca were in favour of amending the constitution of the company to provide marketing services in addition to the regular business providing internet services to customers.

Sharon and Rose dissented vigorously the decision to expand the business beyond what was stated as the company's business in the company's constitution. A general meeting was convened in January 2020 for ADT's shareholders, and Sharon and Rose did not receive a notice to the meeting. A resolution was passed in the meeting with the remaining shareholders (Jimmy and Rebecca) agreeing to amend the company's constitution and expand the business activities of ADT. Sharon and Rose were extremely unhappy with the resolution and complained to the board, however no action was taken.

While working as a director of ADT, Rebecca had access to confidential information regarding a smart health device called "Internet Station" that was developed by the company but still was not sold to regular or proposed for sale to future customers. A rival competitor of ADT approached Rebecca and offered her to act as a director for the rival company plus $ 200,000 tax free and shares in return for the confidential information. Rebecca accepted the offer but did not disclose this to anyone and recently decided to resign from ADT.

Jimmy is aware that ADT is in financial difficulties, but he thinks that the company can still make profit if it continues trading. ADT decided to pay dividends to the shareholders in 2020 and the decision was supported mainly by Jimmy and Rebecca who voted in the general meeting to pay dividends to shareholders.

ADT does not maintain proper financial records and provided no regular updates to the management and shareholders. The non-executive directors are not aware of the exact financial position of the company.

In the last 3-6 months, ADT has experienced financial difficulties and is not able to pay its debts in time. The creditors of the company are demanding to be paid immediately or threatening to sue and place the company in liquidation.

AdviseAdvanced Digital Technologies Pty Ltd (ADT)in relation to the following:

Whether any of the directors have breached their duties under the statute and common law? Please also consider if any defences can be used by the directors and the remedies available.