Borisda Builder Pty Ltd has five (5) directors: Vesna, Sergey, Ilyych, Mikhail and Zviad. Mikhail and Zviad are working directors. They manage the day-to-day operations of Borisda Builder Pty Ltd. The company is engaged in all aspects of home building.

Ilyych is an accountant and he helps out with the production of monthly financial reports for all the directors.


Vesna has attended University and holds an engineering degree and a Masters of Business Administration (MBA). She has a good knowledge of the building industry and the way company finances work.

Serge i Z iad bro her and ha had a long hi or of depre ion and lack of elf-esteem. Zviad ppor ed Serge i h o become a board member e en ho gh he offered little by way of expertise. Z iad ho gh ha i o ld help Serge per onal de elopmen b gi ing him a differen foc

Bori da B ilder P L d had a record ear in The go ernmen fir home b er grant meant that the company had many building contracts. The directors met in July and decided to pay a dividend of 9c per share.

The company has experienced a severe decline in new contracts in the last two months. This is due in part to a number of cut-price builders offering cheap building contracts. This has placed the company in financial difficulties. Mikhail and Zviad have been with the company since day one and are attached to the company. It is their main focus and provides them with emotional and financial wellbeing.

Sergey has never read any financial statements that have been sent to him. He did not check the compan financial re rn for an of he ear before he a appoin ed and he ha ne er read an reports since he was appointed.

Shareholders of Borisda Builder Pty Ltd number 15 and include the directors and members of the founding family who have held onto shares but take little interest otherwise.

Ve na bro her Do g ha a b ilding de ign compan Do g he De igner P L d and Ve na a end its Board meetings and gives advice. Because of her education and experience the Board of Doug the Designer Pty Ltd follows her directions. Recently, Borisda Builder Pty Ltd contracted with this company. It was Vesna that convinced the rest of the Board of Borisda Builder Pty Ltd to enter this contract. It was Vesna that had collected all the quotes for this work and they all exceeded the Doug the Designer Pty Ltd quote. This was due to the fact that Doug the Designer Pty Ltd had put in a quote below the cost price of the work because Vesna had promised more work from Borisda Builder Pty Ltd in the future.

Ilyych attended a Board meeting a few months ago and brought with him what he believed was a great idea. His proposal was that the company become involved in constructing cubby houses for children out of the leftover materials from around their building sites. The other Board members were not so convinced but Ilyych being an accountant produced some very impressive figures based on informa ion from he compan file The board o ed against the proposal after Vesna, with her MBA training, argued the company should focus on its main game of house building.

Ilyych is disappointed but yesterday signed a deal with another building company known as Canweafixdat? Pty Ltd. The deal involves Ilyych being paid a commission of 10% for every cubby house sold and a place on their Board.

Borisda Builder Pty Ltd is having financial problems yet the Board continues to allow the company to trade without considering the consequences.

Required:

Discuss the statutory and common law positions of the directors in the case study above.