Catherine is Managing Director of Chanceit Ltd, a public company that offers financial advice. Her loyal friend Cherry is also a Director ofChanceit Ltd and always votes with Catherine at the Board Meetings. The Company is facing a possible takeover challenge from a competitor called Knowitall Ltd. Catherine and Cherry convince the Board that the best way to prevent the takeover is to issue 100,000 bonus shares to the existing share holders which will increase the shares owned by Catherine and Cherry and make it much harder for any takeover to succeed without their support.

Bonnie is one of the other Directors of Chanceit Ltd but is opposed to this strategy and voted against it at the Board Meeting. Unfortunately she was the only Director to oppose it. She now seeks your advice as to whether this decision of the Board can be challenged in the Courts.

Catherine and Cherry claim that Bonnie is a "spy" for Knowitall Ltd and is not acting in the best interests of Chanceit Ltd.

Required:

Advise Bonnie on what grounds she could challenge the decision to issue bonus shares. Also consider the implications of the claim that Bonnie is acting as a "spy". IRAC format answer