FabKitchens Pty. Ltd. is a relatively new designer kitchen construction company. It has three shareholders, Wei Lee, Sana and Imelda who are also the directors. The company wants to expand its operations to include designer bathrooms and laundries. To fund this expansion, the company needs an injection of $800,000. Wei Lees father-in-law Bruno, is willing to advance this capital, provided the company issues shares to him with special rights which would give him a substantial proportion of the companys profits for a five-year period. Bruno wants a good return for his capital investment, and he wants security of repayment.

The directors have sought our urgent advice.

Required What legal and practical advice can you provide the directors about Brunos offer?

In your own words, is equity finance the best option for FabKitchens Pty. Ltd.?

Why or why not? In your own words, what is your recommendation?

Support your analysis and recommendation with relevant sections of the Corporations Act 2001 (Cth) and or case law.

Subject: Law of investment and financial market (Australian Law)