Game Pty Ltd is a company that operates a large sports store. Sally and Rob are the directors. Sally's daughter, Kelly, is a talented marathon runner. Kelly's ambition is to represent Australia at the 2021 Olympic Games in Tokyo. Sally thinks Kelly would be a good brand ambassador for Game Pty Ltd.

Sally asks Rob to prepare contract between Kelly and Game Ltd under which Game Ltd agrees to pay Kelly $50,000 per year for four years in return for six in-store appearances per year, and a further $50,000 bonus if she is selected for the Olympic team in 2021. Game Pty Ltd is also allowed to use photographs of Kelly in its advertisements.

Rob is concerned about this commercial deal. He knows that at a sportsperson, similar to Kelly's reputation, would not expect to earn such a high commercial fee for a similar deal. Rob, however, does not wish to harm his long -standing friendship with Sally and does not voice any concern.

The agreement is approved at the company's board meeting in September 2016, with all the directors (including Sally) voting in favour of it. The shareholders of the company are unaware of this contract. Some six months later, there is direct evidence to show that the finance committed by Game Pty Ltd to this sponsorship deal with Kelly has put a large strain on the company's cashflow.

(a)Advise whether any of the directors (Sally and Rob) of Game Pty Ltd have breached their duties under the relevant provisions of the Corporations Act 2001 (Cth); [10 marks] and

(b)Assume breaches of law have been identified for both Sally and Rob. If so, discuss whether any legal defences will help them avoid liability [10 marks]; and

(c) Advise ASIC of the potential consequences of the breach of the Corporations Act by both directors, Sally and Rob [10 marks].

Your answer must make specific reference to the facts.