HEY

CAN I KNOW THE SOLUTION OR FORMAT FOR THIS PROBLEM.

Twirls and Curls Pty Ltd runs a hairdressing salon in Canberra. Luigi is named as the governing director in the constitution. The constitution gives the governing director power to appoint additional directors to hold office until the following annual general meeting as long as there is no more than a maximum of five directors. The other directors are Luigi's adult children Theresa and Franco neither of whom work in the salon on a day to day basis. In March this year, after returning from visiting family in Italy, Luigi appoints Rita, the company's award winning hair stylist, as a director.

Luigi has now fallen ill with Covid 19. Although, Luigi hasn't been in the salon since his return, and the government regulations did not require the salon to close, Maria, Luigi's wife, says to Theresa and Franco that they should suspend business operations while Covid 19 is an issue. Rita does not agree but is outvoted by Theresa and Franco at the directors' meeting. Theresa and Franco argue that it is for the safety of staff and clients.

Luigi holds 50% of the shares and Theresa and Franco hold 15% each. Younger brother, Marco who is 18 and in year 12 at school owns 10%. Rita owns 10%.

Theresa has been stood down from her job in a travel agency and is receiving no pay. Maria suggests to Franco that the company should lend $20,000 to Theresa to tide her over especially since she still has her mortgage to pay. Franco says he is fine with that but he is not sure Rita will agree and probably Theresa can't vote on it. Maria thinks on it and talks to Luigi who is now recovering at home. She suggests to him that Luigi could appoint Marco as his alternate director. It would be good experience for him since he wants to study Commerce at ANU. Luigi, who due to his illness cannot attend board meetings appoints Marco as alternate director.

Rita, Franco, Theresa and Marco meet for a board meeting. Franco proposes lending $20,000 to Theresa for 12 months with no repayments for 12 months and at no interest rate. Rita says that the company hasn't got enough cash to be lending $20,000 with no return on that money. She says that the company still owes money on the recent salon fit-out. Since the corona virus crisis might last longer than 6 months they need to carefully manage their reserves. Theresa abstains from voting. Franco and Marco passthe resolution to lend the money to Theresa with Rita voting against it.

Rita seeks your advice. She remains of the view that it is a bad decision to lend the money to Theresa although she says the company can readily pay its bills and has assets including the shop.She also thinks they should have kept the salon open as long as government regulations allow. She has been going over the company records. It appears that Luigi's tenure as governing director terminated at the 2018 annual general meeting and no action has been taken since for him to be re-elected. She wonders what this might mean for her appointment and also for Marco's appointment as alternate and the decisions that have been made by the directors. She is also concerned that there may be breaches of the Corporations Act or general law. Consider all the facts and advise her. Is there any action she can take in relation to any of the issues that she raises? Cite legal authority for your advice.