Holdfast Pty Ltd operates several retail stores selling industrial clothing wear. It has the following three directors on its board: Dave who is the managing director; Jane who is the company secretary and a director; and Mary who is a director.

In May, Mary proposed that Holdfast Pty Ltd should buy a laundry business owned by BS Pty Ltd for $2 million. This item was placed on the agenda of the June directors' meeting. Prior to the meeting Jane was asked to make business plan for the new acquisition and Dave was asked to make a financial report outlining the impact of the acquisition. The June directors' meeting went overtime and Jane had only a couple of minutes to explain the business plan. Dave tabled his financial report but there was no time to discuss it. After a very quick discussion which was mainly about the Melbourne Cup horse race, the directors voted to approve the acquisition. After the purchase was finalised it was discovered that Dave's financial report had many mistakes and did not give a true picture of Holdfast's poor financial position, and Dave's family company owned 80% of the shares in BS Pty Ltd. The purchase of the business plunged Holdfast quickly into insolvency.

Advise the directors of actions they may face.

(under Australian law)