in 2021, Home Construct Ltd ('Home Construct'), a large independent hardware store chain with around fifty stores in NSW and WA, bought all the shares in a struggling competitor, Power Hardware Pty Ltd ('Power Hardware'), whose stores were mostly in Queensland and northern NSW. Chu is currently CEO of Home Construct, his wife Pam is Home Construct's nonexecutive Chair. Chu and Pam are also controlling shareholders of Power Hardware through their majority shareholding of Home Construct.

Before the acquisition, Power Hardware was formerly a wholly-owned subsidiary of Sunlite Co Ltd ('Sunlite'), a NZ-based multinational. Sunlite agreed that in return for acquiring 100% of Power Hardware's shares, Home Construct could make a down payment of AUD$5 million, and the balance of the purchase price, $25 million, would be paid to Sunlite in regular instalments over the next six years. But during that six-year period, Sunlite would have the right to examine the financial statements of Home Construct and Power Hardware at regular intervals, and the right to appoint a receiver to seize Power Hardware's assets if they believed that there was any risk of default on the remaining balance of the $30 million debt.

Home Construct's initial acquisition of Power Hardware was completed in June 2021, but due to the ongoing pandemic, six months later the warehousing and distribution operations of Home Construct and Power Hardware still had not been properly consolidated, and both firms were struggling to fulfil customers' orders on time. In January 2022, Pam and Chu decided to adopt a new distribution and supply system from TechStart Pty Ltd, on a subscription which cost $2500 a month, based on a detailed proposal by Sunlite's vice president of finance, Terry Bravo. The aim was to co-ordinate the Home Construct and Power Hardware companies' orders from suppliers so there was no overlap. Any purchases from overseas suppliers for the group would now be made by Home Construct, and purchases from Australian suppliers would be made by Power Hardware, and then at the end of each year the two companies would transfer money to make up any shortfall owing to the other company in the group.

Unfortunately, the new system meant that because 80% of the group's suppliers were based in Australia, Power Hardware had to pay much more money up front to order supplies, and by the middle of the year, the deficit owed by Home Construct to Power Hardware was already $18 million. When Terry Bravo saw the mid-year financial statements, he was extremely concerned about the complexity of this new system and demanded that the new system be abolished, to which Pam and Chu agreed. They terminate the agreement effective immediately, and in so... Page 5 of 6 doing, neglect to pay out the remainder of the yearly subscription worth $15,000. This is because they are occupied with the 1 August 2022 notice from the ATO of an amended tax assessment for $5 million due to a rejection of deductions and tax concessions that Home Construct had claimed in its 2021/22 tax returns. Pam and Chu vow to vigorously defend this notice with the ATO.

In the lead up to the end of the financial year on June 15, 2022, Pam and Chu are exhausted from working overtime without extra remuneration, so they pass a resolution at a director's meeting giving themselves each $50,000 bonuses.

On 10 September 2022, Pam and Chu receive a complaint from Home Construct's top contractor, and Pam's second-cousin Sam, that he was underpaid on his last job for Home Construct. Pam and Chu value Sam's longstanding relationship and hard work so agree to pay Sam all outstanding amounts and give him a company car for $100, in exchange for signing a contract to work exclusively for Home Construct for another 12 months. Unhappy customers start leaving scathing reviews across social media channels, and the final straw for Home Construct's shareholders is when Today Sydney runs a tv segment on the situation. Shareholders are outraged by the Board's conduct.

You are a lawyer with well-respected firm Holt and Adams Pty Ltd and have been asked by your supervising partner to put together a legal brief advising whether there have been any breaches of duties to the company (if any), the consequences of any breach, and any other relevant legal issues