In addition to his own small company, Johnny sits on the board of a large multi-national publiccompany as a non-executive director. Johnny has a gambling addiction and is in significantpersonal debt. A financial trader tells Johnny that he can make a lot of money if he uses hisposition as director to gain access to the company cheques, forge a loan from the large companyto his small company, and then use this money to buy shares in the large company. Johnnyfollows this advice, and within one week returns enough money to discharge all his personal debts. Johnny then sells the shares and pays back the total amount loaned from the largecompany. ASIC discovers the fraud and takes action against Johnny for contravening his duties ascompany director. Johnny argues that since the loan was paid back in entirety, the company hasnot suffered any detriment.

a.) Explain, with reference to the Corporations Act 2001 (Cth) and case law, whether Johnny has acted in accordance with his duties as a director. (11 marks)

b.) What penalties may Johnny face if he has not acted according to the Corporations Act 2001 (Cth). (4 marks)