It is now late May 2022. Barry has been working on an expansion plan for the business that will involve partnering with a tech start up to develop an app that will let users custom design their surfboards anywhere in the world. Barry has several good connections in the tech industry and the project looks very promising for FBL. The directors are provided with detailed financial analysis of the proposal including a comprehensive risk analysis. The directors read the material presented to the board and agree that the proposal looks promising. Tina and Matt (NED) decide that the opportunity is too good to pass up and they set up a separate company SurfinCo Pty Ltd. Tina and Matt do not declare their interest in SurfinCo Pty Ltd and continue to sit in on meetings with FBL discussing the expansion plans. Tina and Matt give proper consideration to all matters presented to the board and believe that they are working in that capacity in the best interests of FBL. They believe that they are able to distinguish between their work for FBL and their personal interests. Tina and Matt appoint a CEO for FinCo Pty Ltd who is very experienced in the industry (Stan) and he (independently of Tina and Matt) engages a leading Australian tech company who also work on commission for FBL. Tina and Matt do not specifically use the contacts within the tech industry as discussed by Barry, but Stan does approach similar companies. Surfin Pty Ltd is able to undercut FBL given its lower cost structure, but much of its success is also due to the skills and hard work of Stan. With Surfin Pty Ltd up and running, Tina and Matt resign from the board of FBL. Barry recommends 2 replacement non-executive directors Amanda and Ash who are both executives of a medium sized company of which Barry is a paid consultant and substantial shareholder.

Now assume that it is September 2022. KR Pty Ltd was successful in its legal action in Question 1A, and there is a change of control at FBL, including the election of a new Board, and Barry Ling has been forced to resign by the new Board. You are FBLs newly appointed lawyer.

Advise the new Board about the previous Boards conduct and any individual directors, with reference to the Corporations Act 2001 (Cth) and the General Law. (40 marks)