Ivan, Boris and Y elsin are the directors of Techno Ltd, a company specialising in new healthcare technologies, particularly those dealing with diabetes. Ivan met his Australian friends Boris and Y elsin while they were on exchange at university in Russia, and some years later they agreed to go into business together, as Boris is an accountant and Y elsin has expertise in marketing. Techno Ltd is an Australian company with a subsidiary in Russia, where most of the research is carried out, due to the Russian government's generous grants program for medical research. Ivan is also the Chief of Research at the Russian company, and spends all his time in Russia supervising his researchers. The researchers have developed a new Internet-connected insulin pump, which allows for remote control of the pump by patients and real-time data to be sent to medical specialists.

Ivan's team is ready to take the next steps to commercialise the pump, but this will need significant funding. In January 2017, all the directors of Techno Ltd voted unanimously to raise equity funding for the company, based on healthy profit projections prepared by Ivan in December 2016. However, in April 2017, Ivan finds out that a company in Ukraine has independently developed a similar type of pump. Ivan lets Boris know about the prospective competitors, but hopes that their company might still be first to market.

In June 2017, Ivan calls a directors' meeting to approve the prospectus he has prepared. Ivan, who speaks Russian and Mandarin but not English, asks Boris to organise a translation of the prospectus. Boris says: We are running out of time on this Ivan. You can trust me, it's all ok, I've checked it with the lawyers.

No translation is prepared, but at the next board meeting, Ivan and Boris vote to issue the prospectus. Y elsin doesn't tum up. He has not turned up to the last five board meetings held since the vote on fundraising, as he says he is too busy on the marketing campaign.

The prospectus was issued and the fundraising went well, with 100 000 new shares issued to 1 000 new shareholders.

However, shortly after the fundraising Ivan became aware that the profit projections included in the prospectus were out-of-date, and Boris had not modified them to accommodate the news of the Ukraine company's likely entry into the market. The Ukraine competitors managed to launch their competing product a couple of months later, and at the end of the first year after the fundraising, Techno Ltd is operating well below the profit projections contained in the prospectus. Ivan comes to you to ask for advice on what may happen to him and to Techno Ltd.

(a) What legal actions may be available against each of Ivan, Boris and Yelsin for breach of directors' duties under the Corporations Act 2001 (Cth), and what are the likely consequences of those actions? (14 marks); and

(b) What remedies may be available to the shareholders of Techno Ltd relating to the information in the prospectus? (6 marks).