Lily is the managing director of a company specializing in buying and selling hair loss

remedies for men. The company, Stoploss Pty Ltd (Stoploss) was registered in 2012.

Stoploss markets to men between the ages of 40 and 70 years. In October 2017,

while Lily is out of the office buying some stationary, she visits an old friend Tom at

Tom's work. As they are talking Tom asks Lily whether her company would be

interested in helping him to market a new organic hair treatment for women called

"No Curl". Tom claims that the treatment is perfect for women because it straightens

hair without the need for an expensive hair straightening device. Lily tells Tom that

her company would not be interested because it sells men's products only. She

offers to help Tom herself. Tom agrees. Lily and Tom set up a company called "No

Curl Pty Ltd (NC) and become its directors and members. Lily is the majority

member. They call the product "No Curl" and the business of the company is an

overnight success.

At a board meeting of Stoploss six months later, Lily proposes that Stoploss enters

into a long-term contract with NC to buy supplies of No Curl for re-sale. The board

agrees and as part of the contract Lily negotiates with the board that she will be paid

a small commission on each sale because she drew the board's attention to this new

product opportunity. Stoploss makes large profits from selling the soap overseas. In

June 2018 Stoploss learns that Lily is involved in NC.

i. Briefly describe the powers and authority of a managing director;

ii. Advise whether Lily has breached her director's duties;

iii. If Lily has breached her director duties what consequences