Morris, John and Paul are directors and shareholders of Newry Property

Developments Pty Ltd ("Newry"). John and Paul are also the only two general

partners in an accounting firm. The total issued shares in Newry consist of

6000 ordinary shares, with each shareholder holding 2000 shares. All shares

are fully paid. Newry has been very successful in the last two years but has not

paid any dividends to its members in that time. The shareholders agreed at an

AGM to put profits towards further property development projects instead.

Morris is a single parent of three young children, as his wife recently died. He

approaches John and Paul to ask if Newry will begin paying dividends again

to its members, as this will help his financial situation. John and Paul refuse to

declare dividends, as they claim it will not benefit the "long term goals of

Newry". Morris is displeased and wants to sell his shares. John and Paul

refuse to buy him out and also threaten to not register any transfer to a third

party. Morris reluctantly resigns as a director. Morris then asks to see Newry's

most recent financial statements, but John and Paul refuse to provide the

information. Morris discovers by chance that John and Paul's accounting firm

has been receiving large "management fees" from Newry.

(a): Advise Morris of his possible remedies. What kind of legal action (if any)

would you recommend Morris to bring and why?

(b): Could ASIC prosecute John, Paul or Morris for breaching their statutory

directors' duties? If so, who would be prosecuted, which duties have they

breached, and will it be a civil penalty or criminal prosecution

?