multiple choice questions

1.A director is entitled to rely on information and advice provided by others but they:

Must have reasonable grounds to believe the information and advice is reliable

Must consider the fairness of this towards his/her fellow directors

Must advise the board of this arrangement

Must advise ASIC of this business judgment

2.A director has a special duty to prevent the company from trading while insolvent. They have a defence referred to as 'safe harbour'. This means:

Directors start developing a course of action reasonably likely to lead to a better outcome

Employees convince directors that the accounts and records are safe and it is reasonably likely that a better outcome will emerge

Employees develop a course of action that will lead the company out of insolvency

Directors of maritime companies can allow their companies to trade even if insolvent

3.If you had a director who was not attending any board meetings, never questioning any board decisions and failing to ensure that any person that they had delegated tasks to actually had the skill to perform those delegated tasks then:

That board would liable for breaching conflict of interest laws

That director would most likely fail the requirements of diligence

That director would be disqualified from acting as a board member in the future

That director would be considered to be responsible

4.As a general rule, when the company is solvent, directors should:

Not consider the interests of employees when they are acting in the best interests of the company

Only pay employee shareholders

Avoid paying employee entitlements as they are acting in the best interests of the company

Consider the interests of employees at the expense of shareholders

5.In a public company, a director who has a material personal interest in a matter being considered by the board of directors must:

Not be present at the meeting when the matter is discussed or vote on the matter unless the other directors allow as per s195(2)

Vote in favour of the matter because to do otherwise would not be acting in the interests of the company that they hold a material personal interest in

Be present to explain the extent of their interest

Call for all of the details of this matter to be redacted