Notable Stationery Pty Ltd is an Australian company that sells high-end stationery products.

Silverlinings Paper is a company registered in Australia. It is a seller of premium paper, calendars, diaries and pens.

Through various factors, the companys profits have decreased in the last several months. The directors appoint an external expert from France, Warren Batty, to organise a plan to raise the companys profitability. Warren is also made a non-executive director.

Owing to the distance between France and Australia, Warren cannot travel to Silverlinings head office in Sydney very often. The company buys a corporate videoconferencing account to facilitate Warrens attendance during board meetings. But sadly, due to the 10-hour time difference between Australia and France, Warren hasnt been able to attend most of the board meetings.

Warren is not fussed about this. He thinks that he is a marketer who shouldnt be dealing with company management. In any case, the directors and other external advisers can always update him.

Silverlinings has now released its 2020 year-end financial statements. Jacob Marx, who is a non-executive director, who is a certified public accountant, and the companys external accountants and auditors realise that the financial statements did not disclose that the company had just borrowed $10 million from ANZ Bank. This omission makes it look like the companys financial position is much better than it really is.

Discuss the potential liability of Silverlinings directors under s 180 of the Corporations Act, including any defences they might raise. You must consider all the facts presented above in your answer. (10 marks)