Please answer as quickly as possible:

GHG Ltd is a publicly listed company with 10 directors. Members of the board included Mr Richard Addington (non-Executive Director), Mr Howard Bumble (Chief Executive Officer) and Ms Dominique Carter (Director). The following events occurred over a six-month period. A GHG Ltd subsidiary paid $10 million to a company which Mr Addington was sole director called Atlantic Hawk Equities Pty Ltd. This transaction was arranged after discussions between Mr Addington and Mr Bumble, the latter on the board of the subsidiary. Available evidence makes clear some of the normal procedures for a transaction of that type were bypassed. In particular, transactions involving this much money would normally be approved after assessment by the Finance Committee controlled by the Board of Directors of GHG Ltd. Once the monies were in control of Mr Addington, $4,000,000 of these funds was used to acquire shares in GHG Ltd, in order to prop up the GHG Ltd share price. The remaining funds used to purchase shares in unlisted venture capital technology companies associated with Mr Addington, and loans made to entities also associated with Mr Addington. These transactions occurred with no board or member approval and without disclosure to the other directors. Proper procedures were not followed including loans were made without proper documentation and no security was sought. There was evidence the transactions were conducted in such a way that they would not come to the attention of other directors of GHG Ltd. It was also apparent that Mr Bumble did not get an independent valuation on the investments that were made with the $10,000,000. Similarly, it was also clear that Ms Carter, who was aware of the transactions, not take any action to have the Finance Committee look at the investment.

Questions 1 (a) (10 marks)

In relation to each director, has there been a breach of section 180 Corporations Act 2001 (Cth)? Give reasons with your answer and refer to any relevant case law. If you think there has been a breach, what penalties are permitted against directors in breach of this section?

Question 1 (b) (10 marks)

Do you think there has been a breach of the duty to act in good faith, in the best interests of the corporation and for proper purpose? In your answer refer to both caselaw and legislation. Do you think any breach is sufficient to justify criminal proceedings against any of the directors?