1. PQR Pty Ltd is a family company with three directors appointed by the family shareholders. The directors are to investigate new opportunities on behalf of the company, including purchases of new business to improve profitability of the company.

Two of the directors are convinced by Reddington a younger director that there are plenty of opportunities for business overseas, and then takes off on an extended trip. Reddington sends back messages that he has found some good investment opportunities and asks the other directors to send money for the purchase of what he says are outstanding investments, soon to be gone. The directors put their faith in Paddington, ask no questions, and send a lot of money to Reddington.

Reddington goes missing, the money sent by PQR has gone, the company has been significantly affected by these losses, and some family members are seeking an explanation and are very angry with the lack of supervision of Reddington by the remaining two directors. Explain with reference to law.

• What might be the liability of the remaining directors for the losses?
• What might be the liability of the directors who failed to monitor what was going on in the company?
• Can a shareholder of the company take an action on behalf of the company? Will a court automatically allow for a shareholder to represent the company?