Question 1

(a)

V-Farm Pte Ltd (V-Farm) is a hydroponic farm that produces large quantities of hydroponic vegetables. It entered into a contract with Delish Supermarket where V-Farm would supply all its products exclusively to Delish Supermarket. The directors of Delish Supermarket subsequently discovered that U-Farm Pte Ltd (UFarm), a wholly-owned subsidiary of V-Farm, is selling vegetables to competitors at cheaper prices. It appears that the subsidiary was incorporated to enable VFarm to avoid the effects of the contract with Delish Supermarket.

Delish Supermarket's directors come to you for advice. Relate to the directors if they have a right to sue V-Farm for breach of contract.

(b)

Nova Ltd launched its initial public offering (IPO) for its shares in 2020, accompanied by a prospectus. A few months after the investors purchased the shares, they discovered certain information in the prospectus was incorrect. The investors made their purchase based on the profit figure and financial highlights reported in the 2019 audited financial statements purportedly prepared by a top accounting firm. It turned out that the financial statements were not prepared by the top accounting firm and the directors of Nova Ltd errantly inflated its profits. In the prospectus, the company claimed that it generated a combined $10 billion in revenues and owned some 30 entities. It turned out that they did not generate this amount of revenue and many of these entities do not exist. The investors voice that they would not have purchased the shares had they known about these misstatements.

State what is a prospectus and illustrate the potential liabilities that the directors of Nova Ltd may face as a result of the misstatements in the prospectus.