QUESTION 1 ABC Lid is a public listed company. ABC Ltd's shareholders are: FinCorp Ltd (40 per cent); SunCorp Lid (35 per cent); and the remaining 25 per cent shares are held by a diverse group of shareholders. ABC Lid has tendered for the construction of a large block of apartments and is likely to be the successful bidder. It will need an injection of funds to construct the block of apartments. The directors of ABC Lid are concerned that FinCorp Lid, which has other interests in construction apartments, may launch a takeover of ABC Lid, which may be accepted by the 25 per cent of diverse shareholders. The directors of ABC Lid are concerned that if this takeover occurs then they may not only lose their position as directors, but FinCorp Ltd will terminate the employment of many workers of ABC Lid as FinCorp Lid has a reputation of using foreign workers rather than local workers. At a board meeting the directors of ABC Lid have resolved to allot a substantial number of shares to SunCorp Lid in consideration for a promise that SunCorp Lid will arrange finance for the construction of the apartments. The allotment to SunCorp Lid will have an impact on the shareholding power of FinCorp Lid to the effect that, after the allotment, FinCorp Lid will only command 10 per cent of the voting power. REQUIRED: Using the relevant provisions of the Corporations Act 2001 (Cth) and case law, advise the directors of ABC Lid on whether they have exercised their powers for a proper purpose in issuing the shares to SunCorp Ltd. Note: disregard laws pertaining to takeovers when answering this question. NOTE: You are required to use the 4-step process in answering this question. The marks allocated for the steps are as follows: Steps 1 and 2: 6 marks Steps 3 and 4:9 marks