QUESTION 2

You have been approached by a director of a company trading as "3L Ltd" for short and "Lime Lafter Ltd" in other places.

The business is currently situated near the UQ campus, on the traditional lands of the Turrbal and Jagera peoples.

3L Ltd employs 40 employees

There are 25 shareholders, 15 of whom work in 3L Ltd. The remaining 25 employees are not shareholders.

There are 3 directors, being Allan, Bessy and Charlotte.

3L Ltd has issue consolidated revenue of about $16 million for the financial year ending 2020.

The 3 directors want to raise money via a share issue rather than debt. They want to raise the money to purchase more shares in a company 3L Ltd has an interest in, now called Appleton Pty Ltd.

3L Ltd owns 10% of the shares in Appleton Pty Ltd. Shareholders in Appleton Pty Ltd have offered to sell 3L Ltd a further 70% of the shares in Appleton Pty Ltd.

Appleton Pty Ltd has 40 employees and consolidated revenue of $20 million. The price shares are being offered is exceptionally good.

The directors of 3L Ltd are concerned there might not be enough interest or money if they just approach existing employees and shareholders. Charlotte chats sometimes to a man at the coffee shop while they are waiting for their take-away coffees. She does not know his name but knows he invests in companies. She suggests he might be worth approaching to explore the opportunity.

The directors of 3L Ltd do not want their above steps to alter their type of company.

Advise the directors of 3L Ltd on the legal consequences that arise in the above facts