Question 4

The Board of Dental Assist Pty. Ltd. has five directors: three are executive and two nonexecutive.Dental Assist provides an employment agency for dental nurses.The Board recently approved the purchase of a complex computer system from Singsong Computers Pty. Ltd., on the recommendation of Sharif Omar, one of the non-executive directors.

A minority shareholder of Dental Assist, Pam Yates, is aware that Sharif and the other non-executive director, Jing Jao, are the shareholders and directors of Singsong Computers.Pam believes that an equivalent quality computer system could have been purchased for a fifth of the cost.

Pam Yates has another concern. She believes that one of the executive directors, John Stone, is approaching the dental nurses who have registered with Dental Assist to offer them training courses with 'ProTrain', a partnership he conducts with his spouse. Pam Yates considers that Dental Assist should be diversifying so that it provides this training.

Required:

a) Advise whether any of the directors breached sections 181-4 of the Corporations Act 2001. Consider the position of each director. (15 marks) and

b) Advise Pam Yates, whether she has any rights as a shareholder to take legal action and if so, under which section or sections of the Corporations Act 2001 (5 marks)

In response you must give reasons and refer to sections of the Corporations Act 2001 (Cth) and cases where relevant.