Question to solve:

Marilyn Moodie is a director and chairperson of Anthrax Ltd, an airline company operating out of Hervey Bay. Anthrax Ltd provides air transport to Fraser Island and joy flights around the Fraser Coast. Marilyn is also the majority shareholder in Virgin Bush Pty Ltd, a management consultancy, which provides advice to tourism enterprises and operates out of Brisbane.

Anthrax Ltd has met with hard times due to a slump in overseas and domestic visitors to the Fraser Coast caused by the COVID pandemic. Global market forces suggest that a further downturn in the market is imminent and recovery will be slow. The directors of Anthrax Ltd believe that a restructure is necessary and are aware that this will mean job losses. The board has called for expressions of interest from businesses specialising in management strategies.

At the last directors' meeting two expressions of interest from management companies were tabled and discussed. Marilyn gave particular attention to the documentation supplied by Virgin Bush Pty Ltd and emphasised the company's stated experience in tourism and in redundancy planning and implementation. A resolution was passed, on which all directors present voted, to engage Virgin Bush Pty Ltd for the planning and implementation of the restructure.

Last week, one of the other directors of Anthrax Ltd, Frieda Frenzy, learned from a colleague in Brisbane that Marilyn Moodie is a major shareholder in Virgin Bush Pty Ltd. Frieda is alarmed and angry that the board has been unaware of Marilyn's involvement with that company. Frieda comes to you for advice as to what action can be taken against Marilyn.

Format:

Please advise Frieda. Limit your response to a discussion of the directors' duty to avoid conflicts of interest under common law and the Corporations Act 2001. (Cth). Your response should take into account the nature of the duty and any consequences of its breach, as well as any requirement that Marilyn disclose her interest in Virgin Bush Pty Ltd.

Answering the question requires demonstrating knowledge and understanding of Associations Law by correctly identifying legal issues and applying relevant legal principles. Each issue raised in the question must be addressed in a detailed paragraph response.

Answer: