Read the Scenario and answer the given questions.

Waverley plc produces fresh organic fruit. There are three executive directors, Fergus, Edward and Flora as well as other non-executive directors. Several months ago, Stuart Ltd approached the board of Waverley plc and offered to sell the company a plot of land adjoining one of its principal market gardens.

Due to current uncertainties and large debt burden, the board rejected the proposal. Subsequently, Edward and Flora, acting through Baron Ltd, of which they are the only shareholders and directors, acquired the land in the name of their company for their original asking price $150,000.

After some period, the board of Waverley plc regretted about the initial refusal to buy the land, and is now seeking to acquire the property, which is back on the market at $250,000. The board was not informed about the identity of the controllers of Baron Ltd. Edward and Flora attended the board meeting at which the decision was taken.

The board of Waverley discovered that Talbot plc is considering a takeover bid of Waverley. Talbot plc is planning to break up the various parts of Waverley and sell them off individually and to remove the company's directors. Accordingly, the directors of Waverley cause the company to issue new shares to Alice - an existing member who is known to oppose the takeover - with the aim of preventing the takeover from succeeding.

Discuss

1. Potential liabilities that Edward and Flora may assume, and
2. Waverley's response to a potential takeover.