Question
Reggie is the CEO and Managing Director of Nufone Ltd which is a new startup company offering cheap telephone and internet services to the public.
Reggie is the CEO and Managing Director of Nufone Ltd which is a new startup company offering cheap telephone and internet services to the public. To expand the client base quickly, he has been offering cut price deals to the subscribers which cost more to provide than the company is receiving in fees. Reggie explains to the Board of Directors that this is just a temporary strategy to gain market share quickly and to lock out competitors. He is relying on a promise from Jiggo, one of the large shareholders, that a line of credit for $200,000 will be available for the next 12 months. Unfortunately, Jiggo, has a change of heart and advises Reggie that he is cancelling the line of credit with immediate effect. This will mean there is no further credit to fund the cut price offers to the subscribers. Using the IRAC format, explain what actions Reggie and the Board of Directors should take,? Refer to relevant legislation and cases in your answer.
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