Subject: Company Law

MODULE : FUNDRAISING - DEBENTURES AND SHARES AND DIVIDENDS

Question:

Apollo Ltd (Apollo) specialises in the creation of computer games. The company has three directors: Hong, Lin and Winnie. Hong is the managing director. The board of director of the company wanted to raise capital through the issue of shares because they need to use the capital to finance a new game (Orion) they are launching. They ask Emily, who is a renowned expert in the gaming community, to assess Orion and they receive her consent to include her statements in the prospectus. Emily states the following: Orion is a computer game that will revolutionise the world. It will create a new generation of player. The game has no glitches or faults in it. It runs smoothly and has excellent design. In reality, Emily was too busy to check the game. She actually wrote her statement based on past games produced by Apollo. A number of investors bought shares based on her statement. When the game is launched, it is a total disaster. The game was not designed properly and had a number of glitches and faults in it that did not allow the users to play the game. The investors would like to take action against Emily. Advise Emily on her liability.