Question
The client and issues: BW Enterprises Ltd is a small capital sized company incorporated in Melbourne on 3 February 2000. The directors of the company
The client and issues:
BW Enterprises Ltd is a small capital sized company incorporated in Melbourne on 3 February 2000. The directors of the company are:
Brian the CEO,
Gurinder the IT director
Voon-Ling the marketing director
Jose is the CFO and finance director
Swee-Lim is the purchasing director
All are executive directors of the company
All the executive directors own their respective shares in the company via their family trusts. Together they own 65% of the shares equally.
Chiew is a non-executive director who was nominated by the Halliwell Ltd which owns 15% of the shares in BW Enterprises Ltd. Halliwell Ltd owns 15% and the public owns the remaining 20%.
The company has been involved in the manufacture, distribution and installation of solar panels and batteries throughout Australia and New Zealand.
It has developed new technology in relation to the production of solar panels but needs more funding to get it into a commercial stage.
The financial results for the year ended 30 June 2021 show that the company has been profitable since 2015. However it has no income tax liability because of the prior year losses. The CFO Jose anticipates that the losses will be used up by 2022 and that the company will have an income tax liability. The interim financial statements as at 30 April 2022 show the following:
Total assets: $37m
Liabilities: $28m
Net shareholder funds: $9m
The net shareholder funds is made up of:
the issued share capital $12m
accumulated losses: ($3m)
Operating revenue $15m
Operating expenses $12.5m
Due to the issues of COVID during the last 2 years and the current conflict in Ukraine, it has placed stress on the company's financial position and the ability to develop the new technology. Many of the software developers and engineers involved were based in the Ukraine and this has slowed down the development of the new technology.
Brian and Voon-Ling have requested a meeting to discuss several issues that have arisen and would like your advice on the matters plus any other recommendations you as experts may have considered.
Issues:
Gurinder is an aspiring politician and is seeking nomination for one of the major parties in the upcoming November 2022 State elections. As the IT director he acquired specialised software that allows the company to track all queries and requests for solar panels. It stores a lot of client data useful for the company when it finishes developing the new technology.
However, Gurinder has also used the software and the data within the software to mail out to people political information to assist him in the upcoming state election.
Brian is not that concerned as he believes that if Gurinder gets elected he can help the company get State Government contracts.
Voon -Ling is not so happy but has not told the other directors about this.
Questions:
- identify the legal issues
- explain the relevant law both the legislation and case law
- apply the law to the facts and come to a conclusion
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