The directors of BPS Ltd have become increasingly concerned that Shel Ltd will make a takeover bid for their company. The shareholders of BPS Ltd have recently expressed their dissatisfaction with the company's performance and the directors are concerned that an offer by Shel Ltd will be accepted by the shareholders because of this dissatisfaction.

BPS Ltd does not have a constitution and the directors consider the following two possible courses of action:

1) To issue $1 million ordinary shares to Carltex Ltd (8 marks)

2) To refuse to approve any transfers of shares from existing shareholders to Shel Ltd. (2 marks)

REQUIRED

Discuss whether the two courses of action above are potential breaches of directors' duties.