The organisation that you work for has a growing profile in the profession and therefore expects all staff to demonstrate a high degree of professionalism.

In the advice that you are to prepare you are expected to demonstrate that you understand the relevant law and how the law applies to the issues raised by the client and come to a logical conclusion.

You are also expected to be able to justify your conclusion by reference to the relevant legislation in the Corporations Act, ASIC Act, or any other legislation you think appropriate, ASIC regulatory guidelines and case law.

Your senior manager has high expectations of you and she will not accept:

1. any grammatical errors or unsubstantiated statements or conclusions made in your report.
2. Incorrect spelling or references to the client
3. She will not tolerate any material copied from textbooks, google or any other source which you attempt to pass off as your own material.
4. Any references you make to articles, journals or other textbooks must have been reviewed or read and understood by you and correctly referenced.

Background:

You have recently graduated as an accountant/ financial adviser and your first position is with medium sized integrated accounting and financial services organisation in Melbourne.

The directors of Metrix Pty Ltd (Metrix) a large private company that is involved in the building of residential homes throughout Australia has sought an appointment. You have been asked by your senior manager (Megan) to sit in on a meeting of the client and the directors and to take notes on the issues raised and then to prepare a written report on the matters for review by your senior manager. The meeting is scheduled for Tuesday 13 September at 8 am. You will be expected to take notes of the meeting and then prepare a statement of advice for Megan to review. Once she is happy with it, she will send out to the client.

THE CLIENT MEETING The client and issues: Metrix Pty Ltd (Metrix) is a large private company established in 1976 by Mario Le Mesurier and Stephen Adam. The two were carpenters and built up the company to be the preeminent home building company in Australia. The company focuses only on building residential homes. They do not build commercial buildings. The company has the following directors and senior officers: Mario Le Mesurier Chairperson Stephen Adam: Managing director Li Ma: Chief Financial Officer Suren Chandra: Construction director Victoria Moser: Design director Joshua Leong: Purchasing director Ali Ahmed: Senior safety and welfare manager Kathy Di Mella: Senior architect Mario, Stephen and Li have asked for the meeting because they have the following issues, they would like advice on. Issue 1: The company since January 2021 has been losing money on housing contracts due to the increase in building materials, the labour shortage and the nature of the contracts with customers. Currently to complete 58 housing contracts the company would make a loss of $3,653,000 in total. The reason for this was that these contracts were fixed price contracts and did not envisage the impact of COVID on supplies and labour. The financial statements prepared by Li show that this would result in the company for the year ended 30 June 2022 making a trading loss of $11,200,000. Other factors attributing to the estimated loss are rental costs, operating expenses and the cost of funding the construction of a new head office building in Mitcham. The company currently has retained earnings as at 1 July 2021 of $15,864,372 and after the estimated trading losses of $11,200,000 for 30 June 2022, this would leave Metrix with accumulated profits of $4,664,372. Metrix is also facing pressure from its contractors to pay them for their materials and services. The outstanding creditors are $18,328,789. Some are secured over the new head office, building supplies but many are unsecured.The shareholdersfunds of Metrix consist of: Authorised share capital (ordinary) $12,000,000 A W $3.000.000 Retained earnings $4,664,372 Total sbatebotdersfunds of the Metrix as a_1 30 June 2022: $24,664,372 The directors are mindful ofthe need to retain funds for working capital and estimate the company needs working capital of at least $6,500,000. Issues they seek advice on: 1. Is there a prot at law from which the directors of Metrix can pay a dividend if they wish to do so? The board of directors of Metrix has had a history in the past of paying dividends each year of approximately 15% of the retained earnings of the company at the end of the year. 2. If they do decide to pay a dividend of 15% of retained earnings, would you recommend it or not? Issue 2: The company has its own constitution (previously called the memorandum and articles of association). In the constitution it stated that the A class preference shareholders were entitled to a dividend of 6.5%.each year. The directors would like to reduce this rate to 2.25% given the current nancial position of the company and propose replacing the existing rule with a new rule reducing the dividend to 2.25%. Issue they seek advice on: 1. Can the A class preference shareholders prevent the company from changing rule in the constitution to reduce the dividend rate? Issue 3: On a building site, one of the plumbers fell off the roof and severely injured herself. An investigation by Work Safe Victoria found that Metrix had not ensured that adequate scaffolding had been erected on site to prevent such an accident. Ali as the senior safety and welfare manager was responsible for ensuring the safety of the workers. He stated that he had delegated this responsibility to the supervisor on site and that it was that person's responsibility. Issue they seek advice on: 1. Is the company liable or is Ali and the supervisor personally liable for the injury to the plumber