Tower Buildings Ltd ('Tower') is an Australian construction company with four executive directors. Xu is the Chief Executive Officer; Sean is the chairperson; Ed is the Chief Financial Officer; and Athena is the Director of Operations.

The 'Melbourne Apartments' project is not doing well, and is plagued by delays from community complaints. This development made a loss of $AUD2.3 million in 2020. Athena had asked her Operations team to prepare a full audit on the project, but she does not have time to read the report that shows losses of $1 million are expected from this project in the next 6months.

In February 2021, Athena discusses the project with Ed who is preparing the company's financial statements, which will be included in company reports and sent to the board. Athena assures Ed that losses from 'Melbourne Apartments' are only a short term liquidity problem, and that it is important to continue building during lockdown, as protestors can not to travel from other suburbs! Ed accepts this and notes in the financial statement that the development is on track with time and budget with other no concerns.

Athena thinks starting another build would shift attention from 'Melbourne Apartments'. She prepares a board paper outlining the benefits of acquiring undeveloped land in regional Victoria for a community development project called 'Ballarat Towers'.

At a board meeting in May 2021, the directors discuss company performance. Sean (Chairperson) has measles and is signed off work for two weeks. Xu (CEO) explains relying on Ed's reports regarding 'Melbourne Apartments' to inform the board about finances - and all is well. The following resolutions take place:

• All directors vote to acquire a short-term 6 month loan for $2 million for the company, to cover additional labour costs associated with the pandemic. Ed registers concern with the board, as he suspects this may place the company in financial difficulty;
• Three directors vote to proceed to pay out 11 cents per share in dividends in early December 2021, totalling $3 million. Ed is the only vote against this motion;
• All directors vote to pay $450,000 in short term bonus incentives to all board members in late December 2021, for meeting key performance targets;
• The board delegate to Athena the role of ascertaining suitable Ballarat sites for future land acquisitions.

Following the May board meeting, Athena has not had time to research new sites. She delegates this task to her cousin Rod, a Consultant. Rod's report favours one site that can be purchases for $9 million. Rod does not state that he owns the land. Its real market value is about $6 million.

The loan of $2 million must be repaid by December 2021. Ed is concerned this would leave the company with only $1.5 million in cash reserves. Ed sends an urgent communication to all directors for discussion at the next director meeting:

• Three directors (other than Ed) vote to postpone the loan repayment until after the New Year;
• Three directors (other than Ed) vote to proceed with the dividend distribution, which has already been promised to shareholders;
• Three directors (other than Ed) vote to proceed with acquiring the Ballarat land.
• All directors agree to initiate capital raising to retail investors by issuing 1 million shares to raise $11 million to pay out the loan and fund the land purchase. This is the second share issue in 12 months.

Brad holds eight per cent shares in Tower Buildings Ltd and is concerned about its finances - he thinks it should not pay dividends. Brad registers concern with the company auditor prior to the annual general meeting, scheduled for December 2021. He considers using his power in the following ways:

• Item 1: To vote down the proposed director remuneration;
• Item 2: To initiate a resolution to stop the proposed payout of dividends;
• Item 3: To initiate a resolution to stop the proposed acquisition of the Ballarat land;
• Item 4: To initiate a resolution to stop the proposed share issue; and
• Item 5: To initiate a resolution to remove the directors from office

Discuss whether the directors are bound to their initial declaration to distribute dividends to the shareholders of Melbourne Towers? Support your answer with reference to statutory and case law?