.ul vodafone AU 46 1:28 pm 6} 73% @D H coursehero.com Problem Set 8 The following problems and questions should be answered after you have read Chapters 15 and 16. 1. Look at question 5 of Problem Set 6. Assume that the directors of JV Investor have breached their duty to prevent insolvent trading. What consequences can follow? See [1112-180], [1115-140] and 5131'lE of the Corporations Act 2. Look at question 3 of Problem Set 7. Assume for the purposes of this question that the board of AMGL issued 500,000 shares in breach of its duty to exercise the share issue power for a proper purpose. What action, if any, can ASIC take against the directors who voted in favour of the share issue? See [1113-180] [ms-300], [1l15-14D] and 51317E of the Corporations Act 3. What action, if any, can Mr Xu and XYZ Ltd take in relation to the improper share issue? See [ms-210], [1116-240] and nus-400141115420] 4. Look at question 5 of Problem Set 7. Assume Patricia makes the investment and it is highly profitable. What action, if any, could SAFPL take against Patricia? See [1115-140], [1115-210], slSl'lH of the Corporations Act and Regal (Hastings) 1/ Gulliver 5. What action, if any, could Jason take against Patricia? See [le-210] 6. The constitution of SAFPL allows for the directors to pay a dividend to holders ofA Class shares at their discretion. Over many years, the company had paid a dividend which, although not sizable, was sufficient for the shareholders who chose to do so, to live on. However, David and his siblings are angry about the discontent that Jason has been stirring up among the Henry grandchildren, some of whom they see as lazy and undeserving. So the board of SAFPL resolves not to pay a dividend to the A Class shareholders this year, and instead, to retain earnings to fund the development of the organic farm in the Riverina. What action, if any, can the Henry grandchildren take in respect of non-payment of the dividend? See [le-210], 55232 and 233 ol the Corporations Act and Thomas v H W Thomas er Stuc ? We have tu ors online 24/7 who can help you get unstuck. Ask Expert Tutors .ur vodafone AU 4G 11:14 am @ 55% ED 0 coursehero.com Private Find study resources View the Solution Problem Set 6 The following questions should be answered after you have reatChapters 11 and 12. 1. At FW'PL, Mario remains concerned about the level of dissent and discontent Jason is stirring up among the Galli grandchildren. He decides to contact Simon and offer to acquire Simon's shares in FWPL. As managing director, Mario knows there is a good chance that the company will soon enter into a distribution agreement with a major retailer in the United States that will greatly enhance the value of the business. He believes now is the right time to make an offer for Simon's shares, before the deal is fmalised and announced. Mario knows that, as a director of FWPL, he owes duties to the company. But does he owe any duties to Simon in these circumstances? 2. JV Mine Pty Ltd is 50% owned by GML. In 2009, GML was approached by QIVTNE Ltd, the other shareholder in JV Mine, to make a further major investment in IV Mine, to enable it to develop a new copper mine. The then directors of GML delegated to others, including a geologist, the task of obtaining the technical information about the amount of copper that might be able to be mined. The report prepared for the directors indicates that the proposed investment in the mine should be very successful. Queried by his fellow directors about the optimistic forecasts, Mr Chester (who has a geology qualication) assures them that all appears to be in order. However, some of the information has been negligently prepared. This means that, when the directors rely on the report and invest GML's funds in the mine, the investment will not be as successful as the report indicates. Have the directors of GML (or any of them) breached their duty of care? 3. Gina Gunter is the company secretary and general counsel of GML. In 2009, she was the executive responsible for conducting the negotiations with JV Mine and QMNE Ltd. She formulated the proposal that came to the GML board, supervised the due diligence, retained the expert geologist and settled the relevant contracts. She was an enthusiastic supporter of the project and was keen to \"get it done'. Did Ms Gunter owe a duty of care to GML? To JV Mine? If so, did she breach that duty? 4. Once the problems with IV Mine become apparent, GML's advisers prepare a dra notice to be sent to the ASX in compliance with GML's continuous disclosure obligations under ASX Listing Rule 3.1. The notice states that disappointing results at the IV Mine site are not expected to impact on GML's financial performance for the relevant year. In fact, this is not correct, and this would have been apparent from a careful reading of the monthly management accounts and projections. The directors of GML say that they never saw the draft notice and if they had seen it, they would not have approved it. However, the board minutes suggest that the directors saw and approved the notice. It is sent to the ASX immediately after the board meeting. The directors do nothing to correct the notice once it is released. Have the directors (or any of them) breached their duty of care? 5. JV Mine Pty Ltd has four directors: Addis, Boon and two nominees of QMNE Ltd, the company that owns the other 50% of the issued shares in JV Mine. In 2011, the mine operated by JV Mine was hit by severe ooding and ceased production for several months. The chief operating officer of IV Mine sent a report to its directors explaining that there were cash ow difculties, that copper prices were dropping, View the Solution Ask Expert Tutors .u vodafone AU 46 11:14 am @ 55%ED coursehero.com Private Find study resources View the Solution Problem Set 7 The following questions should be answered after you have reatChapters l3 and 14. l. FWPL is proud of its longstanding connection with the Riverina area of New South Wales, where it is a signicant employer. The local hospital is raising money to build a new aged care facility for the community. Mario would like FWPL to make a signicant donation to fund the new facility, which he hopes will be called the 'Angelo and Francesca Galli Home'. Peter O'Donnell has queried whether this is an appropriate use of corporate funds, particularly given the substantial investment FWPL will be making this nancial year in developing the organic vineyard at Robinvale. Having regard to their duty to act in the best interests of FWPL, can the directors approve the donation? 2. The failed investment in N Mine is impacting on GML's nancial position. Over at Blue Mine, the reduced production levels imposed on it by its parent company GML have made that company less protable; however, it still has some cash available. To Smooth over the current difculties at GML, Blue Mine makes an unsecured loan of $5 million to GML. Have the directors of Blue Mine breached their duty to exercise their powers and discharge their duties in the interests of Blue Mine? Would your armwer be different if Blue Mine's constitution included a provision reflecting s 187 of the Corporations Act? 3. At GML, Addis and East are concerned that the significant stake in GML acquired by XYZ Limited means that they might end up frozen out of the business they started. For some time, East has been in discussion with another mining industry gure about a highly prospective gold eld near GML's mine in the mid-north of Western Australia. East suggests to Addis that GML issue 10 million shares to this person as a means of creating ties with GML that might help it to secure access to the eld in the future. Addis and East bring the proposal to the GML board. Mr Xu is furious as he sees it as a ploy to entrench further their control of the company by putting shares in the hands of a person who is likely to support Addis and East in the future. If the share issue goes ahead, have the directors breached their duty to exercise their powers for a proper purpose? 4. For many years, FWPL has had a transport and logistics contract with a company called BigTrucks. That contract is due for renegotiation. Peter O'Donnell, who is a director of FW'PL, owns RiverTrans Pty Ltd. He would like RiverTrans to tender for FWPL's transport and logistics business. Advise Peter and the FWPL board on what is required when a company controlled by a director of a proprietary company enters into a contract with that company. S. Pia Galli attends a wine industry conference at which she meets an agricultural scientist who is working on a process to extract value from the waste products of winemaking. The scientist is very keen to enter into ajoint venture with a signicant wine producer to test and hopefully commercialise the technology. At Pia's suggestion, the scientist prepares a proposal and presents it to the board of FWPL. FWPL is impressed by the technology and the opportunity it presents for the business, but because of the signicant investment it is making in the organic vineyard at Robinvale, is not in a position to take it up. After the meeting, Pia phones the scientist Ask Expert Tutors