Uninest Limited (Uninest) is a student accommodation provider. A competitor, Urbanlodge Limited (Urbanlodge), is planning a takeover of Uninest as the current management of Uninest is underperforming, its share price is declining and it is experiencing cash-flow problems. Uninests shares are valued at $10.00 per share. Urbanlodge makes an offer of $12.00 per share. The board of directors of Uninest is aware that Urbanlodge intends to replace the entire management team (board of directors) at Uninest with a new management team, if Urbanlodge is successful in its takeover bid. Christine Neales (Neales) acts as a consultant for Uninest and has negotiated on behalf of Uninest in a number of important transactions in the past, including the acquisition and development of new properties and the negotiation of long leases. Due to her experience in the field, Neales is given great autonomy in decision making in Uninest and the board of directors always follows her directions. Neales devises a strategy to ensure that Urbanlodges takeover bid will not succeed. Neales instructs the directors to pass a resolution for Uninest to lend $30 million interest-free to one of its directors, Gilligan, to enable him to purchase shares in Uninest, as this would inflate the share price of Uninest. This would mean that Urbanlodge would have to offer a significantly higher share price in order to succeed in its takeover offer. The directors of Uninest know that Urbanlodge would not be in a position financially to make a higher offer and therefore its takeover bid would not succeed and the directors positions on the board of Uninest would not be at risk. All of the directors of Uninest vote in favour of the resolution proposed by Neales, Uninest makes the loan and the directors issue the shares in Uninest to Gilligan.

Advise whether the directors of Uninest have breached any of their general law directors duties and also their directors duties under the Corporations 4 Act 2001 (Cth). In your answer, discuss whether Neales would have any liability. Give reasons for your answer and provide relevant statutory law and/or case law as authority for your answer.

To answer the question you need to follow this instruction :

1. Identify the directors duty which is relevant to the facts in the case study, based on the conduct of the director/s.

2. Analyse the duty (I.E. State the principles which apply to the duty, State any rules which may apply, Examine the tests used to determine compliance with or breach of the duty)

3. Apply the law to the facts

4. Conclusion