Wealth Advisory Pty Ltd (WA P/L) provides advisory services to clients about investment strategies for wealth creation, especially via investments in shares. WA P/L was started by Ginny Potter. Over 25 years, Ginny built WA P/L into one of the largest private investment advisory businesses in the Southern Hemisphere. Ginny and Lucius Weasley, Ginny's husband, each had a 50% shareholding and were the only two directors of WA P/L. Lucius has always been the managing director as Ginny focused on investment strategies. Recently Ginny retired as a director, but she still attends board meetings as she loves the thrill of the share market and strategic issues.

Ginny and Lucius had three children, who now have roles in WA P/L:

Harry, finance manager and director, Luna, business strategy manager and director, and Bellatrix, part-time assistant in the social media department.

Since everyone still thinks Ginny is usually right, the other directors generally vote following Ginny's advice. Bellatrix is not a director of WA P/L, but she does not like feeling left out, so she attends board meetings and votes on all board decisions.

WA P/L's share structure was later changed as follows:

Ginny - 52%

Lucius - 27%

Harry - 7%

Luna - 7%

Bellatrix - 7%

One day, when Harry is doing the cash flow projections, he realises that there has been a huge error in the previous cash flow calculations and WA P/L is $7m in debt, instead of being $7m in profit. (He thinks someone mistook the debits for credits).

Part A

- If WA P/L goes into liquidation, who will be considered as directors for the purposes of owing directors' duties under the Corporations Act 2001?

- Explain why.

(For the answers to all these parts, refer to relevant court cases, legal principles and legislation wherever applicable)

Part B

Sadly, Ginny and Lucius have gone through a bitter break up. Harry, Luna and Bellatrix side with Ginny. With their support, Ginny would like to pass a shareholder resolution to amend WA P/L's company constitution to appoint 2 more directors as

the constitution only provides for a maximum of 4 directors. Lucius is very much opposed to this amendment. Ginny, Harry, Luna and Bellatrix seek your advice about whether they will have sufficient voting power to amend the constitufion.

- Do you think they will have sufficient voting power?

- Why or why not?