You are a director of a public company. In the last board meeting you discovered that the company has lost a lot of money from a failed investment in coal seam gas. You are worried that you are to blame as you proposed the investment based on the recommendations from 3 independent reports and your own investigation as an engineer. All the board voted in favour of the investment. You read the reports thoroughly, made further investigations and have no personal interest in coal seam gas.

a)Should an allegation of breach of duty arise:

• identify specifically and explain the defence(s), if any, potentially available under the Corporations Act?
• Is it likely this defence will be successful and why/why not?

b) You are also worried that the company might be insolvent because of several more unsuccessful investments in the past 6 months.

• What are the indicia of insolvency? Name at least 2.
• Provide a relevant case authority describing indicia of insolvency.

c) The directors call an emergency board meeting as the company accountant has just emailed to confirm that the company accounts are showing losses. The losses date back 3 months.

• What is the best course of action now for the directors?
• Explain why.