You are also expected to be able to justify your conclusion by reference to the relevant legislation in the Corporations Act, ASIC Act, or any other legislation you think appropriate, ASIC regulatory guidelines and case law.

https://asic.gov.au/

http://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/

Your senior manager has high expectations of you and she will not accept:

1. any grammatical errors or unsubstantiated statements or conclusions made in your report.
2. Incorrect spelling or references to the client
3. She will not tolerate any material copied from textbooks, google or any other source which you attempt to pass off as your own material.
4. Any references you make to articles, journals or other textbooks must have been reviewed or read and understood by you and correctly referenced.

Background:

You have recently graduated as an accountant/ financial adviser and your first position is with medium sized integrated accounting and financial services organisation in Melbourne.

The directors of Metrix Pty Ltd (Metrix) a large private company that is involved in the building of residential homes throughout Australia has sought an appointment. You have been asked by your senior manager (Megan) to sit in on a meeting of the client and the directors and to take notes on the issues raised and then to have a written report on the matters for review by your senior manager. The meeting is scheduled for Tuesday 13 September at 8 am. You will be expected to take notes of the meeting and then have a statement of advice for Megan to review. Once she is happy with it, she will send out to the client.

THE CLIENT MEETING

The client and issues:

Metrix Pty Ltd (Metrix) is a large private company established in 1976 by Mario Le Mesurier and Stephen Adam. The two were carpenters and built up the company to be the preeminent home building company in Australia. The company focuses only on building residential homes. They do not build commercial buildings.

The company has the following directors and senior officers:

Mario Le Mesurier Chairperson

Stephen Adam: Managing director

Li Ma: Chief Financial Officer

Suren Chandra: Construction director

Victoria Moser: Design director

Joshua Leong: Purchasing director

Ali Ahmed: Senior safety and welfare manager

Kathy Di Mella: Senior architect

Mario, Stephen and Li have asked for the meeting because they have the following issues, they would like advice on.

Issue 4: Because of the shortage of supply of timber and other building materials, Joshua the purchasing director found it difficult to source the materials at a reasonable price. He managed to find one supplier Sandalwood Pty Ltd who was prepared to provide Metrix with the building materials at a reasonable price. To "thank" the director of Sandalwood Pty Ltd, Joshua signed a contract to transfer a block of land owned by Metrix to the director of Sandalwood Pty Ltd at no cost. Joshua signed the contract and also forged the signature of Victoria on the contract. Kathy Di Mella, the senior architect is nervous about the financial viability of Metrix and therefore her employment. She has always harboured ambitions of running her own architectural practice. During the year Victoria inadvertently left her computer on and Kathy downloaded the client list of Metrix. She established a new company called Melldik Services Pty Ltd to provide architectural services and contacted the clients from the lost she downloaded One of Metrix's clients advised Mario that Kathy's company had contacted them. Issue they seek advice on: 1a. Is the contract valid and is Metrix liable to transfer the land to the director of Sandalwood Pty Ltd. b. Can Metrix take action against Joshua? c. Can the directors remove Joshua? d. Can Metrix take any action against Kathy? Issue 5: Li has indicated to the board of directors that the company is fast running out of funds to survive and complete the housing contracts. Given the downturn in the financial markets around the world, construction companies in particular are suffering from severe cash burn at the moment. Li has indicated that Metrix only has sufficient cash at bank to fund 3 months of operations. Mario, Stephen and Li are looking at various funding options and are considering: 1. Continue trading and incurring further debt in the hope of riding out the financial storm. 2. A rights issue 3. Private placement to Paradise Merchant Bank Ltd, see below The current shareholders of the company are: Employees: 5% (15 staff) Mario:12.5% Stephen: 12.5%Li: 2.5% Tiger Investments Ltd 40% (an investment bank based in Malaysia.) Paradise Merchant Bank Ltd: 27.5% (a venture capitalist) based in Melbourne. There are 12,000,000 shares currently on issue. The current market price is $1.50 which represents a decrease of 30% since the beginning of the year. The valuation was prepared by your employer. Megan advised the directors in the meeting that the price of a rights issue should be at a 30% discount to current market price. The rights issues should be in the following ratio: 1:3 (for every 3 ordinary shares owned 1 new share can be acquired under the rights issue. When Tiger Investment Ltd and Paradise Merchant Bank Ltd acquired their interest in the company the share price was $12.45 per share. Li estimates the company will need $15,000,000 within three months. Mario, {Stephen and Li have no spare cash to invest in the company and would be happy to reduce their holdings. Issue they seek advice on: 1. What are the consequences if the company continues trading after the three months are up? 2. How much could Metrix raise by way of the rights issue assuming all the shareholders take up their entitlement? 3. What are the risks to them given the current economic and lack of condence in the construction industry and nancial markets turmoil? 4. What is a private placement and does the company need to issue any documents for this