ZUB investment Ltd (ZUB) is a specialist financial management company that is listed on the ASX. ZUB has many investors in Australia, and the company is generally highly regarded. ZUB has 4 directors; Mr Shorter, Ms Drifter, Mr Shapeless & Dr Wittless (who holds a PhD in creative marketing). At a directors meeting in March this year, a proposal to purchase a small financial management company is discussed. The proposal is accompanied by a report detailing the financial status of a company called Risky Business Pty Ltd. Only 2 of 3 directors attend this meeting. Ms Drifter does not attend as she is away on holiday in the Caribbean. Mr Shapeless attends the meeting initially, however he leaves abruptly during opening proceedings for medical reasons (he has recently undergone emergency surgery). During the meeting, Dr Wittless glances over the financial report for Risky Business Pty Ltd and comments that it sort of looks impressive. Mr Shorter does not read the financial report for Risky Business Pty Ltd, considering the opinion of Dr Wittless to be entirely reliable. Together, Mr Shorter and Dr Wittless approve the proposal for ZUB to purchase Risky Business Pty Ltd. Not long after the purchase, it becomes apparent that Risky Business Pty Ltd is financially unsound and purchasing the company has grave consequences for ZUB, which appears to have become insolvent. The shareholders of ZUB are angry and wish to make the Board accountable for their decision-making.

A). Outline the consequences that are likely to apply for the breaches of directors duties identified in Part A (10 marks).