Law > QUESTIONS & ANSWERS > University of Texas - LAWS 3100Tutorial 6, week 7 questions (1). BEST ANSWERS (All)

University of Texas - LAWS 3100Tutorial 6, week 7 questions (1). BEST ANSWERS

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Laws3100 semester 1 2018 Tutorial questions Tutorial 6, week 7 The following problems and questions should be answered after you have read HRS Chapters 11 and 12. 1 At SAFPL, David remains conce... rned about the level of dissent and discontent Jason is stirring up among the Henry grandchildren. He decides to contact Steven and offer to acquire Steven’s shares in SAFPL. As managing director, David knows there is a good chance that the company will soon enter into a supply agreement with a major food processor in the United States that will greatly enhance the value of the business. He believes now is the right time to make an offer for Steven’s shares, before the deal is finalised and announced. David knows that, as a director of SAFPL, he owes duties to the company. But does he owe any duties to Steven in these circumstances? 2 JV Investor Pty Ltd is 50% owned by AMGL. In 2009, AMGL was approached by Blue Ltd, the other shareholder in JV Investor, to make a further major investment in JV Investor, to enable it to develop a new and highly prospective technology based on blockchain. The then directors of AMGL delegated to others, including a computer expert, the task of obtaining the technical information about the prospects of the technology. The report prepared for the directors indicates that the proposed investment should be very successful. Queried by his fellow directors about the optimistic forecasts, Mr Chester (who has an information technology qualification) assures them that all appears to be in order. However, some of the information has been negligently prepared. This means that, when the directors rely on the report and invest AMGL’s funds in the technology, the investment will not be as successful as the report indicates. Have the directors of AMGL (or any of them) breached their duty of care? 3 Gina Gunter is the company secretary and general counsel of AMGL. In 2009, she was the executive responsible for conducting the negotiations with JV Investor and Blue Ltd. She formulated the proposal that came to the AMGL board, supervised the due diligence, retained the IT experts and settled the relevant contracts. She was an enthusiastic supporter of the project and was keen to ‘get it done’. Did Ms Gunter owe a duty of care to AMGL? To JV Investor? If so, did she breach that duty? 4 Once the problems with JV investor become apparent, AMGL’s advisers prepare a draft notice to be sent to the ASX in compliance with AMGL’s continuous disclosure obligations under ASX Listing Rule 3.1. The notice states that disappointing results at the JV Investor project are not expected to impact on AMGL’s financial performance for the relevant year. In fact, this is not correct, and this would have been apparent from a careful reading of the monthly management accounts and projections. The directors of AMGL say that they never saw the draft notice and, if they had seen it, they would not have approved it. However the board minutes suggest that the directors saw and approved the notice. It is sent to the ASX immediately after the board meeting. The directors do nothing to correct the notice once it is released. Have the directors (or any of them) breached their duty of care? [Show More]

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