Reference no: EM131029670 , Length: 2500 Words

1. FWPL is proud of its longstanding connection with the Riverina area of New South Wales, where it is a significant employer. The local hospital is raising money to build a new aged care facility for the community. Mario would like FWPL to make a significant donation to fund the new facility, which he hopes will be called the ‘Angelo and Francesca Galli Home'. Peter O'Donnell has queried whether this is an appropriate use of corporate funds, particularly given the substantial investment FWPL will be making this financial year in developing the organic vineyard at Robinvale. Having regard to their duty to act in the best interests of FWPL, can the directors approve the donation?

2. The failed investment in JV Mine is impacting on GML's financial position. Over at Blue Mine, the reduced production levels imposed on it by its parent company GML, have made that company less profitable; however it still has some cash available. To smooth over the current difficulties at GML, Blue Mine makes an unsecured loan of $5,000,000 to GML. Have the directors of Blue Mine breached their duty to exercise their powers and discharge their duties in the interests of Blue Mine? Would your answer be different if Blue Mine's constitution included a provision reflecting s187 of the Corporations Act?

3. At GML, Addis and East are concerned that the significant stake in GML acquired by XYZ Limited means that they might end up frozen out of the business they started. For some time, East has been in discussion with another mining industry figure about a highly prospective gold field near GML's mine in the mid-north of Western Australia. East suggests to Addis that GML issue 10,000,000 shares to this person as a means of creating ties with GML that might help it to secure access to the field in the future. Addis and East bring the proposal to the GML board. Mr Xu is furious as he sees it as a ploy to entrench further, their control of the company, by putting shares in the hands of a person who is likely to support Addis and East in the future. If the share issue goes ahead, have the directors breached their duty to exercise their powers for a proper purpose?

4. For many years, FWPL has had a transport and logistics contract with a company called BigTrucks. That contract is due for renegotiation. Peter O'Donnell, who is a director of FWPL, owns RiverTrans Pty Ltd. He would like RiverTrans to tender for FWPL's transport and logistics business. Advise Peter and the FWPL board on what is required when a company controlled by a director of a proprietary company enters into a contract with that company.

5. Pia Galli attends a wine industry conference at which she meets an agricultural scientist who is working on a process to extract value from the waste products of winemaking. The scientist is very keen to enter into a joint venture with a significant wine producer to test and hopefully commercialise the technology. At Pia's suggestion, the scientist prepares a proposal and presents it to the board of FWPL. FWPL is impressed by the technology and the opportunity it presents for the business, but because of the significant investment it is making in the organic vineyard at Robinvale, is not in a position to take it up. After the meeting, Pia phones the scientist and says that she would like to invest her own money in the project. Pia does not tell her fellow FWPL directors of her decision. Is Pia allowed to make the investment?

6. In addition to being a non-executive director of GML, Dr Dawes is a partner in a consulting business that provides specialist advice to mining companies on taxation matters. QMNE Ltd approaches Dr Dawes' business partners to undertake a review of the taxation position of JV Mine. The fee that is offered for the work will be paid by JV Mine and is very generous - well above current market rates for the equivalent work. Having regard to Ch 2E of the Corporations Act, would the approval of GML's shareholders be required before any agreement is made between JV Mine and the consultants?