Discuss the liability of each of the directors

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Reference no: EM133420045

Case: CANNY investment Ltd (CANNY) is a specialist agricultural management company that is listed on the ASX. CANNY has many investors in Australia, and the company is generally highly regarded. CANNY has 4 directors; Mr Pamper, Ms Drafter, Mr Shiftless & Dr Wittstein (who holds a PhD in "agricultural management").

At a directors' meeting in March this year, a proposal to purchase a small agricultural management company is discussed. The proposal is accompanied by a report detailing the business dealings of a company called Dodgy Business Pty Ltd.

Only 2 of 3 directors attend this meeting. Ms Drafter does not attend as she is away on holiday in the Caribbean. Mr Shiftless attends the meeting initially, however he leaves abruptly during opening proceedings for medical reasons (he has recently undergone emergency surgery). During the meeting, Dr Wittstein glances over the business report for Dodgy Business Pty Ltd and comments that it "sort of looks impressive". Mr Pamper does not read the business report for Dodgy Business Pty Ltd, considering the opinion of Dr Wittless to be entirely reliable. Together, Mr Pamper and Dr Wittstein approve the proposal for CANNY to purchase Dodgy Business Pty Ltd.

Not long after the purchase, it becomes apparent that Dodgy Business Pty Ltd is agriculturally unsound and purchasing the company has grave consequences for CANNY, which appears to have become insolvent. The shareholders of CANNY are angry and wish to make the Board accountable for their decision-making.

answer both A and B below (25 marks total)

A). Discuss the liability of each of the 4 directors on the Board of CANNY in terms of their duties under the Corporations Act 2001 (Cth)

B). Outline what consequences are likely to follow in the event of breach of the duties by the 4 directors

Reference no: EM133420045

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