Reference no: EM132712589

Notable Stationery Pty Ltd is an Australian company that sells high-end stationery products. Silverlinings Paper is a company registered in Australia. It is a seller of premium paper, calendars, diaries and pens.

• Through various factors, the company's profits have decreased in the last several months. The directors appoint an external expert from France, Warren Batty, to organise a plan to raise the company's profitability. Warren is also made a non-executive director.

• Owing to the distance between France and Australia, Warren cannot travel to Silverlinings' head office in Sydney very often. The company buys a corporate videoconferencing account to facilitate Warren's attendance during board meetings. But sadly, due to the 10-hour time difference between Australia and France, Warren hasn't been able to attend most of the board meetings.

• Warren is not fussed about this. He thinks that he is a marketer who shouldn't be dealing with company management. In any case, the directors and other external advisers can always update him.

• Silverlinings' has now released its 2020 year-end financial statements. Jacob Marx, who is a non-executive director, who is a certified public accountant, and the company's external accountants and auditors realise that the financial statements did not disclose that the company had just borrowed $10 million from ANZ Bank. This omission makes it look like the company's financial position is much better than it really is.

Problem 1: Discuss the potential liability of Silverlinings' directors under s 180 of the Corporations Act, including any defences they might raise. You must consider all the facts presented above in your answer.