Reference no: EM133297735

ABC Company Ltd. is a private company engaged in the manufacturing of garments. It has four directors, Tom, Betty, Paul and James. The company has monthly board meetings, which Tom is only able to attend every four months because he resides abroad. Tom an accountant and signatory to the company accounts signed blank cheques and left them with the company's accountant any time he is around. The accountant has embezzled $20 million and has absconded. ABC Company entered into a contract with Equip Ltd. for the supply of equipment to their new production centre. Paul who is a director and major shareholder of Equip Ltd did not disclose his interest in Equip at the time the board took the decision to enter into the contract. James who has an interest in research discovered a synthetic fabric and he persuaded the board to invest in the manufacture of the fabric. The board refused stating that it was a risky venture even after James informed them of the high profit return. James has decided to manufacture the fabric on his own and is making good profit. The board of ABC has decided to sell a parcel of land it acquired some years ago to Betty's sister at a price far below the current market value. They justified their action to the shareholders in general meeting by a presentation in which they showed that the company was having cash flow problems due to the money embezzled by the Accountant. Peter, a minority ordinary shareholder even though he did not receive notice of the meeting stood up to ask questions at the meeting and to demand poll vote. The chairman of the meeting asked him to shut up and sit down.

Advise the company on the issues raised.