Reference no: EM132204927

Scott Sham is the managing director of BlockBusterz Property Ltd (“BlockBusterz”). BlockBusterz is a well- established property development company that specializes in apartment building in major cities. BlockBusterz recently issued a prospectus in Australia designed to induce investors to invest $500,000 with the company in the form of either shares or debentures. The purpose of the issue is to finance the company’s expansion to building apartments in the major mining towns of Western Australia and North Queensland which would be a huge venture. The company aims to raise approximately $20 million in new funds using the brochure.

The prospectus stated that the company was an applicant for a re-zoning licence and, if granted, BlockBusterz stated there would be substantial earnings arising from this new venture. The prospectus is over 50 pages long and includes a report from the company’s auditor who confirm that all the income and profit forecasts are 100% accurate based on the information provided by the directors. To make it more enticing the prospectus includes a generic testimony available on the company website from the company’s lawyers as follows: “Specter Lawyers are confident in the company’s long term success. BlockBusterz never fail at any project they commit to.” In a hurry to get the prospectus out and exhausted from overwork, Scott forgets to sign the prospectus. Over one million shares were issued under the prospectus offer which still remains open for subscription. The application for the re-zoning licence failed.

Under Corporation act 2001, what are the consequences for the director?