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LAW2001 Corporate Law

tag 0 Download 10 Pages / 2,431 Words tag 01-11-2020
  • Course Code: LAW2001
  • University: Torrens University
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  • Country: Australia


Case Study 1

Uninest Limited (‘Uninest’) is a student accommodation provider. A competitor, Urbanlodge Limited (‘Urbanlodge’), is planning a takeover of Uninest as the current management of Uninest is underperforming, its share price is declining and it is experiencing cash-­?flow problems. Uninest’s shares are valued at $10.00 per share. Urbanlodge makes an offer of $12.00 per share. The board of directors of Uninest is aware that Urbanlodge intends to replace the entire management team (board of directors) at Uninest with a new management team, if Urbanlodge is successful in its takeover bid.

Christine Neales (‘Neales’) acts as a consultant for Uninest and has negotiated on behalf of Uninest in a number of important transactions in the past, including the acquisition and development of new properties and the negotiation of long leases. Due to her experience in the field, Neales is given great autonomy in decision making in Uninest and the board of directors always follows her directions. Neales devises a strategy to ensure that Urbanlodge’s takeover bid will not succeed. Neales instructs the directors to pass a resolution for Uninest to lend $30 million interest-­?free to one of its directors, Gilligan, to enable him to purchase shares in Uninest, as this would inflate the share price of Uninest. This would mean that Urbanlodge would have to offer a significantly higher share price in order to succeed in its takeover offer. The directors of Uninest know that Urbanlodge would not be in a position financially to make a higher offer and therefore its takeover bid would not succeed and the directors’ positions on the board of Uninest would not be at risk. All of the directors of Uninest vote in favour of the resolution proposed by Neales, Uninest makes the loan and the directors issue the shares in Uninest to Gilligan.

Advise whether the directors of Uninest have breached any of their general law directors’ duties and also their directors’ duties under the Corporations

Act 2001 (Cth). In your answer, discuss whether Neales would have any liability. Give reasons for your answer and provide relevant statutory law and/or case law as authority for your answer.

Case study 2

Primo Construction Limited (‘Primo’) is an industrial construction company.

Shane is a director and shareholder of Primo.

Primo performs construction work for Landstock Limited (‘Landstock’) on an ongoing basis. Shane knows that Landstock is going to call for tenders (offers to perform work) from various construction companies, for a new construction contract to build an industrial warehouse near a major port. The warehouse is to be used for the unpacking and storage of goods from shipping containers.

Before the tender process begins, Shane forms a new company called Iconstruct Limited (‘Iconstruct’). Shane is the managing director and a shareholder of Iconstruct. The other directors and shareholders of Primo are unaware of the existence of Iconstruct. Stanley knows that Primo will submit a tender for the contract with Landstock and he also knows what Primo’s tender price will be, based on its construction costs. Iconstruct submits a tender for the contract with Landstock for a lower tender price than Primo’s tender price. The construction contract is awarded by Landstock to Iconstruct due to its lower tender price. If it were not for Iconstruct’s lower tender price, the contract would have been awarded to Primo.

Please answer the following questions and in each case give reasons for your answer and support your answer with authority in the form of relevant statutory law and/or case law.

1.Discuss whether Shane has breached any of his general law and/or statutory duties as a director.

2.Outline the remedies and/or penalties which would apply if both the general law and statutory director’s duties referred to in Question (a) above were breached.

Case study 3

Dronebotics Limited (‘Dronebotics’) is a start-­?up company which designs, manufactures and supplies autonomous drone systems, using automatic flying robots. The robots are programmed by software to complete tasks such as monitoring oil pipelines, inspecting equipment or surveying land and then to return to the base station. The use of the flying robots instead of humans to perform these tasks increases cost efficiencies and productivity.

Dronebotics is approached by an agribusiness, CorpGrain Limited (‘CorpGrain’). CorpGrain wants to use the autonomous drone system to inspect towering grain silos, a task which is very dangerous for employees to perform and which requires compliance with onerous safety regulations.

Frank and Diane are executive directors of Dronebotics and Ron and Kelly are non-­?executive directors. Frank and Diane are entrepreneurial risk-­?takers and are keen to expand Dronebotics into as many different industries as possible.

Frank and Diane want to enter into a contract to supply the autonomous drone system to CorpGrain.

Ron and Kelly are concerned that the current technological capabilities of the autonomous drone system would not cope with the complexity of the proposed task of inspecting the grain silos at enormous heights and that it would require considerable and costly further research to develop the appropriate software. Ron and Kelly are more cautious and use their voting power on the board of directors to commission an expert report on the feasibility of the proposed task being successfully executed by the autonomous drone system with its existing software.

Scenario A

The expert report concludes that it would not be feasible for the proposed task to be successfully executed by the autonomous drone system with its existing software. Frank and Diane refuse to attend the board meeting at which the decision is taken to commission the expert report and also refuse to attend the board meeting at which the outcome of the report is discussed. Frank and Diane are subsequently given the written report to read, but neither of them

read the report nor do they make any enquiries about the report of Ron and Kelly (who have read, assessed and accepted the contents of the report).

Frank and Diane are both very optimistic and are convinced that the autonomous drone system has the required capabilities to carry out the proposed task with the existing software. They are very domineering and stubborn personalities and, in the end, Ron and Kelly are persuaded to vote in favour of the proposal to enter into the contract with CorpGrain.

Have Frank, Diane, Ron and/or Kelly breached any of their general law and/or statutory directors’ duties? Give reasons for your answer and provide relevant statutory law and/or case law as authority for your answer.

Scenario B

Assume that, in the same circumstances as described in Scenario A, the results of the expert report instead indicate that the autonomous drone system in fact has the capability to complete the task required by CorpGrain and that it would be feasible to successfully execute the task. Dronebotics is therefore in a position to enter into a very profitable contract with CorpGrain.

All four directors vote in favour of the proposal to enter into the contract with CorpGrain for the supply of the autonomous drone system.

After purchasing the autonomous drone system, CorpGrain experiences ongoing technical difficulties with the system and is unable to use it for the inspection of its grain silos. CorpGrain states that its own expert can produce evidence that the existing software is not adequate and it intends to claim substantial damages from Dronebotics.

Discuss whether any statutory defences could be raised by the directors in the circumstances. Give reasons for your answer and provide relevant statutory law and/or case law as authority for your answer.

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Total 10 pages

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help (2020) Corporate Law [Online]. Available from:
[Accessed 15 August 2022].

My Assignment Help. 'Corporate Law' (My Assignment Help, 2020) <> accessed 15 August 2022.

My Assignment Help. Corporate Law [Internet]. My Assignment Help. 2020 [cited 15 August 2022]. Available from:

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