Legal Obligations of Directors under Corporations Act - FAQs

Can funds be raised without a prospectus?

REQUIRED

(a) Can the funds be raised without a prospectus

(b) If a prospectus is prepared, will the directors be safe from prosecution if they provide to investors in everything they know that is relevant about the investment?

(c) If the company issues a prospectus and the directors then become aware that there is a false and misleading statement in it, what alternatives are available to them under the CA 

(d) Does the CA provide any protection for directors where funds are raised under a prospectus that contains a misleading statement?

QUESTION TWO

Goodtimes Ltd has had a very successful trading period. The directors decide that the profits should be used to offer to purchase back some of their shares held by the members. The directors wish to undertake two transactions:

1. purchase 12% of the ordinary shares held by Jasline

2. offer all shareholders the opportunity to sell 8% of their ordinary shares to company.

REQUIRED:

In terms of s256 A, describe the obligations of the directors in terms of whether the Corporations Act allows the directors to undertake their plans (