Corporate law question 2 questions total 1500 words
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Vegas Ltd was incorporated on January 2014 and was floated on the
Australian Securities Exchange (ASX) in June 2014. As part of the initial
public offering (IPO) the company issued 300 million shares at $1.50 and
raised $450 million from investors. Vegas Ltd is primarily involved in
property development specialising in casinos and luxury hotels.
Vegas Ltd has three non-executive directors:-, Dr No, Mr White and Mr
Big. Vegas Ltd has one executive director, Mr Bond who is also the
company’s chief executive officer. Mr Big is also the company’s
Chairperson and has an accounting qualification. Mr Goldfinger is the
company’s chief financial officer but is not a director of the company.
Goldfinger was responsible for preparing the financial statements
including the balance sheet contained in the company’s annual report for
the company’s external auditors, Enron Auditors. Moneypenny is Bond’s
personal assistant and was also employed as the company secretary.
Vegas Ltd began developing and acquiring new and existing casinos in
Macau in March 2015. By the end of year, the company had spent nearly
all of the funds raised through the IPO. In April 2015 the company
decided to borrow funds from Cayman Bank. The bank manager at
Cayman Bank, Slick Willy advises Vegas Ltd to borrow using a 12 month
short-term bridging loan of $500 million and “spread” the borrowing
over its balance sheet. Slick Willy advises Bond and Goldfinger that most
of the borrowings could be characterised as non-current since the final
repayment instalment could be rolled into next financial year with the
maturity recorded as July 2016 even though most of the loan repayments
are due within current financial year.
At a recent meeting, the board of directors considers the approach of
Cayman Bank and decide to go ahead with the financing arrangement.
Unfortunately, no minutes of the crucial meeting were recorded by
Moneypenny in her capacity as the company secretary and as required
under the law. Bond, decides to draft an announcement to the ASX
advising the market that the company has received new funding for the
purposes of acquiring a casino in London’s Mayfair district called Casino
The contents of the announcement were also discussed at the board
meeting. However, the draft was prepared by Ms Moneypenny after the
meeting was concluded. Dr No, Mr Big, Mr Goldfinger and Mr White did
not read the draft ASX announcement. Bond decides to tell his personal
assistant, Ms Moneypenny to buy some shares in Vegas Ltd before the
Casino Royale announcement is released to the ASX. The ASX
“Vegas LTD is pleased to announce the acquisition of Casino
Royale in London fully funded through the issue of long term non-
Moneypenny purchases $7,000 of shares in Vegas Ltd the day before the
announcement at $1.75 per share. After the announcement is released to
the ASX the share price of Vegas Ltd fluctuates from $1.90 down to $1.35.
Moneypenny decides to sell her shares for a loss at $1.50, crystallising a
total loss of $1,000 on her recent purchase.
The 2016 annual report was also table at the board meeting in a pack
containing 600 pages. The annual report was signed off by the
company’s external auditors, Enron Auditors. Enron undertook two
audits of the company’s accounts but did not detect any irregularities
during the financial year. The board approved the annual report and
directors signed off on the report. The annual report of Vegas Ltd
BALANCE SHEET AS AT 30 JUNE 2016Millions of Dollars
Current Assets $
Current Liabilities $
Total 600 600
1:- HAS MR BOND BREACHED HIS DIRECTORS’
AND/OR FIDUCIARY DUTIES? PLEASE USE CASES AND/OR
RELEVANT SECTIONS FROM THE CORPORATIONS ACT.
2:- HAVE, DR NO, MR BIG AND MR WHITE
BREACHED THEIR DIRECTORS’ DUTIES AND/OR FIDUCIARY
DUTIES? PLEASE USE CASES AND/OR RELEVANT SECTIONS
FROM THE CORPORATIONS ACT.