AGC Software Pty Ltd (AGC) is a small proprietary company limited by shares that develops, tests and markets its own “anti-malware” software products. Ben has been the sole director at AGC for two years, and prior to that appointment he had served in many other executive roles for a variety of software companies. Ben also holds 40% of the shares in AGC. The remaining shares (60%) are held by 5 other shareholders who are not directors in AGC. Ben and the employees of AGC consider themselves to be highly skilled and knowledgeable in their field. AGC has been increasing its share in the anti-virus software market over the last year which has attracted the attention of the market-leading company, Big Nanny Ltd (Nanny). Nanny makes an offer to Ben that the company will purchase as many shares in AGC as Ben can sell to them, paying him $18.95 per share. This offer is very generous as a recent independent valuation valued AGC shares at only $12.95 each. Ben swiftly makes an offer to buy the shares of the other 5 shareholders in AGC. These shareholders accept Ben’s offer of $13.50 per share to sell most of their shares. However, after the sale is completed, the shareholders are shocked to find out that Ben subsequently sold his newly acquired shares to Nanny for $18.95 each. The shareholders are further shocked when they learn by chance that Ben’s wife is the Managing Director of Nanny. Question 1: Answer both A and B A). Discuss Ben’s liability as a director in terms of the Corporations Act 2001 (Cth) and the relevant case law. B). Discuss the possible remedies that AGC and the shareholders of AGC could seek against Ben.
AGC Software Pty Ltd (AGC) is a small proprietary company limited by shares that develops, tests and markets its own “anti-malware” software products. Ben has been the sole director at AGC for two years, and prior to that appointment he had served in many other executive roles for a variety of software companies. Ben also holds 40% of the shares in AGC. The remaining shares (60%) are held by 5 other shareholders who are not directors in AGC.
Ben and the employees of AGC consider themselves to be highly skilled and knowledgeable in their field. AGC has been increasing its share in the anti-virus software market over the last year which has attracted the attention of the market-leading company, Big Nanny Ltd (Nanny). Nanny makes an offer to Ben that the company will purchase as many shares in AGC as Ben can sell to them, paying him $18.95 per share. This offer is very generous as a recent independent valuation valued AGC shares at only $12.95 each.
Ben swiftly makes an offer to buy the shares of the other 5 shareholders in AGC. These shareholders accept Ben’s offer of $13.50 per share to sell most of their shares. However, after the sale is completed, the shareholders are shocked to find out that Ben subsequently sold his newly acquired shares to Nanny for $18.95 each. The shareholders are further shocked when they learn by chance that Ben’s wife is the Managing Director of Nanny.
Question 1: Answer both A and B
A). Discuss Ben’s liability as a director in terms of the Corporations Act 2001 (Cth) and the relevant case law.
B). Discuss the possible remedies that AGC and the shareholders of AGC could seek against Ben.
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