ACC704 - Companies & Securities Law

TRIMESTER 3, 2014

ACC704 - Companies & Securities Law

Assessment 2

Research Assignment:30%

Length: 2500 +10% words

Due Date:Week 10 - Friday 30^th January, 2015 (5.00 pm)

Submission: Electronic submission–Word .doc or .docx to be uploaded to Turning andMoodle

Anthony, Ben, Catherine and Daniel are directors of Chaser Ltd., a company whose business is wine bottling. Given the downturn in the economy and entry of new countries into the "New World" wine market, competition especially in Asia is becoming increasingly stiff. The directors of Chaser Ltd. feel that it would be prudent to diversify and invest in other business opportunities. During the Easter vacation, Anthony caught up with his old friend from university, Wayne, who works for a green energy company in Norway that predominantly specialises in Tidal energy. Tidal energy is a very new form of energy that is picking up momentum in Europe and the Atlantic coast of the USA. The power created through tidal generators is generally more environmentally friendly and causes less impact on established ecosystems. Although not yet widely used, tidal power has a potential for future electricity generation. None of the energy companies in Australia currently use this form of energy. At the next board meeting Anthony mentions tidal energy as a possible business venture for Chaser Ltd. Anthony invites Wayne who has just formed a company, Westpool Pty. Ltd. that makes tidal stream generators, to come and speak to all the directors of Chaser Ltd., at their next meeting about tidal energy for thirty minutes. Wayne is a very convincing speaker who showed them great 3D underwater pictures of the tidal stream generators his company makes. After Wayne leaves, the directors are all very excited at the prospect of being pioneers in the field of tidal energy in Australia and believe that this will be a profitable business. Without much further discussion they decided to invest $20 million into this venture and to give the sole contract to supply tidal steam generators to Westpool Pty. Ltd. Three months later Chaser Ltd.'s tidal energy business is a disaster. They discovered that the Australian waters is not suitable for tidal energy. While it may be suitable in Europe and the USA, Australia is not a suitable site for tidal energy, mainly because of the Great Barrier Reef. The directors later discovered that although Wayne had been very convincing in his speech to them he really was not an expert in tidal energy and actually held an insignificant position in his company in Norway. Much to the directors' surprise, they discovered that Anthony is a major shareholder of Westpool Pty Ltd.

Advise the directors of Chaser Ltd whether they have breached their directors duties under both the Corporations Act 2001(Cth) and general law.