Paul, Sam, and Tina are the directors and shareholders of Exotic Places Pty Ltd ('Exotic'), a travel company. Each holds 25 % of the shares in the company. The

Page 2 of 2

Remaining 25% of shares are held by five persons, each with 5% of the shares. Due to recent international events and the associated decrease in international tourism, the company is having some financial difficulties, although Exotic is not yet insolvent and has reasonable cash reserves on which to draw if necessary.

Paul and Sam have had enough of the tourist and travel industries and wish to get out of the business. They decide that Exotic should lend $40,000 of the company's cash reserves to a new business, which is owned by Paul and Sam's wives, at an interest rate of 3.5% per annum. At the board of directors meeting called to decide this matter, Tina expresses concern about the loan, stating that she believes the company should be consolidating its current activities and maintaining its cash reserves rather than making a loan to a new and unproven business. Paul and Sam outvote Tina and the loan is given to Paul and Sam's wives for their new business. Paul and Sam subsequently remove Tina from the board of directors (in accordance with s 203C). Tina is furious about these actions, believing that that the loan will cause Exotic to become insolvent and that Paul and Sam are trying to prevent her from having a say in the company.

Advise Tina as to what she can do, as a minority member of Exotic, to prevent the loan from going ahead; to have Exotic take legal action against Paul and Sam for breach of their duties to Exotic; and to have herself reinstated as a director of Exotic.

Refer to case law and/or the Corporations Act as relevant to support your answer.