SCENARIO
Bill Peters is the Managing Director of Smart Investments Pty Ltd (SI Pty Ltd) there is three other Directors. Matt Banniston, Lea Smith and Shelley Stevens.
SI Pty Ltd is a private company who invest money on behalf of their client's base. The Investment Portfolio's are in the Commercial Rental market, whereby SI Pty Ltd purchases commercial properties such as rural shopping centres and the like. The purpose of investing is to minimise the taxation obligations of their clients.
All four Directors of SI Pty Ltd have significant experience in the Commercial Rental market. Matt is in amateur actor in his spare time and is a University friend of Allan Otters.
Allan Otters is a sole Director of Otters Film Productions Pty Ltd. Allan promotes up and coming young film producers and stage productions for the local Australian market.
Allan has been given a script for a new movie to be called; "Yesterday When the War was Over." The book of the same title was a major seller and earned the author a significant sum of money.
Garth Adams is the script writer and he has been getting rave reviews in the independent film industry for his short films and has even won local and international awards. Garth has written a script for a movie based on the book.
Garth wants to extend his career from short films to feature length movies and so he has approached Allan to see if Allan can raise the $10 million he will need to turn his script into a movie. Garth has secured Peter Weir, an internationally recognised Director to direct the movie.
Garth has also secured Cate Blanchet, Mel Gibson and Geoffrey Rush to star in the movie.
Allan then approaches Matt Banniston to secure SI Pty Ltd as investors. Matt takes the proposal to the Board of Directors and they agree to use their client base to raise funds. SI Pty Ltd then sends their client's offers to invest in the film and advise that the film industry attracts a significant taxation benefit.
SI Pty Ltd raises the $10 million and invests in Otters Film Productions Pty Ltd. Shortly after receiving the $10 million Otters Film Productions Pty Ltd is placed into liquidation. The investment from SI Pty Ltd has been seized and is used to pay Otters Film Productions Pty Ltd current debts.
As a result of the liquidation the film cannot be made.
Question:
Discuss the position of each of the Directors. Identify if any breaches of Directors Duties have occurred and identify what they are.
Discuss who you believe may be at fault and why.