Advise whether the same standard will be applied to Drago, as the company’s chief financial officer?

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LAW205 COMMERCIAL AND CORPORATE LAW FOR ACCOUNTANTS

ASSIGNMENT 2 – CASE STUDY

VALUE: 30% OR 30 MARKS

WORD COUNT: 2,000. THIS INCLUDES FOOTNOTES BUT EXCLUDES

THE REFERENCE LIST/BIBLIOGRAPHY. (10% margin under or over)

This assignment may be submitted on or before 11.59pm (ACST), Study Week 9

11 May 2019

· Submit your Assignment using Word or PDF file format

· The assignment must be lodged online via Learnline Assignment Lodgement link.

· Assignment lodgements will be acknowledged automatically on the Learnline site, on submission.

· Citations: The Harvard or AGLC referencing styles may be used, as long as you choose one style and use it consistently.

· Further questions: Post your questions on the discussion board.

ASSIGNMENT 2 – CASE STUDY

There are three (3) questions worth 10 marks each.

DEF Ltd was incorporated on January 2011 and was floated on the ASX in March 2011, having raised $20 million from investors. The company is primarily involved in mining and exploration activities in the Northern Territory. DEF Ltd have three directors: Rocky, Drago and Clubber. Rocky is the company’s chief executive officer. Clubber is the company’s chair. Drago is the company’s chief financial officer. The company began exploration activities in July 2011. After drilling a number of sites, a geological survey was commissioned and the results from the mine wells were tested. The results from the survey reveal that the mining site has low levels of gold deposits and is considered to be uncommercial. The company has already spent $5 million. At a recent meeting, the board considers whether to abandon its mining activities and return the company’s remaining capital back to its shareholders. Rocky is an eternal optimist and never knows when to quit. He argues that the company is on the verge of a major discovery and should continue with its exploration activities. Clubber and Drago are less optimistic and suggest that the company’s remaining capital should be returned back to investors. To avoid another heated confrontation, they agree with Rocky that the company should continue with its drilling program. At the completion of the drilling activities in 2018, all of the company’s capital has been exhausted and there have been no major discoveries.

Required:

1. Have Rocky, Drago and Clubber breached any directors’ duties? (10 marks)

2. Do they have an arguable defence? (10 marks)

3. Advise whether the same standard will be applied to Drago, as the company’s chief financial officer? (10 marks)