Discuss with reference to legislation and case law

Assignment Help Business Law and Ethics

Reference no: EM133534670

Toto is an angel investor and always looks for emerging, cutting-edge businesses to invest in. Recently, he lost a significant portion of his investment after the collapse of the cryptocurrency exchange platform BTX and decided to sell his firm located in the regional New South Wales to offset some of his losses.

In May 2023, Toto, after consulting his wife, Olivia and her brother, Lupto, incorporated a new company called Mind Matters Pty Ltd (Mind Matters) to grow magic mushrooms and supply them to biotech companies for their production of medicines to treat post-traumatic depression. Toto was involved in completing the company's registration. Olivia and Lupto were not directly involved in the process of setting up the company. However, there was an understanding that they would receive $20,000 each once the company was registered. After the company was registered, Olivia and her brother, Lupto, became the first directors and shareholders of the newly formed company.

Toto entered into a contract with Mind Matters to sell his firm for $2.5 million. However, the market value of the firm is way below the purchase price specified in the contract. According to one valuation report, the property value of the firm is estimated at $500,000. Despite this issue as to the valuation, the directors approved the purchase without enquiry. When the new directors were appointed, they found out that Toto sold the firm to the company at an inflated price which caused the company to bring action against Toto, Olivia and Lupto.

Advise Mind Matters (Issue, Law, Application and Conclusion) if the company have any recourse against Toto, Olivia, and Lupto. Discuss with reference to legislation and case law where relevant.

Reference no: EM133534670

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