Reference no: EM131483920

(Q) Roberta is the managing director of EY Pty Ltd, a profitable company specializing in buying and selling anti-aging cosmetics and shampoos for sensitive hair. The market for EY's products is women between the ages of 40 and 70 years. While at the hairdresser's having a power perm, Roberta chats to her hairdresser, Leonardo. Leonardo asks Roberta whether her company would be interested in helping him to market a new organic hair soap called "Wonder Bar". Leonardo claims that the soap prevents male hair loss.

Roberta tells Leonardo that her company would not be interested because it sells women's products only. She offers to help Leonardo herself. Leonardo agrees. Roberta and Leonardo set up a company called Wonder Hair Soap Pty Ltd (WHS) and become its directors and members. Roberta is the majority member. The business of the company is an overnight success.

At a board meeting of EY six months later, Roberta proposes that EY enters into a long-term contract with WHS to buy supplies of the organic hair soap for re-sale. The board agrees and as part of the contract Roberta negotiates with the board that she will be paid a small commission on each sale because she drew the board's attention to this new product opportunity. EY makes large profits from selling the soap overseas.

EY now learns that Roberta is the majority member in WHS. The directors are angry and want to know what can be done.

(a) Has Roberta breached her directors duties. Which (if any) has she breached and explain how she breached has them?

(b) Should Roberta have been present at the board meeting when the contract with WHS was discussed and voted on?

(c) What general law remedies (if any) should EY seek against Roberta?

(d) What statutory penalties (if any) can be imposed against her? Who can impose them?