List the penaltles that may be relevant for breach

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Reference no: EM133506607

Case Study: Luke, Byron and David were all executive directors of a general insurance company called Policy-Haven Ltd. David was the finance director and Byron was the Chief Executive Officer of the company. Luke was a director but also owned a substantial number of shares in Policy-Haven Ltd. Policy-Haven Ltd was a publicly listed company on the ASX. Luke's wite was a director and shareholder of another comgary called Lucky-Dip Pty Ud (LDP).

Luke requested from Byron and David to give an advance of $20 million from Policy-Haven Ltd, to be paid to LDP in return for $20 million worth of LDP's shares. Luke was known to be a financial expert and he told Byron and David that he would use the money to buy sub-prime securitles that were doing well overseas. His banker friends were making lots of money by trading these securities. Ax: shares very valuable. LDP had no other assets. Byron and David also knew that Luke's wife was a director and shareholder of LDP and that there were no other assets in LDP.

As Byron and David trusted Luke's judgement, they did not ask for any security. None of the other directors of Policy-Haven Ltd knew of this advance. They also did not let the investment committee of the company know of the transfer of the funds.

The $20 million was spent as follows:

$10 million given to LDP was used to buy the securities overseas

$6 million was used by Luke to buy more shares in Policy-Haven Ltd to support its share price on the AX, and The remaining $4 million was invested into other private companies where Luke and his family had an interest.

Luke thought he could make a quick profit as he had done in the past. He did not take the trouble to investigate any of these investments. Soon after this, the news coming in from overseas suggested that the securities were worthless and were causing the collapse of many well-known companies. This made the LDP shares which were now owned by Policy-Haven Ltd worthless.

The other directors of Policy-Haven found out about the $20 million given to LDP without their knowledge or consent and they were furious. They have now reported the matter to ASIC and want ASIC to investigate Luks Byron and David for breaches of the Corporations Act.

Question: Based on the provisions of the Corporations Act 2001 (Cth) identified in question 5(a), list the penaltles that may be relevant for breach of the duties identified.

Reference no: EM133506607

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