Topaz, Ruby, Jade and Opal were directors of Permata Pty Ltd, a company engaged in the business of importing and supplying gemstones as wholesalers to the local market. As the market was becoming more competitive, the company decided that it needed to expand its business. Therefore, Topaz made investments to solve cash flow problems caused by a downturn in the business. Topaz had not attended the meeting but signed the requisite documentation agreeing to the expansion of the business and the investments. Both Ruby and Jade voted to proceed with the expansion and the investments. All directors did not seek the professional advice on the said investments.
At the same time, Opal has established contact with Coral, a new business retailer of gemstones. Coral was looking for reliable suppliers, but reluctant to deal with Permata Pty Ltd as he did not like Jade, the Managing Director. Opal took this lucrative business opportunity and arranged to set up his own business as a gemstones wholesaler. He then entered into the contract with the supply of gemstones.
Six months later, Opal resigned as a director and left the company insolvent due to the unprofitable investments.
With reference to the Companies Act, 2016 and decided cases, advise the duties and liabilities of all the directors involved.
Guidelines:
Issues: There are 2 issues in the question
Principles & Laws:Which duties that the directors have breached?
Discuss only duties which are relevant to the issues.
Discuss the issue one by one to relate with the issues above. .
Relate which sections/ cases that are relevant to the issues?
One case for one issue is enough
Applications: Apply the principles of law to the issues discussed to advise in terms of the liabilities of
the directors.Apply one by one based on the issues discussed.
Conclusion: Conclude the discussion for both issues
