QUESTION (20 MARKS)
Carlos, Kit Siang and Nina are directors Build Infrustructure Ltd (BIL). The company has a strong
presence in the Northern Territory. The company’s profit has been on the decline for the past three
years. Builderstone Ltd, another building company, which has a strong presence in the Eastern
seaboard is looking to break into the Northern Territory market. It offers to buy BIL’s shares at 30%
more than the selling price of BIL shares.
It is common knowledge that when Builderstone takes over BIL, it will replace the current board,
which it considers has not managed BIL efficiently.
Carlos, Kit Siang and Nina very strongly advise shareholders not to accept Builderstone’s offer and
change the structure of BIL by issuing 2 million shares exclusively to Northern Stone Pty Ltd who
at a general meeting will vote to retain Carlos, Kit Siang and Nina as directors. This new issue of
shares defeats Builderstone’s takeover of BIL.
(a) Advise Carlos, Kit Siang and Nina if they have breached any of their directors’ duties?
(15 marks)
Northern Stone Pty Ltd (NS) is a subsidiary of Australian Stone Ltd (ASL). When NS took a
$20 million loan to purchase BIL shares, the loan was guaranteed by its parent company ASL. ASL
was called up on the guarantee and eventually collapsed. ASL liquidators maintain that ASL
directors did not act in the best interest of ASL when they provided a guarantee for NS’s loan.
(b) Is this view correct? (5 marks)

Do you want your assignment written by the best essay experts? Then look no further. Our teams of experienced writers are on standby to deliver to you a quality written paper as per your specified instructions. Order now, and enjoy an amazing discount!!