Borisda Builder Pty Ltd has five (5) directors: Vesna, Sergey, Ilyych, Mikhail and Zviad. Mikhail and Zviad are working directors. They manage the...
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Borisda Builder Pty Ltd has five (5) directors: Vesna, Sergey, Ilyych,

Mikhail and Zviad. Mikhail and Zviad are working directors. They manage the day-to-day operations of Borisda Builder Pty Ltd. The company is engaged in all aspects of home building. Ilyych is an accountant and he helps out with the production of monthly financial reports for all the directors. (This question is continued over the page) 3 Week 8 - Question 3 (10 marks) (Cont'd) Vesna has attended University and holds an engineering degree and a Masters of Business Administration (MBA). She has a good knowledge of the building industry and the way company finances work. SergeLJ iƐ Zǀiad͛Ɛ broƚher and haƐ had a long hiƐƚorLJ of depreƐƐion and lack of Ɛelf-esteem. Zviad ƐƵpporƚed SergeLJ͛Ɛ ǁiƐh ƚo become a board member eǀen ƚhoƵgh he offered little by way of expertise. Zǀiad ƚhoƵghƚ ƚhaƚ iƚ ǁoƵld help SergeLJ͛Ɛ perƐonal deǀelopmenƚ bLJ giǀing him a differenƚ focƵƐ͘ BoriƐda BƵilder PƚLJ Lƚd had a record LJear in ϮϬϭϬ͘ The goǀernmenƚ͛Ɛ firƐƚ home bƵLJer͛Ɛ grant meant that the company had many building contracts. The directors met in July and decided to pay a dividend of 9c per share. The company has experienced a severe decline in new contracts in the last two months. This is due in part to a number of cut-price builders offering cheap building contracts. This has placed the company in financial difficulties. Mikhail and Zviad have been with the company since day one and are attached to the company. It is their main focus and provides them with emotional and financial wellbeing. Sergey has never read any financial statements that have been sent to him. He did not check the companLJ͛Ɛ financial reƚƵrnƐ for anLJ of ƚhe LJearƐ before he ǁaƐ appoinƚed and he haƐ neǀer read anLJ reports since he was appointed. Shareholders of Borisda Builder Pty Ltd number 15 and include the directors and members of the founding family who have held onto shares but take little interest otherwise. VeƐna͛Ɛ broƚher DoƵg haƐ a bƵilding deƐign companLJ͕ DoƵg ƚhe DeƐigner PƚLJ Lƚd͕ and VeƐna aƚƚendƐ its Board meetings and gives advice. Because of her education and experience the Board of Doug the Designer Pty Ltd follows her directions. Recently, Borisda Builder Pty Ltd contracted with this company. It was Vesna that convinced the rest of the Board of Borisda Builder Pty Ltd to enter this contract. It was Vesna that had collected all the quotes for this work and they all exceeded the Doug the Designer Pty Ltd quote. This was due to the fact that Doug the Designer Pty Ltd had put in a quote below the cost price of the work because Vesna had promised more work from Borisda Builder Pty Ltd in the future. Ilyych attended a Board meeting a few months ago and brought with him what he believed was a great idea. His proposal was that the company become involved in constructing cubby houses for children out of the leftover materials from around their building sites. The other Board members were not so convinced but Ilyych being an accountant produced some very impressive figures based on informaƚion from ƚhe companLJ͛Ɛ fileƐ͘ The board ǀoƚed against the proposal after Vesna, with her MBA training, argued the company should focus on its main game of house building. Ilyych is disappointed but yesterday signed a deal with another building company known as Canweafixdat? Pty Ltd. The deal involves Ilyych being paid a commission of 10% for every cubby house sold and a place on their Board. Borisda Builder Pty Ltd is having financial problems yet the Board continues to allow the company to trade without considering the consequences. Required: Discuss the statutory and common law positions of the directors in the case study above.

Subject: Law, Social Science

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