Plants N Plus Ltd, a company listed on the ASX, is currently the subject of a hostile takeover from Anglo Brit Ltd. Prior to Anglo Brit's announcement, the market capitalisation of Plants N Plus is currently $100 million and its pre-takeover share price is $1.00.
Anglo Brit has offered $1.20 per share for Citrus, representing a 20% premium. The directors of Plant N Plus Ltd devise an ingenious plan to defeat the takeover. The board manages to convince one of its directors, Graham Stone, to be provided with an interest-free loan worth $20 million. The loan was for the purpose of purchasing shares in Plants N Plus Ltd in order to push up the company's share price. This will mean that Anglo Brit will have to offer more to the Plant N Plus shareholders if they are to successfully take over the company.
a) Have the directors of Plants N Plus Ltd breached their directors' duties (in particular duty to act for good faith in the best interests of the company and for a proper purpose) in relation to the loan that has been advanced to Lang?
b) Can Anglo Brit Ltd take legal action against Citrus Ltd in relation to the latter's conduct and tactics concerning the hostile takeover?
This question belongs to business and corporate law and discusses about advice to directors of Plants N Plus Ltd regarding breach of their directors' duties.
Total word count: 248
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