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.
Serge? i? Z|iad?? brolher and ha? had a long hi?lor? of depre??ion and lack of ?elf-esteem. Zviad
??pporled Serge??? ?i?h lo become a board member e|en lho?gh he offered little by way of expertise.
Z|iad lho?ghl lhal il ?o?ld help Serge??? per?onal de|elopmenl b? gi|ing him a differenl foc???
Bori?da B?ilder Pl? Lld had a record ?ear in ????? The go|ernmenl?? fir?l home b??er?? 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
compan??? financial rel?rn? for an? of lhe ?ear? before he ?a? appoinled and he ha? ne|er read an?
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.
Ve?na?? brolher Do?g ha? a b?ilding de?ign compan?? Do?g lhe De?igner Pl? Lld? and Ve?na allend?
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
informalion from lhe compan??? file?? The board |oled 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.