Nectar Pty. Ltd (Nectar) runs a fresh juice business from the Hunter Valley, NSW. There are three shareholders in this company: Anthony, Jenny, and Chandan. Anthony holds 200 shares; Jenny holds 120 shares and Chandan (an employee of the company) holds 50 shares. All three have also been directors since the registration of the company. Jenny is the Managing Director and Chairperson of the Board. Jenny's friend approached her, asking whether Nectar would be interested in investing in a new company, Oranges Pty, Ltd. (Oranges). Organges owns a few local orchards growing oranges and nectarines. Jenny said she would be personally interested but would also put the idea to Nectar's Board of Directors at its next meeting. At that meeting, Anthony said it sounded a bit vague and indicated he was not interested in further diversifying.
Chandan thought it was a good idea, but chose not to invest, as he agreed with whatever Anthony said.
At the following board meeting, Jenny asked Anthony and Chandan to approve a large loan to her at low interest as she was going to renovate her house. Anthony and Chandan approved this loan.
Instead of using the loan to renovate her house, Jenny used the loan money to buy a large number of shares in Oranges and subsequently, she was also appointed a director of Oranges. Six months later the share value of Oranges increased substantially. Anthony and Chandan have now realised that Jenny has made a large profit from her investment in Oranges and believe that she should pay that to Nectar. Jenny has refused. With reference to the Corporations Act 2001 (Cth) discuss whether any of the directors in this scenario have breached or may be about to breach their directors' duties.
