Gonzo is a recently appointed director of U R Saved Pty Ltd‘, a corporation form

Question

Gonzo is a recently appointed director of U R Saved Pty Ltd‘, a corporation formed for the purposes of assisting businesses which have IT problems. He is one of 10 directors of that corporation. Upon his appointment as a director, Gonzo became concerned about the future financial profitability of the company. He decided that he should explore new opportunities for the company, in order to ensure its financial future. Gonzo approached several businesses which his company had already been dealing with in offering their IT services over the past few years. One of the companies Gonzo approached was Travel Services R Us Pty Ltd‘. This was a very profitable company which offered internet travel sales. U R Saved had previously provided IT services to Travel Services R Us. It appeared that Travel Services R Us was looking for new investors in order to expand the range of products it had been offering. After some consideration, Gonzo decided that this was a very risky and speculative venture and not suitable for U R Saved. But he did believe that this was an opportunity that he would like to take up, so he would invested his own money in the project. Gonzo invested $100,000 and within six months of his investment he has made a profit of $1.5 million for himself. Advise Gonzo of any duties that he may have breached as a director of U R Saved and of any civil or criminal penalties that may result.

Explanation / Answer

Yes he did breach of duty as a director in the follow manner

A.He is holding a personal interest at the time of holding official duty which is a civil offence and may involve penalties.

B. Under the law he may require to return the profit earned to the Company.

C. He may be seized from the position of Director

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