At AMGL, Adderson and Eager are concerned that the significant stake in AMGL acquired by XYZ Limited means that they might end up frozen out of the business they started. For some time, Eager has been in discussion with another finance industry figure about a highly prospective investment play in Europe. Eager suggests to Adderson that AMGL issue 500,000 shares to this person as a means of creating ties with AMGL that might help it to secure access to the project in the future. Adderson and Eager bring the proposal to the AMGL board. Mr Xu is furious as he sees it as a ploy to entrench further their control of the company, by putting shares in the hands of a person who is likely to support Adderson and Eager in the future. 

If the share issue goes ahead, have the directors breached their duty to exercise their powers for a proper purpose? (Answer the question in IRAC Format.)

Answer rating: 100% (QA)

Issue Have the directors breached their duty to exercise their powers for a proper purpose by issuin... View the full answer