IS anybody able to give broad answer to these problem set. Thank you.

CACL 2017

Case studies and problem sets

Problem Set 9

The following problems and questions should be answered after you have read Chapters 17 and 18.

1. Is SAFPL required to prepare financial reports? Have those reports been audited? Have those reports been lodged with ASIC? Give reasons for your answer.

See [17-001], [17-300]- [17-320], s45A of the Corporations Act and Table 17.2

2. AMGL is a listed public company. What special requirements apply to the annual report of a listed company, that do not apply to unlisted companies?

See [17-300] and ss299A, 300A, 302 - 306 and 320 of the Corporations Act

3. In question 4 of Problem Set 7, we saw that AMGL failed to disclose to the market, the effect of the problems at JV Investor on AMGL's likely financial performance. What is the source of AMGL's obligation to disclose that information to the market? What then happens if it fails to make timely disclosure?

See [17-520] - [17-580], s674 of the Corporations Act , ASX Listing Rule 3.1 and 3.1A and ASIC v Newcrest Mining Ltd

4. The feasibility study for the organic lamb project indicates that several million dollars will need to be invested in the first four years on plant and equipment. At the first meeting of the board of SAOM, the directors discuss the various options available to SAOM to fund that work. These options include asking SAFPL to subscribe for additional shares in SAOM, or borrowing the money from SAFPL, Henry family members or external lenders such as banks. What are the key differences between debt and equity funding? What factors should the directors of SAOM consider in making this decision?

See [18-120] and Table 18.1

5. SAFPL has a longstanding commitment to doing business in its local community. As a result of booming sales in the United States, the company has some cash available for short term investment. Rather than depositing it in the bank, SAFPL subscribes for unlisted, unrated debentures issued by a local company called Bangzia Ltd. Bangzia has a number of shop-front 'branches' in local towns that look a bit like bank branches, however Bangzia is not an authorized deposit-taking institution regulated by the Australian Prudential Regulation Authority (APRA). Bangzia uses the money subscribed by investors to make high-risk loans to property developers. Shortly after SAFPL makes its investment, Bangzia is placed into external administration. What rights, if any, does SAFPL have as a debenture holder?

See [18-240], [18-280] and s283BH of the Corporations Act

6. SAFPL has two classes of shares on issue - ordinary shares and A Class shares. Why would a company issue shares of different classes? What are the advantages and disadvantages for SAFPL in structuring its equity capital in this way?

See [18-320]