Jack Lee is the managing director of Noveltech Ltd (Noveltech), a small listed biotechnology company based in Canberra. Carole Smith is an executive director who heads up the company's research division, and Lucy Grey is a non-executive director. 

One of Noveltech's new medicines for dementia, Miracledrug, has been associated with rare but serious side effects. Noveltech's research department has been investigating the issue, but has not been able to discover the mechanism by which Miracledrug could cause these side effects. However, it has been able to rule out other known causes for the side effects in affected patients.

Mention of a possible link between Miracledrug and the side effects appears in the health pages of some newspapers. Jack asks Carole to  draft ASX announcement on this issue. The following draft announcement and copies of the media coverage are included in the package of materials at the next board meeting, listed under the heading 'Items for noting'. 

 

Noveltech's research has revealed no link between Miracledrug and serious adverse side effects. It continues to be safe for physicians to prescribe and remains the best available treatment for dementia. 

 

There is no active discussion of the announcement at the board meeting and, after the meeting, Jack instructs the company secretary to dispatch the announcement to ASX. 

Answer question 1 below if you are completing this assessment as an individual assignment. 

Answer Questions both 1 and 2 below if you are completing this assessment as a group assignment. 

1. 1 Has Jack, Carole and Lucy breached any directors' duties under the Corporations Act? Give reasons for you answer

 

2 Would your answer in relation to Lucy be different if she had a degree in pharmacology? 

Answer rating: 100% (QA)

1 Potential Breach of Directors Duties a Jack Lee Managing Director Jack may have breached his duty of care and diligence Section 180 by instructing C... View the full answer