In January 2009, Mary, Ken’s sister was having financial difficulties and wanted to sell her land on the outskirts of Sydney. She approached Ken asking if Recycle would be interested in buying this land because according to Mary’s predictions, the value of this land would increase given the new infrastructure development in the area: schools, hospitals, and new roads. Infrastructure development usually takes a long period of time, this may even last for close to a decade. However, eventually, if changes are continuously visible, then the price of land will keep on increasing. Ken wanted to help his sister and persuaded the board to purchase the land at an over value. What is more, unbeknownst to shareholders, Ken organized Recycle to loan some money to Mary free of interest. The purpose of these transactions was to provide Mary with financial resources so that she could avoid bankruptcy.

None of these transactions were disclosed to shareholders.

Please advise Recycle Pty Ltd and the ASIC if any of its directors have breached their duties. Discuss by citing relevant Australian laws.