Business Law
Problem
Robotics Ltd, a company specialising in making robotic limbs for human use was recently acquired by Medical Marvels Ltd (MM Ltd). Adam an Accountant and a non-executive director of MM Ltd since 2015 had convinced the Board of Directors of MM Ltd that the acquisition was a very profitable opportunity.
In forming his opinion, Adam had read a lengthy report (over 350 pages long) that was written by the Chief Financial Officer of MM Ltd. Because Adam was busy working at his accounting practice, he did not notice that the report indicated (on page 339) that the company was experiencing a decline in sales of robotic limbs. Also contained in the report (on page 175) was a recommendation that t MM Ltd obtain an independent verification of the robot technology before proceeding with the acquisition.
Adam did not seek an independent verification of the value of the technology. In fact, Adam only read the first few pages of the report which suggested that Robotics Ltd generally appeared to be in a strong financial position.
The acquisition proves to be a financial disaster and the robotic limb technology was significantly overvalued. As a result, MM Ltd becomes insolvent and is unable to pay its debts. A liquidator is appointed and has suggested that Adam has breached his duty as a director.
Q. Advise Adam whether he has breached his duty under s180 (1) Corporations Act 2001 (Cth), including whether Adam has a defence under s180(2) Corporations Act 2001 (Cth).
Please use the ILAC format to answer the above question, citing the Corporations Act 2001 (Cth) and relevant case law where appropriate.