ASX may do a better job than ASIC with this stuff even though it...

ASX may do a better job than ASIC with this stuff even though it falls within ASIC's powers a referral by them to ASIC may go a lot further than a referral via a holder.

If a breach of Directors Duties is involved it may center around whether he breached s.180 of the Corporations Act that is;

(1) A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they:

(a) were a director or officer of a corporation in the corporation's circumstances; and

(b) occupied the office held by, and had the same responsibilities within the corporation as, the director or officer.

There is however significant difficulty in a claim for breach due to the Business Judgement rule which is as follows:

Business judgment rule

(2) A director or other officer of a corporation who makes a business judgment is taken to meet the requirements of subsection (1), and their equivalent duties at common law and in equity, in respect of the judgment if they:

(a) make the judgment in good faith for a proper purpose; and

(b) do not have a material personal interest in the subject matter of the judgment; and

(c) inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and

(d) rationally believe that the judgment is in the best interests of the corporation.

The director's or officer's belief that the judgment is in the best interests of the corporation is a rational one unless the belief is one that no reasonable person in their position would hold.

A relatively low threshold is applied to this test. However if he were to fail on any it would be s.180(2)(c) the point about informing on subject matter. Blind Freddy could see that the terms AGS agreement was not commercially suitable however it is still difficult to prove this point.

The thing with ASIC is they tend to only pursue large cases that are in the wider public interest due to their extremely limited resources. Hence i would not expect much from them. A shareholder action is a possibility yet it is hard to see any prospect of the case without all relevant evidence.

I would think that he does keep his entitlement to the Shares unless something improper/unlawful can be proven. Directors are afforded protection under the above section and the other main duty of good faith (s.181) is also a possibility but again without evidence it is hard to say.

Note that whilst I do work in Law none of the above is advice in any way or form just a general legal outline of the things ASIC, ASX and Holders may be looking at.