MPA701 Corporations Law

Question:

Solartec Pty Ltd (Solartec) is a company who manufacture, market and distribute commercial solar panels and equipment. Having concern about possible government changes to the solar industry Bill the managing director of Solartec and a number of executives of Solartec, came across information that the company's major Australian competitor, "Aussie Solar", was looking to sell its business. Bill heard this information at a solar industry seminar where he sat with James, the managing director of Aussie Solar.

A couple of weeks later Bill held an informal dinner at the local hotel with the four senior executives of Solartec where they discussed buying Aussie Solar. Alex, Solartec's CFO, bought information to the meeting that was gathered about Aussie Solar from the time when Solartec was considering a possible takeover of Aussie Solar. Following the presentation of this information Bill and the other executives decided they would purchase Aussie Solar for themselves without telling the Board of Solartec. While Bill and Alex organised the finance to purchase Aussie Solar, the other executives started contacting Solartec's customers to inform them that they were changing businesses and they would soon be running Aussie Solar and they would be able to deal with them on more favourable terms than Solartec. The bank providing the loan finance was assured by Bill that he and the other executives experience would make Aussie Solar a successful company and their contacts with the Solartec customer base would further reinforce the success of the new business.

Just before the purchase of Aussie Solar was completed Bill and the other executives resigned from Solartec without giving any reasons and proceed to run Aussie Solar, whose name they changed to True Aussie Solar.

The Board of Solartec Pty Ltd seek your advice as to the rights the company has, if any, against Bill and the other officers who left Solartec to run True Aussie Solar which now has a larger share of the solar market than Solartec.

Required:

Advise Solartec of its legal rights against Bill and the former executives of Solartec for breaches of their fiduciary duties at common law and under the Corporations Act 2001.

Also advise Solartec of its remedies, if any, and penalties that may be imposed its former directors officers.