Pablo Martinez CEO of Drip Drop Ltd (DD) Discussion
Pablo Martinez was CEO of Drip Drop Ltd (DD) a public company that conducts water testing across Australia. Tim Little owns 8% of the issued shares in DD.
DD had been performing well, but in the last 12 months had a significant downturn in their profitability. Without obtaining an independent valuation, the Board of DD pass a resolution to sell off some of their assets to Watered Down Ltd to reduce their debt. Unknown to the other directors Watered Down Ltd is the family company of Pablo Martinez.
Tim Little has obtained a valuation report that shows the assets have been sold off at a significant undervalue.
Assume that Pablo Martinez has breached his duty to act in good faith and in the interests of the company and the duty to avoid conflicts of interest and the other directors of DD have breached their duty of care.
Advise Tim whether the court will grant him leave to bring a statutory derivative action under ss 236/237 of the Corporations Act 2001 (CT).
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