You have been asked to give a talk to a group of engineers. At the end of the talk they had the following 2 questions:

You have been asked to give a talk to a group of engineers. At the end of the talk they had the following

2 questions:

Explain what is a meant by the term crystallisation and what the consequences are for the company

Explain the difference between a cumulative and a non-cumulative preference share

Peter is the sole director and shareholder of a company called Whine Pte Ltd (Whine) which

specialises in exporting wine to China.

He has been asked by a large wine distributor Sell at All Costs Ltd (Sell) to be a director of the

company. This company wants to break into the wine export market in Asia and believes that

Peter can help them. Sell is aware that Peter runs and owns Whine.

As a director Peter attends the Board meetings of Sell and finds out that the company is

intending to enter into a joint venture with a Treasury Wines Ltd (Treasury). This will lead to an

increase in the share price of Treasury.

Peter buys some shares in Treasury before the announcement to the public and then sells

them 5 days later and makes a $25,000 profit.

Peter because of his interest in Whine only attends 3 board meetings out of 12 during the year.

REQUIRED:

Advise Peter if he has breached any of his duties at common law in relation to Sell at All Costs

Ltd.