Explain why the director was l

ASIC alleged that Mr Shao, the former executive director andchairman of the company, was involved in the company’s failure tomake continuous disclosure and that he breached his duties asdirector of the company. There were two Australian residentdirectors. Mr Shao admitted that he did not understand the Englishlanguage, whether in oral or written form and did not obtain a fullChinese translation of each prospectus document before signing itor authorising its release.

ASIC alleged that Mr Shao breached his duties by:

• failing to ensure that he had any, or any sufficient knowledgeof the disclosure requirements in the Corporations Act;
• failing to obtain translations of each prospectus document andensuring that they reflected all matters required to bedisclosed;
• failing to disclose to the Board, in the prospectus documents,and to the ASX, the changes in circumstances of the company andprofit downgrade;
• attempting to transfer the initial public offering proceedswithout giving a proper reason and without proper documentation;and
• causing or permitting the company to contravene certainprovisions of the Act, thereby exposing it to the potentialjeopardy of civil pecuniary penalties.

In his defence, Mr Shao alleged that he received and relied onthe advice given to him by the two Australian directors (MessrsFaulkner and Johnson) and professional advisers in respect of thedisclosure requirements of the Act. The fact that Mr Shao was notan English speaker or writer and did not understand Australianlegal requirements did not mean that he could just leave it all toothers and did not excuse him from performing his own duties withreasonable care and diligence.