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Australian Securities and Investments Commission : Assignment

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Added on  2020-03-23

Australian Securities and Investments Commission : Assignment

   Added on 2020-03-23

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1Australian Securities and Investments Commission v Healey [2011] FCA 717IntroductionThe leading case of Australian Securities and Investments Commission v Healey1is a caseagainst the directors of Centro and the said case highlights as how a director can be imposed withstrict duty while giving his consent to the financial statements of the company2. The duty is onhow the statements are presented and how the directors review the same. The decision alsorestrict the position of the directors to the extend they rely on the external advisors whilepresenting the statements. Through this decision a special responsibility is imposed before anycompany director approve the financial reporting statements of the company. Delegation of thisresponsibility is not permitted all the time. The court also submitted that the directors whoapprove the financial reports must also have the knowledge of the same and this duty cannot beexcused on the ground of failure to read3. The decision was laid down in favor of ASIC. Cento is the leading company wherein the defendants was the Chief Financial Officer. On 6thSeptember they approved accounts which were made part of the Annual Reports of Centro. Thereports were released in ASX but in December Centro asked ASX to stop trading as they requireinformation’s to be corrected in the reports4. The duties/responsibilities breached As per the claims of ASIC, the duties and responsibilities that are violated by the Directors ofCentro are5:i.The directors of Centro are in violation of section 344 of the Corporation Act. Section344 of the Act requires every director to undertake all the statutory requirements thatare laid down under Part 2M.3 of the Act that deals with the financial reportingobligations. 1Australian Securities and Investments Commission v Healey [2011] FCA 717.2 Allens, ‘Focus: The Centro Decision And The Approval Of Financial Statements’ 2011 https://www.allens.com.au/pubs/cg/focgjun11_01.htm#Footnotes. 3 Jade, ‘Australian Securities and Investments Commission v Healey [2011] FCA 717’ < https://jade.io/article/226822>. 4Ibid5 The Civil Lawyer, 2011, <http://www.the-civil-lawyer.net/2011/06/centro-matter-asic-v-healey-2011-fca.html>.
Australian Securities and Investments Commission : Assignment_1
2ii.That the directors are in violation of section 180 (1) of the Corporation Act 2001. Thesection imposes a duty on the director to act with all due care and diligence in the bestinterest of the company and fro proper purpose. iii.The directors are in violation of Section 601FD (1)(b) of the Corporations Act. Thesaid section requires the officers of the Responsible Entity of a registered scheme toconduct in such manner so that such actions are in the best interests of the members.If there is conflicting situation amid the interest of the entity and members then themember’s interest must be given priority. Reasons why the duties were breachedThe man reasons because of which the decision was made against Centro are6:i.That the directors of Centro failed to take reasonable cares that are expected fromthem. There was no due diligence and care while catering their duties. ii.The annual reports of Centro Properties Group (‘CNP’) and Centro Retail Group(‘CER’) of 2007 did not lay down some very important matters. The reports did notdisclose that CNP has short term liabilities of $ 1.5 billion and guarantees of shortterm liabilities of an associated company of US$1.75 billion which is provided afterthe balance date. For CER the short term liabilities of $500 million were notdisclosed. Because of the non disclosure the risks of the two companies was notassessed adequately. iii.When the disclosure was not made at that time the same were within the knowledgeof the directors. Even if it is assumed that the matters are not within the knowledge ofthe directors still those are such matters that should be in the knowledge of thedirectors7. iv.If the directors are not of the view that the financial statements are accurate andfurnished truth, till that time it is their duty that such reports should not be publishedin any manner whatsoever. 6Ibid7Francis v United Jersey Bank(1981) 432 A 2d 814; Daniels v Anderson(1995) 37 NSWLR 438,
Australian Securities and Investments Commission : Assignment_2

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