Mia and Charolette are responsible

RUNNING HEAD: CORPORATE LAW
Corporate Law
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RUNNING HEAD: CORPORATE LAW
Issue:
The first concern regarding the given the case study is whether the parties have satisfied
the lawful duties in this specific case study.
The second concern regarding the given case study is whether the parties have performed
any breach of duty in this specific case study.
The third concern regarding the given case study is whether the lawful parties of this
specific case study can be held liable for performing the breach of duty.
The rule of law:
According to Section 588G of the Corporation Act 2001, states the meaning of ‘Insolvent
Trading’. This specific rule is applied from the mentioned Act when a person acts as a director of
a company. During the performance as a director when the company acquires a debt, this
particular section comes to rule the case. It should be compulsory that a company is facing
insolvency during the incurrence of that specific debt. At the same time, the company should
also be insolvent during the occurrence of such type of debt1. When a company incurs any debt,
there should be sensible ground to suspect that the company is suffering from insolvency. It is
known that when any person cannot save a company from the occurrence of debt, then that
particular person creates a contradiction to this provision.
As a result, it has been observed that any person can be said to be performing any offence
if the company found to be suffering from insolvency due to the occurrence of debt and that
particular person should be the director at the time when the debt is incurred2.
1 Fernandez, Prafula. "Insolvent Trading of Companies." Legal Issues in Business 4 (2002): 29.
2 Ramsay, Ian. "Company Directors' Liability for Insolvent Trading." Available at SSRN 924314 (2000).

RUNNING HEAD: CORPORATE LAW
Director Duties:
According to s180 of the Corporation Act 2001, the director of a company should
perform the liabilities for a particular organisation with proper care and diligence like a noble
individual. S181 of the CA 2001 any director should perform to fulfill their responsibility for the
company, and that should be in good faith. It should be stated that the liability of that particular
director includes the performance of the obligation and that should be for a good purpose. S182
of the CA 2001 any director should make use of their power and position in the company so that
benefit and welfare can be acquired for any other person. They should make use of their power
and position in an inappropriate way or method. If this happens, it will be destruction for the
company. S183 of the CA 2001 explains that any director should not make use of any
information that is related to the company in the context of acquiring any benefit and for the
betterment of any other person3. They should not make use of private information, which is
observed to be in the custody of a director in an inappropriate method, which can lead to the
destruction of the company or the institution. The case study of Bell Group Ltd v Westpac (No
9)4 can be taken into consideration to support the above explanation. If any director performs the
breaching of duty, intentionally and recklessly, then they can be held responsible under criminal
proceeding as mentioned in the Corporation Act 2001. The directors should not misuse their
position to gain any benefit that will bring detriment to the company. The director can be
removed from any company if it is found that they are not complying with the responsibility and
they will be ordered to pay the compensation to the company. The case study of ASIC v
Australian Investors Forum Pty Ltd5 can be taken into consideration for supporting the above
3 Varzaly, Jenifer A. "The enforcement of director's duties in Australia: a functional and empirical analysis." (2014).
4 Bell Group Ltd v Westpac (No 9)
5 ASIC v Australian Investors Forum Pty Ltd