Analyzing Legal Issues in the Case Study of Austin Retails under Company Law

Running Head: BUSINESS LAW
Business Law
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1BUSINESS LAW
Introduction
All companies and those who are associated to them have to act in accordance to legal
obligations imposed on the companies and to themselves personally in order to avoid being
prosecuted1. Non compliance with company law may lead to civil as well as criminal penalties.
The corporate veil of the company may also be lifted in such situation and the directors and
officers can be made liable in personal capacity for the losses or injury caused to the company
and its creditors2. The provisions of the Corporation Act 2001 (Cth)3, The Australian Securities
and Investment Commission Act 2001 (Cth)4 and the rules provided by Australian Securities
Exchange are the primary provision which governs the operation of the companies5. The primary
objective of this paper is to analyze the case study of Austin Retails in the light of company law
and identify the key legal issues which have come up in relation to the facts. The paper also
analyzes the strengths of any defenses which the parties at contravention of law may rely upon.
Issue of directors’ general duties violation
According to this section the duty of diligence and care has to be complied with by the directors
of a company. This states that any individual who is an officer of a particular company in
Australia require to be in a diligent and careful sense of mind while serving the company. In the
case ASIC v Australian Property Custodian Holdings Limited [2013] FCA 1342, it was stated by
the judge that if sufficient enquiry regarding to the advice provided by a third party have not
been made by the directors or the directors have not made further investigation into the advice
1 Li, G, Riley, S. Applied Corporate Law: A Bilingual Approach LexisNexis 1st Edition 2009.
2 Harris J, Corporations Law, LexisNexis Study Guide 1st edition 2008
3 Corporation Act 2001 (Cth)
4 The Australian Securities and Investment Commission Act 2001 (Cth)
5 Lipton, P., and Herzberg, A., Welsh, M, Understanding Company Law, 18 edition Thomson Reuters 2018.

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like a reasonable director in same position the duty under section 180 is breached. Such duties
have provided legal ways to find out the obedience of the director regarding the duty. According
to which, the director needs to perform like any reasonable director in a similar situation. If the
individual fails to fall within the proceedings of a sensible director, it would result in the
violation of the duty and diligence and care. It is being clearly stated that it was Bob’s duty being
the director and sales manager of the company, under section 180 imposed on him. But, he was
seen not making any particular enquiry in this matter of forward book of orders which comes
under the guidance of the manager of sales. If any responsible director was allotted similar tasks
in the company like Austin then he must have made sure that he responded sincerely then Bob,
and if he had any doubts regarding the report then he would have looked into the matter and
made enquires himself. Therefore, Bob is found disobedient, and he has dishonored the
requirements under section 180(1) of CA. Further adding bob was seen violating legal
provisions and no responsible director of a company would do such things.
Continuous Disclosure Obligation
The applications related to this section are only applicable on a listed disclosing entity in
Australia, where it is mandatory for the organizations to notify the market operators present
which are the ASIC or ASX according to the listing rules, the advise needs to be given in relation
to any particular event or matter which occurs to the information which is supplied to the
market6.
As said in subsection 674(2) of CA, that this is only applicable on a disclosing entity and the
company has all the required notification regarding the fact that under this judgments, there duty
is to notify the market operators regarding the information which are not obtainable and which
6 Cassidy J., Corporations Law Text and Essential Cases. Federation Press, 4th edition Sydney 2013