Application of Law - Assignment PDF
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Added on 2021-05-30
Application of Law - Assignment PDF
Added on 2021-05-30
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1ContentsQuestion One...............................................................................................................................................2Issue........................................................................................................................................................2Law..........................................................................................................................................................2Application of Law..................................................................................................................................3Conclusion...............................................................................................................................................3Question Two..............................................................................................................................................3Issues.......................................................................................................................................................3Law..........................................................................................................................................................4Application of law...................................................................................................................................4Conclusion...............................................................................................................................................5Reference List.............................................................................................................................................6
2Question OneIssuei.Whether Liam and Peta can face the criminal and civil charges by ASIC?ii.What penalties can be imposed of action is taken against Liam and Peta?LawA director is the most important officer of the company and carries the work of the companywithin the power derived by him under section 198A of the Corporation Act 2001. Any personcan attain the status of a director provided either he is acting as the director or actually posted asthe director as per section 9 of the Act (Shafron v ASIC[2012]. A non executive director is alsoconsidering as a director with respect to section 9 of the Act. (Mugambwa, et, al 2007)As per section 181 of the Act, the acts of the company director must be carried out in good faith,in the interest of the company and for proper purpose.a.Section 588G of the Act that no director must act those results in the insolvent trading ofthe company. The main requirements which hold a director to be in violation of section588G of the Act are, firstly, that when the breach is incurred at that time the person mustbe the companies director (Hall v Poolman (2007), secondly, the director must indulge inacts that resulted in raising the debts of the company; thirdly, that because of the debtthere are chances that the company will become insolvent or is already insolvent (Powerv Traveller (2005). (Lo 2011)A director once found to be in violation of section 588G can safeguard under section 588H of theAct by proving that his acts are supported with reasonable care, informed decision, he was notpart of the decision when the dent was incurred (CommonwealthBank ofAustralia vFriedrich(1991).However if any director is found to be in violation of section 181 or section 588G of the act, thenthe corporation Act has raised penalties for the same.If section 181 and section 588G is violated then compensation, fine and disqualification can bemade fine up to $2,00,000 can be imposed.If the acts are coupled with dishonest and reckless intention then fine along with five yearimprisonment can be imposed.
3Application of LawLiam and Peta are the shareholders and directors of Enterprises Pty Ltd. both of them review thebalance sheet of the company but no question is asked by them regarding the balance sheet.It is submitted that,Peta is in breach of section 588G of the Act, as she was dealing with running, growing andmarketing of the company. In Amy 217 it was found that the company is nit able to ay itssuppliers effectively and thus preference is given to the regular suppliers. The company is notable to pay its taxes in time as in June 2017, a notice from ATO is also received. But, no heed is given by Peta to the said facts and the company continues in its trading resultingin expenses that result in its liabilities exceeding its assets. Thus, the acts of Peta resulted in insolvent trading.Also the acts are not carried with good faith and in the interest of the company so there is breachof section 181. Now, Liam is a non-executive director and thus must comply with its duties. She is not liable forbreach of section 588G as she was not part of the transactions occurring in May and June 2017because he had been diagnosed with cancer and was undergoing treatment at the time. So,defense under section 588H is availed.But, by not checking the balance sheet, there is breach of section 181 of the Act.Issue 2Since Peta has violated section 588G and section 181 of the Act, and the acts are reckless thusalong with civil, criminal liabilities can be imposed.But, Liam is only charged with civil liabilities. Conclusion Peta and Liam are both in violation of their statutory duties and thus penalties must be imposed. Question TwoIssues Whether CloudTech can take action against Alexandra in relation to:i.Contract between Gnosis Records and Banger.
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