Assignment on the Corporation Act 2001

Added on - 28 May 2020

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Running head: COMMERCIAL LAWCommercial LawName of the StudentName of the UniversityAuthor Note
1COMMERCIAL LAWPart AIssueThe question that needs analysis in relation to the given study is that whether thecommon law duties owed by the directors to company along with the statutory duties as providedby the Corporation Act 2001(Cth) have been violated by Juliette in relation to her actionsRulesThe directors of a company own a duty to the organization at common law as well asunder the provisions of enacted legislations of the parliament. The legislation governing theactions of the directors operating within Australia is the Corporation Act 2001 (Cth)According to the CA section 9 the duties provided by the Act is applicable on thedirectors and other officers of the company. In addition there is a fiduciary relationship ofdirectors with the company1.At common law the duties of the directors include1.Duty to use the powers for a proper purpose2.Duty to retaining discretion3.Duty of acting in good faith towards the company’s interest4.Duty to observe Skill, Care and Diligence in relation to their company5.Duty of avoiding conflict of interestThe statutory duties of directors as provided through the relevant sections of the CA includes1Corporation Act 2001 (Cth) at Section 9
2COMMERCIAL LAW1.Section 180- Duty to observe Skill, Care and Diligence in relation to their company2.Section 181- Duty of acting in good faith towards the company’s interest3.Section 182- Duty not to use position in an improper manner4.Section 182- Duty not to use information in an improper manner5.Section 191-194 – Duty to make proper and timely disclosure6.Section 588G – Duty not to indulge in Insolvent tradingThe directors have a statutory as well as a common law duty to act bona fide and towards aproper purpose for the company underSection 181. This means that when the powers aredischarged by the directors it needs to be in good faith, in the best interest and for a properpurpose in relation to the company2.The question in relation to this duty had been discussed in the case ofRe Smith v Fawcett3.In this case it had been ruled by the court the directors owe the duty to the company and thecompany may directly sue the directors in relation to the breach. The directors must have agenuine belief that they are acting in the best interest of the company.Whether the responsibility has been conducted properly is analyzed in an objective mannerby applying the objective test. This means that a reasonable director is placed in the sameposition and it is analyzed that whether the same course of action would have been taken by himas provided in the case ofDarvall v North Sydney Brick & Tile Co4.The directors of the company have this duty towards the company as a whole as discussed inthe case ofPiercy Vs Mills & Co5.2Corporation Act 2001 (Cth) at Section 1813Ltd [1942] 1 All ER 5424[1989] 16 NSWLR 265[1920] 1 Ch 77
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