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(Solution) Assignment on Commercial Law

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Added on  2021-05-30

(Solution) Assignment on Commercial Law

   Added on 2021-05-30

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Commercial Law1Corporation Law
(Solution) Assignment on Commercial Law_1
Commercial Law2Introduction:This paper discussed the case law Australian Securities and Investments Commission v Southcorp Ltd [2003] FCA 1369; (2003) 130 FCR 406. In this case court intended the provisionrelated to the continuous disclosure among the other things also for the purpose of preventing particulars disclosure related to the market sensitive information. In this case, court consider the importance of the existence of the code of conduct or code related to the best practice which is adopted by the company for deciding whether director of the company breach their statutory and common law duties (Kluwer, 2011). Structure of this report includes brief introduction of the case, duties breached by directors under both common and statutory law, evaluation of the decision taken by the court, and impact of theirdecision on the corporate law and other companies in Australia. Lastly, paper is concluded with the brief conclusion. Background of the case:Proceedings related to this case was first conducted in the Court under which civil penalty was sought for the breach of the provisions related to continues disclosure. Currently, provisions related to the continuous disclosures are referred under the corporation Act 2001. In this case, defendant (“Southcorp”) was the famous producer of the wine, as they are the 17thlargest listed company in the Australia in context of the market capitalization. On 18th April 2002, allegation was made by the plaintiff (ASIC), that defendant with the help of Glen Cunningham (General Manager of Corporate Affairs) disclosed following information by E-mailto the eleven analysts:That almost 2000 vintage super premium wines produced by the defendant were expectedto be sold in the financial year of 2003.the poor 2000 vintage wine will affect the gross profit of the company on the 2003 financial year compared to the 2002 financial year was expected to be of the order of $30 million. In this case, parties were agreed that conduct of the Glen results in the contravention of the provision by Glen related to the continuous disclosure stated under section 674(2) of the Act.
(Solution) Assignment on Commercial Law_2
Commercial Law3Subsection of this section reflects the civil penalty provisions of the Act and in case court believed that defendant breach the provision stated under this subsection, then Court had power to made declaration of contravention under the section 1317E(1). In case, declaration related to the contravention had been made and some other conditions were also satisfied then Court had power order against the person who contravenes these sections under section 1317G(1) to pay to the Commonwealth a pecuniary penalty of up to $200,000. In this case, parties were agreed with the contravention and Court would impose penalty on the defendant. They also submitted the penalty amount that was $100,000 (Sulaiman, 2007). Breach of duty:Section 674(2) of the Corporation Act 2001 stated the provisions related to the continuous disclosure. It must be noted that, listing disclosing entity is bound by some disclosure requirement in the listing rules of market. This section is applied on the listed disclosing entities and stated that the organization has information that must be notified by the organization to the market operator which is not generally available and any reasonable person would expect that such information had potential to materially affect the price or value of ED securities of the organization. Organization is under obligation to inform the market operator about such provisions in relevance of those provisions. It must be noted that in case organization fails to comply with these provisions then it is considered as an offence under section 1311(1). Any person, who is involved in this, contravenesthe civil penalty provision stated under section 1317E. This section further states that, person does not contravene the above stated provision if the person satisfied the court that they took all the necessary steps which are considered as reasonable steps in the situation for the purpose of ensuring the listed disclosing entity complied with its obligations, and after taking these steps organization genuinely believed that the listing disclosing entity complied with the stated obligations. Mr. Rares characterized the sending of E-mail by Mr. Glen on 18th April as an “honest blunder”. There were no evidences which stated that Mr. Glen had any fraudulent intention or any other unworthy motive behind these e-mails. However, it seems that Mr. Glen only ensuring that all the analysts who had been earlier consider all the facts which he believed that already disclosed by the defendant. However, while sending the e-mail, Mr. Glen fails to consider the fact that the information sent by him went further than the previous disclosure of the defendant. This can be understood through example, information related to the impact of $30 million on the gross profit because of the defendant adoption of the poor 2000 vintage Wine, and this impact will be expected in full range in the one financial year, 2003.
(Solution) Assignment on Commercial Law_3

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