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(Solved) Assignment on Legal Advice

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Added on  2021-06-14

(Solved) Assignment on Legal Advice

   Added on 2021-06-14

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Legal Advice 1Name:Professor:College:Course:City/state: Date:
(Solved) Assignment on Legal Advice_1
Legal Advice 2Question 1Part (A)Legal advice to ASIC regarding ME Enterprises Pty LtdIssueM.E. Enterprises Pty Ltd a registered company, after investigations by ASIC and complains by supplies was found to be in liquidity problems. The company had liabilities that exceeded its assets. This was evident in two instances where in the May 2017 ME Enterprises Pty Ltd faced financial challenges in paying its suppliers. This was also repeated in June of 2017 when the Australian Taxation Office demanded payment of company taxes.During this period one of the directors Liam a non-executive director had been diagnosedwith cancer and was unaware of the non-payments in May and June of 2017 to both the suppliersand the Australian Taxation Office. The other director Peta is the one who is involved in the day to day running of the business. The payments in the organization had been delegated to employees who ensured that creditors are paid on time.RuleAccording to the Corporation Act 2001 a company is defined as a separate legal entity with a distinct legal existence. This existence is separate from its directors and employees. A company also has the capacity of an individual like to enter into contracts, own assets, sue and besued.
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Legal Advice 3Under certain circumstances directors of the company are personally liable. Some of these circumstances include the following.Areas suffered when a business becomes brokeOne of the most important duties of a director in an organization is ensuring that the business does not engage in transactions when it’s insolvent. A business is declared insolvent when it’s unable to pay its debts on time. This is evident when creditors and legal authorities start demanding to take action. In this particular case the directors are liable. Losses incurred due to directors negligenceDirectors who are responsible for the day to day running of the business are held responsible if losses occur due to their negligence. This can be due to actions of commission or omissio. For instance, entering into illegal contracts or falling to report insolvency to shareholders and relevant authorities.Regulatory inaction towards directorsThis mostly applies in instances, where directors are directly liable if the fail honoring laws being administered by other agencies like the Australian Taxation Office (Tomasic, R., 2016). Directors have a legal obligation to ensure PAYG (Pay As You Go) is paid.AnalysisIn this particular case from the issues and the rule, there is a case of negligence and breach of contract by one of the directors Peta who is involved in the day to day running of the business. She is found liable for not taking adequate action as evidenced by Lord Hardwicke in the case of Charitable v Sutton. He said a director may be guilty of acts of omission or
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