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Personal Liability of Directors in Case of Breach of Director Duty

Briefing the Financial Planning Association on the personal liability of directors for breach of directors' duties in the 'Storm' case and its implications for other corporate boards in the industry, potential defences to liability, and the impact of the new penalties regime on future cases.

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Added on  2022-11-25

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This article discusses the personal liability of directors in case of breach of duty mentioned under the Corporations Act 2001 (Cth). It explores a specific case and the relevant laws and penalties associated with director duties.

Personal Liability of Directors in Case of Breach of Director Duty

Briefing the Financial Planning Association on the personal liability of directors for breach of directors' duties in the 'Storm' case and its implications for other corporate boards in the industry, potential defences to liability, and the impact of the new penalties regime on future cases.

   Added on 2022-11-25

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AYB230
Corporations Law
Student’s Name
5/16/2019
Personal Liability of Directors in Case of Breach of Director Duty_1
AYB230 Corporations Law 1
To, Date: 16-05-2019
Financial Planning Association
Ref: - Personal Liability of directors in case of breach of director duty
This letter is developed on the referenced topic. The same will summarize the personal
liability of directors in case of breach of duty mentioned under Corporations Act 2001 (Cth).
Starting the discussion on this topic, this is to state that every director and officer or
Australian company has some general as well as specific obligations to the company and to its
shareholders. However, in many of the cases, it has been reviewed that directors do not take such
duties seriously and often breach them. In addition to the duties of such people, Corporations Act
2001 (hereinafter referred to as an act) also outlines penalties for breach. “Storm Case” is one
such case where directors of the company performed their functions going outside of the liability
prescribe under the act. In the subjective case, Mr. and Mrs. Cassimatis was appointed as a
director in the company called Storm Financial Limited. The main objective of the company was
to provide financial services including assistance to its customers and investors. These directors
have developed the Storm model. The model has not been developed in an efficient manner and
the company was required to provide borrowing powers to its investors and customer. Further,
the model was focused on the investment in index fund out of the borrowed amount. The model
was suggested to those investors who had repayment capability. The model failed later on
because of being double gearing system. The system has not proved successful for every person
and therefore many investors who had limited funds faced loss out of use of such a model. In this
manner, directors of the company breached their duties under the act. The relevant law for this
case is part 2D.1 of the act. This part of the act provides the duties of a director. As per section
Personal Liability of Directors in Case of Breach of Director Duty_2

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