BA217 – Company Law | Assignment

Running Head: Law 1
Law

Law 2
Introduction:
In case, ASIC v Adler [2002] allegation related to contravention of Corporation Act 2001 was
made against the four defendants that was Mr. Adler, Mr. Williams, Mr. Fodera and Adler
Corporation Pty Ltd. This case was filed by Australian Securities and Investment Commission
(ASIC), and ASIC stated that defendants conduct nine transactions which contravene the
provisions of Corporation Act 2001. These transactions are conducted for the purpose of
misleading the shareholders of HIH. This case mainly focuses on the duties of the directors and
other officers of the company operating within Australia.
Inappropriate behavior of Adler:
Nine transactions was highlighted by ASIC which were conducted by defendants, and especially
by Mr. Adler and Adler Corporation Pty Ltd. It must be noted that Adler Corporation Pty Ltd
was owned by Mr. Adler.
First transaction was related to the advance payment of $ 10 million which was requested by Mr.
Adler, and made by HIHC (subsidiary of HIH) to the Pacific Eagle Equity Pty Ltd. (PEE). Mr.
Williams and Mr. Fodera were accused for the purpose of making this payment on behalf of the
HIH.
PEE was established by Mr. Adler for the purpose of making investment for HIHC. Mr. Adler
purchased shares of HIH through PEE for $ 3,991,856.21 for stabilizing the share price of HIH,
so that he can maintain the value of his shares in HIH by making the impression that shares of
the HIH get support from the market. Later, Mr. Adler sold the shares through AEUT at the loss
of $2,121,261.11. AEUT was incorporated through trust deed in which PEE was the trustee.
These transactions are performed from the payment of $10 million made by HIH to PEE.

Law 3
These transactions were considered as offense because in these transactions duty of director was
breached by Adler, and ASIC can claim against Mr. Adler and Adler Corporation. Mr. Adler
fails to compile with their duties as director in both the organization that was HIH and AEUT.
There were some other transactions also which includes issues related to unsecured loans by
AEUT that cost almost $2,084,345 to the organization. While conducting these transactions, Mr.
Adler enables the AEUT to give unsecured loans to:
 Morehuman Pty Ltd - $160,000.
 Intagrowth Fund No 1 - $500,000.
 Pacific capital partners - $200,000.
 PCP Ensor No. 2 Pty Ltd - $1, 2754755.
Therefore, above stated transactions were considered as breach of director’s duty by Mr. Adler.
Conflict with Australian law:
Above stated transactions contravenes various laws such as:
Section 208 of the Corporation Act 2001 was contravened which states that before assigning any
financial benefit to any specific member of corporate, requires approval from other members
also. No evidences were present which states that approval has been taken by the defendants
from board of directors (Corporation Act, 2001).
Mr. William contravenes section 182 of the Corporation Act 2001. As per this section directors
of the company must not use their power for the purpose of generating profit for themselves or
any other person (Corporation Act, 2001).