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BUSINESS AND CORPORATE LAW 2 Running Head: Business And Corporate Law 2 Case of Fodare Pty Ltd v Shearn

   

Added on  2021-06-14

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Running Head: BUSINESS AND CORPORATE LAW0[Fodare Pty Ltd v Shearn ]Business and Corporate LawStudent’s Name

BUSINESS AND CORPORATE LAW 1ContentsIntroduction......................................................................................................................................1Issues................................................................................................................................................2Case Introduction:........................................................................................................................2The duties/responsibilities breached and reason thereof:............................................................3Rules................................................................................................................................................4Applicability....................................................................................................................................5Decision of the court....................................................................................................................7Impact of the decision on the operation of companies in Australia.............................................8Conclusion.......................................................................................................................................8References........................................................................................................................................9

BUSINESS AND CORPORATE LAW 2IntroductionA corporation is a statutory body which work with the minds and bodies of it is directors andofficers, yet it is a separate entity from such directors. These directors are expected to work in areasonable manner which must bring positive results to corporation as discussed and decided incase of Solomon V. A Solomon & CO. (1897) AC 22. Such Corporation can be incorporate withdifferent agendas and objectives and can also be in form of trust. As soon as such forms ofbusiness started to expand and cherish in environment, many of the cases has come into lightwhere directors performed their duties in a disproportionate manner To discipline such cases, provisions have been made under Section 180 to 182 of CorporationsAct, 2001 (Cth) which defines the way in which directors are required to meet out theirresponsibilities and whenever a director or officer of a corporation contravened to the provisionof aforementioned sections, necessary actions can be taken against them under the purview ofcited law. This report is based upon study of case Fodare Pty Ltd v Shearn (2011) NSWSC 479and would cover director’s duties, the way in which they have been violated and court’s decisionrelated to this case.IssuesCase Introduction:In the conferred case, Fodare Pty Limited, a corporation incorporated in year 1989 with theobject to work as trustee of the family trust named “The Alexandria Trust for Fodare Pty Ltd"

BUSINESS AND CORPORATE LAW 3and Ms. Shearn, an individual, were parties of the case. The said trust was a trust of settlementwhich was constituted for the benefits of Ms. Shearn and her family Members; whereas, Ms.Shearn was director of the said corporation from 18 May 2011 to 22 August, 2006. Corporationhere refer as “fodare” has sold one of it is property titled “Menangle Park property”. Out of thesale amount Ms. Shearn has kept and used amount consisting more than half of sale value for herpersonal benefits. At the time of this transaction, Fodare had some payable and by reason of thisactivity, the same could not pay off it is debts. Solicitor named Mr. Bruce Dennis made anapplication for winding up of the corporation. Further, in the winding up proceedings, whendemand of books of accounts was made from the side of liquidator, Ms. Shearn did not presentedanything in response, whereas it was her duty (Commonwealth Consolidated Acts, 2018).Being the Director of the company, Ms. Shearn was expected to perform her charge for the bestinterest of corporation. (William Roberts, 2018). But in the said transaction, Ms. Shearn hasneglected her duty to effort in good faith and the prime interest of the company. As a matter offact it seemed to be fraud. So, Fodare Pty Limited initiated a case against Ms. Shearn.The duties/responsibilities breached and reason thereof:As per the requirement of section 180(1) of Corporations Act, 2011, a director of a corporationrequires to perform his/her duties and skills with due care and alertness. On 1st December, 2003,Fodare sold it is property to an independent third person for $1,200,000 and received 3 chequesagainst the payment of the forenamed sale. One of the received cheques worth $634,957.79 wasin the name of “Alexandria Trust”. Being the director of corporation, Ms. Shearn had enoughabundant control over the affairs of the corporation; So Ms. Shearn has deposited this cheque in

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