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Business and Corporate Law (doc)

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Added on  2021-06-15

Business and Corporate Law (doc)

   Added on 2021-06-15

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Running head: BUSINESS AND CORPORATION LAWBusiness and Corporation LawName of the StudentName of the UniversityAuthor Note
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1BUSINESS AND CORPORATION LAWTable of ContentsCase Introduction.............................................................................................................................2Breach of duties...............................................................................................................................2Analysis of Court decision...............................................................................................................3Significance of decisions on operations of Australian companies..................................................7References........................................................................................................................................9
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2BUSINESS AND CORPORATION LAWCase IntroductionThe recent decision in ASIC v Flugge (No 2) [2017] VIC 117 given by the SupremeCourt of Victoria is a sequel to the ASIC v Flugge and Geary [2016] VSC 779 that was decidedin 2016. The Australian Securities and Investments Commission [ASIC] initiated a legal actionagainst Mr. Flugge for contravening directorial duties under the Corporations Act 2001 (Cth).The contravening conduct of the defendant was alleged to have been resulting from AWB’sconduct in selling wheat to Iraq under the UN Oil-for-Food Program [OFFP]. The plaintiff hasclaimed penalty of $200,000 to be imposed upon the defendant for such contravention anddisqualification of Mr. Flugge from managing corporations for a period of 10 years. Further,the plaintiff claimed that the defendant must pay seventy percent of the expenses incurred by theASIC. The defendant applied for pardoning the penalty and sought for a court order that ASICpays for proceeding expenses. However, the court exercised its discretionary power and held thatthe plaintiff was not entitled to exonerated application under section [1318] or section [1718S]of the Act. Further, the contravention of the defendant is established which led to the impositionof pecuniary penalty of $50000 and disqualified the defendant for 5 years.Breach of duties The plaintiff, Trevor Flugge who was the director and the chairperson of AWB Ltd hadcommitted breach of section [180(1)] of the Corporations Act between 19 December 2001 andMarch 2002. The defendant failed to discharge his duties and exercise his powers with due careand intelligence, which any prudent person would exercise if such person was under similarcircumstances and holding the same position carrying out the same responsibilities within theAWB Ltd as the defendant. The defendant is said to have committed a breach of section [180(1)] of the Act as hefailed to make any adequate inquiries about the approval of the UN regarding sale of wheat tothe IGB Iraq by Australian Wheat Board [AWB]. The defendant was aware that UN wasmaking inquiries about inappropriate payments of transportation fees to Iraq. AWB was makingpayments of inland transportation fees Iraqi Grain Board [IGB].
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