Business and Corporation Law Assignment (Sample)

BUSINESS AND
CORPORATION
LAW

CASE INTRODUCTION
 ASIC v Flugge (No 2) [2017] VIC 117 given by the
Supreme Court of Victoria is a sequel to the ASIC v
Flugge and Geary [2016] VSC 779 ;
 Payment of inland transportation fees irregular and
fraudulent under the UN Oil-for-Food Program
[OFFP];
 Australian Wheat Board [AWB] was making payments
of inland transportation fees Iraqi Grain Board [IGB].
 Contravention of directorial obligation under
Corporations Act 2001 (Cth);

BREACH OF DUTIES
Breach of section [180(1)] of the Corporations
Act 2001 (Cth)
Duty to act with due diligence and care;
UN was making inquiries about inappropriate
payments of transportation fees to Iraq
Failure to make any adequate inquiries about the
approval of the UN regarding sale of wheat to
the IGB Iraq by Australian Wheat Board [AWB];

ANALYSIS OF COURT DECISION
 Defendant was fully aware of the UN inquiries
about the inappropriate payments being made
by the AWB to IGB for trucking/discharge;
 Defendant failed to failed to use means of
knowledge about confirming whether the
payments made to Iraq were inappropriate;
 Any reasonable director under similar
circumstances would have exercised
reasonable skill and care to use the means to
obtain information about the inquiries
 Defendant contravened section [180(1)];

 Defendant applied for an application for exoneration
under section [1318] or section [1718S] ;
 Defendant satisfied one condition: Honest intentions
required under section [1318] or section [1718S] as
ruled in ASIC v APCH [2014] FCA 1308 [39]-[41;
 All three requirements under section [1318] or section
[1718S] must be satisfied;
 Additionally, breach of duty committed by the defendant
was severe in nature and had adverse outcomes;
 Contravention of the defendant is established and was
imposed pecuniary penalty of $50000 and disqualified
the defendant for 5 years.

SIGNIFICANCE OF DECISION ON OEPARTION
OF AUSTRALIAN COMPANIES
Director must discharge its powers with
due diligence and care ensuring best
interest of the company;
Disqualification term and penalty amount
imposed upon the defendant shall be
proportionate to the amount of
contravention committed by the
defendant;

REFERENCES
ASIC v APCH [2014] FCA 1308 [39]-[41]
ASIC v Flugge (No 2) [2017] VIC 117
ASIC v Flugge and Geary [2016] VSC 779
ASIC v Plymin (No 2) [2003] VSC 230
ASIC V Whitlam (No 2) [2002] NSWSC 591.
Australian Securities Commission v John Phillip Donovan and Julia
Gwendolin Donovan [1997] No Qg 3006.
Coffee Jr, J.C., Sale, H. and Henderson, M.T., 2015. Securities regulation:
Cases and materials.
Corporations Act 2001 (Cth)
Hargovan, A., 2017. Corporate law: Foreign directors of Australian
companies put on notice: No leniency for ignorance of duties.
Governance Directions, 69(1), p.37.
Laby, A.B., 2017. The Fiduciary Structure of Investment Management
Regulation.
Rich v ASIC [2004] 220 CLR 129
Stewart, S., 2017. Are you the next ACM board director?. Australian
Midwifery News, 17(2), p.33.