Australian Corporate Legal Issue

This article discusses the breach of director's duties in Australia, specifically focusing on the potential case against Commonwealth Bank of Australia and its board. The article highlights the guidelines imposed by ASIC regarding the general duties of directors and officers of companies. It also mentions the response of the bank's management and the impact of the scandal on the board and share prices.

Running Head: BUSINESS AND CORPORATION LAW
BUSINESS AND CORPORATION LAW
Name of the Student
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Author Note

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Table of Contents
Australian Corporate Legal Issue...............................................................................................2
Bibliography...............................................................................................................................3

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Australian Corporate Legal Issue
I have gone through one article of Australian Financial Review some time back. The
article was regarding breach of director’s duties. It has contained the articleabout the
interviewing by ASIC with the CEO and the chairman of Commonwealth Bank of Australia,
because of it coming closer to the launch of landmark case against bank aswell as its board
for alleging the breach of the duties of directors and continuous disclosure (Trautman &
Ormerod, 2016).
I have learned that the breach of the duties by the director is subject to the civil
penalties. In case of director’s dishonesty, they may incur criminal penalties. The director
must have to exercise the power they have and discharging of the duties that in the good faith,
which is in organization’s best interests (Asic.gov.au, 2019).I have learned the guidelines of
ASIC regarding the general duties that is imposed by the Corporation Act on the directors as
well as the officers of the companies, which are as follows:
 The duties for exercising the powers and duties with the due care and diligence which
a reasonable person will have that consists of steps for ensuring to be properly
informed about the company’s financial position as well as ensuring that trading is not
done in case of insolvency (Asic.gov.au, 2019).
 The duty for exercising the powers as well as duties in good faith for the company’s
good faith and for the proper purpose.
 The duty for not using properly the positions for gaining the advantage for himself or
herself or for someone else for causing detriment to the company(Asic.gov.au, 2019).
 The duty for not using properly the information that is obtained from the position for
gaining the advantage for himself or herself or for someone else for causing detriment
to the company(Asic.gov.au, 2019).

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In the article, it has been mentioned that the chairman Catherine Livingstone and
former CEO Narev are the former and serving bank executive and directors, to whom the
regulator has issued notices for conducting interview. I have read in the article that the case
of CBA is related to the response of board in responses to the warnings of AUSTRAC in
2016. Bank was indulged in money and intentionally it has failed for disclosing breaches and
adequately responding. ASIC has confirmed the potential case that has rivaled the case of
James Hardie and Centro for creating board’s shockwaves (ANDREW, 2016).
I have read that the management of bank has responded that they are doing this and
spending this money. This response was taken as assurance of addressing the issue. This
scandal has resulted into Mr. Narev’s Departure and shaking of board. The board has
defended the two class actions in relations to allegations by the Maurice Blackburn as well as
Slater and Gordon breakaway company Phi Finney McDonald. This has resulted into fall of
shares price of CBA after allegations of more than 53,000 violation of anti-money laundering
as well as Counter Terrorism Financing Act, which was settled for $702.5 million (Australian
Financial Review, 2019).
However, Mr. Narev has argued that CBA has always responded to the regulatory
requests but if it will disclose everything then market will be confused.

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Bibliography
ANDREW. KEAY, L.L.B., 2016. DIRECTORS'DUTIES. JORDAN Publishing Limited.
Asic.gov.au.(2019).Directors - What are my duties as a director? | ASIC - Australian
Securities and Investments Commission . Retrieved 10 May 2019, from
https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors/directors-
what-are-my-duties-as-a-director/
Australian Financial Review.(2019). ASIC interviewing CBA's Ian Narev, Catherine
Livingstone. Retrieved 10 May 2019, from https://www.afr.com/business/banking-
and-finance/asic-interviewing-cbas-ian-narev-catherine-livingstone-20190304-h1by72
Trautman, L. J., & Ormerod, P. C. (2016). Corporate Directors' and Officers' Cybersecurity
Standard of Care: The Yahoo Data Breach. Am. UL Rev., 66, 1231.