Commercial and Corporation Law

Running Head: BUSINESS AND CORPORATION LAW 0
Commercial and Corporation Law
1/8/2019
Student’s Name
Total Word Count- 3802 words

Commercial and Corporation Law
1
Contents
Report..............................................................................................................................................2
Issue 1 2
Rules 1 2
Application 1 6
Conclusion 1 7
Issue 2 8
Rule 2 8
Application 2 13
Conclusion 2 15
Bibliography..................................................................................................................................16

Commercial and Corporation Law
2
Report
To, Date: 08-01-2019
Andrew Dixon,
Managing Director,
Golden Adventure Ltd
Sub:- A report on director duty breach in the company
Respected Sir,
Kindly find the following report. All the issues asked by you are discussed hereunder.
Issue 1
The issue of the case is to check that whether Derek, being an officer of the company has
breached his duties under common law as well as under Corporations Act 20011?
Rules 1
According to the legal precedent given in the case of Salomon v A Salomon & Co Ltd [1896]
UKHL 1, [1897] AC 222, a company is considered as a separate legal entity. In addition to being
a separate legal person, a company is also an artificial person. Directors and other officers are
there to act for a company. As these people have a different identity form a company and cannot
be held liable for the affairs of the same, hence there is always a possibility that these people can
misuse the separate status of a company. Therefore, to prevent the misuse of this feature of a
1 Corporations Act 2001 (Cth)
2 [1896] UKHL 1, [1897] AC 22

Commercial and Corporation Law
3
company, some duties of directors and officers of the companies are mentioned under common
law as well as under CA. Here, this is necessary to know that what the term officers stand for.
Section 9 of CA provides the definition of an officer. According to this section, following people
comes under the category of an officer:-
 A secretary or director of the company
 Any person who takes the decisions which affect the business of the company as a whole
or a part thereof
 A Person who can affect the financial standing of the company in a significant manner
and
 A person who has the capability to regulate the behavior and decisions of directors3.
It means the duties prescribed under CA for an officer of the company will equally be applicable
to the company secretary. Moving the discussion towards the prescribed duties under CA this is
to mention that these duties consist the general duties as well as the duties of director and
officers in some specific circumstances. The general duties mentioned under CA are more often
similar to the duties prescribed under common law as they have been developed based on the fact
that a director/officer of the company has a fiduciary and trustworthy relationship with the
company. Sections 180-183 of the act carry these general duties. The explanations of these
sections are given hereunder.
Section 180:- This section makes every director as well as other officers of the company liable to
perform their obligations with an amount of care and diligence similar to a reasonable person4. In
3 Austlii.edu.au, Corporations Act 2001 - SECT 9 (2018)
<http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html> .
4 Williamroberts.com.au, Directors' Duties (2018) <
https://www.williamroberts.com.au/News-and-Resources/News/Articles/Directors--Duties>.