Corporation: Artificial and non- individual entities.

Running Head: BUSINESS AND CORPORATION LAW 0
HA3021 CORPORATIONS LAW
1/17/2019
Student’s Name

Corporations Law 1
Contents
Introduction......................................................................................................................................2
Case Introduction.............................................................................................................................2
Overview 2
Facts 3
Duties Breached...............................................................................................................................4
Why duties were breached...............................................................................................................5
The decision of the court.................................................................................................................6
Impact on the decision on other companies.....................................................................................7
Conclusion.......................................................................................................................................7
Reference.........................................................................................................................................8

Corporations Law 2
Introduction
Corporations are the artificial and non-individual entities of society. The same works in a
business environment and has many stakeholders. As mentioned, a corporation is an artificial
person, hence the same appoint some individuals to take the business decisions and to manage
the affairs of the same. These individuals hold the position of officers and directors in a
corporation. Being on such a superior position in an organization and being responsible for the
decisions of the corporation, these people owe a duty of care in respect of their performance and
working. This is the reason that it is expected from them to act in a manner, which is the most
suitable and is in the best interest of the corporation. Corporations of a nation are important for
the economy and governments, as well as other stakeholders, have certain expectations form the
same. In such a manner, the behavior of the management of a company is required to be positive.
Every nation has it is separate legislation to regulate the behavior of corporates as well as of its
directors. If to talk about Australia, Corporations Act 2001 (Cth) (act) is the lead legislation that
defines the rights as well as duties of directors. The report presented hereby is focused on one of
the significant cases where company and director of the same breached some of the duties
mentioned under the act. The report will also include the decision of the case and impact of the
same on other companies in the country.
Case Introduction
Overview
The case selected for this report is the Australian Securities and Investments Commission v Sino
Australia Oil and Gas Limited (prov liq apptd) [2016] FCA 42. In the subjective case,

Corporations Law 3
chairperson of the company named Sino Australia Oil and Gas Limited breached his duties
mentioned under the act. Tianpeng Shao was the chairperson of this company. The company was
a holding company in Australia and was having a subsidiary company in China. At the time of
initial public offering by the company, Mr. Shao made certain non-compliances in respect to the
disclosure requirements. In addition to this, he was also making some fraudulent bank
transactions out of the money received to the company from its IPO. In March 2016, the federal
court of Australia provided an order to wind up the company and made Mr. Shao as well as
company liable for breach of many sections of the act.
Facts
If to talk about the facts of the case, this is to state that in the year 2013, the company for the
purpose of its initial public offering issued prospectus document. Mr. Shao signed the document.
In addition to the chairperson, Mr. Shao was also the executive director of the company. By the
help of IPO, the company has raised the funds worth $12,829,318 (Minterellison.com,
2016). Afterward, Mr. Shao requested two of the resident Australian directors namely Mr.
Faulkner and Mr. Johnson to transfer the money to accounts of the company in China. Both of
these directors had no knowledge about the reasoning of this transaction and therefore they have
refused to co-operate to Shao in the subjective dealings. Cause of their refusal to be a part of the
fraudulent activity, Shao took steps to move both of the said people from the position of
directors. Afterward, these directors have reported the issue of bad corporate governance to
ASIC. Federal court initiated and committed an inquiry on the company and after many of the
finding in the respective matter, the court finally found it suitable to make the Sino wind up. In
March 2016, Federal court issued the order of winding up of the company considering the