Business and Corporate Law Assignment Answers

   

Added on  2020-03-23

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Business and CorporateLawHannon v Doyle [2011] NSWSC10(Student Details: )
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CASE REPORT2IntroductionThe Corporations Act, 2001 (Cth) is a key piece of legislation which is applicable for all the companies in Australia. This act acts as a governing act for the companies in the nation, where each and every aspect of the functioning of the company is ruled by the act. So, from the naming requirement of the company, to its type, from its incorporation to winding up, all such and more provisions are provided under this act (Latimer, 2012). One of the key provisions of this act relates to the director duties covered under Part 2D.1. When the duties laid down under this section are contravened, a case is brought against the directors and they have to face relevantpenalties for such breach (Cassidy, 2006). Hannon v Doyle [2011] NSWSC 10 is one of such cases where a breach of director dutieswas claimed, and these were established by the court, but as they were not claimed upon, no decision was made on these duty braches. This case revolved around the claims of minority oppression and the resulting remedies from it (Wright, 2011). This report covers a detail of the different aspects which surrounded this case to specifically highlight the duties breached in this case. BackgroundIn this case, David Hannon had applied for leave so as to initiate legal action on behalf ofAPH, i.e., Afro Pacific Holdings Pty Ltd and APC, i.e., Afro Pacific Capital Ltd, where APH held 88% shares, based on section 237 of the Corporations Act. As he had been a former directorand the member of these companies, he made a claim pursuant to section 236(2)(a)(i) and section236(2)(a)(ii) and left the court to decide upon whether the criteria covered under section 237 of
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CASE REPORT3this act was fulfilled. It was argued in the matter of serious question by Hannon that unsecured loans were made by APC to Doyle and Turner and some of these loans were interest free. He also claimed that the 15 million options which APC held in TFC, i.e., Transvaal Ferro Chrome Ltd had been “alienated” to the two companies which were owned by the two directors of APC, i.e., by Doyle and Turner, along with the options of the company being sold at a price which wasbelow the market value. He also highlighted that Doyle and Turner were provided with excessiveremuneration by APC (Wright, 2011). A noteworthy point raised by Hannon was that APC had lent some money to Africa Pacific Capital Pty Ltd, herein referred to as Pacific, which was a company formed and owned by Turner and Doyle. Further, Turner and Doyle made Pacific supply certain services to such companies which were the existing clients of APC, and where the services’ procurement was based. There had also been diversion or transfer of assets to Pacific, and these assets were such to which APC had been entitled. Lastly, Hannon highlighted that no dividend had been paid by APC even when there was amiability of profits, where the dividends could have been paid prudentially. And this gave rise to a claim to be made under section 232 of this act for the oppressive conduct of affairs (Wright, 2011). Duties BreachedUnder the Corporations Act, the directors of the company have been imparted with certain duties. One of the reasons for imparting these duties on directors is that the minority shareholders of the company are to be protected from oppressive conduct and where such is done, the remedies have to be awarded to the minority shareholders (Paolini, 2014). Under section 181 of this act, the directors have been given the duty to make use of their powers and to
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