Business Laws Sample Assignment
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Added on 2021-06-18
Business Laws Sample Assignment
Added on 2021-06-18
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Running Head: BUSINESS LAWBUSINESS LAWName of the Student:Name of the University:Author Note
1BUSINESS LAWANSWER 1Identified IssueTo find out whether or not the provisions of directors’ duties under the Corporation Act 2001(Cth) have been violatedIdentified RuleThe individual who has absolute control over managing the operation in the organization inwhich they work is said to be a director (Coffee, Sale and Henderson 2015). The court stated thatif the directors of a company are seen to be in relationship said to be fiduciary in accordance withthe company they work in, then it is their responsibility to make sure that their work is said to bethe best for the organization as any other fiduciary agent, as per the case of ASIC v Healey[2011] FCA 717. Several duties are imposed on the directors in regards to their position in thecompany they work in. The directors of the company are imposed such duties under theprovisions mentioned in the CA and also the common law. According to the application of theCA, the first duty which the director holds while operating the business in Australia is duty ofobserving diligence and reasonable care. The s. 180 of the CA, describes exactly what the duty ismade up of. This section is then separated in two sub parts. The first portion of the section statesthe rules by which it is determined that when can the duty of diligence and sensible care, iscontradicted by the director. In the second portion of the section, includes the business judgmentunder the common law into the legislation. These rules are also said to be a type of defense, uponwhich the directors have their confidence in taking risky decisions regarding business (Mann andRoberts 2015).
2BUSINESS LAWThis section exactly signifies that any director of the company or any officer of the organizationwho have been given the authority to manage the matters in their work requires to make note ofdue care and diligence while working for the company. They need to work as a sensible person,that is the powers needs to be put into action and duties need to be released by the director or theofficer in the similar situation in the same company or they have occupied similar responsibilityin the same office as of the director. Thus, the conclusion of this section in regards to thecorporate law states that a director of the company needs to express extraordinary skills in theprocess of managing company operations, rather the director requires to follow similar skillswhich any sensible director would have done being in an identical situation and similar position.According to ASIC v Hellicar[2012] HCA 17, the director is expected to violate the section if itis determined that director was not notified himself in regards to the matters of the companydecisions which were made by them, the director was not able to be present in the meetings ofthe discussion which was required to carry out the business activities properly, and therefore theyfailed to manage the operations of the company properly (Du Plessis 2017). The director did not abide by the duties which were provided by s. 180(1), because they violatedthe s. 1041H of the CA, as their behaviour was deceptive and misleading in regards to theprospectus document, as per the case of Australian Securities and Investments Commission vSino Australia Oil and Gas Limited [2016] FCA 42. The court stated that when the directorsdo not abide by the lawful requirements they could have acted more carefully and diligently in
3BUSINESS LAWregards to manage the business affairs as a sensible director would do in similar situation, hewould not have taken any actions that would lead towards lawful obligations.In case the director of a company is unable to abide by the provisions under s. 189 which statesthat the director who wants to have a confidence in the advice given by other individual, requiresto have a sensible assumption that the advice he is getting is correct and competent, as per AWALtd v Daniels t/a Deloitte Haskins & Sells & Ors (1992) 10 ACLC 933; (1992) 7 ACSR 759They require to make self-analysis into the company matters themselves for the purpose offulfilling their thoughts in regards to the advice and its quality. If such requirements are notfollowed properly, then the director is held for not acting carefully and diligently in regards tothe company operation and therefore, the director has violated the provisions under the s. 180 ofthe corporation act.Meanwhile the s. 180(2) of the corporation act, brings up a scenario in which the directors of thecompany are able to skip the allegations of violating the duty of diligence and care. If the role ofthe business judgement is fulfilled by the directors of that company, then the court states therequirements of s. 180(1) to be met, for the purpose of satisfying this business judgement rule thedecision which was made by the directors requires to be in the company’s proper purpose andgood faith. It was also added that directors of the company must not have any sort of interest insetting such an order to match with the mentioned requirements under the rule. The directors arerequired to notify themselves for the purpose of fulfilling what the rule requires. Realistic beliefis required to see whether the decisions taken by the director are for the benefit of the company.
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