Business Law Case Study Assignment

Added on - 01 May 2020

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Running head: BUSINESS LAWTable of ContentsAnswer 1..........................................................................................................................................2Answer 2..........................................................................................................................................3Answer 3..........................................................................................................................................5Answer 4..........................................................................................................................................7Answer 5..........................................................................................................................................9References......................................................................................................................................11
1BUSINESS LAWAnswer 1IssueThe issue in this case is to determine that whether any directors’ duties inthe CA have beenbreachedby the director of High Rise development Limited.RulesThe CorporationsAct 2001 (Cth) (the Act) imposes duties on all persons who are officers anddirectors of a company with respect to section 9 of the Act. The statutory duties are given outthrough Section 180-184 of the Act.The directors have the duty to use their skill and diligence in an appropriate way while managingthe operations of the company. Whether the decision taken by the directors is through the use ofappropriate skill and diligence or not is determined by the court. This is done by applying the testprovided in section 180(1) of the Act. A hypothetical and reasonable director is placed in thesame position which the director in context is in. it is than considered that whether the reasonabledirector would have taken the same decision. If yes than the section is complied with and if notthe section has been violated.Section 181 of the Act purports to impose an obligation to act bonafide and for a proper purposeof the company on its directors. This means that the directors must act in good faith and alwaysensure the best interest of the company while discharging their duties.Section 182 of the Act imposes an obligation on the directors of the company not to misuse therepowers provided to them by their position in the company. The position must not be used for any
2BUSINESS LAWpersonal gain or gain of any third party at the cost of the company. Where there is a conflict ofinterest between company and personal interest, the company interest always has to be givenpriority.Section 183 of the Act imposes an obligation on the directors of the company not to misuse thereinformation obtained by them through the company. The information must not be used for anypersonal gain or gain of any third party at the cost of the company.ApplicationAs per the facts provided by the case study the company is governed by two directors. Thecompany has recently entered into a deal to manage new high rise residential units. One of thedirectors of the organisation wants to give the cleaning contracts to the company owned by hisfriend’s wife. The quotes provided by such company are excessive however knowing the factsthe director is willing to provide the contract to her company. If this contract is provided section180(1) would be breached as a reasonable person would not have done so if he was placed in thesame position. Section 181 of the Act is also breached as the act is not in the best interests of thecompany. The director would also breached section 182 and 183 as his act would ensure gain ofa third party at the cost of the company. The only way in which the directors can avoid suchbreached is through obtaining a defense under section 180(2) or making proper disclosure to theother director under section 191 of the Act. Director can make disclosure at an Annual GeneralMeetings or EGM to the Board and members of the companyAnswer 2Issue
3BUSINESS LAWThe issue in this case is to determine whether oppressive remedy can be claimed by the two sonsRulesThe Act provides provisions related to oppressive remedy through section 232-234.Section 232 of the Act provides that the court has the authority to make any order which hasbeen provided in section 233 of the Act. The order can be made when a resolution or a resolutionwhich has been proposed, the way in which the operations of the company is carried out or aproposed or actual omission or act on the part of the company is not overall beneficial for all themembers of the company or unfairly discriminatory against, unfairly prejudicial to or oppressivetowards a member or group of members in that or any other capacity. It further states that withrespect to such acts the person to whom any shares have been transferred by the operation of lawor by will, would be deemed as the member of the company.Section 233 of the Act sets out the orders which can be made by the court in relation to section232, the orders are as follows.The winding up of the companyRepeal or modification of the constitutionSupervising the operations of the company in futurePurchase of shares from members to whom shares have been transferredReduction in share capitalOrder to continue, institute or defend a legal suitAuthorising a member to continue, institute or defend a legal suitAppointment of receiver or managerRestraining a specific conduct
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