Business Law Assignment
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Added on 2020-04-29
Business Law Assignment
Added on 2020-04-29
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Running head: BUSINESS LAWBusiness lawName of the StudentName of the UniversityAuthor Note
1BUSINESS LAWDirectors Any person who is appointed to the position of a director or an alternate director is deemed to bea director of the company under section 9 of the Corporation Act 2001 (Cth) CA. The personwould be known as a director regardless of whatever name is provided to such position. Peoplewere not properly appointed are also included through sections 9 as the directors of the company.According to such provisions person acting in the position of a director are known as De factodirectors of a company.In the given situation it has been provided that May and June are two directors of the companyclan Limited. Thus as they are made directors through appointment they would be deemed asdirectors under section 9 of the Corporation Act.Types of director’s duties and breachesThe directors of a company owe a duty towards it under the common law as well as legislationsenacted by the parliament. These duties have been imposed on the directors in order to ensurethat the interest of the shareholders and other stakeholders of the company such as its creditorsare protected (Keay 2014). In the case of Australian Securities and Investment Commission (ASIC) v Cassimatis (No. 8)[2016] FCA 1023 the Court ruled that as the directors were not able to ensure appropriatediligence andcare towards discharging the duties in relation to the company they had violatedsection 180 (1) of the CA.
2BUSINESS LAWSection 180 of the CA directs the directors of a company to discharge there obligations towardsthe company through observing care and diligence which would be deployed by a reasonabledirector under the same position and situation. Section 181 of the CA directs the directors of a company to carry out the activities towards aproper purpose and the best interest of the organisation they are working for.Section 182 of the CA directs the directors of a company to never misuse the position which theyhold in the company to make personal profits and cause loss to the company.Section 183 of the CA makes it mandatory for the directors of the company not to use anyinformation with respect to the company which can be accessed by them for making personalprofits and causing loss to the company. Under common law the directors of the company have a duty to avoid any conflict of interest.Conflict of interest signifies the dispute between the personal interest of the directors and theoverall interest of the company (Langford 2015). In case any such situation arises it is the duty ofthe directors to always prefer and give priority to the interest of the organisation. The commonlaw also provide the duty to deploy due skill and diligence towards operations of the organisationand to act for a proper purpose (Gerner, Paech and Schuster 2013). Section 588 G of the CA directs the directors of a company to stop trading when the companyhas become insolvent. In addition the section provides that the directors must not carry on anytrade activity if a reasonable person under same circumstances would have a belief that thecompany would become insolvent if the trading is carried on. The directors of the company whoindulge insolvent trading and breach the provisions of section 588G are personally liable for anydebt incurred by the company due to the insolvent trading.
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