Business Law

Running head: BUSINESS LAW
Business Law
Name of the Student
Name of the University
Author Note

1BUSINESS LAW
Heading
Corporations Act 2001 (Cth)
Issue
1. Appointment of Sally as a non-executive director who took no active role in Royal
Group Ltd.
2. Disclosure of fact by Brittany as the property negotiated by her in Maroubra was
owned by her father-in-law
3. Brittany receiving ‘red-packet’ donation from her father-in-law for negotiating the
deal.
4. Brittany taking part in the board meeting in June 2018 even when she had her
personal interest in the Maroubra property.
5. Carrying forward the deal to purchase the Maroubra office building knowing that the
path of the flight from Kingsford Smith Airport has been re-routed to fly over the
building in Maroubra.
6. Paying the employees $20,000 each even when the company faced a loss for not
being able to rent out the Maroubra.
Rule
As per the Fiduciary Duties, there are four significant obligation of the directors that
governs corporate behaviour. The fiduciary duty directs the directors to: a) act in good faith
for the best interest of the company, b) act for a just and reasonable purpose, c) avoid
conflict of interest, and d) not to incur secret profit (Hill and Conaglen 2018).
Under Corporations Act 2001 (Cth), the directors have certain general duties to carry
out for the best interest of the company. Section 180 of the Corporations Act 2001 directs a
director to carry out his duty with care and diligence in a way in which a reasonable person

2BUSINESS LAW
would do so if they were appointed as a director of a company or they held and office of the
same responsibility in the company like a director.
Section 181 of the Act ask the director of a company to exercise his power and
discharge his duties in good faith for the best interest of the company and also for or a
proper and reasonable purpose. Violation of this provision leads to civil penalty.
Section 182 of the Act states that the director officer secretary or employee of a
company must not make improper use of their position for gaining personal advantage or
that might cause harmful effect to the company. Violation of this provision leads to civil
penalty.
Section 183 of the Act direct any person who is or has been an officer or a director or
an employee of the company to make proper use of the information and it should not be
used for personal advantage or causing detriment to the company as held in Green v Bestobell
Industries Ltd (1982) WAR 1.
Section 184(1) of the Act states that a director of a company shall be held for
committing an offence if they prove to be reckless or dishonest on purpose. They shall also
be held liable for not discharging their duties and exercising their powers in good faith for the
best interest of the company and for a proper and reasonable purpose. Section 184 (2) state
that director employee or an officer shall be held for committing an offence if it is proven that
they have made use of their position in a dishonest manner. Sub-section 3 of the same
provision states that the director shall be held liable for committing offence if they make use
of the classified information of the company for a dishonest purpose, which would help them
to gain personal advantage held in as Furs Ltd v Tomkies (1936) 54 CLR 583 .
Section 191 of the Act tells a director to intimate other directors regarding his own
personal interest in times of conflict and otherwise. The director shall have a strict liability to
share about his personal interest pertaining to any matter or affair of the company. However