CASE ANALYSIS. Case Summary  Growfast Pty Lid has thre

CASE ANALYSIS

 Growfast Pty Lid has three directors who are
also the only shareholders (Sam, Peter,
Rose)
 Since six months, company has been facing
competition
 Sam locates a new premises and calls board
meeting for approval of buying
 Rose is reluctant while Peter does not
understand the financial implications
 Company purchases the new land but
profits remain low leading to chances of
bankruptcy
Case Summary

 Key issue is to determine if Rose as non-
executive director is in violation of the
following duties.
◦ Duties of directors bestowed under common or
general law
◦ Statutory duty to care and conduct due diligence
as highlighted in Corporations Act 2001
Issue

 General law duties of a director
◦ Act in good faith
 Using powers for proper purpose
 Avoid conflict of interests
 Retain discretionary powers
◦ Deploy care, diligence and skill when taking
decisions
 Statutory Law
◦ Section 180(1) – Directors should discharge duties
and exercise power with care with due diligence
Relevant Rule

 Conduct of Rose during the board meeting
highlights that even though Rose was suspicious
about the proposal but she still agreed without
additional evaluation leading to current crisis.
 Breach of general duty to deploy care and due
diligence along with statutory duty under s 180-1.
 She should have not agreed and considered
possible alternatives before concluding the best
proposal for the company
Application

 Rose is in the breach of the following
◦ General duty of deploying care, diligence and skill
when taking decisions
◦ Statutory duty of care and due diligence (s. 180-
1)
 To avoid the breach adequate due diligence
should have conducted by Rose before any
final decision especially when she felt being
rushed by Sam.
Conclusion

 Cassidy, J. (2013). Corporations Law Text
and Essential Cases (4thed.). Sydney:
Federation Press.
 Ciro, T. & Symes, C. (2013).Corporations
Law in Principle (9thed.). Sydney: LBC
Thomson Reuters.
References