Directors' Responsibilities and Powers

This project explores the responsibilities and powers of directors in a company, particularly under the Corporation Act 2001. The assignment delves into the roles and duties of directors, including allocating work, managing risks, and protecting members' interests. It also discusses the consequences of failing to comply with these duties, including penalties for directors. The project provides a comprehensive analysis of directors' powers and responsibilities in an Australian listed company.

CASE STUDY
Contents

INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Corporation Act 2001 is an Australian based law which primarily focused on functions of
companies. It consists roles, responsibilities and duties of directors and other officers (Gorris,
Hamermesh and Strine, 2011). So that, every member of the organization has to comply with
such rules and regulation which are imposed on them. In the present discussed on case
Australian Securities and Investments Commission v Mariner Corporation limited 2015. In
which Mariner is the company which is listed in Australia and engaged in acquisition and
merger. Its directors as well as other officer are bound to perform their functions in effective
manner which are imposed on them as per rule of law,
TASK
Case: Australian Securities and Investments Commission v Mariner Corporation limited 2015.
In this case Mariner was an investment company. Its shares are listed in Australian Stock
Exchange. It is targeted as well as engaged in mergers or acquisition under small cap sector. On
25 June 2012, the Mariner firm has been announced a proposed off-market bid for Austock. But
in that time firm have to sufficient fund in order to satisfy its obligations which is imposed on it
related to bid. The bid has been announced at a price which is much higher than the current
market price (Hanks, 2011). Also at same time Mariner released the assets approx. half of the
value. The minimum acceptance is highly conditional which is 50%. But the director only
accepts around 35% of shares. On the basis of this it is strongly recommend that the rejection of
bid. Furthermore, the bid has been defined as low risk bid. The firm have three directors name
called Mr Olney-Fraser, Fletcher as well as Christie (Fairfax, 2011). Two directors from these
were appointed as directors on November 2010 and third appointed on April 2010. All these
three directors are worked together in order to attain their target and they try to perform ethically.
Mr Olney-Fraser had rights from the company to conducting trading of shares up to 50,000
dollars in small cap companies without receiving approval or consent of other members or
directors of firm. Mr Christie was play role as Executive chairman of Mariner board. The person
held different number of non-executive directorship in further unlisted firms.
As per Corporation Act 2001, companies are bound to perform their functions which are
imposed on them. Certain powers and duties are mentioned under this act. Through this they are
responsible to take best decision regarding protection of rights and interest of each person of
firm. If any person perform function recklessly and intentionally dishonest towards company
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than such acts are considered as criminal offence. On the other side, criminal offence has been
created when any person performs recklessly and misuse his power. They have to receive
information and knowledge regarding interest of firm. As per section 184 directors must receive
information through which they can manage position in company and attain their target as well.
Due to non-performance of act penalties must be imposed on them equal to around 2,00,000
dollars.
Breached of duties means directors and other members are failed to comply with their duties
which are mentioned under law and imposed on them. Due to breached of duty certain penalties
needs to imposed on them. Penalties should be equal to mentioned under law. As per such duties
directors have to take care of another and maintain their performance in effective manner. But in
present case directors no contravene any act as per the judgement of court under section 180 (1).
In present case the breached has been done by directors of the firm are as aligned below-
 They announce bid without sufficient financial resources. It was considered as
reckless as well as breach of section 631 (2) (b) of this act.
 Mariner is the firm which is engaged in contravention or misleading of section
1041H of the act. The initial approx. 10.5 cents per share takeover bid.
 There are various duties and responsibilities imposed on directors or other
officers under section 180 (1). But such duties of due care as well as diligence
has been breached by directors.
 In case one or more of the mentioned risks of harm to Mariner firm. It was
reasonably foreseeable. The actual jeopardy has been included in that. No person
or firm can bound to hold double penalties for the same act. Furthermore, in
present case firm proposed takeover bid which was significant.
Above mentioned duties are breached by directors which are imposed on them as per the
rules of law (Sale, 2011). Various provisions of the act define roles and responsibilities of
members of companies which they have to fulfilled while they are performing their functions.
They are responsible to take care of other members who are part of their organization. Duty of
care must be imposed on them which they have to fulfilled in effective manner. Legal obligations
imposed on them which have to fulfil by directors for the purpose of perform their functions.
Some duties of directors as well as other officers which are mentioned under Corporation Act
2001. These duties are as aligned below-
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 Section 180- Person to whom duties, powers and responsibilities imposed has been
considered as reasonable person. This is the duty of care and diligence which reasonable
have to perform in effective and timely manner.
 Section 181- Person must be exercise powers as well as discharge duties which are
imposed on them. They have to perform their duties in good faith under best interest of
the firm.
 Section 182- According to such act person have to use their position in better way. They
are not able to use improper use of their duties. Try to attain their target in better way.
 Section 183- As per this act they have to properly use available information in order to
obtain best possible result. Try to use available information in better to enhance their
skills and knowledge.
 Section 184- On the basis of Corporation Act, court may have imposed penalties on
criminal who done wrongful act which is considered as crime under act. Penalties must
be imposed equal to amount mentioned under law. Person have to fulfil the same which
is imposed on them.
Directors needs to meet their duties which are mentioned under law due to some reasons-
 If they make judgement through good faith along with their purpose. Through this they
can take effective decision in the interest of entire company and perform their functions
in effective manner (Siegel, 2011).
 Not able to include their personal interest at the time of take final judgement regarding
firm.
 Try to inform other members of the company about subject matter which is relevant and
appropriate according to them.
 Final judgement of the directors must be taken in the interest of company and able to
protect interest and rights of people as well.
 No person can earn personal profit while discussing final judgement of then firm.
Various types of roles and responsibilities of directors mentioned under corporation act
which is beneficial for them. Certain duties of directors and other officers are having
impact on their performance and able to maintain their performance as well. Through
they can attain 5their target which is imposed on them and consists under law. They are
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bound to perform function according to their duties. Try to protect interest and rights of
other members of firm.
In present case ASIC asserted that the certain directors have been contravened section 180
and Mariner contravened section 631 (2) (b) also section 1041H. In present case defendants has
been denied with this statement. They argued that there was no foundation for the any breach of
duties of directors which is mentioned under section 180.
In which Beach J has been held that ASIC are not able to made claim against Mariner as
well as its directors. In this case Beach J is the Justice of federal court has been found that-
 The test related to reckless has been considered as subjective test as per section 631 (2)
(b). Such test applied on Mariner and it was found that such firm is not considered as
reckless. So decision taken by judges is binding parties to follow the same and perform
functions in effective manner.
 Also Mariner was not able to engage in any conduct in contravention of section 1041H. It
is mentioned in relation to presentation of price as well as funding. Mariner has been
engaged in deceptive conduct which is concerning the price presentation (Dooley, 2011).
 In the present case Mr Olney-Fraser may not contravene section 180. So that, due to this
Mariner firm also not contravened section 631 (2) (b). According to this it has been
satisfied all essential elements of the business judgement as per section 180 (2).
 In the judgement of court, it is found that all directors not contravened any act. They
having appropriate ability to perform functions. Directors has exercised their reasonable
duty of care and diligence. Different issues related to circumstances of particular firm.
Responsibilities of company needs to be distributed among directors as well as its
employees.
 Judges found that directors having appropriate information and knowledge of their
performance which are imposed on them. Through this they can conduct transaction
within stipulated time period.
 Judgement should include best interest of company as per Corporation Act 2001.
In case Australian Securities and Investments Commission v Rich, the directors’ beliefs
having impact on different factors such as:
 Importance of business judgement has been made.
 Availability of time for the purpose of obtaining important and relevant information.
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 Certain costs have been occurred while obtaining important information.
 Confidence of both directors as well as other officers in order to exploring different
matter.
 Material information needs to be available for directors and officers.
Some duties of due care and diligence which they have to fulfil while performing their functions
are as aligned below-
Accounting knowledge- Every directors and other members of the firm needs to have to full
knowledge about accounting in order to ensures their performance. Through which they can
effectively make and read balance sheet, profit and loss account and further financial document
which are needs to be framed by companies. Try to identify costs of each department in order to
reduce it to earn better profit.
Accountability as well as control- Directors of company are able to control effective costs.
Through this it has provide sound corporate governance which is helpful for companies. It is
helpful tool to control risk management in effective manner. every member of the firm having
right to receive information which they required. There is no defence available for them.
Allot work to members- Directors and officers are responsible to allot work to other
members according to their knowledge and performance. Through which they manage work in
effective manner and control their functions as well.
In case directors are failed to comply with such duties than effective penalties imposed on
them. They are not able to earn secrete profit but responsible to protect interest or rights of other
members (LaFond and You, 2010). Directors must have focused on their roles, responsibilities
and duties which are imposed on them. For the same purpose they are bound to perform such act
within stipulated time period. Have to take decision in the interest of entire company. Through
which firm can attain better profit and able to easily attain target as well. For the same purpose
directors are responsible to frame plans and strategies in order to fulfil their target and maintain
performance in effective manner.
CONCLUSION
In the above project, it has been examined that directors and officers are responsible to
comply with their powers which are mentioned under Corporation Act 2001. In the present case
Mariner is the listed company which is based and established in Australia.
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REFERENCES
Books and Journals
Dooley, M.P., 2011. Rules, standards, and the model business corporation act. Law and
Contemporary Problems. 74(1). pp.45-55.
Fairfax, L.M., 2011. The Model Business Corporation Act at sixty: shareholders and their
influence.
Gorris, J.M., Hamermesh, L.A. and Strine, L.E., 2011. Delaware Corporate Law and the Model
Business Corporation Act: A Study in Symbiosis. Law and Contemporary
Problems. 74(1). pp.107-120.
Hanks, J.J., 2011. Legal Capital and the Model Business Corporation Act: An Essay for Bayless
Manning. Law and contemporary problems. 74(1). pp.211-230.
LaFond, R. and You, H., 2010. The federal deposit insurance corporation improvement act, bank
internal controls and financial reporting quality. Journal of Accounting and
Economics. 49(1). pp.75-83.
Sale, H.A., 2011. The New Public Corporation. Law & Contemp. Probs.. 74. p.137.
Siegel, M., 2011. An appraisal of the Model Business Corporation Act's appraisal rights
provisions. Law & Contemp. Probs.. 74. p.231.
Online
Mariner decision gives directors of bidders greater latitude when announcing takeover bids.
2017. [Online]. Available through: < https://www.claytonutz.com/knowledge/2015/june/mariner-
decision-gives-directors-of-bidders-greater-latitude-when-announcing-takeover-bids>. [Accessed
on 2nd October 2017].
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