Case Study Corporate Law Naeles

Added on - 21 Apr 2020

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Running head: CORPORATE LAWCorporate LawName of the StudentName of the UniversityAuthor Note
1CORPORATE LAWTable of ContentsCase Study 1....................................................................................................................................0Case study 2.....................................................................................................................................3Part A...............................................................................................................................................3Part B...............................................................................................................................................5Case 3...............................................................................................................................................6Scenario A........................................................................................................................................7Scenario B........................................................................................................................................8References......................................................................................................................................10
0CORPORATE LAWCase Study 1As per the given case the directors of Uninest Ltd relied on the opinion of Neales, theboard of directors of the company passed a resolution so as to grant interest free loan to one ofthe directors, Gilligan.Pursuant to the above, Gilligan was issued the requisite shares. It is seen in the case studythat Neales is a consultant who is working for Uninest and she has taken many decision onbehalf of the company (Hahn, Peter and Meziane Lasfer 2015). Therefore, the directors of thecompany relied on the decisions of the Neales and passed a resolution granting to lend Gilligan asum of $30 million which is interest free. It is seen that this strategy is formulated so that there issignificant rise in the price of the shares and thus it will make Urbanlodge Ltd difficult to takeover the management of the company (Hung and Humphry 2015).The Corporations Act ,2001, which lays down the duties of the directors of the companieswhich is subject to a business judgment rule and in pursuant to which the director is required tomake decision in good faith and for a valid purpose. There should not is any personal interest inrelation to the judgment (Lanis, Roman and Grant Richardson 2012). The directors shall conveyto the rest every aspect to the decision so that they are able to believe on appropriateness. Theyshall believe that the decisions are taken care of in the best interest of the business.As per Section 180, of the Act all the directors and other officers shall exercise theirpowers to disclose the powers so that they are able to discharge their duties with care anddiligence. Section 181 of the Act provides that the directors shall on good faith undertake theinterests of the company and for a valid purpose (Richardson et al., 2013).
1CORPORATE LAWThe Court has applied the business rule in supplied a statutory support. In the case ofAustralian Securities and Investment Commission v. Mariner Corporation Ltd.(2015) it is seenthat in order to ascertain the breach of duty it is essential to assess that the application of thebusiness judgement rule is illustrated as per Section 180 (1) of the Act (Sealy, Len and SarahWorthington 2013).The following is taken into consideration for determining the liability:The surrounding circumstances and the terms of constitution and the nature of businessand composition of the board.The role of the directors and the responsibilities that are distributed with other officers,reporting systems and other requirements of company.The applicable legal ConstitutionIn the above scenario the company in order to avoid the takeover and to lend a large amountof amount to one of the directors so as to enable him to make a purchase the share of thecompany at a higher rate. It can be seen that the comapny took thsi decision on the advice of tehconsultant Neales.This shows that the director has failed to exercise diligence or care in doingthe correction action. Thus, the resolution was passed for granting interest free loan to one of thedirectors of the company was completely based on the decision of Neales. All the directors reliedupon the decision of Neales and have failed to take the decision by application of their own skillsand experience (Van den Berghe and Lutgart 2012).In the case, the court inASIC v. Rich(2009) says that both the directors and officers of thecompany are under an obligation to inform them on what decision they have taken. In light of theabove case law and the judicial pronouncement it can be stated that the directors failed to comply
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