logo

Corporate and Corporation Law Name of the Student Name of the University

6 Pages1299 Words147 Views
   

Added on  2021-06-14

About This Document

COMMERCIAL AND CORPORATION LAW 5 COMMERCIAL AND CORPORATION LAW Name of the Student Name of the University Author note Question 1 Issue: This situation discusses the issue whether the directors of the company will have the authority to pursue the civil or criminal liability as it has been mentioned in the legislation of Corporations Act, 2001. If the company fails to meet the debts it will be treated to be insolvent as per Section 95A of the above mentioned act. When the directors of the company have the authority and duties, they must

Corporate and Corporation Law Name of the Student Name of the University

   Added on 2021-06-14

ShareRelated Documents
Running head: COMMERCIAL AND CORPORATION LAWCommercial and Corporation LawName of the StudentName of the UniversityAuthor note
Corporate and Corporation Law Name of the Student Name of the University_1
1COMMERCIAL AND CORPORATION LAWQuestion 1Issue: This situation discusses the issue whether the directors of the company will have theauthority to pursue the civil or criminal liability as it has been mentioned in the legislation ofCorporations Act, 2001.Rule: The statute of Corporations Act, 2001 is said to govern the existing companies andorganizations in Australia. If the company fails to meet the debts it will be treated to beinsolvent as per Section 95Aof the above mentioned act. It has been established in the caseof Chaimandos v Sydney WaterCorporation. [2014] NSWSC 10. Further, Section 95A(2)of the Corporations Act states that a company is considered to be insolvent when it is notsolvent. When the directors of the company have the authority and duties, they must makesure that the company is protected from the process of insolvent trading. Therefore, being thedirector if the obligation is breached at that time and he or she has the knowledge that thecompany will become insolvent in the exact position must have the knowledge of thescenario. Section 588(3) of the Corporations Act, ifthe director commits any kind ofoffence and continues to sustain the debt that has been acted on behalf of the company in adishonest manner. For the case of insolvent trading, the ASIC can apply the civil penalties in imposingthe payment of compensation to that company which has suffered loss because of thecreditors. Substantial fines should be imposed as well and lastly, the directors will bedisqualified for looking after the affairs of the company. If the debts are incurred in afraudulent manner through an insolvent trading then the ASIC can make the directors pursuewith the penalties related to the criminal activities.
Corporate and Corporation Law Name of the Student Name of the University_2
2COMMERCIAL AND CORPORATION LAWApplication: It can be stated from the facts that the company did not succeed in paying thecreditors which resulted in prioritizing these payments that the directors had made. Further,the tax obligations were not met by the directors. If Section 95A(1) is applied in thesecircumstances, then the company was declared to be insolvent (Varzaly 2015). Liam and Petawere the directors of a company that has been insolvent since June 2017. The company wastherefore unable to meet all the mentioned debts. Peta and Liam had kept transacting evenafter being aware of the fact that the company will be insolvent. It therefore resulted in abreach of duties as per Section 588G of the Corporations Act, 2001. In case of a breach, ASIC has the right to pursue for the civil penalties as per Section588J by both the directors. Therefore, it was stated that Liam was suffering from cancerbecause of which the financial position of the company that was formed (Ramsay 2015). Itcan thereafter be stated that Liam did not act in any dishonest manner while undertaking theinsolvent transactions since he was not aware of the financial position of the company.However, it can be inferred that the ASIC will fail to initiate any kind of criminalproceedings against Liam as it has been mentioned under Section 588K of the said act. Itcan therefore be used against Peta. Conclusion: It can be concluded by stating that the criminal proceeding can be applied byASIC for the compensation of the losses that the creditors have incurred. The penalties willalso be applicable. The mentioned penalties deal with the imposition of fines, disqualificationof the directors and to compensate for the losses that have been incurred by the creditors. Onthe other hand, ASIC can bring the criminal and civil proceedings against Peta in relation topreventing the insolvent trading. The civil proceedings can only be applied against Liam.
Corporate and Corporation Law Name of the Student Name of the University_3

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Corporation Law - Assignment Sample PDF
|6
|1009
|135

Corporation Law - Assignment Sample PDF
|6
|1040
|48

Corporation Law - Assignment
|7
|1145
|69

Assignment on Corporate Law (pdf)
|6
|1030
|65

Application of Law - Assignment PDF
|6
|1458
|225

Corporations Law : Assignment Sample
|6
|1197
|54