Running head: COMMERCIAL AND CORPORATION LAW Commercial and Corporation Law Name of the Student Name of the University Author Note
Commercial and Corporations Law1 Answer to Question No 1 Issue There are two issues involved in this case. The primary issue is to determine whether Marlow can resign from Clear Vision Limited and incorporate a new company to conduct the block chain business. The secondary issue is to determine the changes in the advice if their constitution contained a clause identical to Section 194 of the Corporations Act 2001. Rules As a general rule, a director can resign from a company by giving a notice of resignation. Director can resign by giving the notice to the registered office of the company under the Corporations Act 2001. Otherwise, they may give a written notice of the resignation to the Australian Securities and Investments Commission, accompanying with a notice of resignation given to the company. Under Section 5.1 of the Corporations Act 2001, the company should notify ASIC about the resignation of the director, if the same has not already been done by the director of the company. In this case, the director will not breach any of his fiduciary duties and he can resign at any time. However, it is provided under Section 201A of the Corporation Act 2001 that it is mandatory for a company to have at least one director. If the company has only a governing director to conduct their business, the director may acquire obligation while resigning. As a consequence, if the sole governing director of the company is willing to resign, he may lead the company to breach the provision of the Section 201A of the Corporations Act 2001. The director may cause the company to knowingly have less than one minimum director. The director and the company both may liable for this under the Act. Section 194 of the Corporations Act 2001 provides that if the director has any material interest in affairs related to the company, and discloses the interests to the directors,
Commercial and Corporations Law2 then the company cannot avoid the transaction merely because it has the existence of the interest and the director may proceed any transactions relating to the interest, unless the interest is of a nature that which is not required to be disclosed under Section 191. A company can include the clause 194 or any clause identical with this clause in their constitution. Application Marlow was the majority shareholder and effectively involved in delivering expert advice to IT investment businesses. He was the governing director of the firm. He was aware that he is responsible for providing the services of the company under its constitution. Sean and Becky trusted Marlow to run the business for the collective interests. In this present situation Marlow cannot resign the company under the Corporations Act 2001, to cause a pain to Sean and Becky as they did not agree to contribute capital for developing the block chain product. It was provided under the constitution of Clear Vision Ltd, that Marlow should be engaged in the business of the company. If he resigns from his position, then the company would be left with no one to effectively govern the business. Therefore, it would be suggested to Marlow to find an appropriate replacement for his position before he gives the notice of design. Under Section 201F (1) of the Corporations Act 2001 Marlow can appoint another director with a help of a resolution from Sean and Becky. He can resign the company after doing so and conduct the block chain business with Polly and himself keeping himself as a sole shareholder and directors. If Clear Vision Ltd had a clause in their constitution identical with Section 194 of the Corporations Act 2001, Marlow would not have been able to resign the company. Under this Section Sean and Becky could not have been able to avoid the transaction as Marlow had made necessary disclosure about his interest to develop the block chain product. The Clear Vision Ltd cannot avoid the transaction in this case. Therefore, Marlow can proceed with the
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