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Company Law Assignment | Commercial & Corporation Act

   

Added on  2020-05-28

9 Pages2084 Words279 Views
Running head: COMMERCIAL & CORPORATION ACTStatutory Derivative ActionName of the student:Name of the university:Author note
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1COMMERCIAL & CORPORATION ACTTable of ContentsIntroduction................................................................................................................................2Discussion:.................................................................................................................................2Statutory derivative action......................................................................................................2How it works as a remedy for the shareholders.....................................................................3Reasons for reformation.........................................................................................................4Process of reformation............................................................................................................5Conclusion..................................................................................................................................6Reference....................................................................................................................................7
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2COMMERCIAL & CORPORATION ACTIntroduction: In Australia, the company matters are governed by the Corporation Act 2001 (Cth).This Act has provided certain provision for securing the interest of the shareholders byprescribing the duties of the directors. It has been stated that if the directors of the companywill fail to perform their duties, the shareholders can bring certain action against them.Statutory derivative action is such action. It is a common rule that if a director could not ableto perform his duties prescribed by law, the Board of Directors can take action against him.Under the derivative action, a shareholder can bring action against the alleged director undercertain circumstances (Stylianou 2017). However, there are certain loopholes present in thissystem and certain reforms are required to amend the provisions of the action. In this report, abrief discussion on it has been made. Discussion:Statutory derivative actionThe nature of statutory derivative action is corporate-based. This action can betaken against a director of the company by a shareholder. According to Section 236 of theCorporation Act 2001, the shareholders have the right to bring an action against the directorof a company if the director has not performed their duties (Chen 2017). The duties of thedirectors have been discussed under certain sections of the Corporation Act 2001. Accordingto section 180, a director should have to take proper care in case of dealing with theshareholders. He must act in good faith as stated under section 181 of the Corporation Act. Ifa director will misuse his or her position, he will be liable under section 182 (1) of the Act. Incase a director continue to trade while the company has become insolvent, he will be liableunder section 588G of the Act. However, the common rule is that in such circumstances, theBoard of Directors will take all the necessary actions against the alleged director. Dilemma
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