Directors' Duties and Corporate Responsibility

Law 1
Kinsela v Russell Kinsela Pty Ltd (in liq) (1986)

Law 2
Contents
Introduction of Case-.......................................................................................................................3
The duties and responsibilities breached and the reasons behind it-...............................................4
Analyze the tribunal decision and the reason for the decision in view of the Corporations Act in
Australia-.........................................................................................................................................6
The relevance of the decision in development of Australian corporation’s law and the impact of
the decision on the operation of companies in Australia-................................................................8
References:....................................................................................................................................10

Law 3
Introduction of Case-
An organization is an association of group of individuals who work together in order to attain
some motive whether it be economic or social. No legalities and technologies can be attached to
its meaning. An organization should make its registration under the Companies Act, 2013. An
organization can be defined as a group of individuals who make contribution of funds and
employ these funds towards business activity and also shares the loss and profit according to the
contract signed by them. There are various features of organization under the Companies Act,
2013-
 Independence- An organization has a distinct identity from its directors, owners and
employees and carries out its business activities after complying with all the legal
requirements of incorporation.
 Perpetual- An organization has a succession on the perpetual basis and is considered as
an artificial person. This states that the organization will continue its business to infinite
period of time as it does not get affected by death and inefficiency of the directors to
perform and because of any other event (Hayne, 2014).
 Common seal- The organization is an artificial person, therefore agents of the
organization work on its behalf. The agents of the organization enter into a contract by
the common seal of the organization.
 Liability- The liability of the members of the organization is limited. As, the organization
has a separate legal entity therefore the organization is responsible for the repayment of
debts and not the members and owners of the organization.

Law 4
The family of Kinsela was doing the business of funeral and also was shareholders in different
organizations in addition to the directors. The organization was effectively carrying out their
business. The organization was involved in the business of providing claim of insurance in
respect to the cost incurred on the funeral of their customer. The organization was receiving
amount from clients and in order to this the organization used to provide funeral for free. But
after a period of span, the organization incurred severe liabilities and thus losses were increased.
Funeral Act 1979 was introduced in order to safeguard the creditor’s interest. When the
organization was suffering losses, Kinsela family thought that they should continue their
business in spite of all the losses. They thought of giving it lease for the time period of 3 years.
But, In April the organization thought to wind up their business because of increase in liabilities
(Langford, 2011). The reason behind increase in liabilities and huge losses of the organization is
that the directors were not able to work in a proper manner and were unable to maintain funds for
the organization.
The duty of directors of the organization was to solve all the conflicts before winding up the
operations of the organization and the organization should pay proper amount to their
contributors if there is joint petition of winding up has been signed up by the creditors and
contributories of the organization. The directors of the organization should look after the proper
payment of funds to the creditors which were due to them. The liability of the organization has
been raised at the time when the organization has give lease on the least market value and this
the organization has dissolved (Koh and Oh, 2015). At the time of liquidation of the
organization, the lease was being challenged as the director was not being able to pay to the
creditors and other members.