Director Duty Breaches & Case Analysis
Added on 2020-03-04
18 Pages3707 Words92 Views
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ASSESSMENT 12ContentsPart A...............................................................................................................................................4Issues............................................................................................................................................4Laws.............................................................................................................................................5Arguments of parties....................................................................................................................6Decision of the case.....................................................................................................................8Part B.............................................................................................................................................10Case a.........................................................................................................................................10Issue.......................................................................................................................................10Rule........................................................................................................................................10Application............................................................................................................................11Conclusion.............................................................................................................................12Case b.........................................................................................................................................13Issue.......................................................................................................................................13Rule........................................................................................................................................13Application............................................................................................................................14Conclusion.............................................................................................................................15
ASSESSMENT 13Bibliography..................................................................................................................................16A.Cases...................................................................................................................................16B.Legislations.........................................................................................................................16C.Others..................................................................................................................................16
ASSESSMENT 14Part AIssuesThe key issue in the case of ASIC (Australian Securities and Investment Commission) v Cassimatis (No. 8)1, revolved around the possible breach of director duty by Mr. and Mrs. Cassimatis2. In this case, the company Storm Financial Limited held AFSL, i.e., Australian financial services license and was providing finance services based on the model developed by the director of Storm Financial Limited, Mr. Cassimatis. Under this model, the borrowings of the clients were taken against the equity of their homes, followed by margin loan obtainment. Ultimately, the funds were used for establishing cash reserves and for investing in the index funds. Till the time the clients continued to have the capacity of borrowing funds, the model was continued to be applicable on them. Due to the double gearing model used by the company, the investors had to bear high losses, during the time of global financial crisis. The model was applied on people whowere close to retirement and were vulnerable, plus who had limited assets and income. So, they had no chance of recovering their financial position owing to the actions undertaken by the directors. The reason for claiming a breach by directors was that they allowed the company to give wrong advice to the investors based on the model3. 1 [2016] FCA 10232 David Jacobson, Case Note: Storm Financial Directors Liability For Company Conduct (21 September 2016) <https://www.brightlaw.com.au/case-note-storm-financial-director-liability-for-company-conduct/>3 ASIC, 16-277MR Directors of Storm Financial found to have breached their duties under the Corporations Act (26August 2016) <http://asic.gov.au/about-asic/media-centre/find-a-media-release/2016-releases/16-277mr-directors-of-storm-financial-found-to-have-breached-their-duties-under-the-corporations-act/>
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