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LAWS4005 - Company Law - Case Study

   

Added on  2020-03-01

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COMPANY LAW2ContentsPart A...............................................................................................................................................4Issue and facts..............................................................................................................................4Relevant Law...............................................................................................................................5Arguments made by the parties...................................................................................................6Decision given in this case..........................................................................................................8Part B (a)........................................................................................................................................10I: Issue........................................................................................................................................10R: Rule.......................................................................................................................................10A: Application...........................................................................................................................12C: Conclusion............................................................................................................................13Part B (b)........................................................................................................................................13I: Issue........................................................................................................................................13R: Rule.......................................................................................................................................13A: Application...........................................................................................................................15C: Conclusion............................................................................................................................16Bibliography..................................................................................................................................17

COMPANY LAW3A.Articles/ Books/ Reports.....................................................................................................17B.Cases...................................................................................................................................17C.Legislations.........................................................................................................................17D.Others..................................................................................................................................18

COMPANY LAW4Part AIssue and factsIn ASIC (Australian Securities and Investment Commission) v Cassimatis (No. 8)1, the main issue was related to the breach of duties of director by two directors, i.e., Mr. and Mrs. Cassimatis2. The company in which Mr. and Mrs. Cassimatis were the directors was Storm Financial Limited which was a holder of the Australian Financial Services License (AFSL) and was also engaged in financial services on the basis of Storm model, which was central to this case, and which was developed by Mr. Cassimatis, the director of Storm Financial Limited. Storm model provided the borrowing of funds from the clients in exchange for the equity where a margin loan was also obtained. These funds were used by the company for creating cash reserves, along with making investments in the index funds. The model was applicable on the clients only till the timethe clients had the capacity of borrowing funds. The company used a double gearing model, due to which, the investors underwent huge losses when the world was facing the 2008 financial crisis. The storm model was used on such individuals, who were not only close to retiring, but were in a vulnerable position, as they had no or negligible source of income and assets. Hence, there prospects of attaining their financial position back, due to the actions of the directors, was next to impossible. The rationale behind holding the violation of director duty on part of Mr. and 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/>

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