Overview of Company Law Assignment

Added on -2020-02-24

| 10 pages| 2099 words| 106 views

Trusted by 2+ million users,
1000+ happy students everyday

Showing pages 1 to 3 of 10 pages

Running Head: COMPANY LAW ASSIGNMENTBreach of officer’s dutyName of studentName of University
COMPANY LAW ASSIGNMENT2IntroductionIn Fame Decorator Agencies Pty Limited v Jeffries Industries Limited, the respondent was a public company listed in the stock exchange. The appellant was an ordinary and convertible preference shareholder in the respondent company. The appellant was allowed to transform its convertible shares into ordinary one on a given day. The method for the conversion of the shares required lower average sale rate of ordinary shares in respondent in the last twenty working days before the day of conversion so that after conversion more number of ordinary shares may be given to the appellant. Accordingly, on the last day of the said period, the appellant sold the ordinary shares of the respondent company resulting into lowering the market rate of the shares of the respondent company. The judge at the trial court decided that the appellant has breached sections 995 and 998 of theCorporation Act, 2001 (Fame Decorator Agencies Pty Limited v Jeffries Industries Limited (1999) HCATrans 52; AustLii 1999).In the instant case the company holding the convertible preference shares, the procedure for the conversion of which was linked to the average selling rate of the given ordinary shares fora period of twenty days, positioned an order soon before the closing of the working day for the period of the said twenty days with an object to bring down the average selling rate of the shares for that particular day thereby raising the count of ordinary shares that is to be given after conversion. The effect of the act of the appellant company was that the value of the shares reduced by 22 cents. This act was therefore considered to be in contravention of section 1041B of the Corporation Act. Also the act was of deceiving nature as the persons who wanted to buy
COMPANY LAW ASSIGNMENT3the shares of the respondent company were influenced to think that the market rate of the shares imitated the real relation of the force of demand and supply. IssuesThe main issue in the instant case was that whether the appellant has made contravention of Sections 995 and 998 by deceiving the share purchasers in the stock market by selling shares at a lower rate. Further the question was did the director of the appellant company owed any dutywith regard to the deceptive trading of shares.RulesThe Corporation Act prohibits misleading and deceptive conduct of a person of an organisation with regard to trading of securities (Corporation Act 2001 (Cth) s 995(2)). Further the Act also prohibits any act which is in the nature of creating a false or deceptive appearance with regard to the rate of any share in the share market (Corporation Act 2001 (Cth) s 998(1)).The Corporation Act also prohibits a person to engage or to enter into a dealing which might result into the creation of an artificial rate for the purpose of dealing into shares listed in a stock exchange (Corporations Act 2001 (Cth) s 1041A).Under the Corporation Act a director is not exempted from his general duties (as given under sections 180, 181, 182, 183 and 184) or his fiduciary duties with regard to any of the transactions related to shares or their conversion where such transaction is authorised under the

Found this document preview useful?

You are reading a preview
Upload your documents to download
or
Become a Desklib member to get accesss

Premium

$45

Q&A Library Access

Chat support

12

Document Unlocks

4

Answer Unlocks

Students who viewed this