Breach of Duty by Directors under Section 588G of Corporations Act 2001 (Cth)

Running head: COMPANY LAW
COMPANY LAW
Name of the Student
Name of the University
Author Note

COMPANY LAW1
Issue
The issue to be discussed in this particular case would be whether Alice, Libby and
Peggy breached the duty and what kind of remedies are available if there is a breach of duty.
Law
Section 588G of the Corporations Act 2001 (Cth) talks about the duties of the directors to
prevent insolvent trading. This section only applies if a person or an individual is considered to
be a part of the company as a director at the time when there is a debt which is incurred by the
company. It also applies if the company at that point of time is considered to be insolvent or
turns into an insolvent after incurring the debts incurs any kind of debts during that time when
the company is incurring debts. It also applies to the companies where at that time there has been
suspicions that the company is becoming insolvent or already has become insolvent which is
after commencement of this act or during it. It also discusses that the person violates this section
if the person has no knowledge or does not suspect that the company at that time might be
incurring debts or might become insolvent or a person on reasonable grounds or who would be in
a like position and would be aware of the circumstances of the company. This section also states
and applies to a person if the person commits any offence where the person was considered to be
a director of that company during the time it incurred any kind of debts. The company becomes
insolvent at the time of incurring the debts or after the incurring of the debts. The person was
aware or had some suspicion regarding the insolvency of the company at the time when there
was debts which were incurred. The individual was unsuccessful to prevent the company from
incurring debts in a dishonest way (Morrison, 2002). It can be seen in the case of Standard
Chartered Bank of Australia Ltd v Antico (1995) 131 ALR 1.