Breach of Duty as Director and Safe Harbour under Corporations Act of 2001

Running head: CORPORATE LAW 1
Corporate Law

CORPORATE LAW 2
Table of Contents
Introduction................................................................................................................................3
Part A.........................................................................................................................................3
Answer to Question 1.............................................................................................................3
Answer to Question 2.............................................................................................................3
Answer to Question 3.............................................................................................................4
Answer to Question 4.............................................................................................................4
Answer to Question 5.............................................................................................................4
Conclusion..............................................................................................................................5
Part B..........................................................................................................................................5
Answer to Question 1.............................................................................................................5
Answer to Question 2.............................................................................................................6
Answer to Question 3.............................................................................................................6
Answer to Question 4.............................................................................................................6
Answer to Question 5.............................................................................................................7
Conclusion..............................................................................................................................7

CORPORATE LAW 3
Introduction
There have various kinds of reformations of laws related to corporations in Australia.
These kinds of reformations have been influenced by the hearings in the parliament and the
decisions of the courts accordingly. The Corporations Act of 2001 has played an extremely
important role with regard to the transformation of the system pertaining to the legalities
governing corporations in the desired manner accordingly. The main aim of the assignment is
to present an overview of the aspect relating to the breach of duty as director with regard to
the Corporations Act of 2001 accordingly as far as insolvent trading is concerned. The
concept of safe harbour would also be demonstrated with regard to exception of the liabilities
for breach of duty as a director with reference to the prevention of the company form trading
in an insolvent manner accordingly. As a result, Section 588 GA of the Corporations Act of
2001 would be analysed in an effective and efficient manner as far as the application of the
exception related to safe harbour. It would help in the determination and identification of the
feasibilities involved in the application of the concept of safe harbour in an effective and
efficient manner. The case study focusing on Mr. Daly would also be taken into account as
far as the aspect of the breach of duty as a director is concerned accordingly. It would help in
the identification of the aspect relating to safe harbour as far as insolvent trading is concerned
accordingly. In the case study, it is to be taken into consideration whether the other directors
are liable for breach of duty or not.
Part A
Answer to Question 1
The obligation of the director of the company is to ensure that the company does not
plunge into a situation which involves insolvent trading. Such an aspect implies fiduciary
duty on part of the director as far as the exercising of good faith is concerned accordingly
taking account of Sub-section1 of Section 181 of the Corporations Act of 2001 and the
common law of England and Wales with reference to the aspect of due-diligence. Section 588
GA of the Corporations Act of 2001 would facilitate the ease of the aspect related to
exemption accordingly as far as safe harbour is concerned taking account of the aspect
pertaining to reasonable steps being taken accordingly. If the director does not undertake any
kind of reasonable step with reference to the prevention of the company from trading in an
insolvent manner, then it would constitute a breach of duty with reference to the provisions