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Corporate Law Assignment Sample (Doc)

   

Added on  2021-06-17

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Running Head: CORPORATE LAWCORPORATE LAWName of the Student:Name of the University:Author Note
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1CORPORATE LAWIssue:In the given scenario, the issues that exist are related to disclosure obligations of financialstatements, issue of shares, misleading and deceptive conduct in relation to advertisement offinancial products and the right of directors to rely on the expert advice provided by experts andcompetent personnel. All these issues have been identified in context of the case study of AustinRetail Ltd.Rule:The law which governs the conduct and the operations of businesses in Australia is theCorporations Act 2001 (Cth)1. This act provides the liabilities, right and duties of the people whoare in charge of the operations of the business and management of the affairs of the company. Itcan be stated that after the incorporation of a company, a company enjoys separate legalexistence. This principle of separate legal entity of a company had been established in thelandmark English case Salomon v Salomon. However, company only enjoys separate artificialexistence; it has to rely on human help for conducting its operations2. This legislation provides that any director or officer of an organization has the obligation toensure that the company or organization in consideration complies with the provisions asprovided in the aforementioned act3. If any of the persons who are in charge of managing theaffairs of the company fail to comply with the provisions of the Corporations Act, fines andpenalties are imposed on the company and on the directors or officers on some occasions.1 Corporations Act 2001 (Cth)2 Bottomley S, Hall K, Spender P, and Nosworthy B, Contemporary Australian Corporate Law 1st edition 2017 Sydney Cambridge3 Harris, J. Hargovan, A. Adams, M., Australian Corporate Law LexisNexis Butterworths 5th edition, 2015.
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2CORPORATE LAWIt has been specifically provided in section 189 of the Corporations Act 2001 that an officer ordirector of the company can rely on the expert and professional advice provided if it is believedby the director of the company that the advice provided by the expert was within the expertise ofthe director. The reliance on the expert advice provided by an expert is considered to bereasonable and accepted in the court as a ground of defense if it is established that the reliancehad been made in good faith, the director had made an independent assessment of theinformation that he relied upon and the reliance was reasonable4. Section 180(1) of the Corporations Act 2001(Cth) lays down the provisions of the breach ofduties of directors5. In accordance with this section it can be stated that directors or the officersof the company have the duty of care and diligence while discharging their duties. The duty ofdiligence and care of directors are assessed by the perspective of any reasonable person acting inthe same circumstances and the position of directors. In the case ASIC v Australian PropertyCustodian Holdings Limited [2013] FCA 1342, it had been held by the court that a directorcannot be considered to have acted with due care and diligence if it is established that he did notmake any personal enquiries about the truth and genuinely of the information which had beenprovided by the outsider and on which he relied6. A director has the statutory duty ofdischarging his duties as any reasonable director acting in his position would have done. If it isestablished that any other director would have discharged their duties with additional care anddiligence such director would be held to have breached his duty according to the provisions ofsection 180(1).4 Baxt, R., and Fletcher, K.L., Fridman, S., Corporations and Associations Cases and Materials on, Butterworths, Australia, 10th edition, 20085 Corporations Act 2001 (Cth)s180(1)6ASIC v Australian Property Custodian Holdings Limited [2013] FCA 1342
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