Corporate Law

Running head: CORPORATE LAW 1
Corporate Law

CORPORATE LAW 2
Table of Contents
Case Study 1...............................................................................................................................3
Case study two...........................................................................................................................4
Answer to Question a.............................................................................................................4
Answer to Question b.............................................................................................................5
Case study three.........................................................................................................................5
Scenario A..............................................................................................................................5
Scenario B..............................................................................................................................6

CORPORATE LAW 3
Case Study 1
Issue
Whether the directors of Uniset are in breach of duty or not?
Rule
The Corporations Acto of 2001 would be applicable.
Application
The facts of the scenario provided imply that the directors of the company Uninest have
contemplated to act in such a manner so that the acquisition of Uninest by Urbanlodge is
curtailed. Sub-section 2 of Section 180 of the Corporations Act of 2001 implies that any
decision made by the respective e director of the company must be taken as far as the aspect
of good faith is concerned and to not have any kind of interest at the personal level with
regard to the decision concerned. It should be seen whether the directors have acted in good
faith pertaining to the scheme related to vote as initiated by the consultant Christine Neales. It
is also to be seen whether such good faith implies the best interests of Uninest as far as the
prevention from being acquired by Urbanlodge is concerned in accordance with Section 181
of the Corporations Act of 20011. Section 182 of the Corporations Act of 2001 implies that
any director must not act in an improper manner as far as the exercising of the powers vested
is concerned with regard to the best interests of the company. As per Section 182 of the
Corporations Act of 2001, the director of a corporation must not use the position in an
improper manner thereby having a detrimental effect of over the company as far as the modus
operandi is concerned. Sub-section 1 of Section 184 of the Corporations Act of 2001implies
that recklessness and intentional dishonesty constitute offences which are perceived to be
criminal in nature. As far as Section 189 of the Corporations Act of 2001is concerned, the
aspect related to reliance of information comes into play if such reliance was made in good
faith and in the best interests of the company. It is to be seen whether the reliance by the
directors with regard to the vote on the scheme initiated by Christina Neales has been made in
good faith or not and whether it would further benefit of the company. Sub-section 1 of
1 Andrew Keay,. Board accountability in corporate governance. (Routledge, 2015).

CORPORATE LAW 4
Section 191 of the Corporations Act of 2001implies that there should be e disclosure of
information by a director to the other directors of the company with regard to the voting on
the matters implying personal interests. Sub-section 1A of Section 191 of the Corporations
Act of 2001implies that the aspect related to strict liability is applicable in matters pertaining
to such kinds of personal interest2. The aspect related to strict liability is interpreted as per
Section 6.1 of the Criminal Code of Australia. If it is inferred that the decision of directors
with regard to the vote over the scheme initiated by the consultant Christina Neales would
have an extremely detrimental effect over Uninest as far as its progress and development in
the long run is concerned, they would act in breach of their duties as directors as implied by
the relevant provision of the Corporations Act of 2001 thereby being held liable for such
breaches of duties as far as due diligence is concerned.
In the case of Australian Securities and Investments Commission v Cassimatis, Mr. And Mrs
Cassimatis were the directors of Storm Financial, a company entrusted with the providing of
services pertaining to financial consultancy3. Upon being investigated by the Australian
Securities and Investments Commission, it was indentified and determined that the financial
schemes incorporated by them would have no benefits in the long run and the major investors
pertaining to that scheme are close to retirement age4. In this case, it was held by the Federal
Court of Australia that Mr. And Mrs Cassimatis had acted in breach of their duties as
directors as far as the application of Sub-section 1 of Section 180 of the Corporations Act of
2001. As a result, it is imperative that the Australian Securities and Investments Commission
would have to play an important role with regard to the investigation into the matter of
Uninest and provide them with appropriate advice with regard to the viability of the
acquisition by Urbanlodge in the long run. It would lead the detection with regard to the
breach of duties on part of the directors of Uninest accordingly. If the directors are found to
be in breach, liabilities would be imposed on Christine Neales accordingly.
2 Rosemary Teele Langford and Ian Ramsay. "Is a Conflict of Interest under the General Law the same as a
Material Personal Interest under the Corporations Act?." (2018) 36.3 Company and Securities Law Journal 285.
3 Australian Securities and Investments Commission v Cassimatis (No. 9) [2018] FCA 85
4 Kate McFarlane,. "Victorian Court of Appeal on whether the corporations act priority scheme applies to
insolvent corporate trustees." (2018) 40.7 Bulletin (Law Society of South Australia) 20.