Corporate Law Assignment Sample

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Added on 2021-06-15

Corporate Law Assignment Sample

Added on 2021-06-15

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Running head: CORPORATE LAWCorporate LawName of the studentName of the universityAuthor note

1CORPORATE LAWINTRODUCTION The case of Australian Securities and Investments Commission v Australian PropertyCustodian Holdings Limited (Receivers and Managers appointed) (in liquidation) (Controllersappointed) (No 3) [2013] FCA 1342 is in relation to corporation law and the duties of managesto responsibly manage an investment scheme of a disclosing entity. The court in this case had toanalyze the meaning of best interest n relation to the statutory duties to act in the company’s bestinterest proper purpose and good faith. The court had to determine whether the test for bestinterest is objective or subjective in nature. In this case the duty of undivided loyalty to membersof scheme was also at stake. The directors’ duty when there is a conflict of interest and thecourse of action which needs to be taken in such situation had also been analyzed by the court inthis case. The statutory duty which is provided under section 10 of the Corporation Act 2001(Cth) which is to exercise care and diligence also had to be analyzed by the court n relation to thestandard of care and diligence which would satisfy the duty. The paper analyzes the facts of thiscase, the decision of the court and the importance of the decision in Australian company law. CASE INTRODUCTION AND FACTSThis case has been initiated by the Australian Securities and Investment Commissionalleging that the six defendants in this case had made contraventions on relation to the provisionsof a Corporation Act 2001 (Cth). Allegations had been made by the ASIC that provisions of s601FC as provided in part 5C of the CA related to “the duties imposed on a responsible entity ofa managed investment scheme” had been breached by the defendants. The ASIC further allegedthat the duties which an officer of such entity has in relation to a responsible entity under s601FD have been breached by the directors of the company. In addition allegations had been

2CORPORATE LAWmade by the ASIC that rules which prohibit related parties transaction indulged into byresponsible entity prior to taking approval under the provisions of section 208 of the CA from themember along with the prohibition which directors of a responsible entity involved in the breachof section 208 as per section 209 have also been contravened. The first defendant in this case wasAustralian Property Custodian Holdings Limited. The other five defendants were the directors ofthe first defendant at all relevant times. They are namely William Lionel Lewski, Mark FrederickButler, Kim Samuel Jaques,, Michael Richard Lewis Wooldridge and Peter John Clarke. In this case a resolution had been passed by the directors of the responsible entity bywhich they wanted to make many amendments to the constitution of the company. In relation tothe amendments the directors wanted to add two new fees a listing and a removal fee. There wasa clause in the constitution of the responsible entity cannot be amended without the approval ofthe members in case such alterations was in relation to favour or benefit of the responsible entity.Reference had also been made by the constitution in relation to section 601GC of the CA throughwhich changes in relation to a constitution could be made without taking approval from themembers only in situation where there was reasonable consideration on the part of the companythe right of the members would not be affected adversely by the change. An advice had beenprovided by the lawyer of the responsible entity which suggested that the amendment without themembers’ approval may be valid even if there is benefit of the responsible entity. Allegationshad been made by the ASIC that the company and one of its shareholders was to be providedwith significant gains in relation to the amendment of the constitution. This is because all theequity in the RE was held by one of the directors Mr Lewski and his family. This was furtherproved by the facts that the fees provisions could have been trigged a multiple times. In relationto the amendment of the constitution there was an agreement by the board to pay the RE.

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