ASIC v Adler (2002) 41 ACSR 72

Running head: CORPORATE LAW
Corporate Law
Name of the Student
Name of the University
Author Note

CORPORATE LAW1
ASIC v Adler (2002) 41 ACSR 72
Background of the Case
This present proceeding has been instituted before the court in relation to the contravention of the laws
applicable to corporations operating in Australia four individuals listed as defendants in this present
proceeding. The alleged defendants held liable under this proceeding are as follows:
• Mr. Adler designated as the shareholder along with a non executive director of HIH,
• Mr. Williams designated as the CEO and the founder of the HIH,
• Mr. Fodera designated as CFO as well as the HIH, and
• The Adler Corporations Pty Ltd.
The plaintiff involved in this proceeding who has been conferred with the institution of the proceeding
was the Australian Securities and Investment Commission (ASIC).
In this proceeding, there were nine transactions pointed out by the ASIC to have been executed by the
individuals listed as defendants that have contravened provisions of the Corporations Act 2001 (Cth).
There have been a payment of 10 million dollars with respect to a unit in the trust solely controlled and
regulated by Mr. Adler who was also designated as a non executive director in the insurance company of
HIH by way of an unsecured loan. The transfer has been carried out by Mr. Fodera. The trust involved in
this incident has been regulated by Mr Adler through the Pacific Eagle Equity Pty (PEE) and Adler
Corporations. The assets within that trust has been managed by PEE which includes technology stocks.
The worth of these stocks were much below the amount of 10 million dollars. Certain portion of this
$10000000 has been utilised by PEE for the purpose of buying shares of HIH. There has been a
shareholding substantiation belonging to Adler Corporations in HIH. The extended loan has never been
approved or presented for approval towards the shareholders of the company.

CORPORATE LAW2
Key Legal Issues
In this present proceeding, the legal issues that were presented was whether any of the directors duties
inculcated within the Corporations Act 2001 (Cth) have been contravened by any of the directors who
have been listed as a defendant in the present proceeding. There has been a breach of s 260A, the
Corporations Act 2001 (Cth). There has also been a breach of the provisions contained in the sections
discussed as below:
• The provisions contained in s 180(1), the Corporations Act 2001 (Cth) that requires the director
to abide by the duty of acting in a diligent and careful manner while exercising their powers as a director.
• The provisions contained in s 181, the Corporations Act 2001 (Cth) that requires the director to
abide by the duty of carrying out their actions as a director in utmost good faith serving a proper purpose
for the company that ensure the best interest of the company.
• The provisions contained in s 182, the Corporations Act 2001 (Cth) that requires the director to
abide by the duty of abstaining from utilising designation as a manner which is improper for the
company.
• The provisions contained in s 183, the Corporations Act 2001 (Cth) that requires the director to
abide by the duty of utilising the information that they have accessed owing to their designation as a
director in a proper manner.
In this case, Mr Adler has contravened the provisions contained in s 180(1), s 181, s 182, s 183, the
Corporations Act 2001 (Cth). He has also breached the provisions contained in section 588G, the
Corporations Act 2001 (Cth)this is because he has been involved in the arrangement which has caused a
collapse within the largest insurance company operating in Australia causing the company to be declared
as insolvent.