Corporate Law Practice - Assignment
Added on 2021-02-19
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CORPORATE LAW
Table of ContentsINTRODUCTION...........................................................................................................................3MAIN BODY...................................................................................................................................3Summary of case and parties at fault...........................................................................................3Primary legal issues related with officer duties and directors.....................................................3Penalties to different parties.........................................................................................................4Actions of the directors and officers when company was probably insolvent............................5Role of ASIC................................................................................................................................6Interesting observation and findings............................................................................................6Reflection and observation..........................................................................................................7CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................1
INTRODUCTIONCorporate law is a body of law, rules, practice and regulation which governs the relation,rights, companies, conduct of person and businesses. It helps in regulating legal entities that existto carry out business activities in a lawful and legal manner. This study will highlight, case onASIC v Adler (2002) 41 ACSR 72. MAIN BODYSummary of case and parties at fault.Adler was a non executive director, Domain Fodera was a financial controller anddirector and William was a Chief Executive officer and a director. In the year 2000, HIHInsurance paid around $10 million from a wholly owned subsidy HIHC to Pacific Eagle EquityPty Limited (PEE). PEE used approximately $3.9 Million in order to purchase shares of HIH.ASIC contend that, Adler's purpose in order to purchase shares was to support the share prices ofHIH for the personal benefit related to HIH shareholding. HIH shares were sold at a loss of $2.1million. ASIC contended proceedings against Adler, Fodera and William alleging contraventionsrelated with financial assistance, related party transactions and directors duty provision inrelation with Corporation Act. The two directors get contravened of s208 of corporation act,which is related with party financial benefits. Directors also get involved in the breach of s260Aof Corporation Act which is related with financial assistance for the purchase of shares. Alder,William and Fodera were held responsible for contravening directorial duties under ss 180, 181,182 and 183 of corporation law. Alder also made PEE to make three unsecured loans ofapproximately $2 million. The payment was unsecured and inadequately documented. Thetransaction was not carried out at arm's length. There was no ratification or approval wasobtained from the board (Muscillo and Dawson, 2016). There is an alleged breach of directorialduties as an officer by Adler a non executive director of HIH, Domain Fodera was a financialcontroller and director and William was a Chief Executive officer and a director. Alder isproviding financial assistance in order to acquire shares in a holding company. Alder alsofocuses on providing financial benefit to the related party of the company. Primary legal issues related with officer duties and directors.Section 180 (1) states that, every director of the company should adhere to normativestandards and codifies the general law. Section 181 states that, director should exercise theirpowers in good faith, exercise their powers, act with reasonable diligence and care, avoiding
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