Corporate Law Assignment : Wild cat mining Ltd

CORPORATE
LAW

TABLE OF CONTENTS
Is Chairman of company breached fiduciary duties. ..................................................................1
REFERENCES................................................................................................................................3

Is Chairman of company breached fiduciary duties.
Australian laws imposes number of duties and obligations upon number of individual
who are employed by or act on behalf of, an Australian company. In this present case study,
there were three directors of Wild cat mining Ltd as Bill, Sam and Rubin (Hawkins, 2018).
Therefore, firm has raised $20 million from investors. By the December 2018, the company had
already spent $15 million. Thus, company was having $5 million in their bank account.
In the recent meeting, Board of directors has abandon the mining activities and thinks to
return the remaining capital back to their shareholders. However, both Sam and Bill wanted to
carry out operations as they were on verge of major oil discovery so wanted to continue with
exploration activities (Smith, 2018). One of partner Rubin, non executive director and chairman
of company has argued and suggested to return remaining capital back to the investors.
Afterwards, Rubin also agrees to both other partners for drilling operation. At the completion of
June 2019, the company capital has been exhausted and there were no major oil discoveries.
Therefore, case indicates that fiduciary duty defined as legal term and have relationship
between the patties that stimulate one to act exclusively in the interest of other. Thus, Rubin has
breached his duties. Being the chairman and non executive director of the company he must have
performed his duty as of good faith and fair dealing or the duty of loyalty. Additionally, Rubin
breached his duty as he must have returned the remaining amount to the investors. However, he
has supported both other partner Sam and Bill in drilling operation which was of no use. So, he
has to suffered the damages for which the breach was the proximate cause. In this case, the
Rubin was personally responsible as funds of the investors was with company and they have
invested remaining amount in oil discovery operation instead of returning to investor.
He must be aligned with the duties as care, loyalty and obedience. Henceforth, he is
responsible for the carrying out their duties prudently. In Australia, the term fiduciary duty
defined by the act of corporations 2001 and this has explained under section 184 (1) of the
corporation act. Rubin may not assign obligation of care to investors, whatever the condition are,
being the chairman of the company he has to be personally liable for outcomes. In this case, the
person is responsible and holds for the legal and ethical relationship in trust of other. Henceforth,
the party that has been struck by the failure of fiduciary duty may selected to claim for the
equitable compensation. So, the parties to contract are not needed to subordinate their interest to
another person. Thus, the fiduciary obligation can be considered as highest standard. Thus, the
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duty of utmost good faith and the duty imposed upon the fiduciary is strict. On the other hand, it
can be understood with help of example as-
Nortek shareholders has received only $ 86.00 in cash for each share of Nortek stock
they own. Thus, this transaction can undervale the firm may undervalue the company and would
result in term to no gain or loss to the shareholders of Nortek. Thus, the Nortek stick traded at $
89.99 per share on April 15th, 2015 and traded at $ 86.78 per share till 20 August, 2015 (SEVERE
CONSEQUENCES FOR KNOWINGLY ASSISTING IN BREACH OF FIDUCIARY DUTY,
2018). Therefore, there is presense of potential breach of fiduciary duties, in this the Australian
shareholders can make allegations over the directors for selling the company shares at below
price.
Thus, the company is secretly responsible to ensure to complies with the certain
requirements under the corporation act. Director to the firm needs to take the reasonable steps to
pay to the investor to the firm. In this case, Rubin was liable to pay to investor in order to gain an
advantage for themseleves to determine to company.
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REFERENCES
Books and Journals
Hawkins, D., 2018. Breach of Fiduciary Duty Retirement Plan. Wisconsin Law Journal.
Smith, D., 2018. Liability for knowingly assisting in a breach of fiduciary duty. Bar News: The
Journal of the NSW Bar Association, (Summer 2018).
Online
SEVERE CONSEQUENCES FOR KNOWINGLY ASSISTING IN BREACH OF FIDUCIARY
DUTY. 2018. 2019. [Online]. Available through : <https://www.mst.com.au/severe-
consequences-for-knowingly-assisting-in-breach-of-fiduciary-duty/>.
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