Corporation Act Assignment 2022

RUNNING HEAD: CORPORATION ACT
Corporation Act
Name of the student
Name of the university
Author Note

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CORPORATION ACT
Issue:
The primary concern related to the case of Sparkling Pty Ltd is regarding the
significance of the act of Sarah and the outcome of the provided case.
The secondary concern that is required to be discussed is about the outcome of the
provided case if the officer of the loan department would be more careful regarding the
expiration of Sarah’s appointment.
The last concern that is required to be discussed would be about the possible outcome of
the provided case if the loan amount were provided to the other two outlets.
The rule of law:
Duty of the Directors:
The duty of the board or the panel is to reward and appoint the organisation’s CEO. They
help in the approval of the plan and also in formulating the strategies for running the business
that sets the goal of the organisation. The decides for the organisation’s annual budget and plans
for effective management that helps in running of the company successfully. They monitor the
outcome of the specific business and thinks about the performance of the management.
Liability of diligence and care:
The important behaviour required for performing a duty depends on the circumstantial
evidence associated with the responsibility and position of the director of the company or an
organisation. Any director, including the executive director, should carry a distinct experience
and skill for reaching to higher standard. Director must utilise their control and power, and
similarly they should carry out their roles and responsibilities with diligence and care that a

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CORPORATION ACT
decent person should be focusing if they hold the position of a director of an organisation under
different circumstances. Similarly if they carry out the task of a director of a specific company
that occupies the same company. The director’s behaviour should not be considered due to the
deficiency of experience and skill. Every director should arrange for meeting to gain the
minimum standard of objective or goal. The provision of the CA 2001, section 180 explains the
duty of a director as they should handle with diligence and care on the performance of the
director. U/s 181 of CA 2001 explains that there should be presence of proper purpose and good
faith which on breaching may hold an organisation’s director to be personally liable.
For example: a finance director who has a deficiency of enough liability and cares for the
matter relating in the field of finance or any matter related to the field of funding leads to the
breach of liability and duty, and therefore a decent behaviour from the director of an organization
of non-executive level may not be found in breach. The case study of Bell Group Ltd vs Westpac
can be considered similar as the court held that the directors of the organisation to be liable
personally for the establishment of debt in the company’s name as the loan sanctioned was found
to be fraud.
Liability of good faith:
Director should utilise their power and control, and at that particular moment should
carry out their duties and responsibilities with the best interest of the organisation associated with
good faith of the organisation as a whole. The actual aim for the duty of the directors is to carry
out their task in a noble manner for development of the company according to the good belief of
the directors. Additionally, along with these director’s behaviour, they can be judged objectively