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The Corporations Act 2001| Company Law

   

Added on  2020-05-11

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Company LawQuestion based assignment(Student Details: )

QUESTIONS2IssueWhether there had been a breach of director duties on part of Bond in this case, or not?RuleIn Australia, the Corporations Act, 20011 is the legislation which rules over the conduct and the working of the companies in the nation and included in Part 2D.1 of this act is the director duties2. As per section 180(1) of the Corporations Act, it is the duty of the directors in the nation to act in a manner which depicts care and diligence particularly when the directors use their powers and discharge their obligations3. In case where the provisions covered under section 180(1) are contravened, civil obligations covered under section 1317E are raised and in such cases, the court gets the power to make a declaration of contravention4. In Australian Securities and Investments Commission v Macdonald (No 11)5, the chief executive officers of the company, was deemed to have contravened this section as he was covered under the definition of other officers in section 180(1)6. The chief executive officer in this case was MacDonald, and he had failed in advising the board of the company about the Draft ASX Announcement. Apart from this, he had also failed in getting the necessary approval before the Final ASX Announcement was released and also regarding the facts that some 1 Corporations Act, 2001 (Cth)2 Corporations Act 2001, pt 2D.13 Corporations Act 2001, s180(1)4 Corporations Act 2001, s1317E5 [2009] NSWSC 2876 Katherine Czoch and Michelle Mulder, Australia: The James Hardie Decision: Australian Securities & Investments Commission v Macdonald (No. 11) [2009] NSWSC 287 (2010) <http://www.mondaq.com/australia/x/106690/Corporate+Governance/The+James+Hardie+Decision+Australian+Securities+Investments+Commission+v+Macdonald+No+11+2009+NSWSC+287>

QUESTIONS3modifications had been carried on before the announcement was released. As a result of this conduct of Macdonald, the same was deemed as a contravention of director duties, apart from being misleading and deceptive7.In addition to the statutory law, the common law also provides certain obligations over the directors of the company, in addition to the key officers of the company. As per the common law, it is the duty of the directors to steer clear of such circumstances in which a conflict of interest is present and also are required to avoid using the corporate opportunities for their personal benefits8. These provisions are also covered in the statutory law, i.e., the Corporations Act, as per which the directors and the officers of the company are under an obligation to make proper use of the position which they hold in the company, on the basis of section 1829; and also have to use the information of the company in a proper manner particularly when it relates to confidential information, on the basis of section 18310; and the applicability of both these sections put a restriction against such misuse, whereby an advantageis attained for someone else or for themselves, particularly when it is detrimental for the company11. A leading matter in which this was upheld was the case of ASIC v Stephen William Vizard12. This was a case in which the court banned the director of the company, i.e., Vizard, from managing the affairs of any company for a period of 10 years and was also awarded 7 David Jacobson, ASIC v James Hardie Decision: Company, Directors And Officers Were Misleading (2009) <https://www.brightlaw.com.au/asic-v-james-hardie-decision-company-directors-and-officers-were-misleading/>8 PwC, A guide to directors’ duties and responsibilities for non-listed public companies and proprietary companies in Australia (2008) <http://etraining.communitydoor.org.au/pluginfile.php/608/course/section/95/GuideDirectors_Apr08.pdf >9 Corporations Act 2001, s18210 Corporations Act 2001, s18311 Julie Cassidy, Concise Corporations Law (The Federation Press, 5th ed, 2006)12 [2005] FCA 1037

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