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Corporations Law - Assignment Sample

   

Added on  2021-05-27

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Running Head: CORPORATIONS LAWCORPORATIONS LAWName of the Student:Name of the University:Author Note:
Corporations Law - Assignment Sample_1

1CORPORATIONS LAWCase: Australian Securities and Investments Commission v Fortescue Metals Group Ltd[2011] FCAFC 19Breach of duties of directorsThe Australian Securities and Investment commission after conducting enquiries aboutthe framework agreements between the Chinese companies and the Fortescue Metals Group(FMG) started proceedings against the the Fortescue Metals Group alleging the following:The company engaged in misleading and deceptive conduct in accordance with section 1041H ofthe Corporations Act 2001(Cth)The aforementioned company had breached the duty of continuous disclosure as provided insection 674(2) of the Corporations Act due to the following reasons: The company failed to disclose the true meaning of the framework agreements to thepublicThe initial statements of as to the legal effects of the framework agreements which wasbinding on the aforementioned company and the Chinese contractors to finance, buildand transfer products failed to comply with the provisions of section 674(2) of theCorporations Act 2001 (Cth). The company failed to correct the misstatements in relation to the terms of theframeworks agreement which had been given earlier by the company. It has been provided in section 1041H(1) that a person while acting as an officer or director ofthe company must not engage in conduct in relation to financial service or product, which is
Corporations Law - Assignment Sample_2

2CORPORATIONS LAWmisleading and deceptive or likely to mislead and deceive the people. It can be further stated inaccordance with this section that failure to comply with the provisions of this section is not anoffense. Failure to comply with the provisions of subsection 1041H (1) may lead to a civilpenalty under section 1041I. Further in section 674 it has been provided that companies have the obligation ofcontinuous disclose relevant information in the disclosure document as per the listing rules. Ithas been provided in subsection (1) of the section 674 that this section applies to every listeddisclosing entity, if the listing rules in the listing market require such disclosing entity to notifythe market operator about specified matters or events that may arise. The purpose of this duty ofcontinuous disclosure is to allow the market operator to notify the market participants about anynew circumstances and events that may arise. Failure to comply with the provisions of thissection is an offense under subsection 1311(1). There is a provision for imposing a civil penaltyfor contravention of this section under section 1317E. It has been provided in section 674(2A)that a person cannot be held to have contravened the provisions of this section if such personproves that he took all reasonable steps to ensure that the disclosing entity complied with theprovisions of subsection(2). Any person who has been alleged to have contravened theprovisions of this section can seek relief from liability under section 1317s of the CorporationsAct. In this case the Company Fortescue, had disclosed the information related to theframework agreement with the Chinese companies to the ASX. Fortescue had stated that theframework agreements were legally binding upon the parties. Subsequent to the disclosure of thisinformation the share prices of the company rose. However, the agreements were actually notbinding legally upon the parties. The parties had represented a cler intention to be bound by the
Corporations Law - Assignment Sample_3

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