logo

Company Law Assignment Directors Duties

   

Added on  2020-05-08

7 Pages1481 Words198 Views

DIRECTOR DUTIES2Part 1IssueWhether Bond breached any of the director duties or not?RuleThe Corporations Act, 2001 (Cth) is the governing act under which the duties of the directorsand the key officers of the company have been defined. Under section 180(1) of this act, thedirectors and the key officers have an obligation of acting with care and in a diligent manner,while the duties are discharged and the powers are used. Where there is a breach of this section,the court gets the power of making a declaration of contravention, pursuant to section 1317E(Austlii, 2017). Australian Securities and Investments Commission v Macdonald (No 11) [2009]NSWSC 287is a leading case in which the court held that the CEO had breached his directorduties covered under section 180(1) (Czoch and Mulder, 2010). This was because the CEO, i.e.,Macdonald had failed to advice the company’s board regarding the Draft ASX Announcementbeing expressed in emphatic terms; and also because Macdonald had failed in obtaining theapproval before the release of Final ASX Announcement or regarding the fact that amendmentswere made before releasing the announcement. This led to the conduct of CEO being deemed asdeceptive and misleading, resulting in breach of director duties (Hargovan, 2009). Apart from this act, the common law imposes certain duties on the directors of the company,along with the key officers. Under the common law, the directors are under an obligation toavoid such situations where there is a conflict of interest and they also have to avoid taking

DIRECTOR DUTIES3advantage of the corporate opportunities of the company for themselves (PwC, 2008). Similarprovisions are covered under the governing act, where the directors of the company are under aduty to not misuse the position which they have in the company, pursuant to section 182 and tonot misuse the confidential information of the company, pursuant to section 183 of this act,particularly in such a manner where they obtain an advantage for themselves or for someoneelse, or cause a detriment to the company (Cassidy, 2006).ASIC v Stephen William Vizard [2005] FCA 1037 is a case where the director was imposedpecuniary penalties of $390,000 and was also banned from managing any company for ten yearperiod. This was because in this case, Vizard dealt with the share dealing for his own personalbenefit and this was done by using the information which he had attained by being a director inthe company, i.e., in Telstra (Reid, 2017). ApplicationIn the given case study, Bond had breached his director duties covered under section 180(1).This is because Bond decided to draft the ASX Announcement and placed the contents of thedraft before the board. However, he did not bring it to the attention of the board about theborrowings were characterised as non-current as the final repayment instalment could not berolled to the next year. Also, he failed to obtain the approval of the board before the Final ASXAnnouncement was made. Hence, this would be deemed as a breach of duties of Bond as perAustralian Securities and Investments Commission v Macdonald(No 11) as he was a CEO of thecompany and he failed to be careful and diligent in his work. There is also another section which was breached by Bond in this case which was section 182and 182. He misused the information of the company, which he obtained by being the CEO of

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
The Corporations Act 2001| Company Law
|7
|1038
|143

Corporate Law ACC2006/ACC204 Group Assignment
|8
|1755
|75

Assignment Business and Corporation Law
|11
|2850
|91

(Solved) Business and Corporations Law Assignment
|10
|808
|90

Case Study on Company Law: Corporations Act of Australia, 2001
|11
|1972
|230

ASIC v Padbury Mining Limited: Breach of Directors' Duties
|12
|1068
|427