Corporate Law: Uninest, Primo, and Iconstruct Case Study Analysis

This case study analyzes three scenarios involving potential breaches of director's duties under the Corporations Act 2001. The first case examines whether the directors of Uninest Limited breached their duties by approving an interest-free loan to a director, potentially impacting the new company, Urbanlodge Limited. The second case focuses on Shane, a director of Primo, who starts a competing company, Iconstruct Limited, and assesses whether he breached his duties, potentially impacting Primo's tender and construction contracts. The third case, with two scenarios, investigates whether Frank, Diane, Ron, and Kelly breached their duties. The analysis involves identifying the issues, applying relevant sections of the Corporations Act, and concluding whether breaches occurred, along with potential penalties, referencing case law such as Fayad v Bellpac Pty Ltd and Phoenix Eagle Company Pty Ltd -v- Tom Mcarthur Pty Ltd.

Running head: CORPORATE LAW
Corporate Law
Name of the Student
Name of the University
Author Note

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Table of Contents
CASE STUDY 1..............................................................................................................................3
Issue.............................................................................................................................................3
Rules............................................................................................................................................3
Application..................................................................................................................................4
Conclusion...................................................................................................................................5
CASE STUDY 2..............................................................................................................................5
Issue.............................................................................................................................................5
Rules............................................................................................................................................5
Application..................................................................................................................................7
Conclusion...................................................................................................................................7
CASE STUDY 3..............................................................................................................................8
Scenario A...................................................................................................................................8
Issue.............................................................................................................................................8
Rules............................................................................................................................................8
Application................................................................................................................................10
Conclusion.................................................................................................................................10
Scenario B......................................................................................................................................11
Issue...........................................................................................................................................11
Rules..........................................................................................................................................11

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Application................................................................................................................................11
Conclusion.................................................................................................................................12
Reference.......................................................................................................................................13

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CASE STUDY 1
Issue
According to the case study, the issue has found whether the directors of Uninest have
breached any of their general law directors as per the legislations of Corporation Act 2001(Cth)
or not?
Rules
The Corporation Act 2001 has defined the legislations of the duties of the directors of the
organisation where they has right to exercise their powers and discharge their duties for the
corporation with care and the diligence. According to the Section 180 of the act, describe the
rules where the directors must make decisions in the business where it should have accurate
judgement with good faith and a proper purpose. It should not make conflict with any personal
interest. The information about the corporation should not disclosed by the directors outside of
the corporation. The director must exercise their powers according to the best interest of the
corporation.
The section 181 has defined where the directors and other officers of organisation must
work and exercise their contribution or duties with good faith for the best interest of the
corporation along with the proper purpose. The section 182 has described that the directors are
completely prohibits from unethical use of their position for gaining advantage personally or
nobody should not affected with the detriment to the Corporation under the general duties of the
directors. The section 183 of Corporation Act has stated that directors are also provided to
disclose any information, which are related to the organisation and help to give advantages for
his personal use and cause bad effects to the Corporation.

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Breach of duty of care by directors may cause penalty for such activities where court can
order to pay pecuniary penalty according to the damage or loss, which the organisation has
faced. The Court has also right to disqualify the person who holds the position of director from
managing Corporation for a period the court considers appropriate according to the section 206c.
For the breach of duty of care, the court has legislated according to the section 1317E of
the corporation that director is bound to pay for the penalties for which the duty of care towards
the organisation and must compensate damages which the corporation has faced due to such
activities.
In the case of Fayad v Bellpac Pty Ltd [2004]1, the Australian Federal Court has found
that a breach of trust and duty of care has been reached by the directors while imbalance of
convenience towards the Corporation according to the Corporation Act 2001. Another case
Oates v Consolidated Capital Services Ltd [2008]2 English company has found to Breach the
directors duty due to the double derivative processing square the federal court has alleged the
company for such act according to the company act 2001.
Application
According to the case study, the directors of Uninest Limited have agreed with the
proposed resolution by Neales, and they think the loan and the director’s issues will share to the
new company. According to the section 180,181, 182, 183 and 184 the directors of Uninest
Limited has right to exercise their power for their organisation but while pass the resolution to
lend $30 million interest free to only one director. Therefore, the new Cooperative Corporation
1 [2004] NSWSC 755
2 [2008] NSWSC 464

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may face low cash flow problems. Therefore, the director of Uninest has breached the duty of
care and conflicted with the resolution of new corporation Urbanlodge Limited.
Conclusion
According to the case fact, the directors of Uninest have beached their general duties of
section 180,181, 182, 183 and 184, which may cause penalty for them, and they are bound to pay
the compensation to the new corporate company.
CASE STUDY 2
Issue
a. According to the case study, the issue has found whether Shane has breached any of his
general law or statutory duties as a director or not.
b. If Shane has breached his General law or statutory duties as a director then what penalties will
be applied for the breach of law and statutory directors duties according to the Corporation Act
2001?
Rules
a. The Corporation Act 2001 has defined the legislations of the duties of the directors of the
organisation where they has right to exercise their powers and discharge their duties for the
corporation with care and the diligence. According to the Section 180 of the act, describe the
rules where the directors must make decisions in the business where it should have accurate
judgement with good faith and a proper purpose. It should not make conflict with any personal
interest. The information about the corporation should not disclosed by the directors outside of
the corporation. The director must exercise their powers according to the best interest of the

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corporation. The section 181 has defined where the directors and other officers of organisation
must work and exercise their contribution or duties with good faith for the best interest of the
corporation along with the proper purpose. The section 182 has described that the directors are
completely prohibits from unethical use of their position for gaining advantage personally or
nobody should not affected with the detriment to the Corporation under the general duties of the
directors. The section 183 of Corporation Act has stated that directors are also provided to
disclose any information, which are related to the organisation and help to give advantages for
his personal use and cause bad effects to the Corporation.
b. Breach of duty of care by directors may cause penalty for such activities where court can order
to pay pecuniary penalty according to the damage or loss, which the organisation has faced. The
Court has also right to disqualify the person who holds the position of director from managing
Corporation for a period the court considers appropriate according to the section 206c.
For the breach of duty of care, the court has legislated according to the section 1317E of
the corporation that director is bound to pay for the penalties for which the duty of care towards
the organisation and must compensate damages which the corporation has faced due to such
activities.
In the case of Fayad v Bellpac Pty Ltd [2004]3, the Australian Federal Court has found
that a breach of trust and duty of care has been reached by the directors while imbalance of
convenience towards the Corporation according to the Corporation Act 2001. Another new case
Phoenix Eagle Company Pty Ltd -v- Tom Mcarthur Pty Ltd [2017]4 English company has
3 [2004] NSWSC 755
4 [2017] WASC 130

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found to Breach the directors duty due to the double derivative processing square the federal
court has alleged the company for such act according to the company act 2001.
Application
a. According to the current situation, Shane holds the position of a director and shareholder of
Primo and now he started a new company name Iconstruct Limited. However according to be a
director of the previous company he holds the statutory duties towards the company and bound
to follow the section 180,181, 182, 183 and 184 under the Corporation Act and must exercise the
power of duties of directors with care and due diligence towards the organisation.
b. According to the corporation at the directors duties Shane has breach the terms of the
corporation and under the penalties of section 1317E of Corporation Act 2001 he is bound to pay
the penalties to Primo because the company has faced lower tender price and construction
contract has not made.
Conclusion
a. According to the fact of the case, Shane has breached his general law and statutory duties as a
director of primo.
b. according to the section 183 he must not disclose any information or use the company for
personal benefits. Therefore, he will be bound to pay remedies and penalties to Primo, as they
are not able to make the tender contract with land stock Limited.

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CASE STUDY 3
Scenario A
Issue
According to the case, study the issue has been arises whether Frank, Diane, Ron and
Kelly breached any of their General or statutory director’s duties towards their corporation or
not?
Rules
Under the Corporation Act, the section 180 has legislated the care and diligence by the
directors and other officers towards their Corporation. Directors are bound to exercise their
powers and work with proper duties with care and diligence for the company. The directors of a
company holds responsibilities within the Corporation where exercise of the powers must
applied for the other directors of the company and the corporation itself under this act.
The director must exercise their powers with good faith for an appropriate purpose for the
organisation. Director must not exercise their power for the benefits of personal interest and they
must involve with every appropriate reasonable subject matter, which are related with the
corporation. The section 181 has defines the good faith where are director is must exercise their
powers for the good faith which also benefited for the best interest of the corporation along with
the proper purpose. The section 182 find the position of the directors for a director must not use
the position and ethically for gain advantage for personal interest. According to the section 183
has define the use of information where a director is bound to keep private information, which
are related to the company, and they must not disclose any information for personal advantage
for themselves or someone else. The duty of this exercise also continued after the person left the

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position of the director of the Corporation. Section 185 has described the rule of interaction with
the section 182 ,184 where the directors must take the liability for holding the position under the
corporation and must not commenced any civil proceeding for breach of a duty where they hold
the liability for the Corporation.
The section 197 as described the director’s liability for the company and other obligation
in it. Therefore, it defines that the act where directors holds the liabilities as a Trustee for the
Corporation is also liable to discharge the every exercise of liabilities for the Corporation. It will
not exercise at the liability if a breach has cause by the corporation or the corporation acts
outside the scope of the powers to on limiting the corporation, which holds the liability under the
section 198A. Director has powers for the replaceable rule for director can change or exercise
powers for the company accept any powers at the company’s constitution requires the company
to exercise through the General Meeting. According to the section 135 of the replaceable rule the
managing director has right to exercise the powers which has conferred by the directors of the
company under the section 198 C of the Corporation Act 2001. According to Section 198D the
director has, right to delegate any of the powers unless the company is Constitution provides.
Breach of duty of care of directors may cause penalty for such activities where they can
order to pay pecuniary penalty according to the damage or loss, which the organisation has
faced. The Court has also write to disqualify the person who hold the position of director from
managing Corporation for a period the court considers appropriate according to the section 206c.
The breach of duty of care the court has legislated according to the section 1317E of the
corporation at that directed is bound to pay for the penalties for which the duty of care towards
the organisation and mass compensate damages, which the corporation has faced due to such
activities. The significant kisses for the breach of the director duties as found are Thomas &

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Anor v Arthur Hughes Pty Limited & Ors [2015]5, Australian Motor Finance Limited
(Receivers and Mangers appointed) v Angeleri (No 3) [2010]6, Australian Securities and
Investments Commission v Citrofresh International Ltd (No 3) [2010]7 and Eastland
Technology Australia Pty Ltd & Ors -v- Whisson & Ors [2002]8.
Application
According to the case facts when the general meeting as conducted Frank and Diane
refused to attend the board meeting while the other directors Ron and Kelly has persuaded votes
in favour of the proposal to enter into the contract with crop grain. According to the fact of the
case, a General Meeting has conducted under the corporation by the directors it is necessary that
each member of the director must attend the meeting while Frank and Diane refuse to attend the
general meeting which breach the terms of the directors duties according to the section 198A of
the Corporation Act.
Here Ron and Kelly also breach the terms of the general laws where they have
knowledge about the capabilities of the Drone system to carry out the proposed task but they
convince vote to enter into the contract with crop again it may affect the reputation of the
company which is against of the directors duty of the Corporation Act.
Conclusion
According to the which of the terms of 198A of Corporation Act Frank and Diane can
face penalties for which the rules and according to the section 180 of the Corporation Act Ron
and Kelly main penalty it section 1317 under the Corporation Act.
5 [2015] NSWSC 1027
6 [2010] FCA 1431
7 [2010] FCA 292
8 [2002] WASC 150

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Scenario B
Issue
The issue has arrived whether CropGrain has any right to take legal actions against the
directors of Dronebotics Limited for providing technologies which has difficulties and breach the
terms of contract or not?
Rules
According to the terms of contract a contract must consists of five elements, which are
acceptance and proposal, legal intension to create valid contract, consideration, capacity and
certainty. Therefore, it is necessary to satisfy all the terms of contract according to the Contract
Law of Australia. When the terms of contract has failed to satisfy then the damages can claimed
by the innocent party. The liquidate amount of the damage can claimed from the aggrieved party.
In the case of O'Brien v Dawson [1942]9, a contract has been breached by the directors of a
corporation and appellate to the Supreme Court of New Wales and the defended directors have
terminated for the breach of the contract. R v McNell [1922]10 is another case where the breach
has found by the parties
Application
According to the case study, the directors of the Dronebotics Limited have made the
contract to deliver the drone system to CroGrain Limited. Two of the director has the knowledge
about the incapability of the Drone system but other directors of the company have passed the
resolution to make the contract with the company. Now they have delivered the technology with
9 [1942] HCA 8 (07 May 1942)66 CLR 18; 41 SR (NSW) 295
10 [1922] HCA 33 (27 July 1922) 31 CLR 76