Duty of Directors and Shares Under the Corporations Act 2001

Running head: DUTY OF DIRECTORS AND SHARES UNDER THE CORPORATIONS ACT
2001
DUTY OF DIRECTORS AND SHARES UNDER THE CORPORATIONS ACT 2001
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DUTY OF DIRECTORS AND SHARES UNDER THE CORPORATIONS ACT 2001
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Question One
a) Growth Ltd. is a public limited company and it want to make a 12 million share issue for
the development of the business. According to the Corporations Act, 2001 the provision
mentioned under Chapter- 2D does not allow the public company without issuing a
prospectus when the amount of funds is large in nature. A prospectus is necessary
because it is considered as the disclosure document.
b) If the prospectus has been made by the company and if they provide all the information
related to investment then the directors will not be liable for prosecution under
Corporation Act, 2001.
c) No alternatives will be available under the Corporations Act, 2001 because it is the duty
of the directors to act in good faith and cannot take advantage by misleading the
shareholder.
d) The Corporations Act, 2001 give protection to the directors only if it is proved by
Section- 180 (2) otherwise they will not get any protection.

DUTY OF DIRECTORS AND SHARES UNDER THE CORPORATIONS ACT 2001
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Question Two
1. Goodtimes Ltd. had a successful business trading and in order to invest the profits
the company decided to purchase 12% of the ordinary shares held by Jasline.
Section- 256 A of the Corporations Act, 2001 says about rules to be followed in
case of buying back the share and depletion in the share capital (Adamson and
Loch 2018). The Directors need to save the creditors and the shareholders by
stating that the insolvency of the company can be occurred by the transaction,
shareholders of the company must act according to impartial manner, all
information related to the company must be disclosed (Langford and Teele 2016).
Section- 257 A of the act talks about the power to buy back must be followed by
the procedures of the company and it must not effect on the company in relation
to make payments to the creditors. This type of buy back is considered as the
special buyback. Section 257 D of the act talks about procedures about the
particular buy back. The offer of buyback has been made only to Jasline and not
to every shareholders in the company. Section 257 D (1) talks about that this buy
back should be approved by all the shareholders or 75% of majority members
must favour a resolution. Jasline who is the selling shareholder in this buyback
must not vote in favour of this buy back. Section 257 D (2) talks about notice
must be sent to the shareholders to inform about the meeting to vote for a
selective buyback and it must include all the necessary information related to the
proposal. The company does not need to provide all the information if it has been
already disclosed by the company to the shareholders, if that would be

DUTY OF DIRECTORS AND SHARES UNDER THE CORPORATIONS ACT 2001
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unreasonable. Section 257 D (3) of the corporations act talks about the necessary
documents to be file by the company to Australian Securities & Investment
Commission (ASIC) before sending the notice to the shareholders. The
documents which needs to be lodged are the copy of the notice and the relevant
documents which will send to the shareholders along with such notice.
2. Goodtimes Ltd offer all the ordinary shareholder to sell 8% of the shares to the
company then it will come under the Equal access buy back. Section 257 B talks
about the procedure to be followed by company. Goodtimes Ltd in this buy back
offers to sell all ordinary shareholders their ordinary shares and it satisfies Section
257 B (2) if the act. In order to deal with Section 257 B (2) it must ignore certain
differences which related to offers on which different amounts remain unpaid,
different accrued dividend entitlements and each shareholder is left with a whole
number of shares (Chan, Konan, Chen, Hu and Liu 2018). The obligation of the
directors must be according to Section- 256 A of the act by informing all the
shareholders the material information about the company, risk involved in the
transaction and it must treat all the shareholders in an impartial manner.