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Future of Company Law in Australia

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Added on  2020-05-16

Future of Company Law in Australia

   Added on 2020-05-16

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Running head: DIRECTORS DUTIES Directors DutiesName of the StudentName of the UniversityAuthor note
Future of Company Law in Australia_1
1DIRECTORS DUTIESTable of ContentsIntroduction......................................................................................................................................2Facts of the case (Introduction of the case).....................................................................................2Directors’ duties which have been breached...................................................................................3Court decision Analysis...................................................................................................................4The implications of the decision provided by the court in future of company law in Australia.....8Conclusion.......................................................................................................................................8References......................................................................................................................................10
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2DIRECTORS DUTIESIntroduction When a person is appointed as a director or officer of a company they are imposed withobligations under statutory provisions as well as common law which they have to observe whiledischarging the duties. These obligations are commonly known as directors’ duties. One of suchduties of the directors towards the company is that they must have a minimum level of care anddiligence while they are discharging the duties towards the company. This particular duty isstated expressly in the provisions of section 180 of the Corporation Act 2001 (Cth) as well asunder landmark cases of common law. When such directors failed to comply with this duty theyare charged under provisions of the act where buy they are subjected to suspension as well asfinancial penalties. One of the cases where this duty had been discussed by the court is the caseofASIC v Padbury Mining Limited [2016] FCA 990.Facts of the case (Introduction of the case)The case is in relation to an announcement made by the defendant company with respect tothe Australian security exchange (ASX). The court in this case imposed a ban on the directors ofthe defendant company for a period of 3 years. In addition to the band the court also imposedupon the directors a financial penalty work $25,000 for the breach. The directors were held liablefor breaching section 180 of the act as they did not prevent their company from making anannouncement where it was stated that the company is going to receive funding amounting to 6million dollars for the purpose of carrying out a construction project in west Australia. Thisannouncement was made by the company on the 10th of April 2014. The announcementconsisted the following terms.
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3DIRECTORS DUTIESThe company has been successful in securing the funding required for its project inWestern AustraliaA private investor has agreed to provided the funding on terms mentioned in theshareholders agreementThe project is to be developed by Midwest Infrastructure Private Limited (fully ownedsubsidiary)What the company failed to mentioned in the announcement was that the company still needed tocomply with certain terms of the agreement in order to secure the funding. According to one ofthe terms the company needed to secure a 1.3 billions bank guarantee before it would be eligibleto the required financing. The presence of this term in the agreement was known to the directorsof the company. However although such terms were present in the agreement no steps weretaken by the directors of the company to state within announcement that the agreement is highlyconditional.The organization had directed ASX to halt share trading in relation to the company which theyagain asked to be lifted. Between such period at least 200 Million shares of the company hadbeen traded. After the trading at surge prices the company made an announcement stating aboutthe termination of the agreement with the financer.
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