Law of Business Organizations | BX2112

Running Head: BUSINESS AND CORPORATION LAW
0
Law of Business
Organisations
BX2112
1/4/2020
Student’s Name

BX2112 1
Contents
Introduction......................................................................................................................................2
Question 1........................................................................................................................................2
Issue 2
Rules 2
Application 4
Conclusion 5
Question 2........................................................................................................................................5
Question 3........................................................................................................................................6
Conclusion.......................................................................................................................................7
References........................................................................................................................................8

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Introduction
Companies are artificial entities where directors and officers of the same take business decisions
on behalf of their companies and are responsible to look after all the compliance. The concept of
corporate governance demands managers of the business is ethical and responsible in the
performance of their duties. In Australia, Corporations Act 20011 (the act or CA 2001) applies to
every company registered in this country and outlines duties, which are required to perform by
directors and officers. In recent times, many of the cases have reported where these business
managers have breached their duties and held liable by the relevant authorities. The presented
report has been developed on one such case, which is related to executives of Murray Goulburn
Co-operative Co. Limited. The report shall contain legal issues of the case, the role of the
Australian Securities and Investments Commission (ASIC) and the significance of other similar
cases.
Question 1
Issue
What alleged corporate legal issues have found in the subjective case?
Rules
Corporations Act 2001 demands every director as well as officers of the company to follow some
of the compliance while dealing on behalf of the company. These duties are divided into two
sections namely general duties and specific duties. Section 180 to 184 of the act carries these
1 Corporations Act 2001 (Cth)

BX2112 3
general duties. According to section 180 (1) of the act states that every director/officer of the
company is liable to behave similar to a reasonable person and to perform the functions with
diligence and care2. Similarly, section 181 of the respective act believes that it becomes the duty
of business managers (officers and directors) to discharge their functions for the proper purpose
of keeping good faith. On the different side, Section 182 and 183 of the act prevent using
corporate information or position for personal use by these directors and officers.
In conjunction with these duties, directors and officers are also liable for some specific duties
that include the duty to make certain disclosures to authorities under different situations. For
instance, section 601FD outlines the duties of officers of a responsible enterprise under a
registered scheme where according to subsection 1, these officers are responsible to act with
honesty, diligence, and care setting aside their interest. Clause b of section 601FD (1) requires
each officer to work as a reasonable person carrying diligence and care3. Further clause f of this
section stipulates that an officer of a responsible entity under a registered scheme must ensure
that such entity complies with the act, constitution of the scheme, compliance plan of the scheme
or any other condition in respect to "Australian Financial service license" of the responsible
entity. Section 674 (1) of the Act puts an obligation on officers of the listed entities to disclose to
market operators on the happing of an event if required so under-listed obligations. It means it is
a requirement under the listing rule but Corporations Act confirms the same.
Section 675 of the act is another important section that applies to the unlisted disclosing entity as
well as on those listed entities where no listing rules are specified in relation to the disclosure of
particular information. As per subsection 1 of this section if these companies become aware of
2 Ian Ramsay and Benjamin Saunders, An Analysis of the Enforcement of the Statutory Duty of Care by the
Australian Securities and Investments Commission (2018) 36(6) Company and Securities Law Journal 497-521.
3 Austlii.edu.au, CORPORATIONS ACT 2001 No. 50, 2001 - SECT 601FD (Austlii) <
http://www5.austlii.edu.au/au/legis/cth/num_act/ca2001172/s601fd.html>.