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Company & Association Law - LAWS19032 | Assignment

   

Added on  2020-03-01

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LAW2017Part AIssueThe issue was basically between the Australian Securities and Investment Commission (ASIC) and the directors of Storm Financial Limited (SFL). It was basically due to the fact that it was considered that the directors, i.e. Mr. And Mrs. Cassimatis were not following their respective duties with diligence and with Ethical aspects. Before the financial crisis struck the world economy, SFL was under good amount of profits, having revenue of $77 million and the value of gross assets, crossing $120 million. According to Mr. And Mrs. Cassimatis, this case is unique in the Australian Corporate History, namely because of the three factors:1.The allegation of breach regarding the care and diligence rely upon the single provision of the Companies Act 2001. 2.The breach regarding the same had occurred, when both were the only shareholders ofthe company and the company was in full solvency. 3.There has been no dispute that both of them were not handling the company with best interests, even during the time of recession. [ CITATION Fed16 \l 16393 ]According to the provisions of the Companies Act, the directors of the company, who are the sole shareholders of a solvent company, could not really breach the section 180(1), by a course of conduct, which is highly likely to contravene provisions of the Corporation Act. Hence, it can be said that the main issue regarding the situation of a solvency company was regarding the car and diligence of the directors of the company, who were the sole shareholders of the company. [ CITATION ASI16 \l 16393 ]2 | P a g e

LAW2017LawAs per the Section 180(1) of the Corporations Act 2001, the directors of the company should discharge all its duty with due respect and care. It should be done with proper diligence as in the absence of the same; it would become difficult for the company to operate its activities with full professionalism. Coming to the professionalism of the whole scenario, the directors of the company were not doing their respective duties in an appropriate manner and hence, it was required by the corporations act or the law to intervene in the situation. [ CITATION ASI15 \l 16393 ]Apart from this the other law, which is applicable in this scenario is the Section 945A (1) (B),related to the direct contravention of the directors of the company. [ CITATION ASI151 \l 16393 ]ApplicationComing to the application of the both the laws, in the current scenario, it should be noted in the absences of these laws, the company would not be able to make sure that it is actually making any sort of an issue, with the current situation. As the lawmakers of the country had stated that in the presence of a solvent company, the directors of the company should make sure that all their activities are taken place with due care and diligence. Proper ethics are to befollowed in the most effective manner and hence, it became an important point for most of the current situation to make sure that all these cases do not arise in the long run. [ CITATION ASI152 \l 16393 ]The main point of comparison in this scenario has been because of the comparison, being made regarding the situations before and after the period of recession. It is because of this reasons that the higher authorities are taking an action against the company, as both the directors of the company are not performing its respective activities with the utmost care. This has been under the scrutiny of the law and therefore, it is to be noted that in the presenceof these laws, all the companies would be required to make sure that all the necessary laws 3 | P a g e

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