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LAWS19032 Company Law: Project | Comapany Act

   

Added on  2020-03-02

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Running head: COMPANY AND ASSOCIATION LAWCompany casesName of the student:Name of the university:Author note

1COMPANY AND ASSOCIATION LAW Part A1.Issue:There are two issues present in the case of the Cassimatis. The issues are as follows:whether the alleged Storm Company had breached any provisions of theCorporation Act 2001 or not.whether the Directors of the company had complied every duty regarding theCorporation Act or not. It is to be clarify that Corporation Act is regulated the provisions of the company relatedmatters in Australia. Under the Act, numerous provisions are engraved that are pointingout the liabilities of the directors in a company. There are certain conditions regarding thedirector’s duties are mentioned under section 180 of the said Act. In the present case,these issues are raised regarding the violation of those duties and necessary consequencesof it. 2.Relevant Laws:Topic of the case is based on certain provision of the Corporation Act 20011. The subjectmatter of the case is based on the director’s duty towards the stakeholders. Rulesregarding the same have been mentioned under the provision of section 180 of the saidAct2. There are certain sub-sections are included. As per section 180 (1) of the Act, adirector of a company must show necessary diligence while performing his duties and heowes care to the shareholders and the other stakeholders3. In ASIC v Adler, certainprinciples of the Corporation Act has been stated and a detailed version regarding the1Aroney, N., Gerangelos, P., Murray, S., & Stellios, J. (2015).The Constitution of the Commonwealth ofAustralia: History, Principle and Interpretation. Cambridge University Press2Barnett, H. (2017).Constitutional and administrative law. Taylor & Francis.

2COMPANY AND ASSOCIATION LAWrelevant sections have been mentioned4. In the case, there was a breach made by theDirector of the company took place. The sections related to the case were section 9,section 180, section 180 (1), section 182, section 182 (2) and section 183 of theCorporation Act 2001. The meaning of the term care includes the reasonable supervisionon the shareholders in case of all circumstances. The applicability of the section in thiscase is wide in nature. Reasonable supervision means he is not allowed to take any stepsthat is wrong in nature or to feather his own nest. The director of a company should nothide any facts from the shareholders or other stakeholders. Under section 184 of theCorporation Act, it has been stated that the directors should have to perform their dutiesin good faith. There shall be no bad intention or ulterior motive behind the acts of thedirectors. It is not expected from the director of the company to misuse the post to earnbenefits.In Corporation Act, there is a provision regarding section 1041H has been mentionedthat states the liability of the director in the finance sector. In ASIC v FMG (2011) 190FCR 370, it was held that the director should not deceive the shareholders to gain certainprivileges in the financial service sector5. It is mentioned under the section that if anyperson violate the principle laid down under the subsection, provision of the civil liabilitywill be applicable on him and he will be prosecuted under the provision of section 1041I3Berk, J., DeMarzo, P., Harford, J., Ford, G., Mollica, V., & Finch, N. (2013).Fundamentals of corporatefinance. Pearson Higher Education AU.4Chia, H. X., & Ramsay, I. (2015). Section 1322 as a Response to the Complexity of the Corporations Act 2001(Cth).5Coffee Jr, J. C., Sale, H., & Henderson, M. T. (2015). Securities regulation: Cases and materials.

3COMPANY AND ASSOCIATION LAWof the Corporation Act 20016. Certain pecuniary penalties will be imposed on thedirectors under section 674 (2) of the said Act. According to the wise interpretation of section 180 of the Act states that the provisionis also applicable on the sole directors of a company so that they could not use the sameas an excuse7. The reason behind the enactment is to secure the interest of theshareholders. It is duty of the director to disclose all necessary information related to thecompany as well as the risks of the company to shareholders and other interested person.In ASIC v Macdonald [2009] MelbULawRw 34, it was observed by the Supreme Court ifthe allegation against a director regarding non-disclosure of necessary documents hasbeen proved, he should be liable under section 180 of the Corporation Act 20018.However, amount of loss is not mandatory in this case. In ASIC v Hellicar & Ors [2012]HCA 17, it was held that the liabilities of section 180 are not comprised of certainstatutory duties only. Provision of section 945A of the Act is applicable in this case tocertain extent. However, the section has been repealed now. 3.Application:In Australia, there are number of cases pending regarding the company matters9. As itis a business country, company matters are placing in a most important position. There6Crane, A., & Matten, D. (2016).Business ethics: Managing corporate citizenship and sustainability in the ageof globalization. Oxford University Press.7Ferran, E., & Ho, L. C. (2014).Principles of corporate finance law. Oxford University Press.8Hargovan, A. (2017). Corporate law: Judicial guidance on de facto director liability for insolventtrading.Governance Directions,69(2), 111.9Ferrell, O. C., & Fraedrich, J. (2015).Business ethics: Ethical decision making & cases. Nelson Education.

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