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Legal Issues for Managers - Doc

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Added on  2021-05-31

Legal Issues for Managers - Doc

   Added on 2021-05-31

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Running head: LEGAL ISSUES FOR MANAGERSLEGAL ISSUES FOR MANAGERSName of the StudentName of the UniversityAuthor Note
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1LEGAL ISSUES FOR MANAGERSILACIssueIf Paris, Vienna and Sydney have breached any civil penalty provision of theCorporations Act, 2001 and/or any common law duties.LawSection 191 of the Corporations Act, 2001 provides for disclosure of personal interest bythe directors. This section mandates that when a director of a company has a personal interest ina contract or any other transaction that the company may enter into the same must be disclosed(Bevan, 2014). Section 192 of the act further provides that the director of a proprietary companycan participate in discussions, vote on, and keep any benefits that may arise from such atransaction if they have disclosed such a personal interest. ASIC v Adlerand 4 Ors [2002]NSWSC 171 reiterated this position (Bottomley, 2016).As per Section 180 (1) of the Corporations Act, 2001 the directors of a corporation mustobserve a duty of care and diligence when acting on behalf of the company. Thus when anofficer or director is guilty of contributory negligence which lead to a detriment for the company,he/she is in breach of their duty under this section. This has also been reiterated in Daniels vAnderson[1995] 37 NSWLR 438 (Bronitt, 2013).Section 588G of the Corporations Act, 2001 provides an obligation on the directors toensure that the company does not engage in insolvent trading (De Bakker et al., 2013). Thismeans that there is a bar from incurring further debt when a company is unable to meet itspresent debts.
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2LEGAL ISSUES FOR MANAGERSApplication Vienna suggested that Milton Motels employ the company “Dodgy Brothers” for theirmotel’s laundry services. Vienna however did not disclose that her husband and brother-in-laware directors of Dodgy Brothers. Thus this was a personal interest as this would get additionalbusiness for her husband’s company and she stood to gain from such a transaction. However thiswas not disclosed to any of the other directors. Thus following the provisions of Section 191 and192 of the Corporations Act, 2001 this was a breach of her statutory duty as a director of thecompany. ASIC v Adlerand 4 Ors [2002] NSWSC 171 also mandates the same (Schultz, Tian& Twite, 2013).Paris was travelling for 6 months and was not available to take calls and participate in thecompany’s decision making process. During this time the company’s accounts became overdrawn and the company was unable to meet its current debts. Thus Paris’s negligent behaviorhad detrimental effects on the company’s financial stand. Thus following the judgment inDaniels v Anderson[1995] 37 NSWLR 438 it may be inferred that Paris was in breach of herduties under Section 180 (1) of the Corporations Act, 2001 (Stephens, 2017). Furthermore, shesubsequently spent $500,000 on furnishing of the motels when the company was unable to payits debts. This was thus an insolvent trade and such a trade would be a contravention of Section588G of the act.Sydney was on a business trip when she was pitched about investing in “Bright Ideas”,however she used her own money to purchase shares in the company. Thus here she was notacting in the capacity of an agent of the company but in her own personal capacity. Thus she wasnot in breach of any provision of the Companies Act, 2001.
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