The Provisions of the Corporation Act
Added on 2020-04-07
14 Pages3338 Words106 Views
Running head: BUSINESS LAWBusiness lawName of the StudentName of the UniversityAuthor Note
1BUSINESS LAWTable of ContentsQuestion 1........................................................................................................................................2Question 2........................................................................................................................................4Question 3........................................................................................................................................6Question 4........................................................................................................................................7Question 5......................................................................................................................................11References......................................................................................................................................13
2BUSINESS LAWQuestion 1Issue The question which has been identified in this case is in relation to the breach of directors dutiesas per the provisions of the Corporation Act 2001 (Cth) (the act)Rule Section 180-184 the act deal provides the duties which the directors must act in accordance withrespect to discharging their obligation towards the operations of the company. As provided in Section 180(1) of the act a director can be held accountable for the breach of thissection if he or she does not apply proper skill and diligence while discharging their obligationsin relation to the company. When a question in relation to the compliance with such section has to be determined the courtdeploys an imaginary reasonable director in the same position when the direct in context waswhile taking a decision in relation to the company and then seen whether the reasonable directorwould have indulged in the same conduct or not. In case the court is satisfied that no reasonabledirector would have indulged in the same action committed by the original director, such directorwould be held liable to the breach of section 180(1) by the court. In the case of Australian Securities and Investment Commission (ASIC) v Cassimatis (No.8) [2016] FCA 1023 the court ruled that for the purpose of analyzing the violation of section180(1) of the Act, no reasonable director would indulge in an actions which may result in the
3BUSINESS LAWcontravention of legal provisions as such contravention cannot be in the best interest of thecompany and definitely not a result of proper skill and diligence. Section 181 of the Act is violated of the actions of the directors of the company are not in goodfaith and towards the best interest of the company. In section 182 of the CA it has been ruled that the directors will breach the provisions of thissection if it is found that they have used the position they have in the company to achievepersonal interest by causing harm to the company. If there is any conflict of interest situationwhich a director of the company is facing where he has to choose between his interest and thecompanies interest he must always chose the interest of the company. In addition the directorsalso have to ensure that any conflict of interest situation is disclosed to the board as per section192 of the Act. Application From the above discussed provisions provided by the Act it can be stated that the operation ofthe organization carried on by the directors are governed by the principles. In the given situationEric being the non executive director of the company has the duty to act in the best interest of thecompany according to section 181 of the CA. he also has a duty to avoid any conflict of interestsituation of his personal interest and company’s interest. Thus buy persuading the board tofinalize the deal with a company where he is a partner to gain personal benefit and not disclosingsuch situation to the board accounts to the violation of section 181 and 182 of the CA. Morton being the director of the company has been imposed with a duty to act with proper careand diligence in relation to the company. Under the section he has the duty to use personal skilland diligence to benefit the company, however he has not done so by not protesting against the
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