Company Law Case Study 2022

COMPANY LAW

Issue (a)
The first issue in the given case scenario is to identify any breaches of duty by Tony
Stark as the director of the company Marvel Universe Pty Ltd and the remedies available
against the same.
Rule (a)
The rules in the given case scenario relate to the Corporations Act 2001 (Cth) that is
comprised of the guidelines for the various aspects of the company management. The act lays
down certain general duties of the director in the “sections 180, 181, 182 and 183.” The
section 181 states that it is the duty of the directors to act in good faith and in a manner, that
represents the best interest of the company. In addition, the section 183 prescribes the duty of
the director to not to use the information gained during the course of the employment, for
purposes that are improper (Australian Institute of Company Directors, 2019). The improper
purpose here is referred to as the purposes that lead to the detriment to the interests of the
company and advantage for self or someone else.
Application (a)
The application of the above rules to the given case study leads to the observation that
the director Tony Stark of the company Marvel Universe Pty Ltd, has been a part of the
syndicate including Dr Thanos and Steve Rogers for the offer of the academic software which
was earlier rejected by the company. The fact of formation of a syndicate for the purpose of
controlling a new company and marketing the software is beyond the best interests and
purposes of the company Marvel Universe Pty Ltd. Further, Tony Stark indulges in
contacting customers of the company which leads to the observation that the director has used
the confidential information of the company.
Conclusion (a)
The conclusion from the previous discussions is that the directors has breached the
general duties of the position. In terms of the remedies, the company can sue the director for
the damages of breaching the duties.
Issue (b)
The issue in the case study is to identify is there is a breach of duty on the part of a
director Tony Stark if he has resigned from the directorship of the company Marvel Universe
Pty Ltd, prior to the formation of the Endgame Pty Ltd.

Rule (b)
It is significant to note that there have been pronouncements in the Australian
Corporate climate, where the courts have upheld the restraints of trade when the directors
have access to the confidential information of the company. However, for the same there is a
necessity of a deed being executed in between such a member/director of the company and
the company. The restraint trade principles were pronounced in the case of Miles v Genesys
Wealth Advisers Limited (2009).
Application (b)
On the application of the above principles of the law to the given case scenario, it can
be stated that there if there is a deed of release being executed between Tony Stark and the
company Marvel Universe Pty Ltd, stating the restraint of trade, then the former director of
the company cannot solicit the clients or compete with the business of the earlier company,
by way of being the director in the new company.
Conclusion (b)
The discussions in the previous parts lead to the conclusion that if the director Tony
Stark had already resigned from the company Marvel Universe Pty Ltd and there was a deed
stating the restraint of trade, the duties of the director would still be breached till the time
mentioned in such deed.
Issue (c)
The issue in the case study is to identify whether there is a breach of the duties on the
part of Tony Stark as the director of the company Iron Man Pty Ltd, and the recognition of
remedies if any.
Rule (b)
As stated, the general duties of the directors of Australia are stated in the sections 180,
181, 182 and 183 of the Corporations Act, 2001. It must be essentially noted that the directors
of the companies are in a fiduciary relationship with the company and work in the best
interests of the company and the stakeholders. One of the duties of the directors is thus to
avoid the misappropriation of the assets of the company for the personal purposes. Section
182 specifically states that the directors must not improperly use the position in light of the
conflict of the interests. If the directors are found to be guilty of the above conduct, they

would be attracting civil penalty and personal liability. The above principles were held in the
case of Australian Securities and Investments Commission v Hellicar (2012).
Application (c)
The application of the above stated rules, lead to the noteworthy point that the director
Tony Stark of the company Iron Man Pty Ltd has improperly used his position as a director
by transferring cash to himself and his friend to the tune of the amount of $50000 and $
650000 out of the funds of the company Iron Man Pty Ltd. The said amounts were transferred
for the personal enrichment in the light of the conflict of the interest that is for the investment
in the shares of the company Endgame Pty Ltd. The latter company has been controlled by
the syndicate of which Tony Stark is a member. Hence, there is a breach of duty of the
general duties of the director and application of the principle of case of Australian Securities
and Investments Commission v Hellicar lead that directors would be personally liable for said
amounts and damages.
Conclusion (c)
It can be concluded that there is a breach of duty of section 181 and section 182 of the
Corporations Act and consequently directors would be personally liable.
Answer (d)
There have been prescribed mandatory general duties of the directors as mentioned in
the sections 180, 181, 182, and 183, together with the several other duties mentioned in the
various other sections of the Corporations Act, 2001. For instance, section 344 prescribes the
duty for the director of the maintenance of the appropriate financial records and data by the
company, section 191 prescribes for mandatory disclosure of the directors interests and ,
section 588G restricts insolvent trading practices. These sections encourage the corporate
activity, because in present times there is huge significance of the interests of the various
stakeholder groups of the company in the management of the affairs of the company. Further,
the pronouncements in the numerous case laws by the judges have led to the observation that
the companies must be managed in a manner by the directors in the light of the agency
relationship. The duties of care, transparency and accountability must be adhered to at all
times by the directors.

References
Australian Institute of Company Directors (2019). Duties of directors. Retrieved from:
https://www.companydirectors.com.au/dutiesofdirectors
Australian Securities and Investments Commission v Hellicar [2012] HCA 17
Miles v Genesys Wealth Advisers Limited [2009] NSWCA 25