ASIC v Mariner Corporation Ltd: Case Study on Directors' Duties

This case study examines the Australian Securities and Investment Commission (ASIC) v Mariner Corporation Limited case, focusing on the breaches of directors' duties under the Corporations Act 2001. The Mariner Corporation was found to have violated several sections of the Act, including sections 180(1), 631(2)(b), 1041H, and 621(3), related to diligence, misleading conduct, and takeover bids. The directors were accused of failing to act with care and diligence in their takeover bid of Austock Group Limited, primarily due to insufficient funds and inadequate consideration of regulatory constraints. The judgment considered whether the directors' calculated risk-taking was justified given the potential benefits to the company, balancing foreseeable harm against possible gains. Desklib provides students access to similar case studies and solved assignments.

b. The duties/responsibilities breached (ex. CA sections 181 or 588G) and explain why
the duties were breached.
Australian securities and Investment commission v Mariner Corporation Limited was a case
that was fought in Federal court of Australia. The case is the announcement of takeover that
was done by the corporation was in violation of the Corporation act 2001. The violation was
claimed to be in different accounts or subsections like lack of funds to make the bid,
misleading or deceptive conduct by the parties involved and breach of the duty of the
director.
The section 180 (I) of the Corporation act 2001 states that the directors of an organisation
should work with care and diligence which was violated by the directors of the Mariners
corporation limited. The violation of the section has been identified in the takeover bid of the
company of Austock group limited.
Firstly violation has been because of the public proposal that has been made by the
organisation which is the violation of 631 (2) (b) which states that a public proposal should
not be made in certain conditions. These conditions involve inability to actually proceed if
the bid is accepted.
Second is the announcement that was made by Mariner to ASX which violated section 1041H
of corporation act 2001 which makes it illegal to do a misleading or deceptive conduct
especially in regards to a financial service.
Thirdly mariner also made a bid of 10.5 cents per share which was a violation of the
corporation act 2001 section 621 (3) which states that in case of takeover bid the sum offer
for the securities should be equal or more than the maximum consideration that was provided
in the agreement of the purchase during the period of 4 month prior to the date of bid.
Fourth violation is the inability to consider the regulatory constraint for the several
percentages of shares of Austock (Jade 2018).
In the case of Australian securities and Investment commission v Mariner Corporation
Limited the section 180(1) which state that the director should act with diligence and care.
This was reflected in their decision to take over Austock. The decision was taken by the
director was because of the fact that they believed that the Austock which is a small cap
company is not reflecting its true value. They believed the true value can be unlocked in case
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both of its ventures that is the property business and the life insurance business is separately
represented. Apart from that the company didn’t had enough financial solvency at that period
of time. The act of the three directors of the company was to take up a calculated risk. Thus
the judgement of Beach J also stated that the conducts of the director cannot be judged
without the consideration regarding the balance of foreseeable harm of the company and the
possible benefit that can come for the organisation (Jade 2018). Thus the decision that has
been taken by the director and in the time allotted to them for making the judgement can be
justified.
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References
Jade (2018). BarNet Jade - Find recent Australian legal decisions, judgments, case summaries
for legal professionals (Judgments And Decisions Enhanced). [online] Jade.io. Available at:
https://jade.io/article/398014 [Accessed 26 Sep. 2018].
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