Analysis of ASIC v Parker [2003]: Impact on Australian Companies

This case study provides a detailed analysis of the ASIC v Parker [2003] case, focusing on the duties of directors under Australian corporation law. The case revolves around a director of QLS Superannuation Pty Ltd who approved a loan without proper verification, leading to a violation of sections 181, 191, and 232 of the Corporation Law. The court found the director failed to adequately examine critical financial benchmarks and valuations, barring him from corporate management for four years. The decision underscores the importance of directors fulfilling their duties in good faith and highlights the role of the Australian Securities and Investment Commission (ASIC) in enforcing corporate law. The case has both positive and negative implications for companies in Australia, encouraging legal compliance while potentially driving corporations to seek alternative ways to conduct business without direct legal violations. Desklib offers similar solved assignments and past papers for students.

Corporation Law on ASIC v Parker
[2003] 21 ACLC 888

Table of Index
 Introduction
 Facts of the case
 Duties of directors under Corporation Law
 Section in issue in the case
 Decision of the case
 Analysis of decision
 Relevance of decision for development of Corporation Law
 Impact of decision over the Operation of the Companies in Australia
 Conclusion
 References

Introduction
 ASIC have to undertake corporation law duties for
the economic interest of the public of Australia.
 Parker was defendant in the case.
 AISC brought the matter before the court for the
apparent violation of sections under which
directors have duty.

Facts of the case
 One of the director of QLS Superannuation Pty Ltd. passed the
loan of $2,500,000 to Mr Perdriau on July 1997.
 The director has to approve it only after independent verification
profit and loss account of Mr Perdriau, the examination of the
valuation done by Talyer Byrne about the assets and the land
value, cost of refit and refit and income yield.
 No such verification was carried out and violation of corporation
law was done.

Duties of directors under Corporation Law
Section 180
Diligence and care
in discharge of
duty.
Section 181
Priority of interest
of Corporation.
Section 182
Restriction of
improper
enrichment of
position of
directors.
Section 191
Disclosure of
personal
interest.

Section in issue in the case
 Section 181: Duty to act in good faith and to serve the
interest of the company- Non performance of independent
verification before approving loan.
 Section 191: Duty to disclose personal interest if any
involved- expressly stating the personal interest to other
directors that behind approving loan success fee is the
reason.
 Section 232: The power of the court to decide the case and
validity of action of director.

Decision of the case
Court found failure of director to examine:
 Verification of benchmark of 80% and expense ratio at not more than 45%.
 The value summited by Taylor Byrne valuers to Board of QLS Superannuation Pty Ltd.:
Asset and land value
Cost of refit and relet and
Income yield
 Obtaining true profit and loss account from accountant.
Directors of the company, the court barred the defendant director from
corporation for the term of four years

Analysis of decision
 Decision of court is based on sound balance of interest of
company and the applicable laws.
 The director’s guilty was evident from the involvement of him
in the success fess of loan approval.
 Such interest had to be disclosed beforehand but directors failed
to do so therefore decision of court to prohibit director for 4
years from management is reasonable.

Relevance of decision for development of Corporation Law
 Decision of ASIC v Parker [2003] 21 ACLC 888 was one of the
example of effective enforcement of applicable laws over
companies.
 The vigilance and seriousness of Australian Securities and
Investment Commission about its duties under the corporation law
will act as threat for the subsequent violators of the corporation.
 It will have deterrent effects for the peer companies for compliance
of legal duties.

Impact of decision over the Operation of the Companies in Australia
The decision have both positive and negative impact of the decision of the case
Positive Impacts:
 Includes attention will be drawn towards the compliance of legal formalities in all
the activities of the business.
 The litigations against the companies for the violation of the duties under the
various rules and laws will be limited to an extent.
Negative Impact:
 Corporation will go for finding the other ways in which they can run their business
without direct violation of the corporation law liabilities.
 The goal of the company for which it is working will also be affected by this.

Conclusion
 All the duties whether they pertain to administrative nature or in
relation to any other functions of the business must be carried out in
bona-fide faith only.
 The noncompliance of the corporation law have the consequences of
pecuniary and punitive nature as well.
 Being on the prestigious position in the organisation directors should
exercise each and every act should be dedicated to interest of the
corporation.

References
 Jade (2018). Australian Securities & Investments Commission, in the matter of QLS
Superannuation Pty Ltd (ACN 059 795 998) v Parker [2003] FCA 262. Available at:
https://jade.io/article/106852. [28 May 2018]
 Jones, R. M. and Welsh, M. (2012). Toward a Public Enforcement Model for Directors’
Duty of Oversight. Vanderbilt journal of transnational law.
 Keay, A. R. and Welsh, M. (2015). Enforcing breaches of directors’ duties by a public body
and antipodean experiences. Journal of Corporate Law Studies, 15 (2). 255 - 284.
 Nettle, G. (2014). The changing position and duties of company directors. Melbourne
University Law Review.