Law of Business Organization: Director's Duties Case Analysis

This case study examines a legal issue concerning whether Banjo can take legal action against the directors of Aussie Boats Ltd (AB) for breaching their equitable and statutory duties. The analysis references the Corporations Act, particularly sections 180, 181, 184, and related provisions concerning director's duties of care, diligence, and good faith. The case involves AB's financial struggles and a proposed takeover bid by Millionaires on Water Ltd (MWB), where potential conflicts of interest arise. The document applies the legal principles to the facts, concluding that legal action may be possible if the directors are found to have breached their duties, potentially leading to penalties under the Corporation Act. References to legal scholars and case law support the analysis.

Running head: LAW OF BUSINESS ORGANIZATION
Law of Business Organization
Name of the Student
Name of the University
Author Note

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Table of Contents
Issue.................................................................................................................................................2
Rules................................................................................................................................................2
Application......................................................................................................................................2
Conclusion.......................................................................................................................................3
Reference.........................................................................................................................................4

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Issue
As per the case facts the issue is whether Banjo can take any legal actions against the
directors of Aussie Boats Ltd (“AB”) for breached their equitable and/or statutory duties towards
the company?
Rules
The corporation act has legislated in the Section 180 where the directors are to the acts of
duty with care and diligence. The section 181 has legislates that the directors are they must act
with good faith towards the other directors and employees of the company. They should use their
positions of the directors with every civil obligation for running the company and holding the
position of directors. It is also included in the section 184 that they must exercise their duties
with good faith and should not misuse their position or disclose any information of the company
which causes any bad effect or criminal offences toward the company. If the directors breached
the sections of 180,181,182,183 and 184 of the corporation act then the members of the board
can take any legal actions against them (Hiller 2013).
Application
As per the fact of the case when AB has failed to work on their business due to the lack
of funds they make some initial discussion with consultancy firm La La Loopsy Pty Ltd but it
failed to help in funding them. Therefore Aussie Boats Ltd (“AB”) has decided to buy up stock
from Millionaires on Water Ltd (“MWB”) where that company has owned 35%of shares with the
plan takeover bid imminent. However $500,000 of shares of La La Loopsy Pty Ltd in return for
the provision of a report on opportunities for AB to supply boats internationally and $1 million

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of shares to the public to be issued for the purpose of raising additional capital for expansion
purposes (Loewenstein 2015.).
Now MWB has also took the shares which help in reduction of 18% of sticks in exhibit
limited but Banjo who is one of the non executive director has found that the director of the
company Clancy and Jack has are acting really out of concern for their positions as MWB is
known to terminate the positions of executive director after completing take over (Lunn 2014).
Therefore according to the sections of 180,181,182,183 and 184 of the corporation act the
directors are bound to acts of duty with care and diligence, good faith, should use their positions
of the directors with every civil obligation for running the company, must exercise their duties
with good faith and should not misuse their position or disclose any information of the company
which causes any bad effect or criminal offences toward the company. Therefore reckless or
dishonesty activities should not exercise with intentionally (Coffee Jr., Sale and Henderson
2015).
Conclusion
However, according to the above discussion and the case facts it can be concluded that if
Banjo want to take legal action against the directors for breach the equitable and statutory duties
for being the director of the company then court can order for the criminal offences towards the
company (Lunn 2014). If it has found that the directors are liable for the breach the duties
towards the company then they can be finned with penalties under the section 1317E of the
Corporation Act.

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Reference
Coffee Jr, J.C., Sale, H. and Henderson, M.T., 2015. Securities regulation: Cases and materials.
Hiller, J.S., 2013. The benefit corporation and corporate social responsibility. Journal of
Business Ethics, 118(2), pp.287-301.
Loewenstein, M.J., 2015. Equity and Corporate Law. SMUL Rev., 68, p.783.
Lunn, B., 2014. Strengthened director duties of care for cybersecurity oversight: Evolving
expectations of existing legal doctrine. Browser Download This Paper.