University Law: Company and Association Law - ASIC v. Cassimetis Case

This case study analyzes the legal issues arising from the ASIC v. Cassimetis case, focusing on breaches of the Corporations Act 2001 by the company's directors. The study examines the directors' duties under sections 180-184 of the Act, particularly section 180(1), concerning the standard of care and diligence owed to shareholders. The case involves allegations of misconduct, non-disclosure of financial risks, and the directors' failure to act in good faith, leading to financial losses for shareholders. The analysis explores the application of relevant legal principles, including the significance of director's obligations, the protection of shareholder interests, and the consequences of breaching these duties. The study references relevant case law, such as ASIC v. Adler and ASIC v. FMG, to support the arguments and legal interpretations. The conclusion affirms the court's judgment against the directors, emphasizing their responsibility to adhere to the Corporations Act and maintain a balance between risk and prosperity within the company.

Running head: COMPANY AND ASSOCIATION LAW
Company cases
Name of the student:
Name of the university:
Author note

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Part A
1. Issue:
In the present case, there are certain issues cropped up regarding the dispute raised in the
case of ASIC v. Cassimetis. The issues can be categorized as follows:
 The first issue is whether the directors of the alleged company had made breach
against any provisions of the Corporation Act 2001 or not.
 The second issue is whether the Directors of the company, Mr. & Mrs. Cassimetis
had followed up every duty mentioned under the provision of the Corporation Act
or not (Aroney et al 2015).
In the case of the Cassimetis, certain provisions of the Corporation Act 2001 should be
followed up. A brief Observation of the case reveals the fact that a serious breach has
been done by the directors of the alleged company. Australian Securities and
Investigation Commission have made an allegation against the acts of the company
towards its shareholders and the following issues are cropped up thereby (Barnett 2017).
2. Relevant laws:
The core of the case is based on certain principles of the Corporation Act 2001. The
applicability of the Act in the continents of Australia is wide in nature. Corporation Act is
a general Act deals with the various aspects of the company related matters in Australia.
Allegation that brought against the company enlightens the provision of the director’s
duty that is particularly mentioned in section 180 of the Act. The duties of the directors
are mentioned under section 180 to section 184 of the Act. In this case, section 180 (1)
will be applied (Berk et al 2013).

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It was contended in the case of Australian security and investigating Commission vs.
Adler that the position of Corporation Act should rely upon certain sections that I deal with
the director duty. The case is solely depend upon the provision of directors duties. Certain
principles of Corporation Act was accepted in that case.The problem regarding the directors
duties are a common problem in the societies of Australia. It should be kept in mind that
Australia is a business country. Under the Corporation Act it has been stated that directors
owe an important position in a company. It is there duty to maintain a professional
atmosphere while performing their job. A director must make a bridge between the company
and the shareholders (Blair 2015).
It is stated under the provision of the Corporation Act that it director should show certain
care and diligence to the shareholders.He must do his duties with good faith. However there
are certain situations, where it can be seen that the directors are not maintaining that part of
their duties. Section 180 subsection (1) it has been mentioned that directors should not misuse
their post at any cost. It has also been mentioned that the directors should have to retain the
prestige of their post. He is under the liability to devote his duties and responsibilities towards
the interest of the company and he is also under the liability that he will not feather his own
nest (Chia, & Ramsay 2015).
There are other sections under the Corporation Act that are specifically deals with the
matter of a director's obligations. Under section 184 of the said act it has been written that a
director ought to remember that he is holding a prestigious post.He should not coerce any
other person for attending his self interest (Coffee et al 2015).
The provision of Corporation Act is widened in nature. In Australia it is very common
that the directors from the financial sector are engaging themselves in a illegal way and try to
Breach their duties regarding the same. there are a number of cases where the related the

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relatedmatters take place. In case of Australian security and investigating Commission vs
FMG (2011) it has been observed by the learned Court that if there is an allegation against a
director of a company that he has received the shareholders of the company for some illegal
purposes that is related to his own interest then the provisions of section 1041H will be
applied. It was held by the court that if the allocation was proved by evidences the director
will be held guilty of the offence and he should be convicted under the section of 1041 eye of
the Corporation Act 2001. However the nature of the penalties is civil. The court held that
along with the civil penalties the director can be imposed with certain monetary penalties that
are in engraved under section 674 sub section 2 of the said Act (Crane & Matten 2016).
The present case is solely based on the principle that is laid down under section 180 of the
Corporation Act. It has been stated under the act that the rules and norms of the act is
applicable upon any kind of directors of a company. There is no limitations of exceptions
mentioned under the section. Are closed interpretation of the section stated that the rules of
the section is also applicable on the sole directors of a company. The ultimate objective of
section 180 of the actors that it is taking an attempt to secure the interest of the shareholders
of a company as they are playing an important role in the economic benefit as well as the
establishment of a company. Therefore it can be said that the shareholders are in wasting their
money to buy the share of the company. These activity are supposed to give a strong support
to the economic backbone of the company. Under the Australian law, it has been stated that
the interest of the shareholders are not going to be excused at any cost. The directors are
under the application that the interest of the shareholders should not be diminished at any
cost. It is also a duty of a director of a company that he must disclose all the essential
documents that are related to the interest of the shareholders and should not hide any
information from the shareholders so that their interests can be suffered by such things. It is a
director's Duty 2 state about the risks of a financial sector so that the shareholders can

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understand the negative as well as the positive impact of the investing money (Dawkins
2014).
The supreme court of Australia has passed a strict rule that is an allegation has been made
against a director of a company that he does not this close all the facts and documents of the
financial project and having the shareholders to invest in the project he should be guilty under
the provision of section 180 of the Corporation Act 2001. It should be noted that the amount
of loss is not get any importance in the non disclosure case. In Australian Security and
Investigating Commission vs Hellicar&ors. (2012), it was stated that the provisions of
section 180 of the Earth is not Limited up to the statutory duties of a director of a company
and the nature of the position of the section is quite wide (Ferran & Ho 2014).
3. Application:
All the relevant rules and laws mentioned under the Corporation Act will be applicable in
the case of Cassimetes. The Australian security and investigating Commission had taken
allegation against the company that the directors of the company coerce the shareholders and
without abide by the rules of the Corporation Act he allowed all the shareholders to invest
their money into the project that is particularly known as the storm project. It has been seen
that the company was faced serious breakdown in the financial sector and all the money is
invested by the shareholders were drowned. Certain contention has been made by the director
of the company that the provision of section 180 of the Corporation Act will not be applicable
in their case as they are the souled director of the company and under the provision of section
180 there is no Express provision where it has stated that the rules of section will be
applicable on the soul directors. The Australian security and investigating Commission
amazed that the director of the company has failed to perform his duties as per the provisions
stated under the Corporation Act. It was also stated that the directors were coerce the money

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of the shareholders and without informing them about the risk of the project, collecting
money from the investors and after the break down in the financial sector of the company,
they had not made any attempt to investigate into the condition of the shareholders the money
of the shareholders and without informing them about the risk of the project collecting money
from the investors and after the break down in the financial sector of the company they had
not made any attempt to investigate into the condition of the shareholders. Most of the
shareholders where from middle class family and after their investments were faced a huge
loss, then became insolvent. 48 can be stated that the directors of the company has not follow
the rules of the Corporation Act and has failed to perform their duties with due care and
obligation (Ferrell & Fraedrich 2015).
Other hand It was also stated that a director who is holding a serious post in a financial
corporation shoot state about the rest of the investment to the shareholders and if he failed to
perform the shade duty in a proper way he shall be liable for the breach of Duty under section
180 of the Corporation Act. In ASIC vs FMG, the same principle was laid down. In ASIC vs
McDonald (2009) it was stated that a director should disclose the relevant materials to the
shareholders and the provision is mandatory in nature. Section 184 of the Corporation Act it
has been stated that the director shoot from their duties in good faith but in this case it has
been seen that the directors of the company has not made any attempt to secure the interest of
the shareholders after the break down in the financial sector and for that reason the
shareholders, who are from the middle class families, become insolvent due to the non
professional action of the directors of the said company (Hargovan 2017).
In this case the provision regarding the director’s duties has been interpreted with certain
jurisprudential mentality of the judge of the case. It was observed by the court that section
180 of the corporation of has taken an attempt to secure the interest of the shareholders of the
company and it is restricting the directors to misuse the post or chair in certain illegal way.

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As per evidences given by the Australian securities investigating commission and the
examination of the witnesses who are supported the evidences identified by the Australian
security and investigating Commission, the court held that the directors of the strong
company was liable under the section of 180 of the Corporation Act and had failed to perform
their job properly and therefore the court at their judgement against the directors of the
company. It is the ultimate duty of a director of a company to maintain a balance between the
risk and the prosperity of the company, but in this case it has been seen that the directors of
the company has failed to make the balance and after the break down in the financial sector
they had not even perform their job in good faith (Hedges et al 2016).
4. Conclusion:
Therefore, from the following facts, it can be stated that the judgement made by the court
as against the director of the company is justified and proper in nature and it is the duty of the
director to maintain the rules provided under the corporation out and in case of any failure by
the director of the company the provisions of section 180, section 182, section 183 and
section 184 of the Corporation act will be applicable on them (Keane & McKeown 2014).
PART B
(a)
The case matter of part B is based on the rules of proprietary company. The company
related matters in Australia is dealing by the several provisions of the Corporation Act 2001.
In proprietary company the rules regarding the directors is regulated by the provision of
section 201H of the Corporation Act. Under the proprietary company the common rules that
every partner of the company has a right to be a director of the same and they can hold shares
in that company either equally or as per decided by the directors of the company. The rules

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regarding the common activity of the company as well as the directors of the company are
governed by the constitution of the same. A constitution is a book that consists of certain
norms that are mandatory in nature and imposed on the each and every part and staff of the
said company. In case of any changes into the profession of the Constitution of the company
it is important to hold a resolution regarding the same and it is mentioned under the provision
of Corporation Act, such resolution should be supported by 75% of votes. It should be kept in
mind that in the voting arena, both the directors and the shareholders of the company has a
right to take participation and in case the rule is avoided by any of the directors, they will be
liable under the necessary profession of the Corporation Act (Laing, Douglas & Watt 2015).
The question is based on the appointment of the director of the proprietary company
and the removal of the director from the post. Under section 201 age of the corporation at it
has been mentioned that the appointment of the director in such proprietary company should
be followed up with certain rules and one resolution process should be maintained regarding
the same and it is a right of the Other directors who can appoint another director. In this case
it has been observed that 4 siblings were formed the proprietary company and appointed
themselves as the board of director of the shirt company. Under the section it has been
mentioned that once a director is appointed certain rules should be maintained regarding the
removal of such director from the post of directorship. It has been stated earlier that Australia
is a business country and the provision regarding the company as well as the corporation of
Australia the provision of the Corporation Act 2001 is applicable. It is a fact that there are
number of cases pending before the court regarding the breach of Duty by the director of the
company as well as certain illegal steps taken by the director of the company that are
unprofessional in nature and create serious impact on others. Therefore an initiative has been
taken by the government of Australia to make the rules regarding the composition of the
companies as well as the director’s duties more stricter (Langford 2015).

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Regarding the removal of the director from the post it has been mentioned that rules
contained under the constitution of the company should be followed up. In the given problem
it has been observed that the company of the case has also a constitution and in the class 9 K
of the constitution procedures for the removal of the directors from their post has been
mentioned in a proper way. However one of the director of the company named Kanye has
been removed from his post without following all the norms mentioned in the constitution.
She was removed from his post by the other directors of the company. Under section 229H
subsection (1) of the Corporation Act voting system should be held regarding the removal of
the director and in that system but the shareholders and the directors will cast their vote
against the director and before the voting program an extraordinary General Meeting should
be held up. In case if the members of the company are agreed upon the fact that the director
should be removed from the post they will cast their votes and the decision of the boat shall
be submitted to the alleged director in the form of a notice and as per section 249A of the
Act, the notice should contained certain signature of the consenting parties. These rules
should be followed irrespective of the constitution. In the present case it has been mentioned
that the constitution allows all the directors of the company to continue the post until the
winding up of the company. However rules stated under the constitution has not been
maintained by the directors of the company in case of Kanye. Even there is no Express
profession stated in the case law that all the others profession that is stated above has been
maintained regarding his removal. Therefore the removed director has every right to take
certain necessary steps against the other directors of the company for the illegal removal from
the company. There is another rule proposed by the Australian securities and investigating
Commission that Form No. 484 should be filled up properly regarding the removal of a
director from his post. However in the present case, there is no mention about the form and

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therefore it can be stated that Kanye was removed from his post illegally (Langford, Ramsay
& Welsh 2015).
The statement regarding the share of the removed directed in the company is also a serious
concern in this case. As per the law regarding the proprietary company, every director has a
right to hold certain shares in the company. It is there right to hold certain shares in the
company and the right should not be snatched away from them if any of the directors were
removed from his directorship. If an attempt has been made to deprive the removed director
from the shares then it will be treated as legal and certain steps can be taken against the other
directors. Section 196 of the Corporation Act 2001 deals with the director’s interest over the
share issue and in case of any violation regarding the rules the affected directors can take
necessary steps as per the rules provided under the Corporation Act 2001 (Pearson 2016).
(b)
In case of proprietary company also the director’s duties should be maintained in a
proper way. The directors of the proprietary company also held liable if there is any breach
made in these duties. The position of section 180 of the Corporation Act is wide in nature and
it has been mentioned under the provision that the director of a company should show
reasonable care not only to the shareholders but also to other directors as well as the
colleagues of the company. The directors of the proprietor company should be act in diligent
while performing the job and they will be under an obligation of the necessary provision of
the Corporation Act 2001. In a company is internal as well as external affairs directors are
playing an important role and the fate of the company is very much reliable on the acts of the
directors. A company’s reputation is very much depending on the director and it is their
utmost duty to perform their job in good faith. However, a laxity has been observed in this
case two of the directors of the company have decided to open a new company without

10COMPANY AND ASSOCIATION LAW
informing the other two of the directors. This act of the directors cannot be stated as a diligent
act. Section 182 and section 183 of the corporation at will be applicable in this case (Rahim
& Alam 2014).
Under section 182 of the corporation at it has been mentioned and clarified that a
director should not misuse their post at any cost. It is also a duty of the directors that no
Bridge has been made easy by them or by any of the director of the proprietary company. The
directors are under an obligation not to act in such a way so that the interest of the company
can be harmed. They should maintain the professionalism in the company and should disclose
all the relevant documents and fax to the shareholders as well as the other directors of the
company. However in this case there is a bridge has been made by the earliest directors as
they had not involved other two directors into their plan and they had decided to incorporate
another company that will be of similar in nature to that the present company. The
Companies Act of Australia will restrict them regarding the opening of a similar company
(Roach 2016).
As per the contention made under section 183 of the Corporation Act, a director of a
company is under a liability not to gain any legal advantage from the company. It is the duty
to avoid such steps for the betterment of the future of the company and should not let them
involved in such situation. India recent case it has been observed that the Provisions of
Corporation Act has not been maintained properly and the alleged directors should be held
liable under the necessary provision of the Corporation Act. It has also been stated under the
Corporation Act that if allegation has been made against a director/ directors that he or they
had breached the provision of the Corporation Act they shall be held liable and prosecuted
under the section of 1317E of the Corporation Act (Sealy & Worthington 2013).

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