Applied Company Law: Analyzing Breach of Duty in Meeting Convening

This case study delves into the potential breach of Section 180(1) of the Corporations Act 2001, which pertains to the duty of care and diligence expected of company directors and officers. It examines a scenario where a failure to properly convene a meeting may constitute a violation of this duty, requiring an assessment of the responsible person's conduct within the specific context of the company's circumstances. The analysis considers factors such as the nature and size of the company's business, the composition of the board, limitations in management and financial reporting systems, and the distribution of responsibilities. The case study also touches upon the 'business judgement rule' under Section 180(2), which offers protection against liability under certain conditions, emphasizing the importance of documentary evidence like board papers and minute notes in demonstrating due diligence and care.

APPLIED COMPANY LAW

Table of Contents
MAIN BODY...................................................................................................................................3
Identifying the failure to properly convene a meeting ...............................................................3
REFERENCES................................................................................................................................1

MAIN BODY
Identifying the failure to properly convene a meeting
According to the section 180(1) of the corporations ACT, 2001. It states the civil
obligation regarding the duly care and diligence. It identifies the duties of directors and other
officers about the care and diligence (Vanko, 2017). It places an obligation on the officers and
directors of corporation must exercise and discharge their powers with due diligence and degree
of care which a reasonable person would exercise if:
1. They were officer and director in a corporation at time of the circumstances.
2. Occupied the office held with same responsibilities within the corporation as the officer
or a director.
This section does not apply to the non profitable commissions and Australian charitable.
A similar obligation are being placed on these charities under ACNC regulations.
According to this act duty requires a officer or a director to put themselves in a position
that can monitor and guide the management of the company efficiently. Also based on their
degree of knowledge make appropriate business judgement (Haar, 2017). To determine whether
there has been breach in the duty of diligence and care by a responsible person requires an
assessment of the conduct of the responsible person in the context of the company's specific
circumstances. The court will view the organisation's circumstance of the case by the case basis
that is it may include:
 The nature and size of the company's business operation.
 The composition of the company's board of directors and experience of individual board
members.
 The limitations of company's management and financial reporting systems.
 The manner in the distribution of responsibility is made between the employees and the
directors of the company.
However, protection against the liability under the section of 180(1) of the act is provided
under the section 180(2) of the corporation act, 2001. It mainly exists as to ensure that officer
and directors are not demoralized from taking the benefit of the opportunities which involves risk

taking responsibilities (Ramsay and Upadhyaya, 2020). However, it is applied only to business
judgements, that means in respect of matters related with the decision making of business
operations. As a responsible person it will be the duty of the directors to make appropriate
judgements in bonafide purpose and believes that the decision is best in the interest of the
company. The burden of proof lies in the directors and the officers who are seeking on the
protection provide under the best judgement rule.
At the time when the decision is made of whether the judgement rule is satisfied upon or
not is dependent upon the conduct and state of mind of the officer and the directors or the
responsible person. Documentary evidences such as board papers and minutes notes plays a very
crucial role in ascension of defence under the business judgement rule. With the effective board
papers and minute notes will help the responsible person in proving that an effective meeting
was conducted with due diligence and care. As minutes notes is a form of narration of all the
discussions and reasoning that were taken in the meeting.

REFERENCES
Books and journals
Vanko, K.J., 2017. Dissolution and Rational Choice: The Unique Remedial Framework for
Director Deadlock Under the Illinois Business Corporation Act. N. Ill. UL Rev. 38.
p.348.
Haar, B., 2017. Corporate governance codes as regulatory tools to advance stakeholder concerns
in the corporation. In Innovations in Corporate Governance. Edward Elgar Publishing.
Ramsay, I. and Upadhyaya, M., 2020. 'Carrying on Business in Australia': A Study of Court
Judgments. Australian Business Law Review. 48(6). pp.531-537.
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