Corporate Law Case Study: [University Name], Semester 1

This case study analyzes several aspects of corporate law. It begins with an examination of enforceable undertakings, detailing their purpose, recommendations for improvement, and their effectiveness in promoting public confidence in corporate governance. The study then delves into the principles of separate legal entity and piercing the corporate veil, using the cases of Salomon v Salomon and Co Ltd, Gilford Motor Co Ltd v Horne, and Jones v Lipman to illustrate these concepts. The application section explores a scenario where an individual attempts to use a company to avoid pre-existing obligations. Finally, the case study addresses secured loans and the rights of creditors, as well as the validity of proposed changes to company shares under the Corporations Act 2001. The study also touches on the importance of disclosing financial risks according to Australian Security Exchange rules. The references include relevant legal texts and case law.

Running head: CORPORATE LAW
CASE STUDY
Name of the student
Name of the university
Author note

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Table of Contents
Assessment 1 - Participation Activity 1.....................................................................................2
Assessment 1 - Participation Activity 2.....................................................................................3
Issue:......................................................................................................................................3
Rule:.......................................................................................................................................3
Application:............................................................................................................................4
Conclusion:............................................................................................................................4
Assessment 1 - Participation Activity 4.....................................................................................5
Answer to question 1..............................................................................................................5
Answer to question 2:.............................................................................................................5
Answer to question 3..............................................................................................................6
Reference:..................................................................................................................................6

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Assessment 1 - Participation Activity 1
Q: 1(a) valuable undertakings helps to increase the work health and safety process and
an opportunity to make organisational reform can be achieved in this process. Further, certain
communication can be done regarding insecure work practice.
Q: 1(b) there is certain criticism against this undertaking. It is moderately restorative
in nature and proper implementation of this could not be secured all the times.
Q: 1(c) it can be recommended that the design of the valuable undertakings should be
strict and certain regulatory provisions should be imposed. Further, besides the subject of
ASIC, such undertaking should be applied on every possible branches of the working criteria.
Q: 1(d) the main intention of valuable undertaking is to achieve outcome in WHS
policies. Further, if any breach has been made regarding any of the policies, it will take all the
required actions. Imposition of regulatory action may make the process sloth; therefore, the
recommendation may be ineffective.
Q: 1(e) valuable undertaking is more effective as it promotes the public confidence in
the corporate governance and makes the community aware of the acts and result of the
business classes in every sphere. Further, the compliance program could be improved in this
case.
Q: 2(a) Both the individual and company could give enforceable undertaking according to
the guidelines mentioned therein.
Q: 2(b) mainly enforceable undertaking deals with finance and company related
matters and in case any director of the company breaches to maintain the duty, certain
regulatory provisions will be imposed on them.

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Q: 2(c) the company could file a case before the court regarding all the breaching
provisions and if the work health and safety provisions have not been maintained, proper
obligatory process could be developed against the individual.
Q: 2(d) an enforceable undertaking could be regarded as supplement to the court order
and self-monitored investigation will be made in order to identify the breaching provision.
Q. 2(e) enforceable undertaking is a regulatory tool and it helps ASIC to take certain
positive steps in case of certain allegations made before it.
Assessment 1 - Participation Activity 2
Issue:
The main issue of this case is to determine whether the strategy taken by Janice can be
established or not.
Rule:
The main area under discussion of the case is based on the incorporation rule of the
company. Further, certain provisions of the case attract the provision of piercing the
corporate veil of the company. According to the common rule of the company, every
company is a separate legal entity and it will not be liable for any personal acts of its
members. However, there are certain rules for the incorporation of the company and
according to the rule; the company should be incorporated in good faith. If the provisions are
not being followed, then the separate liability principle of the company could be upheld. This
principle is known as piercing corporate veil. There are certain remarkable cases on both the
separate liability of the company and piercing corporate veil of the company. It has been
observed in Salomon v Salomon and Co Ltd [1897] AC 22 that the intention behind
incorporating a company should be fair and no employee of the company could not be held

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liable for debts of the company. This case supports the separate corporate liability of the
company. However, it has been mentioned by the court in Gilford Motor Co Ltd v
Horne [1933] Ch 935 that if any company has been formed to defraud others, the veil of
separate liability will be lifted. Further, in Jones v Lipman [1962] 1 WLR 832, it has been
observed that no company should be incorporated to conceal any true facts or it must not be
incorporated with an intention to avoid any pre-existing liability. In Gencor ACP Ltd v Dalby
[2000] EWHC 1560 (Ch), the court has observed that if any person corporate a company
with a view to diverted his assets to anyone with an intention to avoid any obligation, the
doctrine of corporate veil will not be applied in that case.
Application:
In this present case, it has been observed that an agreement to sell certain paintings
have been made in between Janice and Tim. However, before the day of payment, the painter
has been demised and the cost of the painting becomes high. However, Janice has made
certain strategy to avoid her obligation of sell those paintings to Tim. She wanted to
incorporate a company so that she could sell all the paintings and get the benefits of separate
liability of the company. However, according to the case of Gilford Motor Co Ltd v Horne, it
can be stated that the intention of Janice is to avoid the pre-existing obligations and in this
case, she could not take the plea of corporate separate liability. Further, according to the facts
of Jones v Lipman, it can be stated that Janice wants to conceal the facts of her previous
agreement of sale with Tim and therefore, she could not incorporate the company with an
intention to avoid all such liabilities. Further, Tim could argue the case in the ground of
piercing corporate veil of the company.
Conclusion:
Therefore, it can be stated that Janice could not take the plea of separate legal
obligation of the company. Further, if she has made any such claim, her statement will be

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denied on the ground of lifted corporate veil, as she wants to incorporate the company with
an intention to deny the pre-existing obligation made with Tim regarding all the paintings.
Assessment 1 - Participation Activity 4
Answer to question 1
According to the case, it has been observed that Infinity has taken loan from the
HealthPharm and the nature of the loan is secured one. Further, the company has to pay
certain security interest to the insurance company (Johnson et al., 2017). In this matter, it can
be stated that if the insurance company has become insolvent, it is their primary duty to pay
all the loan amount to the Infinity. The main reason behind the same is that their loan account
is secured. According to the provision on the secured loan in Australia, the loan holder will
get all the benefits if any mishap done with the insurance company. According to the
common law on the secured interest, it helps the creditor to exercise his rights over the
property of the debtor if the debtor has done any default. On the other hand, the creditor is
under an obligation to pay off the loan amount to the debtor in all cases.
Answer to question 2:
According to the facts of the case, it has been observed that the director and manager
of the insurance company have proposed to make certain changes in the share of the company
and they have mentioned certain classes. Such kinds of steps could not be valid, as it will fall
under the provision of derivative action. According to section 232 of the Corporation Act
2001, if a company does certain things that opposes the interest of its members or if the acts
of the company are oppressive in nature or unfairly discriminatory against the interest of the
members, the court can prevent the company to make such rules (Coffee, Sale & Henderson,
2015). In this case, the directors have decided to divide the share of the company in class A
and class B share. in this case, the associates of the corporation has no profit. Further, in this

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process, the director of the company is violating the provision of section 181 of the
Corporation Act 2001. Therefore, it can be stated that the proposed resolution could not be
validated.
Answer to question 3
According to the rule of Australian Security Exchange, the company should have to
disclose all the financial risks attached to any process. Further, the company could disclose
how much the investors will be affected by the risks (Duffy, 2018). The value of the entity’s
securities will be fall under the provision of disclosed obligation.

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Reference:
Coffee Jr, J. C., Sale, H., & Henderson, M. T. (2015). Securities regulation: Cases and
materials.
Duffy, M. (2018). Australian Private Securities Class Actions and Public Interest: Assessing
the'Private Attorney-General'by Reference to the Rationales of Public Enforcement.
Fowler, A. C., Baker, M., & Geraghty, S. (2017). Is faculty practice valuable? The experience
of Western Australian nursing and midwifery academics undertaking faculty clinical
practice-A discussion paper. Nurse education in practice, 26, 91-95.
Gencor ACP Ltd v Dalby [2000] EWHC 1560 (Ch)
Gilford Motor Co Ltd v Horne [1933] Ch 935
Holley, G. (2014). Lessons learned from enforceable undertakings (EU). Government
News, 34(4), 546.
Johnson, R. A., Wild, K., Inforzato, S. K., & Hinaman, T. (2017). U.S. Patent No. 9,596,077.
Washington, DC: U.S. Patent and Trademark Office.
Jones v Lipman [1962] 1 WLR 832
Salomon v Salomon and Co Ltd [1897] AC 22

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