Analysis of Director's Duties & Loan Enforcement Under Corporation Act

This case study examines a scenario involving the enforcement of a loan under the Corporation Act, focusing on sections 128 and 129 concerning statutory assumptions and director's duties. It analyzes whether a loan can be enforced against a company when a director acts without the explicit knowl...Read More

PROBLEM BASED
QUESTION

Table of content
Issue...................................................................................................................................................3
Rule...................................................................................................................................................3
Application........................................................................................................................................4
Conclusion.........................................................................................................................................5
Issue...................................................................................................................................................5
Rule...................................................................................................................................................5
Application........................................................................................................................................6
Conclusion.........................................................................................................................................6

INTRODUCTION
Legal system is an important aspect of the society as it helps out to indicate in reflect
all the attributes through which a person can behave and manage their work. Law provides a
method of working and also protect the rights of individuals from any kind of offences and
harm. It is being seen that Australian law cover all the uniform legislation through which
rights Are being protected for all the unfair contractual terms. The Corporation law in
Australia consist a framework of single legal structure through which all the regulatory
authorities are being managed this implies a principal legislation through which all the
business entities use to regulate their functions in Australia. This also cover all the matters
related to operation in companies and formation, fundraising, takeovers, duties and many
more (Aroney, 2018). In this report there will be a discussion on a case scenario within
exemptions for section 129 of Corporation act and the general exception of section 128.
Further it will also cover the rights of director or officer in case of any breach by establishing
new company.
MAIN BODY
Issue
 Whether the loan can be enforced by our way Pty Ltd against Solar yes Pty Ltd?
Rule
Section 129 of Corporation act provide and assumption through section 128 where
the person there may assume that the officers and also the directors of the company are
performing their duties in a proper manner and documents that are being executed by them
will be without any seal. Here it is an assumption that companies constitution in all the acts
that are being applied with replaceable rules or compliant under the Company Secretary and
directors assent. Any person Who thereby appears in order to provide information that is
being available for the public through a SIC is being duly appointed and also has the
authority in order to exercise power and perform all the customer early exercise areas through
which company secretary and the works are being incorporated (Chandra, Duri, and Smith,
2019). As according to section 129 all the duties that are being performed by the directors are
assumed to be legal and properly executed. The documents that are been signed by any of the
director Will be treated as the final and legal applicability. Section 128 and 129 incorporation
act used to provide deals in the company as dealing with company can make someone who
was there by having an ostensible authority and can negotiate on behalf of any of the
organisational areas and company need not to be with any person who has actual and

ostensible authority. It is complied on the statutory assumptions through which all the
relevancy in the documents are being made. It complies that all the shareholders, banks and
other areas used to rely on the statutory assumptions which were being made in section 129
of Corporation act 2001 through the review of documentation which are being signed by
guarantors, borrowers and other counterparties. This implies to provide force of guarantees
when there is no corporate benefit and in case of forgery. Section 128 is interlinked with the
assumptions that are being given in 129 while dealing with any of the accountable areas of
the company. As in the case of New Zealand banking group Ltd v. Adventure Quest Paintball
Pty Ltd all the circumstances in which the third parties were entitled to manage certain
assumptions while dealing with the company will be based on the Corporation act. Supreme
Court of New South Wales in Australia held that all the loan agreements which are being
signed by one of the directors was forged (Hamilton, and Nichol, 2021). It is also considered
that recovery procedure against any such claims can be made through all the loan agreement
and statutory exemptions which are being made under section 129. Court held that they have
to satisfy the parties regarding the section 128 for the assumption that are being made under
section 129 for the company’s director and their engagement while performing any act in the
loan transactions. It was being held that all the loan agreement that are being executed under
Corporation act will be entitled for the provisions of security and in general existing
guarantees. All the provisions that are being laid under section 128 and 129 will be through
the management of rule of companies that all the functions which are being made by the
companies are protected and entitled with the complied internal rules (Trakman, 2018).
Application
As in this case scenario Our Way Pty Ltd can enforce loan against Solar Yes Pty Ltd.
There has been seen that as according to assumptions of section 129 clause four it is
important that the parties are performing their duties for the company in a proper manner and
while the actual and the ostensible authority is being given by the company to the directors
then they me act on their own interest and also on Contrary for the interest of other matters.
As Mrs Phillips was performing her duties with the company and the proposed guarantee was
not for the company’s interest it was being entitled as a corporate benefit so it can be relied
according to the assumptions of section 129(4) about all the directions and purposes being
raised here while dealing with someone who has having an authority to relied on will be
taken as authentic and valid. And they can ask for money and loan as the important in the
possible dealing in the company is their documents and the other is the statutory assumptions

which are being made while making any deal Mrs Phillips has the authority to deal as she
was a director of the company and there wasn’t statutory assumptions between them that she
can deal be in behalf of company so as according to the diligence procedure which is being
made in the execution of guarantees for the documents can be alleged and managed. Our Way
Pty Ltd Is entitled to take the loan against solar yes Pty Ltd there was no breach from their
side and they rely on the documents which are being given by Mrs Phillips and her signatures
as on behalf of the director of company as all the registration procedure did which are being
made by her was according to the assumptions and the exceptions that are being raised under
the Corporation act (Keck, and et. al., 2019). Thus in this case even though Mr Antony was
not being aware about the act which were being done by Mrs Philip and all the loans and
shares for which Mrs Phillips made a contract with our way Pty Ltd. They will have to pay
the loan as it was being made under the provisions of Corporation act where the assumptions
and regulations are being constituted through the rules for the company secretary and their
duly promised service (Wangmo, 2018).
Conclusion
This can be seen that in this case scenario section 129 of corporation act along with
the statically assumptions which were being made under 128 clause four are being idealised
as this is being suspected that all the performance with actual knowledge is an exception
under the common law in the investigation regarding to the contract and matters. All the
statutory regime and operation in section 129 will relate to the actual authority in the standard
of due diligence procedure is being made for the guarantee regarding the document and the
situations through which all the dealings are being made in the company. All the relevant
activities which are being performed in the company with proper documentations are being
considered as legal.
Issue
 Whether Mrs Phillips and Mr Philip breached any duties of director or officer while
establishing new company?
Rule
There are some important duties of directors under Corporation law in Australia in order to
manage the strategic direction for the benefit of organisation. They are like:
 Duty to act with reasonable diligence and care in order to manage a practice through
which a proper care and caution can be made.

 Duty not to improperly use any kind of information or position of their work in the
company (Mackie, 2018).
 Duty to act in good faith for the best interest of company and also the purpose should
be proper and valid.
 Statutory duty to manage all the financial services along with the environmental law
and also to practise all the health and safety measures for the employees.
 Duty to prevent all kind of insolvent trading.
 Statutory duty to manage all the relations with the financial records and also for
keeping general reporting with their work.
 Duty to avoid all kind of conflicts of interest in their general manner and working
principles (Martin, and et. al., 2018).
 Duty to be loyal towards the organisation and also to ensure that all the potential
conflicts and other issues in the boards can be avoided and there should not be any
kind of issue regarding the directors and their identified circumstances.
 Duty to ensure all the policies which are being given and to turn in order to protect the
organisational asset which are being updated in a regular manner.
 Duty to involve the liability coverage for the level of director and also to determine
different selection and other methods and operations.
Application
In this case Mrs Philip has breached the duty of loyalty as she has shown her personal
interest in order to start a new company by approaching the clients and without giving any
idea to Mr Antony which made it quite difficult for the organisation as they had to pay the
loan on behalf of Mrs Philip. There is being seen that she’s been liable for all the breach she
had done with the organisation for her personal gains and interest without even letting know
the other board member about her ideas for her personal interest and gain (Terrill, and
Boutilier, 2019).
Conclusion
This can be seen from the above case that a breach of directors’ duty will imply to
make them to effect with the issues and when the director of the officer uses their position or
any kind of information in an improper way this will affect the company and will make them
liable for the breach under the Corporation act. As all the directors are needed to act in good
faith and for the best interest in the corporation with a proper purpose, they should not use
any information in an improper way for their personal interest.

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