University Corporation Law Assignment: Derrick's Actions and Breaches

This case study analyzes a situation involving Derrick, the director and CEO of Shamrock Ltd, a public listed company. The core issue revolves around whether Derrick breached sections 182 and 183 of the Corporations Act 2001 (Cth). The analysis examines Derrick's actions, including instructing his stockbroker to purchase shares in his mother's name to influence the share price and qualify for a bonus, and using company information for personal gain. The study references relevant case law, such as ASIC v Southcorp Wines and MG Corrosion Consultants Pty Ltd v Gilmour, to determine if Derrick misused his position and information for personal benefit and detriment to the company. The conclusion finds that Derrick did breach sections 182 and 183, highlighting the importance of directors adhering to their duties.

Running head: CORPORATION LAW
CORPORATION LAW
Name of the Student:
Name of the University:
Author Note:

1CORPORATION LAW
ISSUE:
The matter of disputes arising out in the given case studies is that whether a breach of
sections 182, 183 has committed by Derrick.
Law:
The Corporations Act 2001 (Cth) provides the duties of the directors of the company and
they are held liable in case of violation of those duties. Sections 182 and 183 of the said Act
provide the civil obligations of the directors (Chapple et al., 2018). Section 182 of the Act states
that the director of any company shall not use his position or seat in an improper manner to cause
any undue gain for himself which can result into loss or detriment to the company. The breach of
this section attracts the civil penalty provision laid down in section 1317E of the Act. The breach
of section 182 was seen in the case of MG Corrosion Consultants Pty Ltd v Gilmour [2014] FCA
990 which shows that the Gilmour, the director misused his position for gaining undue benefit
for himself.
Section 183 of the Act states that it is the duty of the director of a corporation that he
must not seek information for using it in an improper manner with the aim of gaining an undue
advantage for him or anyone else. The section also provides that the director has a duty of not
using any information which he got by virtue of his position in the company for causing
detriment to the company. The breach of this section also attracts the civil penalty provision laid
down in section 1317E of the Act. The case of ASIC v Southcorp Wines 203 ALR 627; 22 ACLC
1 shows that the directors have breached the provisions enumerated section 183 of the Act. In
another case of ASIC v Vizard (2005)145 FCR 57 it was observed Vizard formed a family trust

2CORPORATION LAW
which his accountant used to manage. He then bought share for his firm by using information of
Teltra. Proceedings were begun by ASIC alleging that he had breached his duty of avoiding any
kind of conflict of interest. It was held that Vizard admitted his liability for causing the breach of
section 183 of the Act and he was ordered to pay about 400,000 $ as penalties. Similarly, in the
case of MG Corrosion Consultants Pty Ltd v Gilmour, the director Gilmour was found to breach
section 183 by misusing information which he received by virtue of his position gaining
advantage at the cost of the company.
Application:
In the present case, it is observed that Derrick was the director as well chief executive
officer of a public listed company called Shamrock Ltd. As per his employment contract, he was
entitled to fixed monthly salary together with a bonus provided the share price of the company
amounts to 2.00 $ per share by the financial year end. Moreover the Share Trade Policy of the
company states that Derrick must not involve in purchasing or trading of shares of the company
unless and until such has been approved by board’s ordinary resolution. He was aware of it as it
was read and also accepted by Derrick as a condition of his contract of employment with
Shamrock.
On the last day of the financial year, Derrick gave instruction to his stock brocker to buy
shares of the company in the name of his mother at the market value. This showed that he
breached the employment contract to incur personal gain as in ASIC v Southcorp Wines 203 ALR
627; 22 ACLC 1.
Due to the purchase the share price of the company increases due to which Derrick
became eligible to bonus. However this was not informed to the company Board and he received

3CORPORATION LAW
1,000,000 $ as bonus. This showed that Derrick though prohibited purchasing shares of company
but he did so although in his mother’s name. Moreover he used his position to seek information
of the company that the price of the shares would increase in case shares were bought at the last
day of the financial year. Moreover, he bought them in his mother’s name. All these show that
the intention behind his act was to gain personal benefits in the form of bonus which was
detrimental to the interest of the company. Thus it is seen that the provisions enumerated in the
sections 182, 183 were breached as he used his position to seek information of the internal
matters of the company to gain personal benefit as well as for his mother and this led to the
detriment to the company’s interest. Thus Derreck breached his obligations as in the case of MG
Corrosion Consultants Pty Ltd v Gilmour.
Conclusion:
Thus a perusal of the rules of law enumerated above and its application to the facts of the
case, it can be inferred that a breach of sections 182, 183 has committed by Derrick.

4CORPORATION LAW
References:
ASIC v Southcorp Wines 203 ALR 627; 22 ACLC 1
ASIC v Vizard (2005)145 FCR 57
Chapple, L., Gray, S., Nowland, J., & Sadiq, K. (2018). ‘Name and shame’–director attendance
disclosure and practice. Journal of Corporate Law Studies, 18(2), 311-337.
Corporations Act 2001 (Cth)
MG Corrosion Consultants Pty Ltd v Gilmour [2014] FCA 990.