LAWS3100 Corporations Law Exam: Director Duties and Oppression

This assignment provides a comprehensive analysis of Corporations Law, focusing on director's duties and shareholder oppression. It addresses two key issues: whether Basher and Wallace were unfairly treated and oppressed under the Corporations Act 2001 (Cth), examining sections 232, 233, and 234 regarding oppressive conduct and potential remedies such as winding up the company or modifying its constitution. The second issue explores whether Cass and Barry can use their powers for the benefit of the company, referencing sections 181, 180, 182, 183, 184, and 191 of the Corporations Act 2001 (Cth) related to acting in good faith, due care, and avoiding improper use of information or position. The assignment concludes that Wallace and Basher can apply for an order regarding oppressive conduct and that Cass and Barry are positioned to keep development work on hold based on their assessment, providing a detailed legal analysis with references to relevant legislation.

Running Head: CORPORATIONS LAW
CORPORATIONS LAW
Name of the Student:
Name of the University:
Author Note

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Answer One:
Issue:
In the given set of circumstances, the issue is to identify whether Basher and Wallace had
unfairly treated and oppressed.
Rule:
The Corporations Act 2001(Cth) lays down the rules and the regulations which are binding upon
companies in Australia. It has been provided in section 232 of the Corporations Act 2001 that a
court has the power and authority to make an order under section 233 if the court believes:
 The conduct of the affairs of the company
 An actual or proposed omission or act on behalf of the company
 The proposed resolution or a resolution of the members of the company or a class of
members of a company
 is either contrary to the interests of the members
 Oppressive to, unfairly discriminatory to or unfairly prejudicial against the members in
any capacity.
In section 233 of the Corporations Act 2001(Cth), it has been provided that the court has the
authority or power to pass an order in relation to the affairs of the company. The court can pass
the following orders if it feels a company or corporation has engaged in oppressive misconduct
of affairs:
 An order to wind up the company

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 An order to repeal the constitution of the company or direct the company to modify the
existing constitution of the company.
 An order regulating the affairs of the company in the future
 An order for the purchase of shares by any person or member to whom a share has been
transmitted by operation of law or by the will of a deceased person. An order for
purchasing the shares with an appropriate reduction of the companies’ share capital.
 An order for the company to prosecute defend and Institute specified proceedings
 An order authorizing a person or a member to whom I share has been given by the
operation of law or by will of a deceased person for the purpose of prosecuting defending
are discontinuing specified proceedings on behalf of the company.
 An order restraining of person to do a specific act
 Under which requires a person do the specific act. In sub section 2 of the
aforementioned act it has been provided that in case the court orders for winding up a
company, the provisions of winding up of companies would apply which has been
provided under section 461.
 It has been for the provided in subsection 3 that in case of court orders for repairing or
modifying the constitution of a company or requires the company to adopt a new
constitution, the company will not have the power under section 136 to change or reveal
the constitution if such BP low change would be inconsistent with the provisions of the
order.
In section 234 of the corporations act it has been provided that an application for an order under
section 233can be made by

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 any person was a member of the company even if the application relates to an omission
or an act that is against another member in their capacity.
 Any person who has been removed from the register of members because of reduction in
the number of members
 Any person who is used to be a member of the company only if the application is related
to the circumstances in which the person ceased to be a member.
 Any person who has been transmitted by will a share in the company by operation of law
 Any person whom the ASIC thinks appropriate, regarding the investigations conducted
by it
Application:
Thus by analyzing the facts of the given case study, it can be stated that Wallace and Basher can
apply for passing an order of oppressive conduct of Affairs in accordance with the provisions of
section 234. It has been provided that they had inherited shares from Dan and Gerry, the
founders Darn Good Development Pty Ltd (DGD) by their will. The court will decide the future
or course of actions by determining the conduct of the company’s affairs. As provided in section
233 the court can pass an order of winding up the company. The court upon receiving the
application can also pass an order directing the company to repeal or modify the constitution of
the company. It is worth noting that modifying the constitution in this case would be the suitable
option as that would resolve the dispute regarding the issuance of shares among the members and
subsequently their control over the affairs of the company.
Conclusion

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Thus to conclude, it can be stated that Wallace and Basher can apply to the court for passing an
order of oppressive conduct of Affairs in accordance with the provisions of section 234.
Answer Two:
Question 2:
Issue:
The issue in this case is that, whether Cass and Barry are in the position to use their
powers for the benefit of the company.
Rule:
It is evident that, a number of fiduciary duties are imposed by the Corporations Act 2001
Cth. In this regard, it is noteworthy to mention here that, the Queensland Government, in such
process has established a number of companies operating under certain departments. Therefore,
it is important for the directors to comply with the duties incorporated under the Corporations
Act 2001 Cth. Under the provisions of common law, directors must adhere to the common duties
assigned to them. N this regard, it is important to categorize the duties of the directors under the
Corporations Act that are-
I. To Act in good faith and for the purpose assigned to them.
II. To act in accordance with due care and diligence.
III. Not to involve in improper use of information.
IV. Avoiding improper use of position.
V. Disclose matters for the interest of the company.

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According to the provisions of Section 181 of the Corporations Act 2001 Cth, it is important
on the part of the directors to act in good faith and for the proper purpose. Therefore, the
directors must discharge their duties for the best interests of the company. According to the
provisions of Section 180, the directors should discharge their duties with due care and diligence.
It is worthwhile to refer here that, the directors must make the judgment in good faith and for the
best interest of the company. It is worth noting that, the directors must not have material interest
and if there is any interest then it must be for the benefit of the company. According to the
provisions of Section 182, the directors must not make improper use of their position for the
purpose of gaining advantage for themselves or for any third party thereby causing detrimental
harm to the company. According to the provisions of Section 183 states that, if any information
is obtained by the directors of the company, the information must not be used for causing
detrimental harm to the company or to its members. According to the provisions of Section 184
of the Corporation Act 2002 Cth, there occurs a breach of duty on the part of the directors of a
company, if the director was involved in any criminal offence which was intentionally dishonest.
In this regard, in accordance to the provisions of Section 184(3), if the directors use their position
dishonestly, then it is considered to be a criminal offence. A director is permitted to disclose the
information for the best interests of the company. However, the nature of the interest must be
such that, it relates to the affairs of the company which involves providing reasonable and prior
notice to the directors in order to inform about the nature of the interest. It is noteworthy to
mention here that, the provisions regarding the duty of the directors to disclose certain interests
are depicted in Section 191 of the Corporation Act 2001 Cth.
Application:

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In the present case, it can be observed that both Dan and Gerry being the directors of the
company were carrying out their duties in good faith. They are trying to lift the environmental
restriction because it was for the best interest of the company. in this regard, the provisions of
Section 181 can be applied as the nature of the duty was for the proper purpose. In this regard, it
is worthwhile to refer the provisions of Section 184(1) and 184(3). This is due to the reason that,
the other directors of DGD were not aware of the fact that, a warrant was executed in the name
of Bashers Business and residential premises. The information regarding the development
approval and lifting of restrictions were used by both Dan and Gerry in good faith as it was
unknown to them about the criminal activity of the Basher’s business. Therefore, in this situation
the provisions of Section 183 can be rightly applied. In the present scenario, it can be observed
that both Cass and Barry were using their position as a director in good faith and for the benefit
of the company while reviewing the documents Dan and Gerry. In this regard, the provisions of
Section 182 can be applied.
Conclusion:
In the conclusion, it can be stated that both Cass and Barry are at the position to keep the
work regarding the development of land on hold.

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References:
The Corporations Act 2001 Cth.