Corporations Law Report: Analysis of Storm Case, Director Liability

This report provides an in-depth analysis of the Storm case within the context of Australian Corporations Law. It begins with a summary of the case, detailing the contraventions of the law by the Cassimatises, who were directors of an advisory firm, due to inappropriate financial advice. The report then examines the relevant legal principles, particularly those related to director duties under section 180 of the Corporations Act 2010, including the duty of care and diligence, good faith, and the exercise of powers. The report further explores how the findings against the Cassimatises might apply to other corporate boards, potential defenses to liability, and the media coverage surrounding the penalties imposed. It also considers the impact of the new penalties regime, which commenced in March 2019, on directors in similar cases. The report concludes with a summary of the new penalties regime and references relevant legal and academic sources.

CORPORATIONS LAW

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
a) Provide a brief summary of the Storm case, the relevant law and legal principles involved
in it..............................................................................................................................................1
b) Explain how the findings against the Cassimatises might apply to other corporate boards in
the industry..................................................................................................................................1
c) Consider whether any defences to liability may apply to other corporate boards in the
industry........................................................................................................................................2
d) Consider the media coverage, particularly criticism as to the penalties imposed on the
Cassimatises and describe how, if a similar case were to occur in the future, the new penalties
regime the commenced in March 2019 could affect the penalties imposed on directors...........2
e) Conclude your brief with one x power point slide summarizing the new penalties regime.. .3
CONCLUSION ...............................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Corporations law is the body of legislation in Australia which promotes the business
activities on regular basis. It is necessary because it tells and decided that how any of the
organisation is required manage their work. In context of the file, the major discussion will be on
the Storm case. Their will be the discussion on the duties of director that what they are required
to do and what should not be done.
MAIN BODY
a) Provide a brief summary of the Storm case, the relevant law and legal principles involved in it.
The case was related with Australian Security and Investment Commission v Cassimatis.
Mr. and Mrs Cassimatis were the only director and shareholder of the company. The case arises
because Mr and Mrs Cassimatis contravene the section 180(1). As their company is one of rthe
advisory firm so that had proper knowledge regarding the investment, still they gave
inappropriate advice to the relevant investor. The result of that particular advice was catastrophic
for the Storm (ASIC v Cassimatis: What is a director’s liability for a breach of law by the
company? 2016). The judicial team of this case concluded that Mr and Mrs Cassimatis should
have been aware about the advices which they were giving to the client because application of
the storm model was contravening the s 945A(1)(b) and s 945(1)(c).
The reason behind the contravention of the section was the financial advice as it was not
appropriate because investigation to the subject matter was not reasonable for sum
circumstances. Because advices which were given could have devastating consequences for the
other investor also.
b) Explain how the findings against the Cassimatises might apply to other corporate boards in the
industry.
Firstly, it is necessary to find that what other organisation do on regular basis and how
they manage their day to day activity through which findings can be much and more easy task.
Then it is necessary to know what are the main duties under section 180 of corporation Act 2010
that director is required to follow. Some of the duties which are required to be fulfilled by any of
the directors are listed below:
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 Under section 180(1), directors are required to conclude their work with care and
diligence where they must think what are the possible outcome it anything goes against
the law.
 In section 180(2), it is important that director must not breach their duty and for that they
are required declare their decision on good faith for a proper purpose, should not be any
kind of personal interest while taking decisions (Solaiman, 2017).
 Section 181 says that there must be good faith when exercising their power and duties.
In any of the corporation this sections are not followed as per the guidelines then legal
action can also be taken against them. It is important that director of every organisation are
required to take their actions and decisions as per the guidelines of directors of directors duty.
c) Consider whether any defences to liability may apply to other corporate boards in the industry.
There are various options which says that director of the company can defence the
liability to other corporate boards under section 588G(2), where it is mentioned that if any of the
decision which taken by the director is for the welfare of the organisation then liability will not
be imposed upon the director of a company. Secondly, any of the debt which has been occurred
in which director plan to bring better outcome then penalty will not be imposed on director and
they can easily defence themselves. Even they are various alternate to defence but burden to
prove is always upon the defaulter director.
d) Consider the media coverage, particularly criticism as to the penalties imposed on the
Cassimatises and describe how, if a similar case were to occur in the future, the new
penalties regime the commenced in March 2019 could affect the penalties imposed on
directors.
There were lots of points which were raised by the media when the case of Cassimatis
opened in the court room. The big question which were raised by them was related to the duty of
investor because they want to ask corporation house that isn't there was any duty of investor
because of whom case was entertained in the court room (Hufnagel, 2016) . There were number
of penalties which were imposed on the director as they were made liable to pay $70000 for
breaching the duty which was given to them. If this case would have occurred In future then lots
of problem can be occurred for the person who is the post of director as it would have directly
affected the position in which they are working because licence can also be cancelled if
negligence would have been done in the part of director.
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e) Conclude your brief with one x power point slide summarizing the new penalties regime.
As per the new amendments in the law it is necessary that director's must work as per the
guidelines which are given to them and even changes in law says that judgement can be given
on the basis of Cassimatis and ASIC case where directors were held personally liable (De Silva
Lokuwaduge and Armstrong, 2015). The new law which has been commenced are not much and
more different but still it says that non of the director can work unethically and every decisions
must be given by considering all the situation which can be raised once the decision is taken.
CONCLUSION
It is concluded from the above file, that corporation law is required to be followed where
rules regarding business activity has been mentioned. Directors must take their decision with any
negligence because their single step can create lots of trouble for organisation. Director's can be
held personally liable if any of the law is breached when their intention towards work is not
clear.
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REFERENCES
Books & Journals
De Silva Lokuwaduge, C., & Armstrong, A. (2015). The impact of governance on the
performance of the higher education sector in Australia. Educational Management
Administration & Leadership. 43(5). 811-827.
Hufnagel, S. (2016). Policing cooperation across borders: comparative perspectives on law
enforcement within the EU and Australia. Routledge.
Solaiman, S. M. (2017). Legal personality of robots, corporations, idols and chimpanzees: a
quest for legitimacy. Artificial Intelligence and Law. 25(2). 155-179.
Online
ASIC v Cassimatis: What is a director’s liability for a breach of law by the company? 2016.
[Online] Available Through: <https://www.lexology.com/library/detail.aspx?
g=5ca9bdbe-da55-462b-a5ca-e6d1d1621235>
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