Company Law: Corporations Act, Director's Duties, Shareholder Remedies

This assignment provides a detailed analysis of several company law issues, including director's duties under s 181 of the Corporations Act 2001 (Cth), shareholder remedies, and companies in distress. It uses the HIRAC method to address legal problems presented in case scenarios related to Coin It Ltd, Western East Ltd, Acme Ltd, and Sparrow Private Ltd. The analysis covers fundraising and disclosure requirements, potential breaches of director's duties, available courses of action for shareholders, and recommendations for creditors in external administration scenarios. Furthermore, it explores the liability of auditors and potential defenses against legal action, offering a comprehensive overview of relevant legal principles and their practical application.

COMPANY LAW

INTRODUCTION...........................................................................................................................4
MAIN BODY..................................................................................................................................4
Advise the EastVale directors as to whether they have breached their statutory duties under s
181 of the Corporations Act 2001 (Cth)......................................................................................6
SHAREHOLDERS AND MEMBERS REMEDIES...................................................................7
Advise Alex as to the legal issues, and what course of action available to her...........................7
Companies in Distress and External Administration.................................................................10
From the above scenario first identify who are Sparrow Pty Ltd’s main creditors?.................10
Next, advise each of the main creditors, with reasons, and with reference to the relevant
sections of the Corporations Act 2001 (Cth), as to which form of external administration
would best suit their needs.........................................................................................................10
Auditors, Accounts and Financial Reporting and General Revision.........................................11
Discuss whether AAA Accountants can defend the legal action by Fast Cash.........................11
In your brief to your lawyers advise of what actions you took and all necessary steps to ensure
there was compliance with the Corporations Act 2001 (Cth) and the general law...................11
Make assumptions of fact where necessary. What would be your strongest defense against Fast
Cash?..........................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Company Law are known as those lost which is used in order to help and business
organisation grows in more effective manner. These laws help in development of guidelines with
Framework which is used by an organisation to conduct its business. Also does not provide
information in relation to that legislation which is used within an organisation to make business
environment improve in positive aspect. These laws are mainly used by private organisations in
order to hire director and perform all kind of functions as per the act which has been formed
under these laws. Scope of these laws is wider as they impact business working directly. Things
to be cover in the file are based upon fundraising and disclosure of employees regarding which
case scenario has been given. Also h i r a c method is used in order to solve legal problems
existing within the case scenario used. Fiduciary duties of directors are being covered with
remedies of shareholders and its members. Indian Finance working and owner and vision has
been covered in relation to the case scenario that has been given within it.
MAIN BODY
Case scenario:
As per the case scenario will be in touch with the Managing Director of Coin it limited.
The board of directors of the company are willing to raise capital from the public issue of share
because it needs capital to make a new app developed by the coin it is called "cripytic currancy".
The prospectus of the company state that it is secured and safe for making digital currency
wallets like bitcoin, ethereum and let coin. Prospectus 50 piece long provides all information
which is invention by directors. Under the prospectus just money has been provided by
renowned expert in technical community jerry woodman (Kelman,, 2017). He told that coin it
limited app was created with new and fast features and it is the most trusted app. In a hurry to
get the perspectives and exhaust on the overwork will forgot to send the prospectus and 1 million
shares were issued under the prospectus offered that still remain open for subscription. AP
current government became a total disaster and also had fault with in the transaction. Now
adevice is required to be provided in relation to investors as per their legal right
Heading: Fundraising and Disclosure

Issue: The issue that has been raised from the above case scenario is based upon investor’s legal
right. These are those rights that are being possessed by investors who have done investment
within the company. As per these rights various kinds of aspects in relation to investments has
been covered under the company law.
Rule: Legal rights of shareholders have been discussed under Corporation’s act 2001. The
actress that is legal right is dependent upon the organization that has been opened by an
individual. These rights as follows:
 To attend shareholders meeting and vote on certain issues
 Right to sell your shares
 Right to participate in corporate actions which is been offered in relation to the
organization
Applicability: As per the case scenario it can be observed that managing director of Coin
Limited launched an app which is known as “cryptic currency”. The app was proven to be a
disaster as it was not functioning properly and its various kind of issues within it. This made
investors take legal action against the company. As per the act claim is required required to be
obtained out of the failure of the app. So in this case can be observed that right to participate in
corporate actions has been violated since the prospectus not signed which made the issue of the
share illegal in nature (Kogler, Mittone and Kirchler, 2016).
Conclusion: It can be observed from the case scenario that legal rights of the investors are
mentioned under the corporate act 2001. These rights are very important for investors as it helps
in making claim against those illegal activities to this performed by the director. Also in this case
it can be understood that memorandum of association can never be passed without the direct
signing it.
Case scenario:
It can can be observed that western East Limited is a large commercial wine producer
listed on the ASX. Western has been investigating various expansion of opportunities in recent
months and has decided to launch a takeover for one of its competitors that is East Vales Wines.
What discussion was made regarding the merger it was not successful and western decided to

launch of Style breed of at 20% premium to the company's recent trading price. East Vale not
happy with hostel bed in another one of the directors tell her cousin company when asked it to
act as friendly bidar. Hindustan today's paper well said to provide 2000 Dollar worth to be used
within a casino in Sydney. Also East well find an friendly bidderIn order to motivate Amco, the
EastVale board agrees to sign a 5 year exclusive licensing agreement with Amco of EastVale’s
top 10 wine brands at commercial rates. This effectively prevents Western from realising the
value of buying EastVale because it will not gain 90% ownership nor will it gain control over the
top selling products. Western argues that the EastVale directors have acted in breach of their
duties by frustrating the takeover. Advise the EastVale directors as to whether they have
breached their statutory duties under s 181 of the Corporations Act 2001 (Cth).
Advise the EastVale directors as to whether they have breached their statutory duties
under s 181 of the Corporations Act 2001 (Cth).
Heading: Directors Duties Part 2- ss 181-184 and Fiduciary Duties
Issue: The main issue that has been released from the above case scenario is based upon breach
of secretary duties section 181 of Corporation Act.
Rule: As per the facts of the case it can be observed that section 181 of Corporation Act weather
network explain the about civil implication of directors and secretaries and other officers of the
corporation order to exercise and discharge their duties in good faith in best interest of the
corporation for a proper purpose.
Applicability: Section 181 of the Corporation Act 2001 is applied within the given case
scenario as in this case East Val has frustrated contract bhaiya Green Cross shining 5 years
except the event jagan which is that when friends will be staying at commercial rate only
(Mahida, 2016).
Conclusion: It can be concluded from this discussion that director's duty has been breached by
East Vale. Hindi section 181 of the Corporation Act 2001 has been discussed in relation to the
case study that has been given above.

SHAREHOLDERS AND MEMBERS REMEDIES
Case scenario: It can be observed from the case that Acme Ltd is an ASX listed
agriculture company that supplies major supermarkets with fresh product daily. The main
competitors of Acme is Beta Ltd that is controled by fesity New Zealand corporate tycoon Mick
Doonan. Music into takeover excellence in simo in Australia hosting market 36 years ago and am
and minister of state and state within the company. Becoming next two years to make secure
simulation on the board and company shares are currently trading at two dollar Parashar but have
top lowest $1 Persia in recent months. This has happened due to voting which is done against
every proposal why make. North organisation screen remove Mike from the board and this year
register device plan project rainbow. As per the plan the company constitution is totally removed
from the company. Repeating without letting anyone know about it bhuton major prepositions
which has been put forward and they are as follows
 Proposition 1-that the company’s constitution be amended so as to provide that any
shareholder who is not, as of 1 January 2009, an Australian citizen or (if a corporation)
whose main residence is not in Australia, must not own more than 5% of the issued
ordinary shares in Acme Ltd. Any foreign shareholder holding in excess of 5% must sell
their shares to the company at $2 per share (Moody, Siponen and Pahnila, 2018).
 Proposition 2-if proposition 1 is not carried, then the company’s constitution is amended
by providing that any shares held by persons other than Australian citizens on 1 January
2009, will be stripped of their voting rights immediately.
Advise Alex as to the legal issues, and what course of action available to her.
Election, Removal or Resignation of Directors: CorporationCentre.ca helps federal and
provincial corporations prepare the corporate documents for directors to be elected or removed,
or in case they resign. It's fast, easy to do and affordable. A corporation's first directors are
generally those named on the initial notice of directors that is sent to the government along with
the corporation's Articles of Incorporation. These persons officially become the directors of the

corporation as of the date mentioned on the corporation's Articles of Incorporation and they
remain in office until they are re-elected, removed or resign.
Election
Typically, shareholders elect the directors on an annual basis. The shareholders either re-
elect the present directors for another term or elect new directors (Nieslony and et. al., 2018). If a
new person becomes a director at any other point during the year, the corporation is required to
prepare the proper corporate documentation at that time.
Removal
As a general rule, shareholders have the exclusive right to remove a director.
Shareholders can remove a director by resolution at a special general meeting by a majority vote.
Resignation
A director can resign at any time by giving notice to that effect. It is generally
recommended that a corporation require a director's resignation to be in written form for
purposes of proof. CorporationCentre.ca will assist in your preparation of the corporate
documentation for any new election of a director. This may include:
 Shareholders Resolution. Shareholder resolutions are official decisions evidenced in
writing which confirm decisions made by the shareholders. This resolution is signed by
the shareholders of the corporation and placed in the corporation's minute book.
 Notice of Change of Directors. Following the election, removal or resignation of a new
director, the corporation is required to notify the appropriate government department or
authority of such change by filing the applicable government form together with the
prescribed government fee.
This is covered within section 203 D of the Corporation act 2001. In relation this section
advise given to Alex is that the legal issues raised is based upon rejection of new proposal. So,
through applying the section 203 D director can be removed by passing an order.

Companies in Distress and External Administration
Case scenario: Eddie, Ming and Hanh are the only shaeholdes and directors of Sparrow
Private Ltd,a trading company that supplies food products to cafés around Sydney. In recent
times, Sparrow’s cash flow has been pursuing in very effective manner large customers including
CafeNow has been late in paying their invoices. This has meant that on a number of occasions
Sparrow has not had sufficient funds to pay its bills. At the same time as the company’s cash
flow troubles, the employees write to the directors about an intention to take industrial action in
an attempt to recover unpaid wages and entitlements. The cash flow problems are increased,
when the company’s bank, Bright Bank Ltd, contacts the directors about falling behind on their
monthly repayments. The loan from Bright Bank Ltd is secured over all of Sparrow’s equipment.
In an attempt to ease the financial situation, Eddie on behalf of the company seeks out an
unsecured loan from Quick Bucks Pty Ltd for $50,000 which is guaranteed by the directors of
Sparrow Pty Ltd.
Question:
From the above scenario first identify who are Sparrow Pty Ltd’s main creditors?
The main creditors of Sparrow Pty Ltd are Bright Bank Ltd which helped in opening of
Café Now. The Corporations Act 2001 (Cth) is the principal legislation regulating business
entities (primarily companies) in Australia. It regulates matters such as the formation and
operation of companies (in conjunction with a constitution that may be adopted by a company),
duties of officers, takeovers and fundraising (Savitri, 2016).
Next, advise each of the main creditors, with reasons, and with reference to the relevant
sections of the Corporations Act 2001 (Cth), as to which form of external administration
would best suit their needs.
The Corporations Act 2001 (Cth) amendments to whistle-blower provisions commenced
on 1 July 2019. These provisions expand the protections available to whistle-blowers and the
liabilities of board members and senior managers of corporations, including the penalties for
breaches. The provisions apply to a regulated entity, which includes corporations to which the
Commonwealth constitution applies.

Auditors, Accounts and Financial Reporting and General Revision
Case scenario: In this case scenario it can be observed that an partner in charge of the
audit division within an accountancy firm AAA Accountants. In the years August 2021 Oz Rock
Constructions Ltd (ORC) has approached to provide audit report which is used for the purpose of
loan negotiation with Community Bank of Australia Ltd (CBoA). As the record was been
prepared it was noticed that shares held by “Mrs Han” and the address of shareholders is same
address of Senior Partner of accountancy firm. This resulted in causing financial reviewed and
funds were not lend further . ORC then went to Fast Cash Pty Ltd (Fast Cash) and obtained a $10
million loan from Fast Cash. Six months later ORC went into receivership and defaulted on its
loan. Now Fast Cash discovered ORC inventory accounts were over stated and legal action is
required to be taken against the firm(Zimmermann, 2016).
Discuss whether AAA Accountants can defend the legal action by Fast Cash.
Yes, AAA can defend the legal action by Fast Cash as per shareholders right mentioned
within Corporation Act 2001. In the act various aspects has been explained in relation over
shareholders right.
In your brief to your lawyers advise of what actions you took and all necessary steps to
ensure there was compliance with the Corporations Act 2001 (Cth) and the general law.
As per the brief of the insolvency can be declared which makes liquidation done of the
assets and liabilities that helps in providing remaining amount to Fast Cash.
Make assumptions of fact where necessary. What would be your strongest defense
against Fast Cash?
In thos te strongest defence is based upon winding up of the company through liqudation
which heps in making debts to be cleared within time.

CONCLUSION
From the discussion it can be concluded that company laws are those laws which are used
in order to provide proper legal structure which helps in operating of organization in more
effective manner. In this file things covered is based upon various sections which is used for
dealing with issues faced by an company while operating.

REFERENCES
Books and Journals
Hallstedt, S.I., 2017. Sustainability criteria and sustainability compliance index for decision
support in product development. Journal of Cleaner production. 140, pp.251-266.
Jamali, H. R., 2017. Copyright compliance and infringement in ResearchGate full-text journal
articles. Scientometrics, 112(1). pp.241-254.
Kelman, H. C., 2017. Further thoughts on the processes of compliance, identification, and
internalization. In Social power and political influence (pp. 125-171). Routledge.
Kogler, C., Mittone, L. and Kirchler, E., 2016. Delayed feedback on tax audits affects
compliance and fairness perceptions. Journal of Economic Behavior &
Organization. 124. pp.81-87.
Mahida, N., 2016. Hand hygiene compliance: are we kidding ourselves?. Journal of hospital
infection. 92(4). pp.307-308
Moody, G. D., Siponen, M. and Pahnila, S., 2018. Toward a unified model of information
security policy compliance. MIS quarterly. 42(1).
Nieslony, P. and et. al., 2018. Surface quality and topographic inspection of variable compliance
part after precise turning. Applied Surface Scienc. 43., pp.91-101.
Savitri, E., 2016. The effect of taxpayer awareness, tax socialization, tax penalties, compliance
cost at taxpayer compliance with service quality as mediating variable. Procedia-Social
and Behavioral Sciences. 219. pp.682-687.
Zimmermann, L., 2016. Same same or different? Norm diffusion between resistance,
compliance, and localization in post-conflict states. International Studies
Perspectives, 17(1). pp.98-115.