LAW 200: Commercial Law Report on Breach of Director's Duty

This report examines a case of breach of director's duty under commercial law, focusing on the actions of Ms. Cameron, a director of Bellamy's Australia, who allegedly failed to disclose her substantial shareholding in the company as required by the Corporations Act 2001. The report summarizes the case, highlighting the legal provisions under sections 671B(1) and 1308(2) of the CA 2001, which mandate disclosure of substantial shareholdings and prohibit misleading statements. The analysis emphasizes the importance of transparency and good corporate governance, particularly concerning the rights of minority shareholders and the potential penalties for non-compliance. The report concludes that proper disclosure is crucial under corporate law and failure to do so can lead to severe consequences. References to relevant articles and legal sources are provided, offering a comprehensive understanding of the issue and its implications for directors and shareholders.

Commercial law
Running head: Business Law Assignment 0
Student’s Name
Address

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Corporate Law of each country has its huge significance that outlines how corporations are
expected to behave. In addition to it, the law prescribes the role and responsibilities of various
parties related to a corporation such as officers, directors and other executives. The objective of
this report is to develop an understanding of one of the current issues of breach of director of
duty where a news article has been selected for the same (Appendix 1). The article selected
hereby covers the details of one such recent case where due to breach of duties mentioned under
the Corporation's Act 2001, the director of the company faced charges. The report is mainly
divided into two sections where in the first section the summary of the report will be discussed
and in the second part, the focus will be made on the significance of the issue.
To summarize the article this is to state that Ms. Cameron was a director of Bellamy, a maker of
formula products for children and babies and organic food. She acquired many of the shares of
the company to increase its shareholding in the same. The facts say it all where she increased her
shareholding to 14 million shares of the company representing 14.74% of the total issued capital
of the company, which was a significant percentage under the CA 2001 (asic.gov.au, 2020). AS
ASIC alleged, Ms, Cameron has done it when the company became listed in 2014 and she
pursued this shareholding with her associate "The Black Prince Foundation,". She failed to
disclose that the substantial interest was acquired by her.
The article also discussed provisions of CA 2001 that requires to lodge a notice of substantial
shareholder with the Australian Stock Exchange as well as with the company where a person
begins to hold shares in listed companies resulting in 5% or more voting power. Ms. Cameron
lodge this notice in 2017 but the same also did not contain the whole information and recently
ASIC inquired into the matter (Powell & Gray, 2020). After this investigation, it was decided the
director shall be present in “Hobart Magistrates Court on criminal charges”. Now she is likely to

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face penalty worth $40,250 for these two alleged breaches. Recently disclosed in November
shown a sale of 3.5 million shares in September.
After the above mentioned it is clear that the director of the company failed to act as per the
requirements of the CA 2001. In today’s time where most of the companies are listed and it is far
easy for every person to buy shares from the secondary market the topic of disclosure of interest
has its huge significance. Here the regulatory requirements are the rationale behind the same
does also seems important to discuss hence to state the relevant provisions are mentioned under
section 671b(1) and 1308(2) of CA 2001. The section requires a person to provide information
related to name, address, relevant interest, a relevant agreement under which interest has
acquired and others to the listed company for a listed registered. This information needs to be
provided when the person starts to have or cease substantial interest in the company or there is a
movement in shares of at least 1% or the person announce a takeover bid for scheme or company
(austlii.edu.au, 2020). The section is an important one to know as it applies to every person
including directors of the company. Further moving to section 1308 (2) of the company, this is to
state that as per this section it is an offense to make a misleading or false statement that is
required by or under CA 2001 (holdingredlich.com, 2020). Penalties are another important
aspect to discuss whenever it comes to breach of a section. The maximum penalty defined in
case of breach of this section is 200 penalty units or imprisonment of 5 years or both. On the
different side, the penalty for breach of section 671B is 25 penalty units or six-month
imprisonment.
Due to the failure to comply with these sections, Ms. Cameron is likely to face heavy penalties.
The topic is much relevant at today's time where directors often forget their duties in other
capacities. CA 2001 outlines directors’ duties that all the persons in this position must adhere to.

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Nevertheless, it does not mean that they are not liable to fulfill the duties that they owe in other
capacities such as shareholders. To maintain good governance, transparency is a much-required
aspect and the above-mentioned sections have been developed to assure transparency. Imagine a
situation where no reporting is required and a person acquires more than 20 or 30% share of a
company. Here in such a situation the person would be in authority and can exploit minority
shareholders. Therefore to avoid such a situation and to confirm a healthy shareholding in a
company it seems necessary to have a system to monitor excess shareholdings of share.
Corporate governance is an emerging concept that believes having proper management of the
company where the rights of minority shareholders are secure and matters used to decide based
on the majority of power. It also controls issues such as oppression and mismanagement. The
above-studied case has it is huge significance at today's time as it shifts the director's focus to the
other sections of the act from 180-184 that outlined their basic duties. The heavy potential fine of
the case brings a lesson to all the people who acquire shares and do not report such interest or
report misleadingly. Therefore to conclude this report this is to state that lodgement of
disclosures has a huge significance under corporate law and people need to pay appropriate
attention to it or else they may face heavy cost for it.

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References
asic.gov.au. (2020) 20-033MR ASIC charges Jan Cameron, former director of Bellamy’s
Australia. Retrieved From: https://asic.gov.au/about-asic/news-centre/find-a-media-
release/2020-releases/20-033mr-asic-charges-jan-cameron-former-director-of-bellamy-s-
australia/
austlii.edu.au. (2020) Corporations Act 2001 - Sect 671b. Retrieved From:
http://www5.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s671b.html
Corporation's Act 2001
holdingredlich.com. (2020) Important reminders from the courts. Retrieved From:
https://www.holdingredlich.com/news/important-reminders-from-the-courts
Powell, D. & Gray, D. (2020) ASIC charges Kathmandu founder Jan Cameron over Bellamy's
stake. Retrieved From: https://www.smh.com.au/business/companies/asic-charges-
kathmandu-founder-jan-cameron-over-bellamy-s-stake-20200214-p540ri.html

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Appendix 1
Link of article : https://www.smh.com.au/business/companies/asic-charges-kathmandu-founder-
jan-cameron-over-bellamy-s-stake-20200214-p540ri.html