Legal Analysis: Director's Duties and Responsibilities in JP Pty Ltd

This assignment presents a case study analyzing various aspects of company law, including the importance of external administration, the application of replaceable rules, and the determination of dividends. It explores options for insolvent companies like Trying Pty Ltd, such as voluntary administration, liquidation, and receivership, and discusses the qualifications and responsibilities of a company secretary. The case study also examines the rights of shareholders and the purpose of disclosure provisions in the Corporations Act 2001. Furthermore, it delves into the duties and responsibilities of directors, particularly focusing on acting in good faith and avoiding misuse of position, referencing the case of JP Pty Ltd. The analysis extends to potential compensation for breaches of director duties and the consequences of not following company constitution rules, with a final assessment of contract enforceability in specific scenarios. Desklib offers this document and many other resources to aid students in their studies.

Company law
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Table of contents
PART A...........................................................................................................................................3
PART B...........................................................................................................................................4
PART C...........................................................................................................................................5
REFERENCES................................................................................................................................7
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PART A
Why is external administration important?
Option D
Does a single person company need to use replaceable rules?
Option A
Farah……….Which following is possibility that farah can pursue?
Option B
How are dividends determined? When they can be paid?
Option C
Q-6 Ronald………. It has no business operations?
Option C
What is deed of company agreement and what is effect on company and creditor?
Option D
What describe the statutory injunction?
Option B
Ben….. Which of following is incorrect?
Option B
Members in company have several statutory rights. Which is not right of member in corporation
act 2001?
Option A
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What is receivership and what does it do with company in distress?
Option A
PART B
1. Trying Pty Ltd being a fitness training company becomes insolvent. There are various
options for the insolvent companies which have different consequences. Business is
considered to be insolvent when it is not able to pay its debts. The options available
include voluntary administration, liquidation and receivership. In the voluntary
administration, the company allows external administrator for looking at the company’s
financial records so that life can be brought back. Its consequences can be control
returned to directors if found viable. Liquidation deals in winding up the financial affairs,
breaking the structure of company and then investigating what happened. All the control
such as assets, business and all financial affairs are handed to the liquidator. Its effects
include distribution of assets uniformly, deregistration of dormant company etc. There is
no enough money to pay the employees. In the receivership option, the secured creditor
appoints an external person for collecting and selling the assets of the company. As its
consequence, the full control of the company returns to the directors.
2. The company secretary must have experience in governance, corporate law, finance,
corporate secretarial practice and strategy because he needs to give advice in these areas
of organisation. The qualification required is ICSA or solicitor or accountant or barrister.
They must have knowledge of company law, mercantile law or economics along with
general knowledge. The responsibilities include guiding, linking between the intra and
inter-company works, keeping records of legal works, maintaining the records of the
company, scheduling the meetings, company statutory register and commanding over
corporate governance.
3. No the company Hello Holdings Pty Ltd’s directors cannot proceed with the sale because
the shareholders has come to a resolution to retain the property. Shareholders also known
as stockholders own at least one share of the company so they have equal rights on the
business. They authorise the directors for increasing the paid up capital or issuing shares
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so they are in favour of the success of the company. This is why; if they come to a
resolution the directors cannot go against the same.
4. The main purpose of the disclosure provisions in the corporate act 2001is regulating
various matters including forming and operating the companies but this must be in
conjunction of the constitution which may be adopted by the company, takeovers and
fundraising along with regulating the duties of officers. Disclosure provisions aims at
making available evidence which either undermines or supports the cases of the
company.
PART C
1. Advice company JP pty ltd what duties and responsibilities directors have in common and
statute law
It is important for all director to adhere the duties under common and statute law in
corporation act 2001. As per case study both the directors have breached some duties which are
defined as below :
Act in good faith for proper purpose- the director have breached this duty because it state that
director must act in interest of company and not for private advantage. Thus, Jordan has acted as
per her own interest but not for JP pty ltd.
Not misuse position or info- the director has also breached this duty as Jordan has misused her
power in order to gain advantage for herself. Also, she has not disclosed the info given by ANZ
bank regarding the benefits offered to her.
Besides that, there are statute law duties as well which is being breached by director of JP
pty ltd they are :
Duty of good faith and purpose – Pete has breached his duty as he is interest in property
development which is not in interest of company. So, he is not acting for good faith and purpose
of company.
Duty not to misuse position – this duty is breached by Jordan as she is taking advantage of her
position by dealing with ANZ client for her personal interest.
2. What can company receive as compensation from director
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As per the corporation act 2001, the director is required to pay for compensation or
damage in case they have breached the director duty. The compensation is consequence of
breaching duty. As per case study it is clearly seen that Jordan have breached her director duty.
So, in this she might held personally liable for civil penalties as per corporations act 2001. She
may have to pay fine to JP pty ltd. here, amount can be 3 times of benefit obtained. She may
have to pay compensation and damages not only to the company, but also anyone who suffers
loss as a consequence of the breach. In case if company have suffered a loss than Jordan is liable
to pay company debts. Thus, she may have to pay compensation to Pete and also ANZ bank as
well. Moreover, she might have been removed from her position by court as corporation act 2001
grant right to court for this. hence, Jordan may have to pay compensation to JP pty ltd.
Question
1. Did jazzie have authority to do what she did?
Yes, jazzie have the authority of placing the order in case of John is not available. But
there is nothing written on John business card that jazzie can buy order of above $250,000. Thus,
as per jazzie role she is having authority to buy order.
2. what type of authority did she have, if any?
Jazzie only have authority to handle and manage John business. She is not having any
authority to buy and finalize order in case of absence of John. Jazzie is only receptionist who role
is to greet, welcome, etc. supplier. Also, she answers all questions which is asked by supplier.
Jazzie deal with all the required document to be needed in buying order.
3. What are consequence of Tanking pty ltd following rules in constitution
There are certain consequences of Tanking pty ltd for not following rules. First is as per
corporation act 2001 the section 1324 give power to court to grant injunction to prevent breach.
Moreover, the company may have to pay heavy fine for not following rules in constitution.
4. Can making IT ltd enforce contract?
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No, Making it can not enforce contract as it required approval of Board of director of
Tanking pty ltd to buy order of $250,000. Besides that, it requires signature of John for approval
as well and his presence during order.
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REFERENCES
Books and journals
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