Corporate Law
BLO 2205 Corporate Law
Assignment
Semester 1 2013
INTRODUCTION
Under the Corporations Act 20011, all the directors and officers must be under Common Law duties and Statutory Law duties to exercise their powers in order to carry on one company. It is essential for officers and directors to impose the legal duties for purposes of minimizing wrongful or illegal behaviors’ risks. Briefly, the main fiduciary duties and statutory duties contains duty to act in good faith in the interests of the company, duty to act with due care, skill and diligence, duty to proper use of position, duty to proper use of information, duty not to allow the company to trade while insolvent and so on2.
In this case study, in the Hampton Park Pty Ltd (HP), there are five directors including William, Jack, Susan, Gail and George (chief financial officer). However, since most of directors have breached duty of care under Corporations Act, these actions finally lead to insolvency of HP.
In this essay, there are two legal issues which must be analyzed and discussed. On the one hand, it will be outlined some breaches of duty of care for different directors and officers. Furthermore, the consequences or penalties shall be discussed based on this case study. On the other hand, in regard to insolvent trading, some breaches, defenses to directors and a variety of penalties are going to be advised in terms of legal regulations. After analyzing issues, a decision will be given in the end of essay.
1. DUTY OF CARE UNDER THE CORPORATIONS ACT
1.1 Breaches of Duty of Care
In this case, the central legal issue what must be analyzed is whether there exist any breaches of fiduciary duties and statutory duties under Corporations Act 2001.
The relevant areas of law which can be applied to this legal issue are under both fiduciary duty and statutory duty.
Initially, under statutory law, duty to act with due care, skill and diligence shall be used in this question. The
Assignment
Semester 1 2013
INTRODUCTION
Under the Corporations Act 20011, all the directors and officers must be under Common Law duties and Statutory Law duties to exercise their powers in order to carry on one company. It is essential for officers and directors to impose the legal duties for purposes of minimizing wrongful or illegal behaviors’ risks. Briefly, the main fiduciary duties and statutory duties contains duty to act in good faith in the interests of the company, duty to act with due care, skill and diligence, duty to proper use of position, duty to proper use of information, duty not to allow the company to trade while insolvent and so on2.
In this case study, in the Hampton Park Pty Ltd (HP), there are five directors including William, Jack, Susan, Gail and George (chief financial officer). However, since most of directors have breached duty of care under Corporations Act, these actions finally lead to insolvency of HP.
In this essay, there are two legal issues which must be analyzed and discussed. On the one hand, it will be outlined some breaches of duty of care for different directors and officers. Furthermore, the consequences or penalties shall be discussed based on this case study. On the other hand, in regard to insolvent trading, some breaches, defenses to directors and a variety of penalties are going to be advised in terms of legal regulations. After analyzing issues, a decision will be given in the end of essay.
1. DUTY OF CARE UNDER THE CORPORATIONS ACT
1.1 Breaches of Duty of Care
In this case, the central legal issue what must be analyzed is whether there exist any breaches of fiduciary duties and statutory duties under Corporations Act 2001.
The relevant areas of law which can be applied to this legal issue are under both fiduciary duty and statutory duty.
Initially, under statutory law, duty to act with due care, skill and diligence shall be used in this question. The
Bibliography: A. Books Black, A and Austin, R, Australian Corporations Legislation (LexisNexis, 2012 ed) Ciro, T and Symes, C, Corporations Law in Principle (LBC Thomson Reuters, Sydney, 9th ed, 2013) Phillip Lipton, Abe Herzberg and Michelle Welsh, Understanding Company Law (Lawbook Co, 16th ed, 2012) B. Case Law ASIC v Adler (2002) NSWSC 171 [confirmed on appeal (2003) NSWCA 131] Daniels v Anderson (1995) 37 NSWLR 438 Powell v Fryer (2001) SASC 59 Sheahan v Verco (2001) SASC 91 Torprint International Pty Ltd v Bott (1999) NSWSC 581