Liabilities of a Director
LIABILITIES OF THE DIRECTORS
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LIABILITIES OF THE DIRECTORS
A company is usually established by individuals or Directors (officers included) in this case so as to run it in appropriate manner in order to make maximum profits. For this to happen, it is for the company (Pandora Diamonds and Gems Pty Ltd in our case) to enter or make contracts with outsiders like Kaplan Bank Ltd and Space Solutions Pty Ltd as far as our case is concerned. The contracts made by the company with other outsiders are usually done by Directors who are, most often than not, act as representatives of that mentioned company and be able to be liable by the acts of its Directors as stated in s126. Directors acting on behalf of the company during any contracts are usually in a crucial position of trust within that company, and therefore, the vast array of legal duties will stretch out on their shoulders for holding that position. Due to this hot position, it is easier than not, for their powers to be abused in different ways. Directors have been known to abuse their powers in office for their personal gain. For example, Directors have been held liable for inappropriately using company’s funds in making their personal secret profits. In such cases, the corporate law comes into play (the Common Law and the Corporations Act 2001 (Cth)) and Directors or any other officer who recklessly breach specific duties and obligations should be prosecuted in the court of law. So for the purpose of liability, the common law and the Corporations Act 2001 (Cth) have been laid down so as to minimize the risk of wrongful behaviors by company’s Directors. In this paper, I will discuss the responsibilities, liabilities and duties of a director(s) in a company and give examples how Directors of various companies have been accounted or held responsible for infringing Corporations Act 2001 (Cth) laws.
Directors’
By:
Course:
Instructor:
University, City, State:
Date:
LIABILITIES OF THE DIRECTORS
A company is usually established by individuals or Directors (officers included) in this case so as to run it in appropriate manner in order to make maximum profits. For this to happen, it is for the company (Pandora Diamonds and Gems Pty Ltd in our case) to enter or make contracts with outsiders like Kaplan Bank Ltd and Space Solutions Pty Ltd as far as our case is concerned. The contracts made by the company with other outsiders are usually done by Directors who are, most often than not, act as representatives of that mentioned company and be able to be liable by the acts of its Directors as stated in s126. Directors acting on behalf of the company during any contracts are usually in a crucial position of trust within that company, and therefore, the vast array of legal duties will stretch out on their shoulders for holding that position. Due to this hot position, it is easier than not, for their powers to be abused in different ways. Directors have been known to abuse their powers in office for their personal gain. For example, Directors have been held liable for inappropriately using company’s funds in making their personal secret profits. In such cases, the corporate law comes into play (the Common Law and the Corporations Act 2001 (Cth)) and Directors or any other officer who recklessly breach specific duties and obligations should be prosecuted in the court of law. So for the purpose of liability, the common law and the Corporations Act 2001 (Cth) have been laid down so as to minimize the risk of wrongful behaviors by company’s Directors. In this paper, I will discuss the responsibilities, liabilities and duties of a director(s) in a company and give examples how Directors of various companies have been accounted or held responsible for infringing Corporations Act 2001 (Cth) laws.
Directors’
References: Cassidy, J. A., 2006. Concise Corporation Law. The Federal Press, Sidney, Australia. Hopt, K.J.E. & Teubner, G.E.C.N.L.K.C.D., 1985. Corporate Governance and Directorsʼ Liabilities: Legal, Economic and Sociological Analyses on Corporate Social Responsibility. European University Institute Series A Ser, p.XII, p. 462. Latimer, P., 2012. Australian Business Law, 31st ed, Commonwealth of Australia, Australia. Sievers, A. S., 1997. Directors ' Duty of Care: What is the New Standard? 15 Companies and Securities Law Journal 392 a. J. 2006. Directors’ Fiduciary Duties 27 Australian Bar Review 192.