Corporate law question answer hint

Question no.1 hint

Director’s duties

Duty of care skill diligence section 180

Case applied – (a) AWA v Daniels

(b) Daniels v Anderson

Discuss the court of appeal decision what must directors do to comply with their duty? List the things Explain difference between executive and non-executive directors

Is the duty the same for both?

Format letter

Dear ASIC

The purpose of this letter is to advise whether there have been any breaches of corporation ACT 2001 (cth)

1st well tells us who are director 3 managing director executive, non-executive director. Explain who owes director duties. Common law-duty of care skill of diligence. Brief explanation – s180(1) (business judgement rule as a defence……..), Duty of care, skill and diligence. (Don’t write in IRAC form. This is your research part)

Conflict of in-front

Common law + Section 182-183

Relevant case

Duty of disclosure (Public Company)

Remedies (Common law, Civil + Criminal law)

Breach of director’s duty (Conflict of interest)

Breach of fiduciary duties

In last part of letter

You have good reasons to take action against these director and to seek remedies as discussed

Question no.2 hint

Issue

What Rodney’s legal remedies

Rules

Directors duties, Discuss the common law and section dealing with director taking a corporate opportunity refer to a case with IDENTICAL FACTS.

Removal as directors (pty co, rule)

Discuss remedies – majority shareholder are wrong does who will not bring action.

S-232

S-236 (Statutory derivation action)

Most common examples of Conflict of interest

Diversion of business opportunity. Green V bertobell Industries pty ltd (1982) 1 ASIC 1.Cook V Deeks {1916} 1 AC ssaMisuse of company funds :- Paul A Davies (aust) pty ltd V Davies

Secret profits:-Regal (Hastings) Ltd V Gulliver

Member remedies, directors/ Majority stakeholders Vs members minority shareholders

Statutory remedies

The minority oppression remedy: S232 (empower the ASIC and any member of the company to apply to the court….) What oppressive means eg of oppressive –Exclusion from management : Fenuto pty Ltd Vs Bosjak Holding pvt Ltd.

Derivate action : S236-237

Unlikely the company itself will bring action

Serious question

Statutory injunction : s1324

Winding up the company : S461

Directors act in their own interest

Application

What have lily and morris done wrong?

Bonus

Cars

Set up new company to direct business

Personal action (s232)

Rodney wants to protect $100,000.00

Excluded from management

He is affected shareholders. S233 remedy-winding up

S236

Rodney needs “leave” of the court

Serious question to be tried

Directors/majority shareholders not likelyto defend company against wrong does.

Can seek repayment to co, of bonuses profit from diverted contract.

Can seek injunction to stop payment of bonuses.

Conclusion

Question no.3 hint

Definition of solvency sec 95A,

Section 95A of the corporation act 2001 (cth) states

ISSUE

Is the company insolvent, if it is, what must bill and bob do?

RULE

Insolvency definition

A person includes a company……..

Under section 588G, a director has a duty to prevent insolvent trading.

A director face civil and criminal liability for breach of section 588G. This can include civil penalties under subsection1317E(1)

Reason why they were worried?

Voluntary administration, winding up / Liquadition (the options available to the directors include)

Liquidation is a drastic option-shouldn’t be the 1st option if the company Is viable

Sect 435A of the act states that “the object of {Voluntary administration} is to provide immediate winding up of the company.”

The aim is to rehabilitate the company s435A. 3 option —-s439C

End the administration

DOCA (Deed of company arrangement) explain

Place company in liquataionWhat happens with voluntary administration

Moratorium (explain)

Director’s guarantees

Deed of company Arrangement or any other options

APPLICATION

There is no income just outgoing. This means the company is insolvent

CONCLUSION

They should appoint an administrator