Commercial and Corporation Law Corporations Act

Question: Discuss about theCommercial and Corporation Lawfor Corporations Act. Answer: It has been advisable to the directors that Serena being the director has breached her duty as per the duties which have been mentioned under Corporations Act as she had a personal interest an she did not worked in good faith which has been a primary duty of the director to act for the interest of the corporation which she failed to do. As in that there has been several common law and statutory duties of the director which have been mentioned under the Corporations Act 2001 but the main duty was to act with loyalty and to be fiduciary. In the case of Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41 it has been affirmed that director has been regarded as an agent of the principal so he have been granted by common law a duty to act in best interest of the members and the corporation. Fiduciary duty of the director includes: Obligation to maintain caution; Obligation to evade conflict of concern etc whereas the lawful duty of a director includes (Legal Services Commission of South Australia, 2016): To proceed with sensible concern and carefulness (s 180); Make the ruling in good faith and for an appropriate rationale (s 181); Not to inappropriately make use of their position in order to attain an help for themselves to Cause disadvantage to the corporation (s 182); Not to abuse the data of the corporation (s 183) (Australian Institute of Company Directors, 2016); Not to irresponsibly or deliberately fraudulently misuses their position or data they gained as it would amount to criminal offence (s 184); To depend on the data or suggestion provided by others if it was made in good faith was sensible unless contrary proved (189); To be apprehended accountable for the dealings of the delegate 190 Reveal certain welfare (s191); Give other directors a standing notice about an interest (s 192) etc As per section 1317E some declarations have been made which would amount to infringement and financial penalty orders have been described under s 1317G for such violations which would be applicable on the directors. As per the business Judgment rule courts would not appraise the virtues of the trade decisions made by the directors so the director must act in the best interest of the corporation. This defense only be relevant where there was a contravention of the duty of car under s 180. And majorly defenses have been described under section 1318 of the Act which affirms the power to award relief (Australasian Legal Information Institute, 2016). Failure to comply with the obligation can have severe consequences comprising up to 5 years jail time, criminal and civil penalties of up to $200,000, disqualification from managing a corporation and may also ultimately leave a director personally liable for the corporations debts. In the case of ASIC v Rich it was affirmed that the Chairman have high standards than minimum and their duties include observing the general performance of the board, flow of economic data to board etc. And as per the matter of ASIC v Adler, where it was clearly stated that the managing director have the overall duty for the daily management of the corporations trade so serena being the chairman and the director of the corporation and Blair being the director being should have worked and acted for the benefit of the corporation. But in the current case only Blair acted in good faith and Serena did not as she had a personal interest involved which has been a business rule of section 180. In another case of Healey v ASIC the court held the director has violated s 180 of the Act as he have a duty to read and focus on the contents of the statements which they were going to be approving. So, as a consequence of breaching the duty of care the director would be liable for civil penalty provisions enforced by ASIC. Wherein the corporation can ask the court to: Disqualify an individual from administering the corporation; Pay penalty of up to $200K; Pay compensation for loss. And if the violation of common law the duty was enforced by the corporation the the corporation can ask for Compensation and damages. In Daniels v AWA Ltd it was affirmed that the auditor, AWAs executive directors were negligent. But AWAs non-executive directors were not negligent as they have different Standard of Care than the executive directors of the corporation. It has been advised to Nathaniel that the yes, the contract was properly executed as it has been clearly stated in section 127 that a corporation can execute the contract if it was witnessed by 2 directors or a director of the corporation (Australasian Legal Information Institute, 2016). References Australasian Legal Information Institute. (2016) Corporations Act2001 - SECT 1318 Power to grant relief.[Online] Commonwealth Consolidated Acts. Available from: https://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s1318.html [Accessed on 20/10/16] Australasian Legal Information Institute. (2016) Corporations Act2001 - SECT 127 Execution of documents (including deeds) by the company itself.[Online] Commonwealth Consolidated Acts. Available from: https://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s127.html [Accessed on 20/10/16] Australian Institute of Company Directors. (2016) What are the duties of directors?[Online] Australian Institute of Company Directors. Available from: https://www.companydirectors.com.au/membership/the-informed-director/what-are-the-general-duties-of-directors [Accessed on 20/10/16] Legal Services Commission of South Australia. (2016) General Duties of Directors - Corporations Act 2001 (Ctth).[Online] Available from: Legal Services Commission of South Australia. [Accessed on 20/10/16]