As per the Corporation Act 2001, Director of the entities have certain duties to follow:-
Rule of Business Judgement: According to this rule, the director of the entity should act upon due care and in good faith, the actions to be taken in the interest of the Company or the shareholders of company.
Situation 1: According to the Corporation Act, Directors of the entities should not misuse their position for any personal interest. This situation, Polyester, the director of Style Pty limited has transferred an amount of $65,000 which tells us that he has breached his duties by using the company's money for personal debt. So he has done breach of his duty in this case.
Situation 2: As per the Corporation Act 2001, the duties of the director is to act in good faith ,duty with care and diligence, not to trade at the time of insolvent, not to use the information and position for improper purpose, act in interest of the company. In the given situation, polyester knows about the financial condition of the company and have transferred the assets to the proprietary company which is not in the interests of the company. Thus he has breached the duties as a director according to the company act.
In Situation 3 It is the duty of the director to act diligently and with due care in the interest of the company. According to this rules, the credit limit is only upto $20,000 but the director allowed $45,000 which is more than the limit by $25,000. The actions is not taken in the interest of the company but taken in personal interests. He cannot use the business judgement rule in this particular situation. It is said that she has breached her duties as a director of the company and liable for the breach of statutory duty.
Purchasing shares in a company means that the buyer is the owner of certain percentage of a company's total equity. And once he or she becomes shareholder and person’s name is registered in the share register of the company. He becomes the legal member of the company.
The individual institution that signs the Association Memorandum (MOA) is a member of the organization. When the company resists the details of part of the organisation's register, it is at this point an individual from the organization. The investor of an organisation, regardless of the number or the rate of property in the organization, is either individual or institution that has purchased the shares of a specific organization. The investor cannot be a person from the organization in such a way until the investor's details or the shareholder are not included in the organization's register book.
As per the corporation Act, a member may be cease to become a members in one of the following ways
i) Transfer
A transfer here means the transfer of shares from an existing member to a third party resulting a sales transaction..
ii) Forfeiture
If a company’s article of association authorizes directors to forfeit a member’s hare and the directors forfeit all of the shares held by a member, then this member is cease to be a member. This will be effective from the date of forfeiture,
iii. Surrender of Shares, if a member surrenders all his holding or shares with the approval of director, then the member’s name is ceased from the membership.
iv. In case of death , when a member dies his membership is automatically ends and transfer to his nominee or legal successor and there will be change in the membership register of the company.
v. Bankruptcy , if a member becomes bankrupt his membership get ceased and comes to end with virtue of Bankruptcy Act.
vi. Sale by a Company in exercise of lien
. If the Company sells ALL the shares held by a member, the membership will come to an end from the moment the buyer's name is entered in the register.
vii. Redemption of full amount redeemable preference shares can also cease a person to be member after the redemption.
As per the case study the requirement is to determine the statutory and common law positions of the directors in the given case study, there are few Remedies and Penalties as per Common law and Corporation Act which will applied to all the Directors and officers of the company as follow:
Civil Penalty as per corporation Act
As Per [10.136] to [10.140]
Statutory penalties apply to breach of statutory duties: pecuniary orders, disqualification,
Criminal Penalty as per corporation Act
Remedies
Duties and responsibilities of the Directors under Common Law and Corporation Act
Common Law |
Corporation Act |
Versna [10.115] Fiduciary Duty to act in good faith: Was the decision made honestly? [10.116 ]Powers must be exercised for a proper purpose: no conflict of interest is permitted |
[10.115] Acting in good faith is the duty to act honestly under s 181 [10.116 Directors have a duty to disclose any material personal interest under sec191 |
Director- Sergey [10.110] Duty to exercise power with due care and diligence [10.124] Duty to ensure the company is solvent according to s 95A criteria |
[10.110] S 180(1) Duty to exercise power with due care and diligence Damages or compensation [10.80] Breach of duty under section 58 G |
Director- Zviad [10.110] Duty to exercise power with due care and diligence [10.116 ]Powers must be exercised for a proper purpose: no conflict of interest is permitted [10.124] Duty to ensure the company is solvent according to s 95A criteria |
10.47 Director have to disclose any material fact or interest s191 [10.115] Acting in good faith is the duty to act honestly under s 181 10.110] Duty to act with care and diligence: s 180(1) |
Llyych [10.120] Duty not to use any information of the personal interest or gain [10.121] Duty not to misuse information obtained as a director/officer |
[10.120] s 181 an officer/ director cannot use their position for personal gain and to the detriment of the company [10.121] Under s 183 officers/directors are not permitted to use any information for personal gained in a position as a director/officer |
Mihail [10.124] Directors have a duty not allow a company to trade while insolvent (though this vague under the common law) |
[10.124] Under s 588G directors have a statutory duty not to allow a company to trade while insolvent [10.125] Under s 588H there are some defences, eg a reasonable belief that the company was solvent |
Joe should consider the following legal compliance while buying shares:
Any company can raise funds for their business reasons, may be for new investment or for other working capital requirements, generally there are two type of financing available to the corporates:
Debt -Debt is the form of borrowed fund, which can raised through debenture or in the form of bank term loan.
Equity- Equity is the shareholder’s fund and company can either issue fresh shares from its authorised capital or can get this authorised capital increase by following certain laid provision as the Corporation Act 2001
According to corporation act to corporations law, Flywell Ltd needs to be a public company as the number of non-employee shareholders in the company will be more than 50 (as they are planning to raise $11 Million from 110 investors). While fundraising, Flywell Ltd needs to ensure that they provide the disclosure form to the potential investors. This disclosure form describes all the fundraising documents and regulations needed for issuing the securities to the investors. In this case a prospectus kind of disclosure is preferred among the available disclosure formats as it provides detailed information about the system, the schematics in which the securities shall be issued.
RG254 of the Corporation Act is also related to documentation required for fund raising.
There are other disclosure documents as per section 706 of the corporation act moreover there are some exemption available on section708.
Ch 6D states and defines that with regards to fund raising securities are also defined in the same manner in sec 700(1) and S 761A of the Act
Sa.gov.au. (2014). Sources of law. [online] Available at: https://lawhandbook.sa.gov.au/ch27s02.php.
Queensland Law Handbook Online. (2015). Where Law Comes From. [online] Available at: https://queenslandlawhandbook.org.au/the-queensland-law-handbook/the-australian-legal-system/where-law-comes-from [Accessed 22 Jun. 2020].
c=au;o=Australian Government;ou=Australian Government Australian Securities and Investments Commission (2020). Fundraising | ASIC - Australian Securities and Investments Commission. [online] Asic.gov.au. Available at: https://asic.gov.au/regulatory-resources/fundraising/ [Accessed 22 Jun. 2020].
Thomson Geer. (n.d.). Home - Thomson Geer. [online] Available at: https://www.tglaw.com.au [Accessed 22 Jun. 2020].
Legislation.gov.au. (2012). Corporations Act 2001. [online] Available at: https://www.legislation.gov.au/Details/C2017C00328.
Bird, H. and Gilligan, G. (2014). [online] Available at: https://law.unimelb.edu.au/__data/assets/pdf_file/0004/1743475/FinancialServices MisconductandtheCorporationsAct2001WorkingPaperNo2.pdf [Accessed 22 Jun. 2020].
Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Corporations Law Assignment Help
1,212,718Orders
4.9/5Rating
5,063Experts
Turnitin Report
$10.00Proofreading and Editing
$9.00Per PageConsultation with Expert
$35.00Per HourLive Session 1-on-1
$40.00Per 30 min.Quality Check
$25.00Total
FreeGet
500 Words Free
on your assignment today
Doing your Assignment with our resources is simple, take Expert assistance to ensure HD Grades. Here you Go....