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

Corporate law question answer hintnnQuestion no.1 hintnnDirector’s dutiesnnDuty of care skill diligence section 180nnCase applied –(a) AWA v Danielsnn                                (b) Daniels v AndersonnnDiscuss the court of appeal decision what must directors do to comply with their duty? List the things Explain difference between executive and non-executive directorsnnIs the duty the same for both?nnFormat letternnDear ASICnnThe purpose of this letter is to advise whether there have been any breaches of corporation ACT 2001 (cth)nn1^st 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)n

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• Conflict of in-front

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• Common law + Section 182-183

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• Relevant case

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• Duty of disclosure (Public Company)

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• Remedies (Common law, Civil + Criminal law)

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nBreach of director’s duty (Conflict of interest)nnBreach of fiduciary dutiesnn nnIn last part of letternnYou have good reasons to take action against these director and to seek remedies as discussednnQuestion no.2 hintnnIssue nnWhat Rodney’s legal remediesnnRulesn

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

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2. Removal as directors (pty co, rule)

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3. Discuss remedies – majority shareholder are wrong does who will not bring action.n
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   1. S-232

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   2. S-236(Statutory derivation action)

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nMost common examples of Conflict of interestn

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• Diversion of business opportunity. Green V bertobell Industries pty ltd (1982) 1 ASIC 1.Cook V Deeks {1916} 1 AC ssa

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nMisuse of company funds :-Paul A Davies (aust) pty ltd V DaviesnnSecret profits:-  Regal (Hastings) Ltd V Gullivernn n

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1. Member remedies, directors/ Majority stakeholders Vs members minority shareholders

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nStatutory remediesn

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• 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 :Fenutopty Ltd Vs Bosjak Holding pvt Ltd.

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• Derivate action : S236-237n
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  1. Unlikely the company itself will bring action

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  2. Serious question

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• Statutory injunction : s1324

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• Winding up the company : S461

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nDirectors act in their own interestnnApplicationn

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• What have lily and morris done wrong?n
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  • Bonus

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  • Cars

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  • Set up new company to direct business

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• Personal action (s232)n
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  • Rodney wants to protect $100,000.00

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  • Excluded from management

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nHe is affected shareholders. S233 remedy-winding upnn n

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• S236

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nRodney needs “leave” of the courtn

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• Serious question to be tried

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• Directors/majority shareholders not likelyto defend company against wrongdoes.

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nCan seek repayment to co, of bonuses profit from diverted contract.nnCan seek injunction to stop payment of bonuses.nn nnConclusionnnQuestion no.3 hintnnDefinition of solvency sec 95A,nnSection 95A of the corporation act 2001 (cth) statesnnISSUEnnIs the company insolvent, if it is, what must bill and bob do?nnRULEn

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• Insolvency definition

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• A person includes a company……..

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

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

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• Reason why they were worried?

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

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

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

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

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• End the administration

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• DOCA (Deed of company arrangement) explain

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• Place company in liquataion

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• What happens with voluntary administrationn
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  • Moratorium (explain)

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  • Director’s guarantees

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  • Deed of company Arrangement or any other options

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nAPPLICATIONnnThere is no income just outgoing. This means the company is insolventnn nnCONCLUSIONnnThey should appoint an administrator