...Asic vs Adler Introduction Since ASIC is a corporate entity, it can engage in legal action with other corporate companies that it suspects to be committing criminal or civil offences within the financialsystem. There are several famous court cases that ASIC has been involved with in Australian law and ASIC vs Adler is one of the cases. The sections that defendants commonly breached include ss180, 181, 182, and 183, which involve failing to act in good faith, failing to provide a duty of care and diligence, and avoiding the use information gained in their positions for their own benefit. The ASIC v Adler (2002) case involved the defendant directors obtaining highly confidential information due to their positions, and using this information to base decisions upon which to buy or sell shares. The main defendant, Adler, was found guilty of breaching ss 180, 181, 182 and 183 of the Corporations Act. The court held that Alder benefited both himself and his family in the transactions. http://www.scribd.com/doc/18531717/CO5121-Assignment Facts Adler was a non-executive director of HIH Insurance Ltd (HIH). William was a director and the CEO of HIH. Fodera was a director and the finance controller of Hih. HIHC was a wholly owned subsidisry of hih. Adler requested and williams and fodera arranged for HIHC ot advance $10 million to Pacific Eagle Equity Pty Ltd (PEE), a company controlled by Adler. The $10 million payment was arranged so that no other director of HIH...
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...Question 1 1. The principle or rule known as the maintenance of share capital is based on the need to protect shareholders and creditors. Share capital is the contribution made by shareholders by subscribing shares of the company. A company’s creditors can only look to the share capital for the payment in the event of a winding up. To protect creditors, a general rule known as the rule in Trevor v Whitworth was developed to prohibit a company from reducing its share capital because a reduction in capital would prejudice the rights of creditors. Moreover, the reduction would in effect diminish the pool of funds available to the company to pay its creditors. The rule in Trevor v Whitworth has been incorporated into Ch 2J of the Corporations Act 2001.Certain provisions of the Corporations Law 2001 seek to enforce the rule Trevor v Whitworth. There are a few Sections of the Corporations Act 2001 that enforce the maintenance of capital principle (or the rule of Trevor v Whitworth). Section 254T of the Corporations Act 2001 stated that a dividend may only be paid from profits. The Section 254T of the Corporations Act 2001 states that a company must not pay a dividend unless: the company’s assets exceed its liabilities before the dividend is declared and the excess is sufficient for the payment of the dividend, and; the payment of the dividend is fair and reasonable to the company’s shareholders as a whole and; the payment of the dividend does not materially prejudice the company’s...
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...society (as a conduit or pipeline through which resources are channelled into goods and services). Where is this regulation?-Corporations Act 2001, Australian Securities and Investments Commission Act 2001, These are both federal or commonwealth (central government). Subordinate legislation also (regulations under these Acts plus ASX listing rules, statements and Guides, Accounting Standards). Finally, A lot of the important principles relating to corporations and their responsibilities have evolved via case law. The (Corporations) Act has been described as “Bloated” – why???, Moves have been made to simplify the Act, but every time this happens, something else comes in to make it bigger again! The Administrative and Enforcement bodies ASIC, Under ASIC Act, Corporations and Markets Advisory Committee, Takeovers Panel, Companies Auditors and Liquidators Disciplinary Board, Financial Reporting Council, Australian Accounting Standards Board,...
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...QUESTION: In ASIC v Healey [2011] FCA 717 at [14] Middleton J stated: A director is an essential component of corporate governance. Each director is placed at the apex of the structure of director and management of a company. The higher the office held by a person, the greater the responsibility that falls on him or her. The role of a director is significant as their actions may have a profound effect on the community, and not just shareholders, employees and creditors. Under the Corporations Act 2001 anyone who is over 18 and not disqualified can be a director. Is it appropriate that there be no qualifications for directors? Should there be different requirements for directors of proprietary companies and directors of public companies? ANSWER Sections 201B(1) and 201B(2) of the Corporations Act 2001 stipulate that directors must satisfy a minimum age requirement of 18 years and are ineligible for appointment if they are disqualified from managing corporations. This qualifies a large proportion of the Australian population. Nonetheless, it is appropriate that there be no qualifications for directors; the corporate form should be available to everyone. The onerous obligations imposed on directors set a high benchmark for Australian directorship. To require positive qualifications would disqualify many competent directors. Qualifications would be inappropriate in many business contexts because the skills required of directors are specific to the corporation. Directors can...
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...Disclosure Promoters and Pre-registration contracts • Who is a promoter? o Whaley Bridge Calico Printing v Green – court has recognised the term promoter as not a term of law but rather one of business. o Emma Silver Mining v Lewis & Son – see Twycross case – used in connection with companies involves the idea of exertion for the purpose of getting up and starting a company and also the idea of some duty towards the company. o Jubilee Cotton Mills v Lewis – professional people, such as lawyers, accountants and bankers, are often involved in carrying out professional services during the incorporation of the company. They are not regarded as promoters if they act purely in their professional capacity in the ordinary course of their profession. o Active promoters – Twycross v Grant Any person who is actively involved, either playing a minor or central role, in organising the formation of a company falls within the definition of promoter. Typical activities associated with promoters – Negotiation of preliminary agreements Preparation of company’s constitution Identifying prospective directors and shareholders Preparation of the company’s fundraising documents (e.g. an offer info statement or profile statement or prospectus) Raising capital, either before or after incorporation Payment of registration fees; and Registration f the company with ASIC. o Passive promoters – Tracey Mandalay Also extends to people who are not directly responsible for incorporation;...
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...Forgiving a Director’s Breach of Duty: A review of recent decisions By Steven Wong1 1 Senior Associate, Corrs Chambers Westgarth, Perth. The author can be contacted at steven.wong@iinet.net.au. 4980429v3 Forgiving a Director’s Breach of Duty: A review of recent decisions Introduction Amid fears of a global recession, directors may well be concerned that their conduct will be scrutinised should they be involved in a corporate collapse. Honest directors risk becoming embroiled in litigation and face “the associated reputational damage and the potential for ultimate financial ruin”2. A director must make commercial decisions. These decisions often involve some form of commercial risk and are sometimes made on the basis of limited information. It would be unjust to hold directors personally liable for a breach of duty, regardless of the situation. Section 1318 of the Corporations Act 2001 (Cth) (Corporations Act) provides some protection for company officers3 against the consequences of a breach of duty in limited circumstances4. The section confers a discretionary power on courts, which reads: If, in any civil proceeding against a person to whom this section applies for negligence, default, breach of trust or breach of duty in a capacity as such a person, it appears to the court before which the proceedings are taken that the person is or may be liable in respect of the negligence, default or breach 2 John Story, Chairman of Suncorp and Tabway quoted in the article...
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...CORPORATE LAW ASSIGNMENT TASK1 Introduction The board meeting conducted by the board of directors of Juices Ltd in December 2010 revealed a new proposal for Juices Ltd to acquire the juice container manufacturing business owner by Fruit juice containers Pty Ltd, $48 million being the settlement price. The proposal was duly considered important as Juices Ltd operated an apple and pear juice producing business and owned ore hands around Australia and the juice container manufacturing business can provide Juice Ltd’s juice containers to the customer who already falls under Juice Ltd’s target market. In order to broaden the domain of its business the proposal was put forward by Chen who is a non executive director of the company though all the board members were suppose to be present in the board meeting else one of the non executive director could non- attend the meeting as on the same day and time she met with an accident and broke her arms and unable to receive treatment from the emergency department of the local hospital. The company managing director Uma was authorized the chairman Jack to acquisition within 10 minutes. Though the company’s chief financial officers Isaacs financial report was presented on the impact of the acquisition but unfortunately he was forbidden to participate in the board meeting and gain or deliver any views in regards to the business proposals. Though it was decided in the meeting to approve the acquisition and signing up of the contract by Uma to...
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...focus is on the directors * ‘officer’ and ‘director’ definition- s9, p200 (Morley v ASIC). * ‘director’- a) appointed director regardless of the name given to their position; b) not validly appointed director but acts in position or; c) not validly appointed but the directors of the company are accustomed to act in accordance with the person’s instructions and wishes; person in a) OR b) is de facto director, within c) is a shadow director * Statutory duties, including the duty to act with reasonable care and diligence and the duty to act in the best interests of the company * Statutory requirement for all companies to have at least one director; PTY company must have at least one, with one ordinarily residing in Australia (s201A(1)); public companies must have at least 3, with at least 2 in Aus (s201A(2)) * Directors’ role: manage or supervise the management; for companies that rely on the replaceable rules as their internal governance rules, s198A provides that “the business of a company is to be managed by or under the direction of the directors’” * Company secretary: public companies must have at least one company secretary (s204A(2)) be 18yo and have at least one residing in Aus; PTY company may have one but is not required to appoint one (s204A(1)); secretary is appointed by directors; responsibilities include record-keeping and lodging certain documents with ASIC; same person may be both director and company secretary; for public companies does Corps...
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