BLAW20001 Lecture Notes - Lecture 12: Corporations Act 2001, Derivative Suit, Trading While Insolvent
6 Jun 2018
School
Department
Course
Professor
1. Who breaches s208 and s260A?
2. Directors duties: care and diligence s180, good faith s181, avoid conflict of interest s182, s183,
s191, s195, avoid insolvent trading s558G
Not: S208, s260A, s209, s260D
Quiz
1. Who enforces statutory duties?
Company S1317H - with or without ASIC's input
2. Who enforces general law duties? Who makes the decision that the company will sue a
director for breach of duty?
Company enforces general law duties - can sue or be sued in its own name, usually by the
board otherwise shareholders under members'/statutory derivative action s236.
3. What remedies are available to companies?
*list in lecture slides
*compensation/damages
* injunction to stop a future action
*constructive trust
*rescission of contract
*account of profits (eg Regal v Hastings)
4. What are the members' statutory remedies?
*oppression s232 or courts may order them s233
*court-ordered winding up s461
*statutory injunction s1324
*procedural irregularity s1322
*variation of class rights s246D
*member's derivative action s236
Question
1. Is Tina permitted to participate in the board meeting about selling the advertising to
AdWorks?
* s195: any director with a material personal interest cannot be present nor vote on the
matter at the board unless the other directors allow it
Nothing on the facts to suggest that other directors have passed resolution to be present and
vote, therefore Tina cannot be present/participate in the board meeting as there is no
approval under s191(2)
* s191: any director with a material personal interest needs to disclose formally to the board
Tina needs to as she is director of public company
She is 100% shareholder of AdWorks and gets discounted price from Eleven
Assume she has not formally disclosed (nothing on the facts)
2. Explain whether the directors breach their duties under s 180 to 183 of the Corporations Act
2001 if Eleven gives the advertising contracts to AdWorks at heavily discounted rates.
S180: duty of care
Objective test: what a reasonable person would do if in same position, same company, same
circumstances
As opposed to subjective test - case by case basis in past
Establish breach of s180: discuss each directors and standard that they will be held to, which
will affect the severity of penalty
Executives - higher standard > non-executives - lower standard
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Who breaches s208 and s260a, directors duties: care and diligence s180, good faith s181, avoid conflict of interest s182, s183, s191, s195, avoid insolvent trading s558g. *oppression s232 or courts may order them s233. Is tina permitted to participate in the board meeting about selling the advertising to. * s195: any director with a material personal interest cannot be present nor vote on the matter at the board unless the other directors allow it. Nothing on the facts to suggest that other directors have passed resolution to be present and vote, therefore tina cannot be present/participate in the board meeting as there is no approval under s191(2) * s191: any director with a material personal interest needs to disclose formally to the board. Tina needs to as she is director of public company. She is 100% shareholder of adworks and gets discounted price from eleven.
