BLAW20001 Lecture Notes - Lecture 11: Oppression Remedy, Civil Penalty, Personal Rights
19 Jun 2018
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CORPORATE LAW WEEK 11
Consequences of breach of duty and members’ remedies
Who enforces the duties? Statutory duties are enforced by ASIC.
Company compensation remedy:
General law duties are enforced by the company and are normally a decision of the board and members are able to
bring action if directors are involved. Members may have separate statutory remedies on the facts.
ASIC enforcement: ASIC has a range of powers to enforce the Corporations Act. For Criminal breaches of the Act:
Special offences:
s 184:
s 588G(3):
s 209(3):
Up to $420,000 fine and/or 5 years jail. Actual penalty decided by court.
Prescribed offences:
s 1311:
$1050 fine- penalty notice imposed by ASIC.
Civil penalty provisions: Pt 9.4B:
Include directors duties in s180-183
Insolvent trading in s 588G
Breach of Ch 2E (related parties)
Breach of Ch 2J (capital maintenance)
-ASIC will apply to court for a declaration of contravention
-Civil standard of proof, rules of evidence and procedure
Court can make these orders on ASIC’s application:
-Pecuniary penalty up to $200,000 s 1317G
-Disqualification order: s 206C
-Compensation order: s 1317H
The company can also apply for compensation under s 1317H even if there is no intervention by ASIC.
s 1317G:
s 1317H:
s 206C:
Can the director be forgiven for breach of duty?
The director can be forgiven by the court under s 1317S (civil penalties) and s 1318 (civil liabilities e.g. general law
duty breaches). The requirements are as follows:
-The officer acted honestly; and
-Considering all circumstances, it is “fair” for the officer to be excused from liability.
s 1317S:
s 1318:
Company remedies- breach of general law duties:
-Injunction to stop a future action
-Compensation or damages
-Account of profits (Regal (Hastings))
-Recession of contract
-Constructive trust
-Some statutory remedies are also available the company e.g. s 1317H compensation.
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-Ratification by the company: ordinary resolution of members in a general meeting can ratify some breached
of general law duties. Members must be given full information and the result is the director or officer cannot
be sued by the company. This is NOT AVAILABLE for statutory duties Miller v Miller. The company cannot
ratify where:
-It is oppressive
-Company is virtually insolvent
-It breaches the equitable limitation
-Takes away a member’s persona right
-Where the company property is being taken by
directors or majority members
-Where directors are acting for an improper
purpose.
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Document Summary
Consequences of breach of duty and members" remedies. General law duties are enforced by the company and are normally a decision of the board and members are able to bring action if directors are involved. Members may have separate statutory remedies on the facts. Asic enforcement: asic has a range of powers to enforce the corporations act. Special offences: s 184: s 588g(3): s 209(3): Up to ,000 fine and/or 5 years jail. Asic will apply to court for a declaration of contravention. Civil standard of proof, rules of evidence and procedure. Court can make these orders on asic"s application: The company can also apply for compensation under s 1317h even if there is no intervention by asic. s 1317g: s 1317h: s 206c: The director can be forgiven by the court under s 1317s (civil penalties) and s 1318 (civil liabilities e. g. general law duty breaches).
