LAWS2203 Study Guide - Final Guide: Business Judgment Rule, Unfair Preference, Selective Reduction
Corporation Law 2018 SEMESTER 1
Note: ss180-198F (Part 2D.1)
Director
duties
Source of Law
Elements
Applicants
Remedies
Defences
Duty of care,
skill and
diligence –
CIVIL
OBLIGATION
ONLY
Section 180 &
CL are the same
*start with the
statue
*supplement
with case laws
(1) A director or other officer of
a corporation must exercise
their powers and discharge their
duties with the degree of care and
diligence that a
reasonable person would exercise if
they:
(a)
were a director or officer of
a corporation in
the corporation's
circumstances; and
(b)
occupied the office held by,
and had the same
responsibilities within
the corporation as,
the director or officer.
http://www8.austlii.edu.au/cgi-
bin/viewdoc/au/legis/cth/num_act/ca
2001172/s180.html
ASIC and
Company,
(Liquidator)
ASIC
If there is a contravention of civil
penalty provision
ASIC applies for a declaration of
contravention (s 1317J(1)) ,, and the
court must make a declaration if
satisfied the person has contravened
a civil penalty provision ( s 1317E)
can then apply for
✓ Pecuniary order – s 1317G
✓ Disqualification order- s
206C
✓ Compensation order-
1317J(1)
Company
Seek compensation under s 1317H
✓ The Court may order the
person who has contravened
a CPP to compensate damage
✓ Damage can include profits –
1317H(2)
✓ Can seek compensation order
by intervening in an
business judgment rule,
reliance and delegation – ss
180(2), 189 and 190
Ratification by general
meeting
Court granting relief- s
1318
SECT 1317S Relief from
liability for contravention of
civil penalty provision
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application by ASIC under s
1317J(3) , or in an action on
its own under ss 1317J(2)
✓ Does not need a declaration
unlike ASIC
http://www5.austlii.edu.au/au/legis/ct
h/consol_act/ca2001172/s1317h.html
http://www8.austlii.edu.au/cgi-
bin/viewdoc/au/legis/cth/num_act/ca
2001172/s1317j.html
Duty to act in
good faith in the
best interests of
the company-
CIVIL
OBLIGATION
ONLY
Section 181 &
the CL are the
same
*start with the
statue
(1) A director or other officer of
a corporation must exercise
their powers and discharge their
duties:
(a)
in good faith in the
best interests of
the corporation;
http://www8.austlii.edu.au/cgi-
bin/viewdoc/au/legis/cth/num_act/ca
2001172/s181.html
ASIC and
Company
Reliance ( s 189)
Delegation ( s 190)
Ratification by general
meeting
SECT 1317S Relief from
liability for contravention of
civil penalty provision
*Criminal Duty-
181
Section 184(1)
(1) A director or other officer of
a corporation commits an offence if
they:
(a)
are reckless; or
(b)
are intentionally dishonest;
ONLY ASIC
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and fail to exercise their powers and
discharge their duties:
(c)
in good faith in the
best interests of
the corporation;
http://www8.austlii.edu.au/cgi-
bin/viewdoc/au/legis/cth/num_act/ca
2001172/s184.html
Improper use of
position- CIVIL
OBLIGATION
ONLY
Section 182
Impropriety –
Objective Test
from Common
Law
(1) A director, secretary,
other officer or employee of
a corporation must not improperly
use their position to:
(a)
gain an advantage for
themselves or someone else;
or
(b)
cause detriment to
the corporation.
http://www8.austlii.edu.au/cgi-
bin/viewdoc/au/legis/cth/num_act/ca
2001172/s182.html
ASIC,
Company
SECT 1317S Relief from
liability for contravention of
civil penalty provision
*Criminal Duty
-182
Section 184(2)
(2) A director, other officer or
employee of a corporation commits
an offence if they use their position
dishonestly:
(a)
with the intention of directly
or indirectly gaining an
ONLY ASIC
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Document Summary
*supplement with case laws (1) a director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they: Company, (liquidator) (a) (b) were a director or officer of a corporation in the corporation"s circumstances; and occupied the office held by, and had the same responsibilities within the corporation as, the director or officer. http://www8. austlii. edu. au/cgi- bin/viewdoc/au/legis/cth/num_act/ca. If there is a contravention of civil penalty provision. Asic applies for a declaration of contravention (s 1317j(1)) ,, and the court must make a declaration if satisfied the person has contravened a civil penalty provision ( s 1317e) can then apply for. Disqualification order- s business judgment rule, reliance and delegation ss. The court may order the person who has contravened a cpp to compensate damage. Can seek compensation order by intervening in an.