Assignment 4: Australian Corporate Law
Lecture Four – Topic 9
Directors’ Duties 2 Preparation:
Read: Jason Harris, Anil Hargovan and Michael Adams, Australian Corporate Law (LexisNexis, 4th ed, 2013) Chapters 15, 16
Questions/Activities:
1. What is meant by good faith?
2. What are the company’s interests?
3. What are proper purposes?
4. How does a court resolve the purpose for which a power has been exercised where a director has more than one purpose?
5. (Seminar Problem) A tsunami hits the west coast of Java. The board of directors of a large mining company decide that the company should donate $5 million to the relief appeal. Has there been a breach of duty? Should this be a breach of duty?
6. Jack Black was the governing director of White Pty Ltd. He allotted shares in the company to his two …show more content…
sons Grey and Beige. Black’s daughters, who are also shareholders in White Pty Ltd have commenced proceedings against their father’s conduct. They want the allotment set aside on the basis that it was made by their father simply to ensure that they would not gain control of the company. Jack Black says that it was in the company’s best interest to ensure that his daughters never gained control.
Required: Advise the parties on the likely outcome of the legal proceedings.
7. When must a director of a company who has a material personal interest in a matter that relates to the affairs of the company give the other directors notice of the interest? What are the requirements of the notice?
8. May a director of a proprietary company that has a material personal interest in a matter that relates to the affairs of a company be present at the meeting of the vote on matters that relate to the interest?
9. Martin is one of the directors of Betta-Tea Ltd. He is also a large shareholder in AIC Packaging Pty Ltd, the sole supplier of tea packets to Betta-Tea. Martin has been receiving secret commissions from AIC Packaging in return for arranging the sale of tea packets at high prices and refusing to accept contracts from AIC's competitors (on the grounds that the competitors' products are of inferior quality).
i. Advise the other directors of Betta-Tea Ltd as to whether Martin is in breach of any common law duties or statutory duties as a director. ii. If the Betta-Tea shareholders or directors found out about Martin's dealings what action could they
take?
10. When will a court grant a director or officer relief for breach of a statutory duty and when won’t a court do so?
11. Can a company permit or ratify a breach of a statutory duty?
12. When may a company permit or ratify a breach of a general law duty?
Note: Please produce a written answer for Question 5 using the IRAC approach and bring your answers in print form to your lecture class.
1.
Directors’ Duties 2 Preparation:
Read: Jason Harris, Anil Hargovan and Michael Adams, Australian Corporate Law (LexisNexis, 4th ed, 2013) Chapters 15, 16
Questions/Activities:
1. What is meant by good faith?
2. What are the company’s interests?
3. What are proper purposes?
4. How does a court resolve the purpose for which a power has been exercised where a director has more than one purpose?
5. (Seminar Problem) A tsunami hits the west coast of Java. The board of directors of a large mining company decide that the company should donate $5 million to the relief appeal. Has there been a breach of duty? Should this be a breach of duty?
6. Jack Black was the governing director of White Pty Ltd. He allotted shares in the company to his two …show more content…
sons Grey and Beige. Black’s daughters, who are also shareholders in White Pty Ltd have commenced proceedings against their father’s conduct. They want the allotment set aside on the basis that it was made by their father simply to ensure that they would not gain control of the company. Jack Black says that it was in the company’s best interest to ensure that his daughters never gained control.
Required: Advise the parties on the likely outcome of the legal proceedings.
7. When must a director of a company who has a material personal interest in a matter that relates to the affairs of the company give the other directors notice of the interest? What are the requirements of the notice?
8. May a director of a proprietary company that has a material personal interest in a matter that relates to the affairs of a company be present at the meeting of the vote on matters that relate to the interest?
9. Martin is one of the directors of Betta-Tea Ltd. He is also a large shareholder in AIC Packaging Pty Ltd, the sole supplier of tea packets to Betta-Tea. Martin has been receiving secret commissions from AIC Packaging in return for arranging the sale of tea packets at high prices and refusing to accept contracts from AIC's competitors (on the grounds that the competitors' products are of inferior quality).
i. Advise the other directors of Betta-Tea Ltd as to whether Martin is in breach of any common law duties or statutory duties as a director. ii. If the Betta-Tea shareholders or directors found out about Martin's dealings what action could they
take?
10. When will a court grant a director or officer relief for breach of a statutory duty and when won’t a court do so?
11. Can a company permit or ratify a breach of a statutory duty?
12. When may a company permit or ratify a breach of a general law duty?
Note: Please produce a written answer for Question 5 using the IRAC approach and bring your answers in print form to your lecture class.
1.