ILAC corporations example
ISSUES:
Issue 1: Is Patricia an officer of Stadium Enterprises Pty Ltd? And is Dan an officer of Fancy Pants Pty Ltd?
Issue 2: Has Patricia breached her duty to act in good faith in the best interests of the company when advising her sister Faye, that SEPL were buying a large amount of shares in FPPL?
Issue 3: Has Patricia improperly used company information to gain advantage for herself and/or her sister?
Issue 4: Has Patricia improperly used her position to gain advantage for herself and/or her sister?
Issue 5: Has Patricia breached the prohibition of insider trading through the use of price-sensitive information when engaging her sister to buy shares in FPPL?
Issue 6: Has Dan breached the director’s duty to prevent insolvent trading in FPPL through purchasing a new fabric cutter machine at $300,000?
LAW:
Law 1: Section 9 CA – Definition of an officer
Law 2: Section 181 CA – Good faith ASIC V Adler – Failure to act in good faith and best interests of the company
Law 3: Section 183 CA – Use of information ASIC v Vidler – Improperly using information gained from the position of Director
Law 4: Section 182 CA – Use of position ASIC v Adler – Improperly using his position as a director
Law 5: Section 1043A CA – Insider Trading
Law 6: Section 588G CA – Insolvent Trading
APPLICATION:
1. S.9 defines an officer as director or secretary of a company. As we are told that Patricia is a director of SEPL, and Dan is a director of FPPL they are classified as officers under the CA.
2. S.181 states, “Directors must exercise their powers and discharge their duties in good faith in the best interests of the corporation and for a proper purpose” (slides). In this case Patricia has failed to act in good faith of SEPL through advising her sister that SEPL are buying a large amount of shares in FPPL. Because of Patricia’s actions, SEPL lost their chance to buy shares at a lower cost, resulting in an additional cost to SEPL of $100,000. Patricia has not
Issue 1: Is Patricia an officer of Stadium Enterprises Pty Ltd? And is Dan an officer of Fancy Pants Pty Ltd?
Issue 2: Has Patricia breached her duty to act in good faith in the best interests of the company when advising her sister Faye, that SEPL were buying a large amount of shares in FPPL?
Issue 3: Has Patricia improperly used company information to gain advantage for herself and/or her sister?
Issue 4: Has Patricia improperly used her position to gain advantage for herself and/or her sister?
Issue 5: Has Patricia breached the prohibition of insider trading through the use of price-sensitive information when engaging her sister to buy shares in FPPL?
Issue 6: Has Dan breached the director’s duty to prevent insolvent trading in FPPL through purchasing a new fabric cutter machine at $300,000?
LAW:
Law 1: Section 9 CA – Definition of an officer
Law 2: Section 181 CA – Good faith ASIC V Adler – Failure to act in good faith and best interests of the company
Law 3: Section 183 CA – Use of information ASIC v Vidler – Improperly using information gained from the position of Director
Law 4: Section 182 CA – Use of position ASIC v Adler – Improperly using his position as a director
Law 5: Section 1043A CA – Insider Trading
Law 6: Section 588G CA – Insolvent Trading
APPLICATION:
1. S.9 defines an officer as director or secretary of a company. As we are told that Patricia is a director of SEPL, and Dan is a director of FPPL they are classified as officers under the CA.
2. S.181 states, “Directors must exercise their powers and discharge their duties in good faith in the best interests of the corporation and for a proper purpose” (slides). In this case Patricia has failed to act in good faith of SEPL through advising her sister that SEPL are buying a large amount of shares in FPPL. Because of Patricia’s actions, SEPL lost their chance to buy shares at a lower cost, resulting in an additional cost to SEPL of $100,000. Patricia has not