corporation law cheating paper

Topics: Board of directors, Bankruptcy, Fiduciary Pages: 17 (7058 words) Published: August 13, 2014
Directors’duties(dd): I.Duties of care and diligence:1whether is a director(d)?s9definesas:(a)appointed:(i)executive director(ii)alternative director(iii)non-executive director(iv)nominee director.(b) not validly appointed (i)they act in the position of a d (de facto d);(ii)d of coy or body are accustomed to act in accordance with the person’s instructions or wishes. (shadow d).2.duty of care and diligence:Assessing whether a breach has occurred:(i)were a reasonable d in the corp’s circumstances and(ii)has the position of d had the same responsibilities within the corp(1)must possess degree skill. Form a view as to coy's financial state; dependent on knowledge and experience.(2)exercise powers with care: take into account knowledge, experience and size of co; basic duty: guide and monitor management; be familiar and understand coy's activities and financial status(commonwealth bank of Australia v Friedrich(1991)).(3)be diligent in performance of functions:attend meetings unless exceptional circumstances(Vrisakis v Australian Securities Commission(1993));conduct periodic review of coy's financial statements(Daniels v Anderson(1995)). s180(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.(i)care.InDaniels v AWA Ltd, the court proposed the minimum standards of care, skill and diligence expected of all directors:(a) obtain a basic understanding of their coy's business (b) keep informed about and monitor the coy's activities and regularly attend board meetings (c) monitor the coy's financial position.All coy d owe the basic duty of sufficiently monitoring the coy’s affairs by maintaining an awareness of the coy’s activities and financial status. Special board position- Managing director, MD and CEO may have an extra obligation to seek to protect the coy’s interests and to fail to do so may be negligence. Chief Financial Officer, the CFO is responsible for ensuring that flow of financial information within the coy and to the public is accurate and sufficient to ensure that the coy complies with its legal obligation.Objectivetest:what a reasonable person would have know, done or believe(Deputy commissioner of Taxation v Clark(2003)).Non-executive d owe a lesser standard of care? (1) non-e d cannot avoid liability by claiming their non-e status allows them to perform their functions to a lesser standard than executive d; (2) nature of obligation is determined in accordance with d's actual role;(3)how d discharge monitoring role depends on their position and responsibilities(ASIC c Rich(2003)).3.Statutory defences:(i)business judgment rule:s180(2)(not apply to insolvent trading): business judgment was made in good faith for a proper purpose; director does not have a material personal interest(ASIC v Adler(2002)).they inform themselves about the subject matter; they rationally believe the judgment is in the best interest of coy(ii)delegation of responsibility to others.①D could only rely on delegates if they were sufficiently monitoring coy’s affairs and manage the coy business so as to de aware of there were irregularities(Daniels v Anderson).The d had no grounds to suspect that delegate was acting improperly.②Ds are responsible for actions of the person to whom they delegate their powers and functions:s190.Except:s190(2)d believe on reasonable grounds that delegate would exercise power in conformity with duties imposed on d;the d believe on reasonable grounds and in good faith and after making proper inquiries that the delegate is competent and reliable.(iii)reliance on others:s189 d can reasonably rely on info and advice provided by others only if the reliance made in good faith;d only rely on...
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