LAWS2301 Final Exam Notes 2020
Lectures 11 – 22 Tutorials 6 – 11 Week 6 – 11 Content
LECTURE 11 & 12 - DIRECTORS DUTIES (PART 2) ... 4
S182(1): ... 4
COOK V DEEKS (1916)1AC554: ... 4
GREEN V BESTOBELL INDUSTRIES PTY LTD (1982)WAR1: ... 4
CRIMINAL LIABILITY: ... 4
183(1): ... 4
ARTEDOMUS V DEL CASALE (2006)NSWSC146: ... 5
CRIMINAL LIABILITY: ... 5
CRIMINAL LIABILITY FOR BREACH OF DIRECTORS DUTIES - S184: ... 5
FORGIVENESS BY COMPANY FOR BREACH OF DUTY - NO LIABILITY: ... 5
o Furs Ltd v Tomkies (1936) 54 CLR 583: ... 5
o Queensland Mines Ltd v Hudson (1978) 52 ALJR 399; ... 5
STATUTORY DISCLOSURE AT BOARD MEETING: ... 5
ENTITLEMENT OF INTERESTED PARTY TO VOTE AT BOD: ... 6
S588G- INSOLVENT TRADING: ... 6
SHADOW DIRECTOR CAN BE LIABLE UNDER - S588G ... 6
4DEFENCES TO CIVIL PROCEEDINGS - S588H: ... 6
ASIC WILL TAKE EITHER; ... 7
LECTURE 13 & 14; MEMBERS' RIGHTS & REMEDIES ... 9
BALANCING COMPANIES & MEMBERS INTERESTS: ... 9
E.G. DIRECTORS ACTIONS: ... 9
REMEDIES AVAILABLE TO MINORITY SHAREHOLDERS: ... 9
MEMBERS' RIGHT TO INSPECT BOOKS: ... 9
CORRECTION OF REGISTER - S175: ... 9
VARIATION OF CLASS RIGHTS - S246D: ... 9
DECLARATION THE PROCEEDINGS INVALID -1322: ... 9
STATUTORY INJUNCTION FOR CONTRAVENTION OF CORPORATIONS ACT - S1324: ... 9
WHO MAY APPLY? ... 10
OPPRESSION S232: ... 10
WHO CAN APPLY? ... 10
ORDERS: ... 10
Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459: ... 11
John J. Starr (Real Estate) Pty Ltd v Robert R. Andrew (A'sia) Pty Ltd: ... 11
Re G. Jeffrey (Mens Store) Pty Ltd (1984) 2 ACLC 421: ... 11
Hannes v MJH Pty Ltd (1992) 10 ACLC 400: ... 11
STATUTORY DERIVATIVE ACTION: ... 11
RATIFICATION BY GM NOT A BAR TO AN APPLICATION - S239 ... 12
COURT HAS DISCRETION IN RELATION TO THE COSTS OF THE APPLICATION AND SUBSEQUENT PROCEEDINGS - S242 ... 12
WINDING UP - S461: ... 12
WHO MAY APPLY - S462(2): ... 12
EXAMPLES OF JUST AND EQUITABLE SITUATIONS: ... 12
LECTURE 15 - COMPANY'S LIABILITY FOR CONTRACTS ... 15
7.1CO ENTERS INTO CONTRACT: ... 15
EXECUTION OF CONTRACT: ... 15
INDIRECTLY: ... 15
AGENT'S AUTHORITY: ... 15
CUSTOMARY AUTHORITY: ... 15
INDIVIDUAL DIRECTOR: ... 16
CHAIRPERSON: ... 16
MANAGING DIRECTOR: ... 16
OTHER LIMITATIONS: ... 16
COMPANY SECRETARY: ... 16
SECTION 129ASSUMPTIONS: ... 16
WHEN THERE ARE TWO SIGNATURES: ... 17
LECTURE 16 - COMPANY'S LIABILITY IN TORT AND CRIME ... 17
CAPACITY OF CO - S124: ... 17
ORGANIC THEORY: ... 17
LIABILITY FOR TORTS: ... 18
THE CRIMINAL CODE ACT 1995(CTH): ... 18
LECTURE 17 - AUDITORS ... 19
INDEPENDENT REPORT ON ACCOUNTS: ... 19
DUTIES: ... 19
STATUTORY: ... 19
AUDITOR MUST FORM AN OPINION: S307 ... 19
REPORT TO MEMBERS - S308 ... 19
DUTY IN CONTRACT OWED TO COMPANY: ... 19
DUTY TO USE REASONABLE CARE AND SKILL (DUTY IN CONTRACT AND IN TORT): ... 20
Pacific Acceptance Corp Ltd v Forsyth (1970) 92 WN (NSW) 29 ... 20
Arthur Young & Co. v WA Chip & Pulp Co Pty Ltd [1989] WAR 100 ... 20
Daniels v Anderson (AWA case) (1995) 37 NSWLR 438 ... 20
CAUSATION -BUT FOR TEST: ... 20
DUTY TO OUTSIDERS - ONLY TORT LIABILITY: ... 21
PROXIMITY TEST FOR DUTY OF CARE: ... 21
LECTURE 18 - COMPANY FINANCING ... 21
SHARE CAPITAL V DEBT CAPITAL: ... 21
VARIATION OF CLASS RIGHTS - S246B ... 21
CHALLENGE: ... 21
LEGAL EFFECT OF VARIATION: ... 21
DEBENTURES S9: ... 21
LECTURE 19 - PUBLIC FUNDRAISING ... 23
6D-TO PROTECT PUBLIC BY GIVING SUFFICIENT INFORMATION ... 23
STEPS TO OFFER SECURITIES - S717: ... 23
DISCLOSURE REQUIREMENTS: ... 23
LODGING OF SUPPLEMENTARY OR REPLACEMENT DOCUMENT - S719 ... 23
CONTENTS OF PROSPECTUS - S728(1): ... 23
Reiffel v ACN 075 839 226 [2003] FCA 194 ... 23
CIVIL LIABILITY: ... 24
DEFENCES ... 24
LECTURE 20 - TRANSACTIONS AFFECTING SHARE CAPITAL ... 24
MAINTENANCE OF SHARE CAPITAL: ... 24
EXEMPTIONS: ... 24
REDUCTION OF CAPITAL: ... 24
CAPITAL REDUCTION ... 25
Re Fowlers Vacola Manufacturing Co Ltd [1966] VR 97 - Fairness ... 25
EQUAL V SELECTIVE REDUCTION - S256B(2): ... 25
CONTRAVENTION – S256D ... 25
INJUNCTION REMEDY AVAILABLE TO CREDITOR OR MEMBER IF INSOLVENCY IS AN ELEMENT OF THE ... 25
SHARE BUY-BACK - S257A: ... 25
BUY-BACK PROCEDURE – S257BTABLE ... 26
OVER 10/12LIMIT: ... 26
SELECTIVE BUY-BACK – S257D2 SITUATIONS ... 26
OTHER CONSEQUENCES – S257JTABLE ... 26
FINANCIAL ASSISTANCE TO PURCHASE COMPANY SHARES OR HOLDING COMPANY SHARES- S260A-C ... 26
PERMITTED IN 3 SITUATIONS: ... 26
S260B ... 26
CONTRAVENTION – S260D ... 26
LECTURE 21 - TAKEOVER ... 27
GENERAL PROHIBITION ON PERSON ACQUIRING RELEVANT INTEREST IN SHARES S606 ... 27
WHO IS PERSON AFFECTED? ... 27
ASSOCIATE - S12(APPLIES ONLY TO TAKEOVERS): ... 27
EXAMPLES OF EXEMPTED ACQUISITIONS - S611 ... 27
TAKEOVER BID - S616 ... 27
OFF-MARKET BID - S632(STEPS) ... 27
INFORMATION IN BIDDERS STATEMENT - S636 ... 28
INFORMATION IN TARGET'S STATEMENT: ... 28
EXPERTS REPORT IN 2 SITUATIONS - S640: ... 28
CONDITIONAL OFFERS - ONLY FOR OFF-MARKET BID - S625 ... 28
ON-MARKET BID (STEPS)- S634: ... 28
COMPULSORY ACQUISITION FOLLOWING TAKEOVER BID - S661A ... 28
COMPULSORY BUY OUT: ... 28
NO MISLEADING OR DECEPTIVE STATEMENTS - S670A ... 28
CIVIL LIABILITY S670B ... 28
DEFENCES - S670D ... 29
LECTURE 22 - EXTERNAL ADMINISTRATION CH 5 ... 29
4 WAYS: ... 29
RECEIVERSHIP: ... 29
POWERS: ... 29
DUTIES - ANALOGOUS TO DUTIES OF MORTGAGEE ... 29
LIABILITIES OF CONTROLLER: ... 30
SUPERVISION OF RECEIVER - S423: ... 30
Week 6
Lecture 11 & 12 - Directors Duties (Part 2)
S182(1):
• A director, secretary, other officer or employee of a corporation must not improperly use their position to;
o Gain an advantage for themselves or someone else or o Cause detriment to the corporation
Cook v Deeks (1916) 1 AC 554:
• Diversion of contract
o Directors negotiated a new contract on behalf of company - directors diverted that contract to another company they control
o Directors were deemed to hold the contract in constructive trust for Company. Another way is to seek an account of profits from the company they created
Green v Bestobell Industries Pty Ltd (1982) WAR 1:
• Company does not have to suffer loss
o Manager of Bestobell formed company Clara Pty Ltd which submitted successful tender. Account of profits available against Clara Pty Ltd, even though Bestobell would not have won the tender.
o Case is about Manager who is also an officer of a company
Criminal liability:
• 184(2) use of position - directors, other officers and employees
o A director, other officer or employee of a corporation commits an offence if they use their position dishonestly;
• With the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the corporation; or
• Recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an
advantage, or in causing detriment to the corporation
183(1):
• A person who obtains information because they are, or have been, a director or other officer or employee of a corporation must not improperly use the information to;
o Gain an advantage for themselves or someone else, or o Cause detriment to the corporation
