week 7& 8 Duty of Care, Dilligence & Good Faith.docx

week 7& 8 Duty of Care, Dilligence & Good...

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Week 7 Week 8 Duty of Care & Diligence Duty of Good Faith Directors’ Duties – content The Corporations Act 2001 (Cth) contains a number of duties, known as “ directors’ duties ”, to be observed by certain persons when exercising their powers and discharging their duties for a company. Although called “ directors’ duties ”, they can, depending on the terms of the particular duty, apply to a: Director ( s 9 – “ director ”) Officer ( s 9 – “ officer ”) Secretary ( s 204A s 204F – “secretary of a company”) Employee Directors’ Duties – issues Accordingly, the following issues must be examined: What are the sources of the duties? Who owes the duties? To whom are the duties owed? What are the duties? What are the consequences of breach? Directors’ Duties – sources General Law: Fiduciary Duties ( s 185 ) 受托责任 , and principles and rules (derived from case law) of ( s 9 – “ general law ”): Common Law, and Equity Statute: restatement / modification of the General Law duties & obligations in addition to the General Law ( s 185 ) s 179 : This Part (Part 2D.1 – e.g. ss 180 – 183) sets out some of the most significant duties of directors, secretaries, other officers and employees of corporations. Other duties are imposed by other provisions of this Act and other laws (including the general law). s 185 : ss 180 – 184 have effect in addition to, and not in derogation of, any rule of law relating to the duty or liability of a person because of their office or employment in relation to a corporation Directors’ Duties – who owes them? General Law duties : directors Statutory duties : s 180 & s 181 – directors / officers s 182 & s 183 – directors / officers / employees s 191 & s 208 – directors + persons related to directors s 588G – directors s 9 – extended definitions: director / officer
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Week 7 Week 8 Duty of Care & Diligence Duty of Good Faith de facto director / de facto officer shadow director / shadow officer Directors’ Duties – categories Duties of care, skill and diligence: s 180(1) exercise reasonable care and diligence prevent insolvent trading Duties of loyalty and good faith: fiduciary duties + s 181 act in good faith in the best interests of the company exercise powers for proper purposes avoid conflicts of interest avoid secret profits and misappropriation Directors’ Duties – categories Duties of care, skill and diligence exercise powers / discharge duties with reasonable care and diligence: General Law Statute: s 180(1) prevent insolvent trading: Statute: s 588G Duties of loyalty and good faith exercise powers / discharge duties in good faith in the best interests of the company General Law Statute: s 181(1)(a) exercise powers / discharge duties for a proper purpose General Law Statute: s 181(1)(b) avoid conflicts of interest General Law Statute: s 182 & s 183 Statute: s 191 & s 208
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