Lecture 11 BFA601 Semester 2 2018.pptx

The duty exists under common law and statute green

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The duty exists under common law and statute Green & Clara Pty Ltd v Bestobell Industries Pty Ltd [1982] What happened in this case? DIRECTORS’ DUTIES(4c) Duty not to misuse information obtained as a director (10.121) DIRECTORS’ DUTIES(4c) Duty not to misuse information obtained as a director (10.121)
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© Directors, officers and employees must not use information to gain an advantage for themselves or an associate, or to the detriment of the company. Australian Securities and Investments Commission v Vizard (2005) What happened in this case? DIRECTORS’ DUTIES(4s) Statutory duty not to misuse information s 183 (10.121-123) DIRECTORS’ DUTIES(4s) Statutory duty not to misuse information s 183 (10.121-123)
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© Section 184 of the Corporations Act provides a series of criminal offences which arise when the behaviour of directors falls far short of acceptable standards due to intentional dishonesty or recklessness: Good faith. A director commits an offence if they are reckless or intentionally dishonest, and fail to exercise their powers and discharge their duties in good faith in the best interests of the corporation or for a proper purpose. Use of position. A director commits an offence if they use their position with intentional dishonesty or recklessly in order to directly or indirectly gain an advantage for themselves, or someone else,or cause detriment to the corporation. Use of information. Any person who obtains information because they are, or have been, a director of a corporation commits an offence if they use the information with intentional dishonesty or recklessly in order to directly or indirectly gain an advantage for themselves, or someone else, or cause detriment to the corporation. DIRECTORS’ DUTIES (s) SECT 184 Good faith, use of position and use of information--criminal offences DIRECTORS’ DUTIES (s) SECT 184 Good faith, use of position and use of information--criminal offences
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© A company is solvent when is can pay all debts as they become due and payable, otherwise the company is insolvent S 588G of the CA imposes a duty on the directors to prevent insolvent trading by their company. When the company incurs a debt, the company is insolvent at that time or becomes insolvent as a result, and there are reasonable grounds for suspecting that the company is insolvent, or would become insolvent as a result of taking on that debt DIRECTORS’ DUTIES (5s) Duty to prevent insolvent trading (10.123) DIRECTORS’ DUTIES (5s) Duty to prevent insolvent trading (10.123)
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© Defences to insolvent trading: s 588H If it can be proved that at the time the debt was incurred: The director had reasonable grounds to expect the company was solvent The director had reasonable ground to rely on information from a reliable source The director did not take part in the management of the company at the time of the debt The director took all reasonable steps to prevent the company from incurring the debt DIRECTORS’ DUTIES(5S) Statutory defences (10.125) DIRECTORS’ DUTIES(5S) Statutory defences (10.125)
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