Lecture 11 BFA601 Semester 2 2018.pptx

Proof of reasonable steps appointment of external

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© Proof of reasonable steps: Appointment of external administrator Consider what steps were taken and the results (Deed of company arrangement?) Metropolitan Fire Systems Pty Ltd v Miller & Ewins (1997) DIRECTORS’ DUTIES(5S) Duty to prevent insolvent trading (10.128) Cont. DIRECTORS’ DUTIES(5S) Duty to prevent insolvent trading (10.128) Cont.
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© The second component of directors’ fiduciary duties (the first being the duty to act with good faith) is this duty to avoid situations where, without consent of the company, the director’s personal interests (or another interest which the director is bound to protect) conflicts or may possibly conflict with their duty to the company. DIRECTORS’ DUTIES (6c) Rules governing directors’ disclosure of material personal interests (10.47) DIRECTORS’ DUTIES (6c) Rules governing directors’ disclosure of material personal interests (10.47)
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© A director who has a material personal interest must give directors notice of that interest s 191(1) The notice must be detailed and explain any conflicts Less stringency applies to proprietary companies, and does not apply at all for single person companies A director can give standing notice detailing the extent of their interest DIRECTORS’ DUTIES (6s) Rules governing directors’ disclosure of material personal interests (10.47) DIRECTORS’ DUTIES (6s) Rules governing directors’ disclosure of material personal interests (10.47)
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© Aim is to restore the company to the position they were in before the breach occurred Damages and compensation: directors and officers may be liable to pay compensation to the company Account of profits: officers must hand back profits made from a breach of duty Rescission of contract: contracts held by officers are ended DIRECTORS’ DUTIES (RC) Common law remedies available to the company for breach of directors’ duties (10.129-132) DIRECTORS’ DUTIES (RC) Common law remedies available to the company for breach of directors’ duties (10.129-132)
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© Return of property: court order for defaulting officers to return company property Constructive trusts: if an officer is holding property belonging to the company it is determined to be held in trust for the company Injunction: a stop order issued by a court against the officers DIRECTORS’ DUTIES (RC) Common law remedies available to the company for breach of directors’ duties (10.133-135) Cont. DIRECTORS’ DUTIES (RC) Common law remedies available to the company for breach of directors’ duties (10.133-135) Cont.
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© Civil penalty provisions Declaration of contravention Sections 180–183 and s 588G(2) of the Corporations Act are civil penalty provisions. ASIC can make a declaration of contravention DIRECTORS’ DUTIES (RS) Statutory penalties for breach of the statutory directors’ duties DIRECTORS’ DUTIES (RS) Statutory penalties for breach of the statutory directors’ duties
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© Pecuniary penalty orders: directors can pay up to $200,000, a company up to $1m, payable to ASIC Disqualification: the officer is disqualified
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