The Corporations Act 2001 (Cth) (the Act) places great emphasis on good corporate governance. Along with the rights and powers conferred by the Act, directors are also subject to a wide range of duties that are owed to the company, including members and shareholders. The duties mentioned in the Act occur concurrently with the general law duties. In order to ensure compliance with the legislation, the Act has implemented the use of civil penalty provisions to target the perceived shortfall of the previous methods of corporate law administration. Actions for contravention can only be brought forth by the Australian Securities and Investments Commission (ASIC) in its role as watchdogs of corporate law. Directors that are found in contravention …show more content…
Depending on the circumstances of the case a director, before applying for relief under s 1317S may be eligible for a defence to avoid liability. If no defence is applicable and a declaration of contravention has been made then an application for relief may be made under s 1317S. The purpose of this provision is to excuse directors from responsibility in circumstances where it would be unfair not impose liability. The rationale behind this purpose is that the law recognises at times a director may have to make risky decisions involving the company that is not for their own personal gain. In order to be relieved from liability, the court has set out three criteria that need to be answered, whether the court is satisfied that the director has acted honestly, whether looking at the circumstances as a whole the director ought to be fairly excused and to what extent should relief be imposed, partly or wholly. In relation to the element of honestly, the court looks to the director’s conduct and whether it is without ‘moral turpitude’. This is held to mean conduct without deceit or without the intention of gaining some kind of personal advantage and behaviour without carelessness or indifference. In determining whether or not the director ought to be fairly excused, the court subjectively looks to the seriousness of the breach of duty and the impact that relief will have on the public. In ASIC v Healey it was held that relief under s 1317S does not eliminate the contravention of the director but operates as a ‘dispensing power’ to pardon their
It is the duty of the shareholder who files the derivative suit to prove that the majority of the directors were financially interested in the challenged transaction or were not able to make an independent decision, so that the defence of business judgement does not apply in a particular case. Then a Special Litigation Committee (SLC) would be constituted and it consists of independent and disinterested directors. If the SLC is of the opinion that, the continuance of the derivative suit is in contravention with the interests of the company, then the court considers that business judgment rule protects the decision of SLC and grant that the suit may be dismissed. It is seen that, judges invoke the business judgment rule defence to protect boards of directors from legal liability in the vast majority of shareholder derivative
Bibliography: Turnbull, S. (1997). Corporate governance: its scope, concerns and theories. Corporate Governance: An International Review, 5 (4), pp. 180--205.
According to Corporation Act 2001 s124(1), it illustrates that ‘’A company has the legal capacity and powers of an individual both in and outside the jurisdiction” . As it were, company as a legal individual must be freely with all its capital contribution shall embrace liability for its legal actions and obligations of the company’s shareholders is limited to its investment to the company. This ‘separate legal entity’ principle was established in the case of Salomon v Salomon & Co Ltd [1987] as company was held to have conducted the business as a legal person and separate from its members. It demonstrated that the debt of company is belonged to the company but not to the shareholders. Shareholders have only right to participate in managing but not in sharing the company property. Besides ,the Macaura v Northern Assurance Co Ltd [1925] demonstrates that the distinction between the shareholders and company assets. It means that even Mr Macaura owned almost all the shares in the company, he had no insurable interest in the company’s asset. The other recent case is the Lee v Lee’s Air Farming Ltd [1961] which illustrates that the distinct legal entities between employee ad director allows Mr.Lee function in dual capacities. It resulted that the corporation can contract with the controlling member of the corporation.
The re-use of an insolvent company is protected by UK insolvency law. It helps to protect the interests of investors and creditors are not damaged by a lack of transparency relating to the director's involvement with an insolvent company, and continued involvement with its phoenix.
Over a period of time, issues of unjust enrichment have been a part of the law of restitution. This incorporates all the remedies depriving the defendant of a profit instead of granting reimbursement for the loss that the claimant has suffered. The law of restitution liberated itself only after the revolutionary judgement of the House of Lords in Lipkin Gorman v karpanle Ltd. and Woolwich Equitable Building Society v IRC. “The defence of change of position will be available to a defendant who has received property and on the faith of the receipt of that property, suffered some change in the personal circumstance”. A person, who has changed positions in ‘bad faith’, is not accessible to defence.
The distinction between an unfair prejudice petition and a statutory derivative action has always been in the nature of remedy sought by the claimant. This is arguably the point where a distinction is drawn as to whether a statutory derivative action or an unfair prejudice petition should be pursued. A d...
Hird and Blair, ‘Minding your own business – Williams v Roffey revisited: Consideration reconsidered’ [1996] JBL 254
It is further arguable that the deterrence of unconscionable conduct is the superseding intention of equitable principles. The argument that unconscionable conduct and its prevention for the purpose of equitable principles is strongly supported by the judgment within Legione v Hateley (1983) 152 CLR 406; 57 ALJR 292 in which the High Court particularly found the equitable jurisdiction should be based to release the defendant from penalties relating to their unconscionable conduct within the contract. Within Legione v Hateley, Mason and Deane JJ jointly further stated the fundamental principle in which equity acts should not allow a party to exercise any legal right to amount to unconscionable conduct.
The Act allows negligence as the sole ground unlike common law which required the claimant to establish ‘fraud’ even if negligence existed. It is believed that the ‘d...
The Australian Stock Exchange’s (ASX) Corporate Governance Council (2014) defines corporate governance as “A framework of rules, relationships, systems and processes within and by which authority is exercised and controlled within corporations”. One goal of corporate governance is for the board members to increase shareholder value (Tricker 2015). In order to achieve this, it is important that the board act appropriately and justly so that the best interest of investors are protected. This report will explore the effectiveness of JB Hi-Fi’s corporate governance. JB Hi-Fi is Australia’s largest home entertainment retailer, selling a variety of products at discounted prices. Over the years, they have maintained a substantial
As a consequence of the separate legal entity and limited liability doctrines within the UK’s unitary based system, company law had to develop responses to the ‘agency costs’ that arose. The central response is directors’ duties; these are owed by the directors to the company and operate as a counterbalance to the vast scope of powers given to the board. The benefit of the unitary board system is reflected in the efficiency gains it brings, however the disadvantage is clear, the directors may act to further their own interests to the detriment of the company. It is evident within executive remuneration that directors are placed in a stark conflict of interest position in that they may disproportionately reward themselves. The counterbalance to this concern is S175 Companies Act 2006 (CA 2006) this acts to prevent certain conflicts arising and punishes directors who find themselves in this position. Furthermore, there are specific provisions within the CA 2006 that empower third parties such as shareholders to influence directors’ remuneration.
Perhaps the legal profession should adopt an understanding of the standard conception based upon David Lubon’s, where he suggests that one’s responsibilities under the standard conception are not absolute. Rather, they are dependent upon the effectiveness of the adversary system. In this way, Jackman is correct to ‘transgress’ the generally accepted legal ethical norms in situations where the adversary system is failing the public, such as when Andrew Holland was wrongly persuaded to accept a guilty plea. It appears that Jackman applied Luban’s alternative model of legal ethics by convincing Holland to pursue a more just course of action. In these instances, a lawyer’s exertion of moral influence should be viewed as necessary to offset the power imbalance between the claimant and defendant and, thus furthering the profession’s goal of
In Australia, some legislation Acts are also there likes Lloyd-La Follette (1912), Sarbanes-Oxley (2002), and Dodd-Frank (2010). But in Australia, there have not been so much protection acts for Private companies’ whistleblowers like public sectors . The UK is fortunate to have The Public Interest Disclosure Act, a single, comprehensive Whistleblower protection law that provides protection to both public and private sector whistleblowers).
As previously stated, during my legal experience and particularly while working in judiciary, I dealt with variety of highly sensitive matters, including divorce and child custody proceedings. Thus confidentiality was paramount and any breach would result into disciplinary action. Similarly, when dealing with these matters as well as when representing retired coalminers in their claims for compensations for occupational diseases, I had to adopt sympathetic approach while maintaining professionalism.
The damages were declined on the grounds of economic loss. The leading case which is applicable with regard to duty of care is the decision of House of Lords in Caparo Industries Plc v Dickman. The facts of the case