Matter for Legal Advice - Rules and Principles of  Corporations Law - Law Assignment Help

Assignment Task :

Learning Outcomes 

1. Identify the risks of liability arising from diverse sources  for both the company and its officers and, in particular,  define directors’ duties and the consequences of  breaching those duties; 

2. Describe the financing of companies by debt and equity,  the rules and restrictions in place to protect creditors and  shareholders as well as the rules regulating fundraising; 

3. Use skills, including analytical and deductive reasoning, in  applying the above knowledge, rules and principles of  corporations law to factual situations which could arise in  practice, in order to solve a problem perceptively and  creatively or to have sufficient understanding of the legal  issues to know what questions to ask when referring the  matter for legal advice. 

Task Description 

Students will be presented with two case studies on directors' and officers' duties incorporating  legal issues taken from Modules 3 and 4. 

Students are required to answer all questions on each of these case studies and submit their written  responses via Turnitin on Blackboard.

CASE STUDY 1 

Scintillators Pty Ltd is a company engaged in the event management for celebrities. It is a family  owned company and Joe Johnson, his wife and three adult children all own shares. Joe Johnson,  a former bankrupt, is the sole Director. Joe manages the day to day business of the company  which employs 30 employees, comprising event planners, designers and administrative  support.  

In June of the year the company is engaged by Jerome Best, Australia’s wealthiest gardening  equipment manufacturer, to plan his daughter’s wedding to Simon Stash, the son of Australia’s  wealthiest marketing magnate. The wedding promises to be the most glamorous celebrity  event of the year and Joe Johnson delegates the planning of the event to a team of 4 wedding  planners. The planners arrange the flowers, venue, security and drinks for the event, scheduled  for December in that year.  

All of the suppliers of these services to Scintillators Pty Ltd require payment in advance and the  usual practice of the business is to obtain a personal guarantee from the clients and a 50%  deposit. In relation to this particular event, Joe Johnson, directs the planners that they should  not obtain a personal guarantee, nor require a deposit because he believes that this particular  wedding is worth the risk and will situate the company at the centre of the Celebrity events  market.  

The total supplier’s costs, paid out of company funds, put the company in a financially  precarious position, and Joe Johnson, not knowing the full financial impact, enters the company  into a lease for office premises for a five-year period in the most expensive office building in  Melbourne, owned by Jerome Best Pty Ltd. This forms part of his grand plan for the company  to become the premier celebrity event manager in Australia. In the process of moving premises  Joe Johnson discovers that he did not provide written consent to his appointment as Director. 

In the meantime, Joe Smith’s wife leaves him shortly after, citing irreconcilable differences and  breach of duties owed to the Company. She also says to him that she is going to sue him  personally for breaching his director’s duties and notify ASIC of his former bankruptcy and what  he has been up to in relation to the company. Jerome Best also personally telephones him to  advise that the wedding has been cancelled by the groom and that neither he nor his daughter  would be paying a cent to anyone that has provided anything to do with the wedding.  

Joe becomes concerned about his legal position, honestly believing he has acted with  proprietary and professionalism. He comes to you for advice.  

REQUIRED 

Advise Joe Johnson in relation to any potential equitable, common law and statutory liability. Provide relevant statutory law and/or case law as authority for your answer. 

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