The Corporation Act 2001 - Nice Furniture Pty Ltd Case Study - Law Assignment Hep

Assignment Task:

The decision of whether John and Lorna have breached any of their duties as directors lies directly under the Corporation Act 2001 (Cth) subsections 180-185. Where the directors have fiduciary duties(>>>) under which, duty of care and loyalty are focused.

First of all, they breached the fiduciary duty of directors where the directors solely work for the interest of purpose of one company. In this case, John and Lorna were expected to work for the best interest of the business while they did not think the government tender was a good idea and therefore, rejected it and also got Gabriel off the board, breaching the duty of care and loyalty under subsections 180,181. But on the other hand, a director of a Pty Ltd can be removed according to the replaceable rules under CA s203C.

In addition to that, John and Lorna have formed a partnership and also accepted the same offer that was rejected for Basically Nice Furniture Pty Ltd….

notes

John and Lorna formed a partnership breach of section 183 duty to avoid conflict of interest (asic vs Vizard) ASIC commenced proceedings against Vizard for breach of section 183 of the Corporations Act 2001 (Cth) (duty to avoid conflict of interest). Directors have a fiduciary duty not to use  A person must not improperly use information gained because they are or have been a director, officer or employee in order to make a gain for themselves or cause detriment to the company. Clearly, a person must not use information that they have accessed as a result of their position to make a gain for themselves or to hurt the company. 
The information does not have to be confidential, rather how it was obtained

HELD:     Vizard admitted liability to breaking section 183 of the Corporations Act 2001 (Cth). The Federal Court of Australia ordered Vizard to pay $400,000 IN PENALTIES and was also disqualified as acting as a director for 10 years.

It’s is the fiduciary duty of the directors to act in best interests of the company. Darvall v North Sydney Brick (1988) 6 ACLC 154, Considering the interests of present shareholders. The interest of the company as commercial entity should be considered as a whole. And the interests of the shareholders as a whole is of prime importance 

Parke v Daily News Ltd 
[1962] Ch 927
Interests of employees should NOT be considered ahead of interests of shareholders. This means that there should be no gratuitous payments to employees that will detriment the  interests of the shareholders when company is insolvent

Accourding to 182  Use of position—civil obligations
Use of position—directors, other officers and employees
(1)    A director, secretary, other officer or employee of a corporation MUST NOT improperly use their position to:
    (a)    gain an advantage for themselves or someone else; or

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