One of the main ways in which the ‘veil of incorporation’ can be lifted is when directors breach their duties. This essay question is set around the duty to prevent insolvent trading. You will need to have read the chapter in your prescribed text that deals with this duty and have then researched more widely by looking at other textbooks, the relevant CCH online library, articles from the internet and journal articles. You must answer both parts of this topic. Please make sure you have REFERENCED in the body of your work ACCURATELY,. Remember, referencing shows you have researched and thought about what material will be relevant to assist you in answering the questions.
Read the following scenario and answer BOTH parts (questions) at the end.
OHS Solutions Pty. Ltd. is a company formed by three friends (Des, Satish and Emma) who bring different skills and abilities to the business. Emma is an accounting graduate, Des has expertise in occupational health and safety (OHS) and Satish has an IT degree. They decided to start up a business which would provide a portal through which the public and businesses could access (for free) information on all aspects of OHS. OHS Solutions would finance its business, and make profits, by charging businesses to advertise via their website. The directors of OHS Solutions are:
Managing Director – Des
Finance Director – Emma (non executive)
Director – Satish (executive – employed also to run the technological side of the business) Director – Ying (non executive) – a friend of Des’ and director of Support Pty. Ltd. (Support Pty. Ltd. has gone guarantor for a $50,000 loan from the Business Bank Ltd. to OHS Solutions)
The Shareholders of OHS Solutions (holding equal amounts of ordinary shares) are Des, Emma, Satish and Support Pty. Ltd.
As at January 2007 OHS Solutions had been operating for six months. It had some initial IT problems which prevented some of the advertisers’ material...