2007GIR Assessment 2 ILAC Assignment V6

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2007GIR Assessment 2 ILAC Assignment V6
Course Name: Legal Issues for Managers
Assessment No. 2: Hypothetical ILAC Assignment

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Tutorial: Tuesday 10am-11am
1. Is Patricia an Officer of Stadium Enterprises Pty Ltd (SEPL)?
2. Has Patricia breached her duty to act with due care and diligence?
3. Has Patricia breached her duty to act in good faith in the best interests of SEPL?
4. Did Patricia improperly use information to gain an advantage, causing detriment to SEPL?
5. Has Patricia acted recklessly, dishonestly, and failed to exercise and discharge her duties for a proper purpose and in the best interests of SEPL?
6. Did Patricia engage in insider trading?
7. Is Dan an Officer of Fancy Pants Pty Ltd (FPPL)?
8. Did Dan have a duty to prevent insolvent trading?
1. Section 9 Corporations Act 2001 (Cth) (CA) – definition of Officer
2. Section 180 CA – due care and diligence
3. Section 183 CA – use of information
4. Section 184 CA – duty to act in good faith, use of position and use of information
5. Section 1043 CA – insider trading (all persons, not just directors)
6. Section 588G CA – duty to prevent insolvent trading
Daniels v AWA Ltd (1995) 37 NSWLR 438
1. Section 9 defines an Officer to include a Director of a company. (slides) We are told Patricia is a Director of SEPL so she will be an Officer within the Corporations Law.
2. Section 180 requires that an Officer must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would. (slides) Patricia and Dan did not act in a way that a reasonable person would because they failed to make good decisions that deal with the financial and business affairs of SEPL, therefore it is likely they have breached section 180. Daniels v AWA Ltd (1995) 37 NSWLR 438: The CEO breached his duty of care and diligence because he did not exercise due care and skill to cover decisions dealing with the financial status and business affairs

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