Introduction This study is based on law case reports which comes under the act Corporation ACT 2001 The first section will be based on the law case report Food Works Ltd under the law of Corporation Act 2001 (Cth).
The second section will be consisting on the law case report of Carpet Galore Pty Ltd under the law of Corporation Act 2001 (Cth). Each section has been divided into five categories they are; Background facts, The major law issues, The relevant law, Applications and remedies. After the conclusion will be given in the end of the report by addressing the find outs of the study.
This is a law case report of Food Works Ltd under the law of Corporation ACT 2001 (Cth) Background Facts Dion, Larry and Peter are the three board directors of Food Works Ltd in the groceries retailing company. Dion and Larry are executive directors while Peter is non-executive director. 10% of the organization shares is belonging to both Dion and Larry and the remaining 80% of the shares hold by Raldi Pty Ltd.
Dion met Rendy who is the CEO of Organica Ltd which an organization focused on the manufacturing of realistically developed food product has been made chances for Food Works Ltd on the behalf of a work tiring Europe making businesses in December of 2017. After having a conversation with Raldi, the CEO of Organica Ltd, Dion decided to go against notifying the Board members that might not be attentive in embitter the organic food products from Europe because of the greater dissatisfying expenses. Apart from the Food Pty Ltd, Dion owes another health foods business which is called Lifestyle Today Ltd. In this company, he positioned as a single director and also, he is an isolated shareholder by getting into a deal with Organica Ltd to beginning different kinds of organic goods. The profits in Lifestyle Today Pty Ltd has been raised rapidly because of the higher security on the healthy eating or dieting between the young generation at the same time Food Works Ltd was wrestling to stay competitive.
After the meeting with Randy, Peter find out that the Dion has break down to reveal the contract of supplying organic food products to the Broad of Food Works Ltd. So that peter revealed about Dion contract to Vance and Larry who has no idea about this and also, to find out a better solution for this issue. The Board become conscious on the takeover bid developed by the Raldi Pty Ltd at a latest meeting. At this moment, Vance has suggested to the Board they would give more shares to Dion as well as Larry.
If they do so, the shareholding of the Raldi Pty Lty becomes reduced and it will help to eliminate the takeover. On the same board conference, Food Works Ltd must spend an additional amount of $100,000 on advertising and marketing through media, which is suggested by Vance that in an anguishing try to develop the profitability of its relevant brands. Dion and Larry agreed with this statement because of the greater experience in industry.
The accountant in the company, Rita has been projected to others about the cash flow issues facing by the company due to the edge of failing to resolving and also, she pointed out that advertising and marketing was not a great concept so that Peter reviews the cash flow accounts. Dion, Larry and Vance have been found that the organization was not still able to pay the depts owned so that they argued for resuming the advertising as they very really positive. However, the organization has allowed to resume its vigorous advertising as well as marketing efforts for another year. The profit of the organization has been dried out after a few months. The major legal issues; On December 2017, the meeting held in Europe with CEO of Organica Ltd, Randy by offering business opportunities to Food Pty Ltd. After the meeting, Dion decided to not to tell about the organic food products to Food Pty Ltd after realizing that it was the most profitable business because he thought that organic food products are not interested subject to the board members.
Dion has been getting into a deal with Organica Ltd to establish different types of organic products to another health food organization, Lifestyle Today Ltd, where he has been organizing as an individual director and isolated shareholder. The gaining of Lifestyle Today Pty Ltd has been increased because of the higher awareness of healthy dieting mostly between the youngsters. At the same moment, the Food Works Ltd has been grapple to maintain or stay competitive. On the recent meeting, Raldi Pty Ltd has been derived a takeover bid.
Vance has suggested to the Board members of Food Pty Ltd that they must take further action on giving share to Dion and Larry. This will help them to terminate the takeover launched Raldi Pty Ltd by weakening the shareholding. On the same the meeting, Vance has suggested the organization, Food Works Ltd must take further expense on media marketing and advertising which is worth $100,000 which is a hopeless try to develop the profitability of their relevant brands. Rita who is the accountant in Food Pty Ltd has pointed out that the organization already have some troubles in cash flow due to unable payments of dept owned by the company and investing in marketing and advertising will make the company situation worse. The company has passed a solution that it must resume its insistent efforts on marketing as well advertising for another years. The capital of the organization has been dried out.
The relevant law; In the act “Corporations Act 2001 (Cth), it pointed out that an organization director or any other officer exercise must release their duties and strength with efficient care and effort under section 180. These duties come under the business judgement rule. A director needs to create the organizational judgement regarding to: In order to create the judgement for a better faith and for an adequate aim. If there is not individual attentiveness to the matter on the subject of the judgement.
If there is a reasonable on the adequacy then the enlargement of the judgement regarding to reveal themselves to the subjects. One must have often trust with the judgment that it is the foremost attentiveness for an enterprise. As per the section 181, the directors and other officers in an organization should observer their strength as well as discharge on their duties for best faith in the foremost attentiveness in an enterprise and for an adequate objective.
The have been restricted from not adequately using their position in order to achieve a benefit for their own use or for someone else or being an impact on creating damage to the enterprise under section 182. They also have been restricted from using the data achieved as a reaction of their position along with the organization to achieve a benefit for their personal use or for other or become reason for the loss to the enterprise under section 183. These two provisions are also subjected to the workers in the company. Civil obligation is reason behind all of the provisions. They also known as civil penalty provisions. It will create an announcement to the effect and should command the individual pay in Commonwealth a punishment as financial payment which is consist up to $200,000 and might command the individual to repay the organization if there is any kind of damage happened as part of the violation, in a case a court delivers that a civil punishment provision has been violated.
Under section 206C the court has control on disqualify the individual from managing enterprise for a time ordered by the court regarding as adequate If the director or other officer makes carelessly or deliberately dishonest in failure to attain their strength and reveal their duties for a best faith and in the foremost attentiveness in an organization or for adequative objective, then the Corporation Act 2001 (Cth) also put a criminal offense on the person. Likewise, as per the section 184 the criminal offences are made where a person carelessly or deliberately dishonestly misguided their roles or data that they have achieved by their role in the organization. Under section 191, the directors must have a duty to create complete and directly revealed of data along with their knowledge on accessing the shareholder to create adequately described judgement on any subject matters. Applications; Here, Dion has failed to inform the Board of Food Works Ltd about the business opportunity declared from Randy even after he knows that organic food products are profitable business in Europe.
He uses it for his personal use or own enterprise. So that the Food Works Ltd failed to understand the business trend and led to a loss in their profitability. In order to find out the solution to this, the Food Works Ltd company raise their fund to give more share for Dion and Larry because of the Raldi Pty Ltd has already launched the takeover bidding.
And also, they decided to go for advertisement and marketing through medias which is worth $100,000. But at the time, their accountant Rita has subjected that if they raise fund for any of these plans, there will be a great loss in the organization because of the unpaid depts owned by the company. Even though, because of the tough competition between the companies, the Food Works Ltd dried out their capital. Conclusion and Remedies Dion is liable for the loss of the organization, because it was his responsibility to inform the Food Works Ltd about the offer delivered by the CEO of Organica Ltd Randy and it his responsibility to inform about that it was profitable business in Europe. But because of the false thought he remained silent and use it for his business development.
So that Food Works Ltd got loss in their company profit because of Dion, So, Dion is liable for an offense under the rule of Corporative Act 2001 (Cth). This is the law case report of Carpets Galore Pty Ltd, under the law of Corporative Act 2001(Cth) Background Facts Caitlin, Ben, Sarah and David are the four directors of a family owned importer and retailer of splendor carpets called Carpets Galore Pty Lty. They all are siblings to each other. 80% of shares has been holds by Ben and David where Caitlin and Sarah hold 10% of the shares each.
Caitlin and Sarah have found out that the Ben and David are not responsive taking on the main decisions. Both of the Caitlin and Sarah required their family organization turns into a sales of designer carpets while the other directors objected the concept of expansion and says it was not plan regarding on business and moved the resources from their carpet business. Ben and David have organized some board meeting that they were not revealed them to the Caitlin and Sarah that it is about the significant organizational plans that has been created since taught. The major legal issues Ben and David were not responsive on taking the major plans that derived from the company Caitlin and Sarah plans to develop their luxurious carpet company Carpet Galore Pty Ltd by expanding into designer carpet while Ben and David skip the plan made by the board member by considering that plan is not belong to the company decision and it is diverted from the plans of the company. Caitlin and Sarah have since grasped that the Ben and David must organize some board meetings that they did not discussed with them that it was the essential organization plans which have been made.
The relevant law; Under the section 180 of the Corporations Act offers a civil offense that a director or any other officer should be there on the activity of a reasonable area of supervision and attentiveness in the use of their strength and the revealing of duties. Here, reasonable means that the level of the supervision and attentiveness of a reasonable individual through their role in the enterprise must take actions on the similar situations. The directors must satisfy the requested degree of care, skill and attentiveness through assigning with their colleagues or subordinates belonging to the organization and giving more attention towards it. At least they should get an ongoing attentiveness in the affairs of the organization and achieve a basic recognition on business of the organization.
They must follow whatever it is regarding that comes unexpected to their observation. Applications; In this case, Ben and David are irresponsible with their company decision making. Although Ben has share about 80% within the company. They have avoided the plan delivered by Sarah and Caitlin saying that it was not part of the business plan and it is diverted from their decisions on organizations. Sarah and Caitlin want their business to be improved but it neglected by Ben and David.
Conclusion and Remedies Ben and David are liable for civil obligation as per the Act of Corporation Act 2001 (Cth) which comes under the section 180. As per the rule, the directors or even officers must responsible with their power and disclosure of duties. But here, Ben and David failed to pay attention for the strength and disclosure of duties on activities regarding to the business.
Hence, Ben and David are liable for an offense. Conclusion Both of the cases are based on the Corporative Act 2001 (Cth). The Corporation Act 2001 been widening its rule lengthy and complicated. However, it is suggested by the offers in 15.6 that the duties of takers must attain the foremost values under the section 420A of the Corporations Act 2001 (Cth).
It clearly says that the directors should not engage in other activities that may cause irrelevant damage to the attentiveness of creditors completely such as letting the organization to protraction or the moving plans for sales activities as a protection of the organization at risk.