Corporations Law (Coursework Sample)

LAW 5206 – Corporations Law
Assignment 2 Template – Semester 2 2015
Name:
Student number:
Word count (without footnotes) (maximum allowed 4000):
State any approved extension date and attach the course leader’s approval:
Question 1: /30
Question 2: /30
Total marks awarded: /60
Criteria

F

C

B

A

HD

Quality of analysis and problem-solving skills:

Identifies legal issue/problem

No clear identification of legal issues relevant to the case and/or issues identified are not relevant.

Identifies at least one legal issue relevant to the case but more detail is required.

Identifies most legal issues relevant to the case but lacks clarity.

Correctly identifies most legal issues relevant to the case.

Correctly identifies all legal issues relevant to the case.


Evaluates relevant legal principles

Lack of relevant legal principles or those identified are incorrect

Outlines some relevant legal principles but citation of applicable cases and/or statutory provisions needs more detail.

Outlines some relevant legal principles, citing
applicable cases and/or statutory provisions.

Outlines all relevant legal principles, citing
applicable cases and/or statutory provisions.

Outlines all relevant legal principles, citing
applicable cases and/or statutory provisions.


Develops logical conclusion

Stated conclusion is
not aligned with the question fails to tie together legal arguments either for or against the application of legal principles.

Stated conclusion is broadly aligned with the question and ties together some legal arguments for the application of legal principles.

Stated conclusion broadly answers the question, and ties together some legal arguments for and against the application of particular legal principles.

Stated conclusion answers the question and ties together most the legal arguments for and against the application of particular legal principles.

Stated conclusion answers the question, and logically ties together the legal arguments for and against the application of particular legal principles.

20 Marks

0-9

10-12

13-15

16-17

18-20

Quality of research skills:

Research

Little or no evidence of original research

Evidence of some original research

Evidence of original research from a number of different sources

Evidence of a high level of original research

Evidence of a high level of original research which enhances application and analysis


Citation and referencing

Many errors and/or little or no attempt made at referencing

Mostly accurate – some minor errors

Consistently correct

5 Marks

0

1-2

3

4

5

Quality of communication skills:

Writing style, grammar and spelling

Inappropriate style, tone and/or choice of language or many errors of spelling and/or grammar.

Mostly appropriate style, tone and/or choice of language. Spelling and grammar mostly accurate.

Appropriate style, tone and/or choice of language. Accurate spelling and grammar.

Highly appropriate style, tone and/or choice of language. Spelling and grammar consistently accurate.


Structure – also including brief introduction, body and brief conclusion

Poor structure and/or use of paragraphs or headings

Mostly appropriate structure and/or some use of paragraphs or headings to enhance readability

Appropriate structure and use of paragraphs or headings

Excellent structure and use of paragraphs or headings

5 Marks

0-1

2-3

4

5

MARKING CRITERIA FOR LAW5206 ASSIGNMENT 2 Question 1
Question 1 (30 marks)
Write Maximum of 2000 word answer here:
Question 1: Corporations Law case, study,
Under section 9 of the Corporations Law of 2001, a director is an individual who: is validly appointed through company laws as an alternate director or as a director; even though isn’t validly appointed but carries out the responsibilities of a director (Tomasic, Bottomley and McQueen, 2002). In the Bell limited case, we have been presented with a case, study,. In this particular case, the company has four directors: David, the non-executive chairman; Abbey, the managing director; Bob, the chief financial officer; and Cathy, the non-executive director.
Under the Corporations’ Law, directors play a crucial role in guaranteeing good governance in any company. Non-executive directors play an even more important role regarding injecting independence in the board. A non-executive director is an individual who does not hold an executive position in the firm but has been appointed to a directorship position in its board. The Higgs Review done in the United Kingdom in describes the role of a non-executive director in the board as being that of a guardian of the governance process (Higgs, 2003). However, it is crucial to note that both non-executive and executive directors must comply with the legal requirements set under the Corporations Law of 2001 (Duncan, 2012).
Under the Corporations Law directors, both executive and non-executive, have a:
* Duty not to use their directorship in an inappropriate manner
* Duty of good faith
* Duty of diligence and care and the business judgment rule
* Duty not to utilize information inappropriately
* Duty not to conduct insolvent trading
In the Bell case, study, we have been presented with a scenario in which several violations of the Corporations Law has taken place. The first infringement is the fact that Cathy negotiated an exclusive contract with WS (Western Sydney) limited and didn’t inform the board that the firm she entered into an exclusive contract with a firm owned by her son. Under the Corporations Law of 2001 by acting in this way Cathy violated three sections of the Act. She violated Section 182 which calls on directors not use their position in an inappropriate manner (Edwards, 2002). Under the section, an improper use of position means that the directorship position has been used for gaining advantage for oneself or gaining an advantage for someone else. A director is deemed to have violated this section of the 2001 Law by engaging in conduct for causing detriment or gaining a benefit, in spite of whether or not the detriment or benefit materialized. Cathy by entering into an exclusive contract with her son has violated this section since she is doing business for the purpose of gaining personal financial benefits (Edwards, 2002).
She has also violated the duty of good faith, stated under section 181 of the Act, where a director is charged with exercising his or her position for the best interest of the company and for proper purposes (De Zwart, n.d.). In other words, the director is tasked with acting honestly in all situations regardless of any conflicting duties. The fact the Cathy willingly enters into a contract and doesn’t inform the other three board members that the company – Western Sydney – is owned with her son is not exactly in good faith. The final section she violated is that of disclosure of material personal interest. Under section 191 of the Corporations Law of 2001, Cathy, knowing that she has a material personal interest in the contract with her son’s firm should have given the other board members a notice of that interest (Comlaw.gov.au, 2015).
Bob, who is Bell limited’s chief financial officer and also an executive director in the company board, suspected what Cathy did but did not go ahead and report her actions to any of the board members. In doing so, Bob violated section 180 of the Law, which states that he as a director should exercise a duty of care and diligence. He fails to exercise this duty in a situation where he himself had reservations about a contract that one of the directors had negotiated for the company. Failing to act in a manner that any responsible or reasonable man or woman would in the same position is deemed to be a violation of the law (Comlaw.gov.au, 2015).
This, however, is not the only infringement of the Corporations Law of 2001 that Bob is involved in, he also made sure that the other board members did not come to the knowledge of their corporation’s actual financial position and hides financial information from them for a period. The action by Bob is possibly in contravention of the duty not to trade while insolvent. Whereby Bob in full knowledge of the company’s negative cash flow as the corporation’s chief financial officer hides the information or does not bring the information to the board’s knowledge. Lack of financial reporting not only to the board but also to financial regulatory authorities such as ASIC can not only attract jail time but also hefty fines to the company. For instance in the case, of ASIC vs. Vines, Mr. Vines was accused of failing to exercise due diligence and care (as captured in section 180 of Corporations Law) just because he failed to provide sufficient information to the board of directors. The inadequate disclosure occurred during a situation whereby the board was depending on him to disclose accurate information. In the same way Bob’s defective disclosures could also result in him being held accountable (Asic.gov.au, 2015).
Abbey, who is Bell Limited’s managing director, also violates the 2001 Law. In that despite later coming to know the company’s negative cash flow position, she still goes ahead and proposes to ...