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Corporation Law Term Paper (Term Paper Sample)


A term paper with answers of questions based on corporation law,


Corporation law:
Question 1
Mario is the director of FZPL. Being the director of the business, he is obligated to certain duties to Simon and Jason who are the shareholders of FZPL. The Corporation having a single director is obligated Mario to perform all duties to the FZPL Corporation as well those for Simon and Jason, who are the shareholders. However, Mario has to perform his duties to the Corporation, he should not execute duties that violate the rights of individuals or the shareholders in the Corporation business (Paul C. 2013 pg. 17)
Mario as director of the Corporation business of FZPL is mandated to perform the following duties .He has the duty to remain loyal to the Corporation business (Jeffrey N. Gordon.2012 pg. 54). Mario should be trustworthy to the business in the Corporations. He should be providing information about the business to all the shareholders openly. As a good director of the business he ought to find new strategies to improve the business and disclose it to the members of the Corporation. For example Mario could have shown loyalty to the members of Corporation by divulging to the rest of the shareholders in a Company, about the potential of the business to make a profitable move by entering into a contract with the USA distribution Company.
Mario is obliged to the duty of overreaching. This includes the duty to protect shareholders’ interests from harm. He should protect all the interest that the shareholders of the Corporation of the business, hence have duties to perform to Simon. During the signing of the contract the shareholders stated their interest in the business this should be protected by the directors so that they can be safe till the implementation are enforced by the Company during the business operation. For instance the Mario should protect the interest of Jason who wants to buy the shares from Simon but he should not harm his interest by using the position to acquire the shares hence harming Jason who is a shareholder of FZP (Ray B. & Jackson M 2013 pg.90).
Mario is also bounded to the duty of fair treatment to all shareholders. He should not discriminate any of the members of the Corporation basing to the color, gender, or the type of the interest the shareholder have over the other. For example Mario should not mistreat Jason because he wants to buy shares from Simon .because the director is interested in the same shares so that he can benefit from the same shares. Mario doing this kind of unfairness will be violating his position of the leadership in the FZPL Company. This makes Mario to have responsibility to Simon (Calomiris, w. 2012 pg.48).
As the director of the FZPL Corporation, Mario is compelled to the duty of acting within powers which he owes to all shareholders. He should not act beyond the powers that were signed during the contract agreement. Mario ought to use the powers that are granted to him by enforcing the well-being of the Company. Mario should not to use his charismatic power for his own gain. For example Mario has no right to use his powers to acquire share from Simon who is a shareholder in the Company if he not willing to sell them to him (Ray B. & Jackson M 2013 pg. 70).
As stated in the Corporation law section 181 Mario is held to act in good faith in the Corporation. He should mainly dwell in sacrificing for the Corporation to be in good state rather than dwelling to his personal interest such as increasing his share in the FZPL Company. In order for Mario to show this quality of leadership he ought to let Jason to buy the shares from Simon (Corporation act 2013).
Under section 185 of the Corporation act, Mario is obligated to a duty to avoid conflict of interest in the Corporation business. This duty elaborates that Jason and Mario should not be in conflict due to the urge of personal interest in the Corporation. The law demands Mario not to buy the shares if Jason is interested in them. If Mario decides to create a conflict of interest between him and Jason over the share then he will be violating his leadership roles (Corporation act. 2013).
Under the section 189 of the Corporation law Mario is required to show high standard of care and diligence. Mario should be more concern about the USA distribution Company but not the share of Simon. As the director of the Company he should take measures to ensure that the Company enters into an agreement so that to add value of the business (Corporation act. 2013).
However the law gives Mario the right to retain discretion of the business information since he is the manager of the business. The information that should be discreet should be the sensitive information that when exposed may harm the business. For example if the disclosed that the USA will be joining them in agreement and the information reach the competitors’ it could be break fall of the business. (Jeffrey N. Gordon.2012 pg. 56)
As discussed we find the Mario owe many duties to Simon, who is the shareholder oh the business, because he is the director of the Company, he is obligated to perform the duties to the shareholders and the Corporation as well.
Example of case law
Howard Smith Ltd vs. Ampol petroleum Ltd (1974)
Rw Millers bid itself to Ampol ltd Company, which controlled 55% of the shares. The directors of the Corporation did not want Ampol ltd. to buy the share of the RW Millers because Howard smith ltd had better terms of employing the employees if it was sold the shares. Howard smith ltd was sold share by the RW Millers and took over .this blocked the rivals who are the Ampol ltd. This made the Ampol not to complete the acquisition in the Corporation limited. The Ampol ltd sued in court the Howard Smith ltd HELD: the court decided that that the issue was ultra virus which was exercised for the improper reason in the business. The majority used their power to sell its shares to Howard ltd so that to employ employees but not to be a tanker. The shares of the Howard were withdrawn and sold to Ampol ltd. (Corporation cases. 2014).
Question two
GML is a major shareholder of JV Mine Pty while the QMNE Ltd is a minority shareholder in the Company of JV Mine Pty. The GMl Company and QMNE Ltd directors want to invest further so that they can develop new copper mine in the JV Mine Company. The directors of the GMl conducted a meeting that discussed about the plan of the investment in the JV Mine Pty without the presences of the minority directors who are the QMNE Ltd. The directors of the GML Company breached their duties by violating the rights of the minority in the following ways.
The directors of the GMl breached their duty by failing to provide information to the QMNE ltd. (Jeffrey N. Gordon 2012 pg. 78). The directors failed to inform the minority shareholders about the research that was being conducted on the mining area to identify the amount of copper that could be generated in the mine. This information could help the minority to know the amount to invest into the copper mine so that to protect them from attaining loss. The information provided could have been used in decision making by the minority shareholders. The GMl directors breached their duty by showing the act of egocentrism through the discretion of fragile information to its fellow shareholders.
Corporation law under section 181 provides the directors of the GMl the duty to act in good faith. The directors of the GML Ltd violate this duty by using the information that was reported by Mr. Chester, who was the geologist for their own self-interest, not for the well -being of the JV mine e directors did not inform the minority how the research was conducted. This could have helped the JV mine Company directors to identify the analysis and implement the method to be used when conducting the research about copper mine in unison. This could have led to concrete report, which was not prepared negligently as it was done by me Chester (Ray B. & Jackson M 2013 pg.87).
The minority right to attend Company meeting was violated. This was due to the breach of the directors’ duty to be loyal to the Corporation. The GML directors were disloyal to the Company. They did not inform the Company the activities that were taking place .they dii their own activities in a hidden manner which showed a form of disloyalty to the JV Mine Pty (Tierce, R. 2014 pg. 34-46)
The directors of the GML breached the duty of overarching which is provided under the Corporation law under section 183 Due to this they violated the right of the minority of being protected from harm and the minority interest being upheld. The GMNE ltd was exposed to danger of going to a bankrupt if the mine of the copper cannot be achieved after they had invested in the Company because they never had information about the research (Corporation act 2013)
Section 182 of the Corporation law states that the director has the duty not to misuse position for the self-interest gain .This duty was breached by the GML Company because they used the position of being the majority to oppress the minority of JV mine Pty .This was done by not engaging the minority with right to decision making which they are entitled to....
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