Get Instant Help From 5000+ Experts For
question

Writing: Get your essay and assignment written from scratch by PhD expert

Rewriting: Paraphrase or rewrite your friend's essay with similar meaning at reduced cost

Editing:Proofread your work by experts and improve grade at Lowest cost

And Improve Your Grades
myassignmenthelp.com
loader
Phone no. Missing!

Enter phone no. to receive critical updates and urgent messages !

Attach file

Error goes here

Files Missing!

Please upload all relevant files for quick & complete assistance.

Guaranteed Higher Grade!
Free Quote
wave

Research on an Australian case (ideally not more than 10 years old since the decision by the Court) involving breach of company director’s/officer’s duties under the Corporations Act 2001 (Cth).

Facts of the Case

This paper has the purpose of analyzing the judgement of the court provided in the case of ASIC v Whitlam [2002] NSWSC 591 in the light of duties of directors which are owed to a company. The paper describes in brief the revenant facts of the case. The paper also highlights the duties which potentially may have been breached by the defendant in this case while acting in a way which would contravene the duties. The paper also critically analyzes findings of the court with respect to the decision in this case. What impact the decision may potentially have on the development of Corporation Law has also been analyzed in the situation.  The Chairperson may be provided with the power to vote in proxy for the members who are not present in the meeting. In the given situation the chairperson has the duty to act in accordance to the instructions provided to him or her by the members with respect to the way in which they would exercise their power.  If they fail to exercise the powers in such manner they may be liable for the contraventions of the directors duties imposed on them by the Corporation Act 2001 (Cth).

The allegations in the given situation came to light when the company had to pass two resolutions which were in relation to increasing the remunerations of the directors. These resolutions had been named as resolution 6 and resolution 7. A case had been filed by the ASIC against the director and chairman of NRMA Ltd (the Company), Mr Whitlam (The defendant director) with respect to the breach of the civil penalty provisions.

The allegations were in relation to the breach of s 232 provided by the Corporation Law as he failed to vote proxies in compliance with the instructions provided to him by the members who had appointed him as the proxy against the resolution in context.  The provisions of section 180, 181 and 182 of the Corporations Act 2001 (Cth) had also been alleged to be violated by the directors in context as he altered the minutes of a meeting of directors of NRMA Insurance Group Limited (NIGL). The director had asked the returning 744653officer to make three separate poll papers in relation to proxy votes. The paper were segregated into those who had supported the resolution , those who rejected the resolution and those votes which were undirected. With respect to the meeting in order to constitute a valid vote a pole paper was signed.  A poll paper was signed to form a valid vote. The poll paper has been filled but by the defendant director but they have not been signed in relation to 3,973 votes against resolution 6. This allowed the company to pass the resolution 6 via a special resolution. If these votes would have been counted then the resolution would not have been passed.  A claim had been made by the ASIC that the director in relation to his conversation with the returning officer had knowledge that resolution 6 would not be able to pass the special resolution  if these votes were counted. This is the reason why the director had not signed the proxy form to make resolution 6 pass the special resolution.

Director's Duties Breached by Whitlam

Allegation had also been made against the director that being the member of the board he had changed the board minutes of August 11 2000. The board minutes had contained matters in relation to proposed remuneration of the defendant director.  The alternation indicated that the board has accepted the proposed recommendation made by the director in relation to the remuneration.  

In relation to the above discussed facts the defendant director had contravened various provisions of law. Under section 232(2) of the corporation law (repealed) the director was required to function in an honest way at all times for the purpose of discharging duties and exercising powers. Under section 232(4) of the corporation law the director was required to function with due care and diligence which would be exercised by a reasonable person in the like position. Under section 232(4) of the corporation law the director was required to function without improperly using position to gain an advantage for a third party or himself which results in a loss for the company.  Under section 250A (4) of the corporation law the director was required to vote in a way which was asked by the members.

In addition the director of the company had breached the provisions in relation to section 180(1) of the Corporation Act 2001 (Cth) under which the director was required to function with due care and diligence which would be exercised by a reasonable person in the like position. Further,  the director of the company had breached the provisions in relation to section 181 of the Corporation Act 2001 (Cth) under which the director was required to function in an honest way in the best interest of the company and for a proper purpose at all times for the purpose of discharging duties and exercising powers. The director of the company had  also breached the provisions in relation to section 182 of the Corporation Act 2001 (Cth) under which the director was required to function without improperly using position to gain an advantage for a third party or himself which results in a loss for the company.

It had been ruled by the judges in relation to the claim made by the ASIC against the directors of the company that the defendant director had breached the provisions of section ss232(2), 232(6) and 250A as he had failed to sign the poll paper in relation to his appointment as he proxy to vote against the resolution in context. In addition it had been stated by the court in this case that provisions of section 180(1) of the CA had also been breached by the defendant director as he revised the minutes of the board meeting of the company which dealt with his remuneration package so that it could be adopted by the board after the meeting. However it had also been found in this case that the director has not acted in a dishonest manner with respect to the revisions of the board minutes and thus it exercised its discretion under section 1317S(2) of the Act to relieve the director of any liability for the breach of this section.

Judgement of the Court

An evidence had been provided to the court that the defendant director had knowledge before 1998 AGM that those votes for which he had been provided a proxy if cased would not make resolution 6 pass the special resolution. This means that there was a motive on the part of the director not to sign the proxy form as if it was signed the director would gain substantially from the passing of the resolution. Four main arguments had been raised by the directors in the given situation. He made a claim that his failure not to sign was not a failure of not vote. However such argument had been rejected by the court based on the grounds that rules in relation to the meeting needs a signature on the poll paper so that a valid vote can be made. The second argument which was made by the defendant director was that as he filled his name and inotials on the poll paper the requirement of writing had been satisfied. The director cited Numerous cases to support this proposition.

However all such propositions had been rejected by the court stating that they were decided in the context of a written instrument and had no intention of bearing a signature as it was required by for a valid vote in the present case. These requirements had been expressly notified to the director before the meeting. It had been further claimed by the defendant director that Functions of Chairman of a general meeting are not the same as the powers and duties of a director. He was not acting as a director while acting as chairman at the Meeting. Therefore the contraventions were not breaches of his duty as a director. As a spate penalty had been imposed by s 250A of the CL for a breach by a chairman and the breach of a director the defendant claimed that the roles were different from each other. The court in this case stated that although a chairman of meeting has duties which are different from director duties these duties are no exclusive and does not mean that breach of section 250A would not result in the breach of directors duties. It was clarified by the court that a “director of a company does not cease to be a director because he or she chairs a meeting of members.". in addition a power had been conferred by the company constitution on the president to act as the chair for the members meeting and by the virtue of this power the director had the obligation of not improperly using position to gain an advantage for a third party or himself which results in a loss for the company.

In addition it had been argued by the defendant director that instruments of proxy did not satisfy the requirements of the s250A(1) of the CL which mandates the proxy form should either have a name of the proxy or the office name which the proxy holds. In addition it had been stated by Section 250A(2) that the appointment of a proxy would be valid even where it consisted of some of the information needed by s250A(1). It had been claimed by the director that the constitution of the company did not set out any leniency from the needs in s250A(1) and within the meaning of s82A of the Act the chairman was not an "officer" the instrument which appointed the proxy as a chairman was not valid. The court rejected such arguments. This was because the proxy would be considered to be as valid as the proxy form of the meeting had been approved by the Board. The appointment of the defendant director was also deemed by the court to be valid even where some restrictions in relation to the information required by s250A(1) were present. The court further stated that the position of a chairman had been assumed by the defendant director in relation to the requirements which had been set out by the constitution of the company as per which the president was to act as the chair for the members meeting. The court also stated that the definotion provided by s82A of the Act in relation to the definition of "officer" was also not exhaustive.

However it had also been found in this case that the director has not acted in a dishonest manner with respect to the revisions of the board minutes and thus it exercised its discretion under section 1317S(2) of the Act to relieve the director of any liability for the breach of this section.

  • The decision of the court will mean that the role of the chairman and a director in relation to the AGM is not different and the Chairman can also be liable for the breach of directors duties
  • The chairman have to comply with all requirements in relation to giving a proxy which had been set out before the meeting had taken place.
  • The decision also makes it clear that director of a company does not cease to be a director because he or she chairs a meeting of members.".
  • The definition provided by s82A of the Act in relation to the definition of "officer" was also not exhaustive
  • The appointment of the defendant director was also deemed by the court to be valid even where some restrictions in relation to the information required by s250A(1) were present.
  • The powers conferred by the directors in relation to the constitution of the company also have to be considered by them while assuming responsibilities

References

ASIC v Whitlam (Supreme Court, NSW, 19 July 2002, [2002] NSWSC 591)

The Corporation Act 2001 (Cth)

The Corporation Law

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2020). Essay: Analysis Of ASIC V Whitlam [2002] NSWSC 591 Reveals Significant Legal Implications.. Retrieved from https://myassignmenthelp.com/free-samples/blo1105-business-law/case-of-asic-v-whitlam-duties-of-directors.html.

"Essay: Analysis Of ASIC V Whitlam [2002] NSWSC 591 Reveals Significant Legal Implications.." My Assignment Help, 2020, https://myassignmenthelp.com/free-samples/blo1105-business-law/case-of-asic-v-whitlam-duties-of-directors.html.

My Assignment Help (2020) Essay: Analysis Of ASIC V Whitlam [2002] NSWSC 591 Reveals Significant Legal Implications. [Online]. Available from: https://myassignmenthelp.com/free-samples/blo1105-business-law/case-of-asic-v-whitlam-duties-of-directors.html
[Accessed 01 March 2024].

My Assignment Help. 'Essay: Analysis Of ASIC V Whitlam [2002] NSWSC 591 Reveals Significant Legal Implications.' (My Assignment Help, 2020) <https://myassignmenthelp.com/free-samples/blo1105-business-law/case-of-asic-v-whitlam-duties-of-directors.html> accessed 01 March 2024.

My Assignment Help. Essay: Analysis Of ASIC V Whitlam [2002] NSWSC 591 Reveals Significant Legal Implications. [Internet]. My Assignment Help. 2020 [cited 01 March 2024]. Available from: https://myassignmenthelp.com/free-samples/blo1105-business-law/case-of-asic-v-whitlam-duties-of-directors.html.

Get instant help from 5000+ experts for
question

Writing: Get your essay and assignment written from scratch by PhD expert

Rewriting: Paraphrase or rewrite your friend's essay with similar meaning at reduced cost

Editing: Proofread your work by experts and improve grade at Lowest cost

loader
250 words
Phone no. Missing!

Enter phone no. to receive critical updates and urgent messages !

Attach file

Error goes here

Files Missing!

Please upload all relevant files for quick & complete assistance.

Other Similar Samples

support
Whatsapp
callback
sales
sales chat
Whatsapp
callback
sales chat
close