Company Law for Business - Question 1


In the current case, the s 180 and s 181of Corporations Act 2001 will be applicable. There are four main duties of a director indicated by the Corporations Act 2001 including s 180, s 181, s 182 and s 183 specifies the duty of a director.

Law principles

There are two sections identified to be relevant to the case study. As per the s 180, a director must be following the duty to act with the degree of diligence and care that is expected from a reasonable person in the role. Mainly the principles of this law align with the duty of a director to approve financial statements and approval of the board regarding statements. An exception specified in the subsection, s 180 (1) that the directors are required by the law to exploit their powers and act with a degree of care and diligence that a reasonable individual may exercise in the other circumstances. The acts are required of the in the best interest of the company and should be aligned with the success purpose of the dealings.

A case law, “Residues Treatment and Trading Co Ltd v Southern Resources Ltd (1988) 51 SASR 177” can be described in this context, an attempt has been made to protect the voting rights in the company in case of exercising the power to issue shares by the directors. As the potential takeover has been anticipated the court permitted shareholder action.

In the s 181, it has been specified that the director is expected to act according to his good faith based on the interests of the company and that act must have proper purpose. This duty is recognised as a fiduciary duty that is required in the Corporations Act 2001.


The law is likely to be applied in the current case as there was an indication towards the anticipation of the directors of Fairbridge of potential takeover of the company by Smalls Pty Ltd, a present shareholder of the company. Here, the principle of poison pills could be applied where directors exercise their duties to dilute the voting power of the shareholder. If the court finds that issuing the share was not for the purpose of protecting the company from hostile takeover, the issue will be diminished. If the court finds that it was due to the good faith of the directors for protecting the company from hostile takeover, the share issue can be approved. The problem can be therefore, resolved by understanding and testing the basis for the share issue which will lead to the final decision. The concentration of the power to Chelsea can be another outcome if the share issue is approved by the court.


In conclusion, it can be stated that Small Pty Ltd will be able to challenge the directors of Fairbridge Ltd for beaching their duty as they have issued 1,000,000 shares to Jordan. It is due to the cause that the authority will be concentrated towards Chelsea since Jordan is Chelsea’s husband.

Company Law for Business - Question 2


In this context, the Section 249D of the Corporations Act 2001, Duty of care and director’s duty to disclose the financial reports and Part 2F.1 of the Corporations Act 2001 (Cth) ‘The Corporations Act’ are applicable.

Law principles

It can be stated that the s 249D could be applied here as it specifies the duty of the directors to maintain the rules and regulations regarding the holding meeting with its members, It has been mentioned that the meetings are to be held with the awareness and with full information sharing by the directors of the organization. The duty of care species that the directors are required act on their good faith about the acts will be under the interest of the company. The Part 2F.1 of the Corporations Act 2001 (Cth) ‘The Corporations Act’ specifies under which the company shareholders may report oppressive conduct by the majority of shareholders of the company. As per the s 344 of Corporations Act, the directors are to take reasonable actions that ensure the compliance of the company with the provisions of Corporations Act in context of keeping and reporting financial records. Any breach of compliance with the financial disclosure would apply the s 188 of the Act through lodging complaints with AISC.

The case of “ASIC v Healey & Ors [2011] FCA 717” can be mentioned here, where the court made decision that the director is required to read, understand and apply his or her knowledge’s to the financial statements.


Under s 344 it is mentioned that all the directors have the scope of exercising their reasonable care and in understanding the financial statements of the company. This is breached in the present context. Though Rachael is a shareholder of the company the other two directors Martin did not disclose the financial or accounts information to Rachael. On the other hand,

In the current situation, under s 249D has also been breached as the meeting has been conducted between Martin and Carmen without informing Rachael and no information regarding meeting is shared. If the case of diverting money can be held to be true, it will be the breach of duty of care by the directors of the organization. Therefore, it can be stated that the regulations regarding meeting held with the directors are also was not applied in compliance with the corporations act.


A case can be filed by Rachel under Corporations Act s 344 or the non-disclosure and duty of financial information share by the shareholders of the organization. Here both the acts of the company’s directors are other two directors of not disclosing financial account details and abandoning from board meeting can be challenged by Rachael.

Company Law for Business - Question 3


The s 125, s 126 and s 6 of Corporation’s Act 2001 will be applicable in this context.

Law principles

It can be stated that under s 125 if a company possesses any constitution, it may act as a restriction or may prohibit any exercise of power taken under consideration by the company. However, the power of the organization cannot be considered invalid as it is not in harmony with the company’s constitutional restrictions and prohibitions.

On the other hand, the s 126 of this Act specifies that a company has the power to make, vary and discharge a contract that can be exercised on the behalf of the company that is acting with the express of the company. This power may be exercised even if there is no common seal. A particular procedure is required to follow.

The s 6 of this Act depicts that a company may also buy shares if it is aligned with the company’s constitution.


These sections can be applied in the case of current context, where the shareholders of the company are not in agreement for purchasing stock from Alpha Pty Ltd. It can be stated that the s 125 applies here as if the purchase of the stock is in accordance with the constitution of the company, it cannot be restricted with the company’s constitution. According to the s 126, the company shareholders will have the power to make, vary or discharge of contracts. Therefore, the organization will not able to proceed with buying stock from Alpha Pty Ltd. As there is lack of agreement between the shareholders regarding the current situation.


In conclusion, Chamberlin Ltd shareholders may newly develop, vary or discharge the contract if those can be aligned with the company’s constituent. However, all the shareholders are required to come a common agreeing platform for the development of new contract policy.

Company Law for Business - Question 4


In this context the s 12 of corporation’s act will be applicable here.

Law principles

Under this section of Corporation’s act, a receiver or receiver and manager may be appointed by the court order if a company has a secured creditor to take over entire asset of the company. If the company faces financial difficulties, this mat takes place. In addition the case will also be raised if the secured creditor’s any amount is overdue to the company. A receiver and manager is usually appointed by the court, when it is found that the financial ability of an organization is reduced and affected by any external or internal force. The powers of the directors and the company owners are mortgaged in response of the overdue of the loan. At the time of insolvency and near insolvency of the organization, the issue of appointment of a corporate receiver arises.


In this current case, a manager and receiver may be appointed by the order of the court as $60,000 is overdue by South West Winery Pty Ltd to ABC Bank Ltd. As the company is facing financial difficulties due to reduced sales, as claimed by the organisation; this section of the Corporations Act 2001 to the situation can be applied. However, a recent investment has also been observed to be made by the organisation a TV advertisement for $30,000. Therefore, it is required to be further investigated of the company is actually going through financial difficulties. On the other hand, the company has also crossed the provided time limit to repay the debt of the bank. It can be stated that the receiver will have the power of receiving incomes of the company, paying the expenses. The manager and receiver will also have the power to buy or sell the assets. However, there is also a clear responsibility of the manager to manage the assets of the company after being appointed as a receiver and manager.


In conclusion, considering the clause where it was mentioned that the bank can put a manager receiver to look after the company if the interest cannot be paid by the company.

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Business Law Assignment Help

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