Insolvent trading provisions under the corporations act

Reference no: EM13174315

BLO 2205 CORPORATE LAW ASSIGNMENTSemester 2 2012

Melbourne Pty Ltd has one company secretary, Jill and four directors: William, Jack, Susan and Sarah. William is the managing director of the company while the rest of the directors are non executive directors of the company. Susan is an experienced business woman with other business interests and she is not involved in the running of the company. She leaves the running of the company to William and relies on him. She believes that if there is any problem in the company William will let her know. Sarah is William's wife and she never attends any company board meetings. Sarah always relies on William and never questions his management of the company because she trusts him implicitly in relation to all company matters. Jack has always been actively involved in the running of the company business until July 2008 when he was diagnosed with a heart condition when he became very ill. Following his illness Jack was unable to attend Board meetings and could no longer carry out his main function which was to monitor the financial situation of company. In June 2009 Jack intended to resign from his position as a director but was hospitalised and forgot to lodge his resignation with the company and ASIC.

In June 2009 the financial position of the company worsens. Despite being fully aware of the company's deteriorating financial position William does not inform the other directors of this as he does not wish to worry them. If ever questioned about the company's financial performance William always stated that the company's financial position was solid and he distributed to the board members a summary report confirming this.

As a result of this favourable report, the board of directors decides to declare a dividend to members. Susan was absent from the meeting. Shortly after the dividend was paid the company went into liquidation. The liquidator discovers that the company was not keeping proper financial records since Jack's illness.

REQUIRED:

Advise whether there have been any breaches of the directors' duties in relation to insolvent trading. Also advise whether any defences are available to the directors and what penalties may be imposed upon them if they are found to have breached the insolvent trading provisions under the Corporations Act 2001.

Reference no: EM13174315

Questions Cloud

Define verage hourly wage,output and annual overhead cost : An American Company that sells consumer electronics products has manufacturing facilities in Mexico, Taiwan, and Canada. The average hourly wage, output, and annual overhead cost for each sit.

State the partial pressure of each gas in the mixture : A mix contains 0.540 mol He (g) , 0.420 mol Ne (g) , and 0.050 mol Ar (g). Placed in 1 Liter container at 25*C.

How many grams of ammonia could be produced at maximum yield : if equal masses of N2 and H2 (7.00 grams each) are combined to produce ammonia NH3, how many grams of ammonia could be produced at maximum yield?

In which of the reactions is work done by the system : At constant pressure, in which of the reactions is work done by the system on the surroundings? By the surroundings on the system? In which of them is no work done?

Insolvent trading provisions under the corporations act : Advise whether there have been any breaches of the directors' duties in relation to insolvent trading. Also advise whether any defences are available to the directors

Calculate the concentration of nobr after 57s : The rate constant for the second- order reaction.starting with a concentration of 0.86m, calculate the concentration of NOBr after 57s.

Explain what is the high-t approximation for rotations : What is the high-T approximation for rotations and vibrations? For which of these two degrees of freedom do you expect this approximation to be genrally valid at room temperature?

What is the ka of the acid : If the pH of the weak acid solution in is 2.34 after 7.20 mL of the NaOH was added, what is the Ka of the acid?

Which molecule will undergo only london dispersion forces : which molecule will undergo only london dispersion forces when interacting with other molecules of the same kind?

User Account

All Pages