Case 1 -
James, Joanna and jade would like to start a business; jade owns a small office that his grand- father gave him. It is located on George Street in Sydney. James owns a computer and Joanna is an account. They have all agreed to start an accounting business. They operate the business as a small pty ltd
Joanna has advertised the accounting business through Internet and word of mouth, through his friends. Most of their friends and young people are happy with their services, James has decided to buy new printers without asking the other partners.
James has started a similar business that is managed by his wife and some of their clients have started going to his new business. Joanna and jade are not aware about it.
The company's business has declined and the company is not able to repay its creditors who are threatening to sue the company for non-payment of debts
1. HasJames breached any duties under corporations act?
2. Jade and Joanna suspect that James has a new company and he is not telling them. How can they find out about James's company?
3. Discuss all your answers citing relevant case law and legislation.
Case 2 -
A mining company has a number of directors. Two of these directors are Sam and Justin. Sam is non-executive director who is medical doctor. Justin is an executive director who is also the managing director of the company. Sam has only a basic understanding of balance sheets and has extensive experience as a medical doctor. The company has become insolvent and the directors are sued for a breach of a 588G. The non-executive directors do not understand the true financial position of the company. Can they all be liable? Does it make a difference if one is non-executive director or executive director?
1. Discuss your answers citing relevant legislation and case law.
Case 3 -
What are the different defenses for directors in relation to breaches of s180(1) and s588G of the corporations Act 2001? How do the defenses apply or how can directors use them?
Discuss your answer citing relevant case law and legislation
What is the business judgment rule?
What does section 588H provide?
Any case law on insolvency or defenses?