This is the second of four workshop questions which students are required to answer and submit online for assessment purposes.  Ensure you have read the instructions for completing and submitting your answer to the workshop question which can be found under ASSESSMENT on Learning@ Griffith. There is an opportunity for students to ask questions about their workshop submission answerbut only where students have drafted an answer to the question and only at the workshop. 

The following questions in Part A, B & C are short answer questions. Students are not required to use the ILAC method.  Please answer the following questions by referring to the relevant law (either sections of the Corporations Act and/or case law) and provide reasons for your answer (i.e. Law & Application only).

Part A

Sam, Adrian and Michael call to make an appointment with your firm, Fees Ruthless, Accountants.  You have been asked to establish their new company (No-Tax Agents Pty Ltd).  You advise them not to bother with their own Constitution, but instead to rely on the replaceable rules in the Corporations Act 2001 (Cth).

Advise who should be appointed as directors of their company in view of the following information:

(a) Sam states that he does not want to be appointed a director or company secretary.  He suggests instead that: his family company be appointed as a director; and the company not have a company secretary;

(b) Adrian is currently unavailable for meetings as she has five months still to serve for her last conviction for falsifying company accounts;

(c) Michael is 72 years old and has dementia.  A trustee has been appointed to administer his estate.

Part B

Sabrina was appointed a non-executive director of Trans universe Travel Corporation Limited. After her appointment Sabrina set up an investment company to engage in share trading. As a non-executive director of Trans universe, Sabrina was often provided with confidential information. Sabrina used this information obtained as a Trans universe director to make two share purchases and a share sale. Unfortunately, Sabrina actually lost money from the share trades and Trans universe did not suffer any loss as a result of Sabrina's conduct.

Given the following circumstances:

• Sabrina admitted that she breached the Corporations Act;
• Sabrina co-operated with the ASIC in the course of its investigations;
• Sabrina was a very well known and respected public figure;
• ASIC and Sabrina agreed that an appropriate period of disqualification was 4 years.

Assuming that Sabrina was found to have breached s183 Corporations Act. Apply the criteria in ASIC v Adler and determine a disqualification period (if any) for Sabrina.

Part C

Arana, Mirabella and John establish a company in which they each take shares. Arana has another job as an accountant and so she contributes most of the money to the new company and receives 60% of the shares in the company. Arana chooses not to become a director of the company. Mirabella and John each take a 20% shareholding and also act as the company's directors. However, John forgets to submit a written acceptance of his role as a director. During the first year, the company runs well. Given that Arana owns a majority of the shares in the company, she is consulted about any significant decisions by Mirabella and John. If Arana disagrees with the course of action proposed by Mirabella and John, then normally they will compromise to suit Arana. One day while Arana is inspecting the company's accounts, she notices some accounting anomalies which suggest that Mirabella has been misappropriating funds from the company. Furthermore, Arana believes that the company has been insolvent for some time.

a) Does Arana fit within the definition of an officer under the Corporations Act?

b) Can John avoid liability as a director for insolvent trading by arguing that he was not officially appointed (due to the fact that he did not accept his position in writing)?