HA3021-Corporations Law

Assessment

The purpose of the Group Assignment is to provide students with an opportunity to work in a collaborative environment in solving two case problems by citing the relevant legal rules and cases and applying these to the facts of the case.

In this Group Assignment, students are required to:

1.Demonstrate the legal principles for managing a company in particular the company’s relationship with others.

2.Critically analyse the concept of corporate internal rules and management.

3.Analyse the role and responsibility of directors and members in the management of the company.

4.Analyse the interaction between members’ rights, directors’ duties and corporate governance.

Purpose

The Group Assignment aims to provide students with an opportunity to work in a collaborative environment in reporting on a recent Australian Corporations Law case relating to Directors Duties and breaches of Directors Duties.

Group Report

The Group is required to write a commentary regarding the following: (The main theme is on Directors Duties)

Marvin and his wife Vivi, own shares in a company called Strata Schemes Pty Ltd. Vivi is also a member of the Board of Directors along with two others who are Jane and Carl. The total number of Directors on this Board is three.

Marvin is known to Jane and Carl and both Directors are aware that Marvin and including his wife Vivi can be quite intimidating. Marvin through his wife Vivi, wants to see that the Board approve a deal in which Strata Schemes Pty Ltd will agree to enter into a contract with a third party which both Martin and Vivi have an interest in.

The Notice of the Proposed Dealing was presented to Jane and Carl at a Board of Directors meeting. The information contained in this Notice was vague and it was unsigned and it left Carl feeling rather uncomfortable to endorse. Carl thought that since this unsigned Notice of Proposal is presented by Vivi, he asked her a series of questions about this document and she confessed that she and her husband Marvin have a vested interest in the third party in which they could potentially gain an advantage.

Carl was not impressed and he told Vivi that she can’t vote on this Notice. Vivi reluctantly left the Board meeting and so the Notice was voted on by Jane and Carl. The result was a tie – one a piece – and as a consequence of a tied vote the Notice of Proposal was rejected. Marvin and Vivi were told of this decision and they both were infuriated.

Marvin somehow found out that Carl was the one that voted against the Notice of Proposal and now has demanded that he ‘change his vote’ and he believes that Carl is being unreasonable. Marvin also wanted to know from Carl why he voted no and demanded an explanation.

Marvin then demanded that another Board of Directors meeting be held and the same Notice of Proposal be put to the Board to vote on because he ‘found’ information on the internet that his wife can actually vote on this Notice because he claims that it’s not a conflict of interest.

Carl is worried. He feels that Jane will side with Vivi in allowing this Notice of Proposal to pass. Carl is concerned because it’s not for the benefit of the company and also for the shareholders. 

Carl has now come to you for some guidance. He wants to know the following:

a) Is there a conflict of interest on the part of Vivi to vote on a Notice of Proposal which she and her husband will gain an advantage through their connection with the third party?

b) Is she breaching her duty as a Director? (With this particular question, explain to Carl the statutory duties of a Director and whether or not she is in breach of her directors duties)

2. The Group report must be submitted via SafeAssign on Blackboard.

3. The word count for the report is 2,000 word, with a 10% allowance under or over the 2,000 word limit. Please write the total word count for your report on the assignment cover sheet.

4. A minimum of six (6) scholarly and academic references must be cited. One of thesesources must be the case that is the topic of the report. The references must be cited both in-text and in a reference list at the end of the report.