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Assessment Description . 1000 word (+/- 10%) assessment. Two problem-based questions, approximately 500 words each answer. The questions will cover topics from weeks 4-8. This assessment is worth 30%...

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Assessment Description

.

  • 1000 word (+/- 10%) assessment.

  • Two problem-based questions, approximately 500 words each answer. The questions will cover topics from weeks 4-8.

  • This assessment is worth 30% of the course overall marks. See attached Rubric for guidance.

  • Due via Turn-it-in, in week 10, Monday 21 May 2018 at 15.55pm AEST.

  • You are to use IRAC in analysing and structuring your answer.

  • You MUST cite relevant law in your assessment.

  • You must adhere to KBS plagiarism rules. Please refer to these rules on the KBS website.

  • Your use of proper grammar, spelling, punctuation and expression WILL be taken into consideration. If you need assistance please see student services at your local campus.

    What is NOT required?

    • A bibliography or referencing list is not required.

    • A contents page is not required.

      COMMONWEALTH OF AUSTRALIA Copyright Regulations 1969

      This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (‘Act’). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Kaplan Business School is a part of Kaplan Inc., a leading global provider of educational services. Kaplan Business School Pty Ltd ABN XXXXXXXXXXis a registered higher education provider CRICOS Provider Code 02426B.

Assessment Information

Question One

You are a senior analyst working for the Australian Securities and Investments Commission (ASIC). Part of your role involves investigating possible breaches of directors’ duties, and you have been made aware of ME Enterprises Pty Ltd.

Liam and Peta are the shareholders and directors of ME Enterprises Pty Ltd.

Peta is actively involved in the day-to-day running of the company. She spends most of her time marketing and growing the business. She relies on the company’s employees to pay creditors on time. Liam is a non-executive director. Every quarter Liam and Peta meet to review the financial position of the company. A simple balance sheet is prepared by an employee but Liam and Peter generally don’t ask any questions about the contents of the balance sheet.

In May 2017, Peta started receiving angry calls from her suppliers claiming they had not been paid. She instructed her staff to prioritise paying the suppliers that were critical to the business, and delay paying those that were not. In June 2017, ME Enterprises Pty Ltd received a notice from the Australian Taxation Office demanding payment of unpaid company taxes. However, Liam and Peta did not pay the outstanding taxes and made no changes to company expenditure. ME Enterprises Pty Ltd continued to operate until the end of June 2017. The balance sheet prepared for the end of June 2017 showed that current liabilities exceeded current assets.

You discover that Liam was unaware of these events occurring in May and June 2017 because he had been diagnosed with cancer and was undergoing treatment at the time.

REQUIRED:

a)With reference to relevant provisions of theCorporations Act, and relevant case law, advise your manager about whether there are grounds for ASIC to bring civil or criminal action against Liam and Peta. Do not consider action under section 180 of theCorporations Act.

(10 marks) b)If ASIC’s prosecutions team decides to pursue action against Liam and Peta, what penalties could

ASIC seek from the court?

COMMONWEALTH OF AUSTRALIA Copyright Regulations 1969

This material has been reproduced and communicated to you by or on behalf of Kaplan Business School pursuant to Part VB of the Copyright Act 1968 (‘Act’). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Kaplan Business School is a part of Kaplan Inc., a leading global provider of educational services. Kaplan Business School Pty Ltd ABN XXXXXXXXXXis a registered higher education provider CRICOS Provider Code 02426B.

(5 marks)

Assessment Information

Question Two

Alexandra, James and Simone are the directors and shareholders of a data storage solutions company called CloudTech Pty Ltd (CloudTech).

Alexandra wants the business to take a new direction – innovation in the music industry. Gnosis Records recently put out a new project to public tender, dealing with music files for a new streaming service. In a meeting of the directors in February 2018, James and Simone resolved that CloudTech should not submit a bid because streaming music was a new industry neither of them knew anything about and they were already having trouble serving their existing clients.

Later in February 2018, Alexandra decided to incorporate another company, Banger Pty Ltd (Banger). Alexandra is the sole director and shareholder. Banger submitted a bid to Gnosis Records, which was ultimately successful in securing a $5 million contract over 5 years. The estimated profit over the life of the contract is $1.8 million.

In April 2018, Alexandra realised that she could offer CloudTech’s clients a better service with the innovative solutions developed at Banger. One night, after the other directors and staff had gone home, she downloaded CloudTech’s complete client list. The next day she resigned as a director of CloudTech.

Alexandra used the client list to contact CloudTech’s clients, but none of them agreed to engage Banger. James and Simone have found out about Alexandra’s attempts to lure CloudTech’s clients and about Banger’s $5 million contract with Gnosis Records. James and Simone are extremely unhappy with Alexandra.

REQUIRED:

Advise CloudTech as to whether it can take any action against Alexandra in relation to:a)the contract between Gnosis Records and Banger.

b)Alexandra’s use of CloudTech’s client list.

(7.5 marks) (7.5 marks)

Answered Same Day May 03, 2020

Solution

Preeti answered on May 09 2020
150 Votes
Case Laws
Question 1
Issue:
The Corporations Act 2001 is considered as the main legislative requirement mandating company’s directors and officers to comply and act accordingly. It has placed a compliance burden over the neck of all company directors resulted in several corporate collapses and turnarounds.
In light of this statement, ME Enterprises Pty Ltd has failed in clearing dues or paying off suppliers, and, unpaid company taxes resulted in a legal notice from Australian Taxation Office demanding payment of unpaid company taxes. In spite of it, Liam and Peta, shareholders and company’s directors did not pay taxes and other expenses, gave rise to allegations from ASIC (Australia Securities and Investments Commission).
Law/Rule:
With reference to Section 182 of The Corporation Act, directors, officers, and shareholders are under statutory obligation to use their position for benefiting firm or enterprise, they are not allowed to use their position for gaining an advantage or earning profits for themselves or someone else, causing threat or proving detrimental to the corporation. Moreover, Corporation Act also prescribes directors to properly use and interpret information; they obtained in their position or job, for infe
ing or analysing it properly proving beneficial to the corporation (Baxt, 2016).
Application
A) Pursuant to the provisions of Section 182 of The Corporations Act, Liam and Peta are found at fault for not properly reviewing financial statements presented by company’s employees, and, analysing debt position created pool of unpaid suppliers and company taxes. The balance sheet provides financial details of the company, and, director is expected to review and analyse it properly for deriving true picture regarding company’s financial obligations and other liabilities. However, Liam and Peta did not give any attention to balance sheet and information stipulated by it, which created heavy debt liabilities and allegations from ASIC, and invites civil penalties against Liam and Peta. With reference to ASIC Vs James Hardie civil penalty case, based on directors’ obligations regarding financial matters and preparation of financial reports failure of which results in penalties on directors (ASIC: 10-273MR Decisions in James Hardie civil penalty case, 2010). The case stipulated that directors...
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