Great Deal! Get Instant $10 FREE in Account on First Order + 10% Cashback on Every Order Order Now

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%...

1 answer below »

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.


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 couldASIC seek from the court? (5 marks)


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.(7.5 marks)

b)Alexandra’s use of CloudTech’s client list.(7.5 marks)

Answered Same Day May 04, 2020

Solution

Preeti answered on May 09 2020
135 Votes
Law questions
Question 1
Issue: The case scenario outlined two legal issues to be resolved under the provisions of the Corporations Act 2001, as a generalised framework prescribing directors’ duties and responsibilities towards shareholders and firm.
a) Is it feasible to
ing civil or criminal action against Liam and Peta, on violation of provisions of the Corporations Act.
Liam and Peta are directors as well as shareholders of ME Enterprises Pty Ltd, provided with financial statement by employees at regular intervals depicting financial status of the firm. However, financial statements prepared by employees at ME Enterprises Pty Ltd included unpaid company taxes and settlement of suppliers’ debt. The delayed suppliers’ debt and unpaid company taxes led ME Enterprise Pty Ltd allegation notice from Australian Taxation Office demanding unpaid taxes and other dues.
B) Legal issue is to determine the nature and amount of penalties application to Liam and Peta on account of allegations made by ASIC (Australian Securities and Information Commission).
Law
Both legal issues are resolved under the provision of Corporations Act 2001 specifying directors’ duties and responsibilities. The act specifies equitable fiduciary duties and obligations owed by directors to company and shareholders. Any conflict of interest in directors’ duties and obligations invite civil and criminal liability, depending on the violation and nature of
each of duty. COAG (The Council of Australian governments) has placed heavy burden on directors and imposes personal liability for committing and fulfilling directors’ duties and obligations (Australian Corporations & Securities Legislation 2011: Corporations Act 2001, ASIC Act 2001, related regulations, 2011).
Application
A) Along with the provisions of Corporations Act 2001, case law ASIC v Plymin 46 ACSR 126; 21 ACLC 700 & Elliott v ASIC 10 VR 369; 205 ALR 594, 2003/2004, ASIC
ought allegations against directors for
each of statutory duty to prevent and handle case of insolvent trading at the firm. The directors failed in adopting and exercising high care and diligence in preventing firm from insolvent trading, as a result, company was burdened with high debt resulted in penalty against directors and banned from holding position of directorship (ASIC v Plymin , Elliott & Ha
ison [2003] VSC 123 (5 May 2003).
In accordance to this, section 58G (3) of Corporations Act...
SOLUTION.PDF

Answer To This Question Is Available To Download

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here