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Mainzeal Case Context: Mary, Allan, Bikram are partners of a successful construction business which have been running for over 10 years. Recently the partners have decided to incorporate their...

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Mainzeal Case
Context: Mary, Allan, Bikram are partners of a successful construction business which have been running for over 10 years. Recently the partners have decided to incorporate their business into a company. They aim to gain a listing on the NZX and issue shares to the public to fund their expansion. However, they are aware that as the directors of a company they have duties to run the business in a way that complies with applicable legal requirements. They have read about the collapse of the Mainzeal Group (Mainzeal), a once leading New Zealand property and construction companies, and are concerned that they do not fully understand directors legal responsibilities.

Required: Write a report to the partners addressing the following aspect:
a) History and context of the Mainzeal group                        (10 marks)
) What went wrong with the company’s business operations (what led to the group’s collapse)                                     (10 marks)
c) Discuss the liquidation status of Mainzeal Property and Construction Ltd (cite the relevant legislations):
i. You should identify the appointed liquidato
s and summarise their most recent liquidation report. Please check the New Zealand Companies Office
    website for the liquidator’s report                         (5 marks)
ii. Describe what is meant by profession, professional and the role played by professional accounting bodies in regulating the accounting profession.
(10 marks)
d) Discuss the responsibilities that the directors of Mainzeal failed to comply with under the New Zealand Companies Act 1993?                         (10 marks)
e) What defences did the directors present to the courts to counter the claims made by the plaintiff?                                  (20 marks)
f) The lessons learnt from the corporate collapse (i.e. what could have been done to prevent the collapse)                              (10 marks)
g) Comment on how the corporate structure can be misused to evade legal obligations.
(10 marks) Note: An additional 15 marks will be awarded for structure, co
ect use of vocabulary and grammar, and co
ect referencing.

· You should examine newspaper articles, documents on the Company Office website and the High court judgement regarding the Mainzeal case.
· Marks awarded for:
o critical analysis of the issues related to the case
o critical analysis of relevant reports and articles
· Readings and references:
· You are encouraged to read
oadly and reference material from web sources, journal articles, reports, web documents, laws & standards.
· You are required to use the APA 7th referencing style both for in-text citation and the end-of-text reference list.
· Format:
· Type the assessment using a word processing software and use a professional style of presentation.
· The report should have a title, headings and subheadings. A clear reference list should be provided at the end of the report.
· Penalties:
· Explain in your own words as much as possible to avoid ‘cut and paste’ in your writing. Assessments which show high similarity with external content ca
y a minimum penalty of -10 marks.
1 BBUS – ACCT605 Accounting Legal and Regulatory Framework
1 BBUS – ACCT605 Accounting Legal and Regulatory Framework
Answered Same Day Jun 26, 2021 ACCT605 Australian Catholic University


Rupsha answered on Jun 26 2021
117 Votes
Table of Contents
A. History of Mainzeal Group    3
B. Mainzeal’s Business Operations    3
C. Liquidation Status of Mainzeal Property and Construction Ltd    4
D. Mainzeal Director’s Failure in Taking Responsibility    5
E. Defenses Presented by Directors    6
F. Lessons of Corporate Collapse    7
G. Corporate Structure Evading Legal Obligation    7
References    9
A. History of Mainzeal Group
The Mainzeal Property and Construction Ltd was one of the most popular and leading construction firms of New Zealand. Researches as well as documents say that Mainzeal used to deliver almost construction projects of value approximately $7.5 billion across the entire Zealand and used to give employment to almost more that 400 people. The company was held by Richina Global Real Estate. In the year 1968, the company was founded as a semi
anch if the company Mainline Corporations Ltd, which generally transformed its name to Mainzeal Corporation Ltd in the year 1975 (Stuff, 2019). In the year 2006, the company experienced huge setbacks in the finance and made large losses while constructing certain apartments in Auckland CBD and the Quay Park. These losses were recovered by the company considering the earnings of the previous year, but this was not the end of losses. One after another, misfortunes generally struck the organization until it fell. In the year 2011, the company expanded its business and set its footmark in the residential market by the name Mainzeal Living. Suddenly in the year 2013, on the 6th of Fe
uary, the company entered into receivership as a result all the sob-contractors as well as workers were left into locked out stages out of the work sites. Then on the 28th of Fe
uary on the same year the Mainzeal Property and Construction Ltd. were put up in the liquidation and went onto the control of the liquidators. From almost 400 plus staffs at its peak form, the total number of staffs came down to almost 14 by 14th of April, 2013.
B. Mainzeal’s Business Operations
Mainzeal Company was first established in the 1968 and gradually it established with the passage of time. The major shares of Richina, the company which owned Richina, were invested in China in the leather industries. With the passage of the years the parent company took many more shares in the mainland China and huge amount of almost $40 million were transfe
ed from Mainzeal for investment by the decisions of the parent companies. The parent companies also promised to provide assistance to Mainzeal in times of need. But such assurances were not kept as there were no legal deals made about the assurance and the funds taken were not provided back to Mainzeal again. By the year 2012, very significant type of cash flow difficulties struck Mainzeal and there were no possibilities left to
ing the cash back from China (Duncan Cotterill, 2019). After that in the early 2013, the famous company of once, Mainzeal set foot marks into liquidation. The court opined that the
eaching of the duties of the directors of the parent companies were solely responsible for the downfall of Mainzeal Property and Construction Ltd. Their reckless trading, removing of the huge fund and investing in China led to the economic crisis of the company. There was simply no assurance or group support when the company badly needed it.
C. Liquidation Status of Mainzeal Property and Construction Ltd
Just due to some poor decisions of the directors, Mainzeal Property and Construction was put to liquidation in the...

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