The Question This is a study of the case of ASIC v Adler XXXXXXXXXXACSR 72 . In this presentation you are required to address the following issues:  Explain very concisely what happened in this case?...

Case Analysis: ASIC v Adler (2002) 41 ACSR 72
Facts in the case, parties and their positions
The case ASIC Vs Adler (2002) is a civil proceeding against three directors named Rodney Alder acted as the non-executive director of HIH, Ray Williams acted as the founder and CEO of HIH and Dominic Fodera acted as the director and chief financial officer of HIH. The case is one of well-known example of company collapse in the business history of Australia. The case has its roots long back in the history where HIH is founded as one of the largest Australian based company which has provided an unsecured and undocumented loan of amount $10 million to Pacific Eagle Equity (PEE) (Huang and Howson, 2017).
i) Around $4 million loan has been used in acquiring HIH shares listed on the Australian stock market. The shares was purchased by creating a false impression by Adler that he is helping and assisting HIH’s falling or declining phase with the expectation of increasing share price. In simple words, Adler stated that he has engaged in preventing share price of HIH from falling dramatically. Later on, PEE sold HIH shares in total loss of around $2 million.
ii) Around $4 million was used by Alder in purchase of unlisted shares of Internet companies and unlisted technology. Alder Corporation also suffered loss on all these investments.
iii) Around $2 million was lent to the Alder and the associated interest parties. The lending was totally unsecured and done without sufficient documentation (Keay, 2011).
Primary legal issues regarding officers and officers duties
HIH has found as illegally provided financial assistance of $10 million to PEE for purchasing shares. Other directors and investment committees were found as completely unaware of the disclosure and information. Also, $10 million unit trust as subscribed by HIH was also found as less than initial subscription. This act seems as materially prejudiced the interest of HIH, investors and shareholders thereby resulted in contravention of section 260A. With respect to directors, Mr. Alder has contravened multiple provisions of the Corporations Act and portfolio of directors’ duties. The contraventions fall under section 180, 181, 182 and 183 of the Corporations Act, these sections contain directors’ duties of acting with due care and diligence, good faith in best interest of the company, acting for proper and legal purpose, avoiding improper use of position and information ((Plessis, Hargovan, Bagaric and Ha
is, 2014).
Likewise, Mr. Williams has contravened the provisions of section 180 and 182 of the Corporations Act as he failed to act as a proper safeguard while allowing HIH to lent $10 million to PEE. Thirdly, Mr. Fodera failed in submitting a proposal to HIH’s board or investment committees for evaluating and approving the proposal of lending $10 million to PEE.
Detailed discussion of the contraventions of sections 180 to 183 by three directors are:
i) Section 180 asks directors and other officers in a company to act and discharge their duties with due care and diligence as if a reasonable person would have acted. In ASIC Vs Alder, section 180 did not allow HIH to lent sum of $10 million to PEE. Alder failed in placing proper safeguards in place to protect HIH. Also, sum of $4 million used to purchase unlisted shares is also not justifiable as these companies were facing cash flow difficulties and posed significant risk.
ii) Section 181 states to act in good faith and in the best interest of company as well as to act for a specific purpose. In the given case, Alder failed to act in good faith and interest of HIH as he has used loan money for purchasing HIH shares for his personal interest and...