Company Laws Essay

3708 words - 15 pages

Part CQuestion 11. Malcolm asks for legal advice.There are many issues that Malcolm needs to look at due to his conduct as a director of Comtech. Directors of public companies have many statutory and general law duties that they need to be aware of. With statute law, the duties of directors are very specific and they are required to act with reasonable care and diligence. They are required to act in good faith, in the best interests of the company and their actions need to be for a proper purpose. They also have a duty not to continue trading if winding up. With the general law duties, directors have a financial duty as to act in the best interests of other members and Malcolm owes both these general law and statutory duties to company and members.The investigation by ASIC revealed a numbers of breaches by Malcolm of his company duties. He also did not attend meetings with the ASIC to discuss the documents and have a chance to clear his name and lessen the penalties. Malcolm has been very careless and will probably be charged with many things. He may be charged with criminal offences under criminal law but may evade prosecution under civil law where it must be shown beyond a reasonable doubt that he had purposefully breached his duties as director. There looks like there will be a case for a criminal law charges though if it can be shown that Malcolm was doing business when the company was insolvent. Criminal charges can occur if the company was insolvent when it went into debt or became insolvent by incurring the debt, and the director known that the company was insolvent or would become insolvent as a result of incurring the debt.But this would be just the very start for Malcolm. He is also to be charged with many breaches of the Corporations Act 2001 which would be the result of the company going to winding up. Again, the ASIC will enforce statutory duties, and can also enforce general law duties on behalf of a company , if necessary but Malcolm may seek the relief from liabilities under Section 1317S of the Corporations Act 2001. Malcolm's breaches of statutory duties are to breach of a duty of care to act with reasonable care, skill and diligence. There are also many other examples of breach which include having two directors and not three and not keeping record and no reporting.Malcolm was also bad to use the Comtech money to pay debts of another company, and for his personal and also his family expenses. To escape the prosecution for these, he will need to show that the funds were meant for him to be used like this or that they were his personal wages or bonus. But this not likely as it is not stated in the example. Malcolm will be also prosecuted for not lodging and keeping the reports and for trading for six months when the company was insolvency. Malcolm could also be disqualified form being a company director for many years for these breaches.2. Identify breaches of the Corporations Act 2001 have been breached as revealed by...

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