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Corporations/company law (in relation to corporate governance, directors duties and shareholder remedies) - Essay Example

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Summary
In Australia, companies are governed by the general law of Australia and various provisions of both state and federal laws but the chief governing statute is the Corporation Act 2001. Under Corporation Act, directors of Australian companies are imposed with statutory duties…
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Corporations/company law (in relation to corporate governance, directors duties and shareholder remedies)
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Corporations/company law (in relation to corporate governance, directors duties and shareholder remedies)

Download file to see previous pages... 1. Have Smith, Jones and the other directors of Retailer fully discharged their legal duties to Retailer? In your answer you should consider their duties under the Corporations Act and under relevant case law.
Under Section 191(1) of Australian Corporation Act of 2001, a director has the duty to inform other directors of his material special interest whenever there arise from conflict of interest. A director who has such material interest should give a notice of interest to other directors.
As per section 191 (1A), if a director has a substantial personal interest in a business transaction that pertains to the business events of the company, then he will be liable for strict liability under section 6.1 of the Criminal Code2.
At common law, a director has a duty to act in the best interest and good faith of the company and as fiduciaries, director’s have a duty of economic loyalty to the company. Directors must not use their authority for any private purpose or for private advantage. Directors are expected to function honestly in the utmost interest of the company.
Directors have an obligation to avoid potential and actual conflicts of interest and to have clear demarcation between their personal interests and their duty to the company and to avoid from enriching profit out of their position5.
In Magellan v Mount King Mining NL7, it was held by West Australian Supreme Court that the threshold for deciding whether an interest is material interest or not and when such interest is quite low, the character of interest “should have the ability to sway the vote of a specific director on whether to make a decision or not thereby keeping in mind that the conflict of interest must be of substantial and of real kind8
If he has declared his notice of interest at a board of directors meeting where such contract is being voted. The notice should contain the extent and ...Download file to see next pagesRead More
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