subject:corporations law (australian)

This assignment includes two questions and is worth a total of 60 marks. You are required to answer both questions. The assignment is due at 10:00 pm 9 November 2015. Assignments submitted after the due date in the absence of an extension will incur a marking penalty. An extension must be applied for in writing before the due date. Extension applications must be accompanied by appropriate supporting documentation. In particular, where an extension is sought on the ground of illness, a medical certificate must be supplied. Question 1 (30 marks) (1200 words maximum) Bell Ltd is a company that installs kitchen facilities, and has four directors on its board: – Abbey, the company’s managing director – Bob, the company’s chief financial officer – Cathy, the company’s non-executive director – David, the company’s non-executive director chairman The company’s business has been very successful. However, recently it has experience a number of problems. Following the board decision to offer customers a special installation package, Cathy has negotiated an exclusive contract with Western Sydney (WS) Ltd. Cathy has not informed the board that WS is actually owned by her son. Bob suspects that Cathy is personally connected with WS, however, he has not raised his concern with any of the other directors. In addition, Bob made sure the other directors were kept in the dark about company’s real financial position and did not give them meaningful or accurate financial information for some time. Despite Bell Ltd’s negative cash flow position, Abbey proposes to expand its operations into dishwasher installation. Cathy questions whether the company can afford the costs associated with the expansion. As a result, the board delegates to Bob the task to investigate Abbey’s proposal. Bob, however, spends very little time investigating the proposal due to his busy schedule, and hastily prepares a report recommending that the proposal be accepted. The next board meeting is very long and the consideration of Abbey’s proposal and Bob’s report is the last item on the agenda. As the directors are anxious to leave, David allowed only 10 minutes for Abbey to present her business plan for the proposed expansion. Bob’s financial report produced after his investigation on the matter was tabled at the board meeting but he was not allowed to speak or answer questions. Nevertheless, the directors approved the proposal. Following the approval of the proposal, Abbey entered into a contract with Southern Queensland (SQ) Ltd for the purchase of new equipment for the approved proposal. The contract is worth $20,000 and is never paid. Shortly after the contract was signed, the board Law5206 Assignment 2 S2 2015 discovered that Bob’s report had obvious mistakes as he has overlooked many of the additional costs involved in the expansion. Assume that Abbey’s proposal has been proved to be a financial disaster for Bell Ltd, and as a result, the whole board of directors were replaced. Advise the new directors of Bell Ltd whether its former directors breached any of their duties based on the facts stated above. Any defences available to the formal directors under the Corporations Act 2001 (Cth) to avoid liability? Question 2 (30 marks) (1200 words maximum) Assume you have been asked to give advice to some directors on the board of a company that has been experiencing years of financial difficulties. The business has been failing for some time and on a regular basis the board has been reviewing its strategies in order to stay afloat. On a number of occasions the solvency of the company has been questionable but on these events the company has managed to refinance its operations with the bank, its major creditor. The bank has always held security over the whole of the assets of the company and has wanted to try and allow the company to keep going if it can to give it the best opportunity to recover the debts if possible. The bank has recently come to the view that the company may be failing for other reasons. It has lost confidence in the chairperson of the board and suspects he may be embezzling funds. It has reported its suspicions to ASIC. You as a professional accountant are asked to write a formal letter to generally advise on the following issues based on the knowledge you learned in this course: (20 marks) (a) What options are available to the directors if they feel the company operations should be reviewed to see whether it can continue to operate or should cease? Practically how would this process or processes operate? (b) What risks are the directors exposed to if they fail to take these options? (c) What options may be available to the bank depending on the nature of their security? (d) What options may be available to ASIC if investigations prove the suspicions of the bank regarding the chairperson of the board? You should consider to use both primary and secondary sources, e.g. legislation, case law, text books, journal articles and websites, to demonstrate your research skills in support of your advice in the letter. Wherever necessary, you should reference the sources in the letter. (5 marks) Letter format and communication skills.
Instruction:
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This assignment includes two questions and is worth a total of 60 marks. You are required to answer both questions. The assignment is due at 10:00 pm 9 November 2015.
Assignments submitted after the due date in the absence of an extension will incur a marking penalty. An extension must be applied for in writing before the due date. Extension applications must be accompanied by appropriate supporting documentation. In particular, where an extension is sought on the ground of illness, a medical certificate must be supplied.
Question 1 (30 marks) (1200 words maximum)
Bell Ltd is a company that installs kitchen facilities, and has four directors on its board:
– Abbey, the company’s managing director – Bob, the company’s chief financial officer – Cathy, the company’s non-executive director – David, the company’s non-executive director chairman
The company’s business has been very successful. However, recently it has experience a number of problems.
Following the board decision to offer customers a special installation package, Cathy has negotiated an exclusive contract with Western Sydney (WS) Ltd. Cathy has not informed the board that WS is actually owned by her son. Bob suspects that Cathy is personally connected with WS, however, he has not raised his concern with any of the other directors. In addition, Bob made sure the other directors were kept in the dark about company’s real financial position and did not give them meaningful or accurate financial information for some time.
Despite Bell Ltd’s negative cash flow position, Abbey proposes to expand its operations into dishwasher installation. Cathy questions whether the company can afford the costs associated with the expansion. As a result, the board delegates to Bob the task to investigate Abbey’s proposal. Bob, however, spends very little time investigating the proposal due to his busy schedule, and hastily prepares a report recommending that the proposal be accepted.
The next board meeting is very long and the consideration of Abbey’s proposal and Bob’s report is the last item on the agenda. As the directors are anxious to leave, David allowed only 10 minutes for Abbey to present her business plan for the proposed expansion. Bob’s financial report produced after his investigation on the matter was tabled at the board meeting but he was not allowed to speak or answer questions. Nevertheless, the directors approved the proposal.
Following the approval of the proposal, Abbey entered into a contract with Southern Queensland (SQ) Ltd for the purchase of new equipment for the approved proposal. The contract is worth $20,000 and is never paid. Shortly after the contract was signed, the board
Law5206 Assignment 2 S2 2015
discovered that Bob’s report had obvious mistakes as he has overlooked many of the additional costs involved in the expansion.
Assume that Abbey’s proposal has been proved to be a financial disaster for Bell Ltd, and as a result, the whole board of directors were replaced.
Advise the new directors of Bell Ltd whether its former directors breached any of their duties based on the facts stated above. Any defences available to the formal directors under the Corporations Act 2001 (Cth) to avoid liability?
Question 2 (30 marks) (1200 words maximum)
Assume you have been asked to give advice to some directors on the board of a company that has been experiencing years of financial difficulties. The business has been failing for some time and on a regular basis the board has been reviewing its strategies in order to stay afloat. On a number of occasions the solvency of the company has been questionable but on these events the company has managed to refinance its operations with the bank, its major creditor. The bank has always held security over the whole of the assets of the company and has wanted to try and allow the company to keep going if it can to give it the best opportunity to recover the debts if possible. The bank has recently come to the view that the company may be failing for other reasons. It has lost confidence in the chairperson of the board and suspects he may be embezzling funds. It has reported its suspicions to ASIC.
You as a professional accountant are asked to write a formal letter to generally advise on the following issues based on the knowledge you learned in this course: (20 marks)
(a) What options are available to the directors if they feel the company operations should be reviewed to see whether it can continue to operate or should cease? Practically how would this process or processes operate? (b) What risks are the directors exposed to if they fail to take these options? (c) What options may be available to the bank depending on the nature of their security? (d) What options may be available to ASIC if investigations prove the suspicions of the bank regarding the chairperson of the board?
You should consider to use both primary and secondary sources, e.g. legislation, case law, text books, journal articles and websites, to demonstrate your research skills in support of your advice in the letter. Wherever necessary, you should reference the sources in the letter. (5 marks)
Letter format and communication skills.
LAW 5206 – Corporations Law

Assignment 2 Template – Semester 2 2015
Criteria
F C B A HD
Quality of analysis and problem-solving skills: Identifies legal issue/problem No clear identification of legal issues relevant to the case and/or issues identified are not relevant. Identifies at least one legal issue relevant to the case but more detail is required. Identifies most legal issues relevant to the case but lacks clarity. Correctly identifies most legal issues relevant to the case. Correctly identifies all legal issues relevant to the case.
Evaluates relevant legal principles Lack of relevant legal principles or those identified are incorrect
Outlines some relevant legal principles but citation of applicable cases and/or statutory provisions needs more detail. Outlines some relevant legal principles, citing
applicable cases and/or statutory provisions. Outlines all relevant legal principles, citing
applicable cases and/or statutory provisions. Outlines all relevant legal principles, citing
applicable cases and/or statutory provisions.
Develops logical conclusion Stated conclusion is
not aligned with the question fails to tie together legal arguments either for or against the application of legal principles. Stated conclusion is broadly aligned with the question and ties together some legal arguments for the application of legal principles. Stated conclusion broadly answers the question, and ties together some legal arguments for and against the application of particular legal principles. Stated conclusion answers the question and ties together most the legal arguments for and against the application of particular legal principles. Stated conclusion answers the question, and logically ties together the legal arguments for and against the application of particular legal principles.
20 Marks 0-9 10-12 13-15 16-17 18-20
Quality of research skills:

Research
Little or no evidence of original research
Evidence of some original research Evidence of original research from a number of different sources Evidence of a high level of original research Evidence of a high level of original research which enhances application and analysis
Citation and referencing Many errors and/or little or no attempt made at referencing Mostly accurate – some minor errors Consistently correct
5 Marks 0 1-2 3 4 5
Quality of communication skills:

Writing style, grammar and spelling
Inappropriate style, tone and/or choice of language or many errors of spelling and/or grammar. Mostly appropriate style, tone and/or choice of language. Spelling and grammar mostly accurate. Appropriate style, tone and/or choice of language. Accurate spelling and grammar. Highly appropriate style, tone and/or choice of language. Spelling and grammar consistently accurate.
Structure – also including brief introduction, body and brief conclusion
Poor structure and/or use of paragraphs or headings Mostly appropriate structure and/or some use of paragraphs or headings to enhance readability Appropriate structure and use of paragraphs or headings
Excellent structure and use of paragraphs or headings

5 Marks 0-1 2-3 4 5
MARKING CRITERIA FOR LAW5206 ASSIGNMENT 2 Question 1

MARKING CRITERIA FOR LAW5206 ASSIGNMENT 2 Question 2
Criteria
F C B A HD
Quality of analysis and problem-solving skills: Identifies legal issue/problem No clear identification of legal issues relevant to the case and/or issues identified are not relevant. Identifies at least one legal issue relevant to the case but more detail is required. Identifies most legal issues relevant to the case but lacks clarity. Correctly identifies most legal issues relevant to the case. Correctly identifies all legal issues relevant to the case.
Evaluates relevant legal principles Lack of relevant legal principles or those identified are incorrect
Outlines some relevant legal principles but citation of applicable cases and/or statutory provisions needs more detail. Outlines some relevant legal principles, citing
applicable cases and/or statutory provisions. Outlines all relevant legal principles, citing
applicable cases and/or statutory provisions. Outlines all relevant legal principles, citing
applicable cases and/or statutory provisions.
Develops logical conclusion Stated conclusion is
not aligned with the question fails to tie together legal arguments either for or against the application of legal principles. Stated conclusion is broadly aligned with the question and ties together some legal arguments for the application of legal principles. Stated conclusion broadly answers the question, and ties together some legal arguments for and against the application of particular legal principles. Stated conclusion answers the question and ties together most the legal arguments for and against the application of particular legal principles. Stated conclusion answers the question, and logically ties together the legal arguments for and against the application of particular legal principles.
20 Marks 0-9 10-12 13-15 16-17 18-20
Quality of research skills:

Letter format Poor structure and/or miss formal letter elements Mostly appropriate structure and/or some use of formal letter elements Appropriate structure and use of most of the formal letter elements
Excellent structure and use all of the formal letter elements

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subject:corporations law (australian)

subject:corporations law (australian)

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