HA3021: Corporations Law

Assessment Task ʹ Tutorial Questions Assignment 2
Unit Code: HA3021
Unit Name: Corporations Law
Assignment: Tutorial Questions Assignment 2
Due: 11:30pm, 26th June 2020
Weighting: 25%
Total Assignment Marks: 50 Marks
This assignment is designed to assess your level of knowledge of the key topics covered in this unit.
Unit Learning Outcomes Assessed:
1. Discuss the foundations of Australian Corporations Law and constitutional aspects and
2. Apply legal principles to real case situations in the context of different types of business
organizations and the legal issues that arise in day to day business.
3. Analyse the incorporation process and characteristics of corporate legal personality.
4. Demonstrate the legal principles for managing a companLJ in parƚicƵlar ƚhe companLJ͛Ɛ
relationship with others.
5. Critically analyse the concept of corporate internal rules and management.
6. Analyse the role and responsibility of directors and members in the management of the
7. Analyse the inƚeracƚion beƚǁeen memberƐ͛ righƚƐ͕ direcƚorƐ͛ dƵƚieƐ and corporaƚe
8. Analyse the procedures regarding external administration and winding up.
9. Identify and analyse legal issues arising from the administration of a company.
Each week students were provided with three tutorial questions of varying degrees of difficulty. These
tutorial questions are available in the Tutorial Folder for each week on Blackboard. The Interactive
Tutorials are designed to assist students with the process, skills and knowledge to answer the provided
tutorial questions. Your task is to answer a selection of tutorial questions for weeks 6 to 10 inclusive
and submit these answers in a single document.
The questions to be answered are:
Week 6 – Question 1 (10 marks)
PolLJeƐƚer iƐ a direcƚor of SƚLJle PƚLJ͘ Limiƚed inǀolǀed in making ǁomen͛Ɛ cloƚhing͘
Situation 1. She arranges with the companLJ͛Ɛ bank ƚo ƚranƐfer an amoƵnƚ of Ψϲϱ͕ϬϬϬ from ƚhe
company account into a personal bank account held by her in her own name. She uses the funds to
finalise some outstanding personal debts.
Situation 2. As a director she receives information that the company is in a serious financial position.
She arranges to transfer a larger amount of the assets of the company over a new proprietary
company that she formed with the intention of caring on the same business.
Situation 3. Contrary to a resolution of the Board and notwithstanding established business practice
that limits credit to $20,000 she allows a trade debtor (who has a history of bad debts) to exceed its
credit limits by $25,000. The debtor fails to pay the outstanding amount of $45,000. Can she rely on
the business judgment rule in this situation?
Required: Has she breached any duties under the Corporation Act in the three (3) situations listed
Week 7 – Question 2 (10 marks)
Kelvin is considering buying shares in a company. Kelvin asks you to explain to him what is meant by
ƚhe ƚermƐ ͚member͛ and ͚Ɛhareholder͕͛ and ƚhe differenƚ ǁaLJƐ in ǁhich a person may become a
member. He also asks you to explain who may be eligible to become a member, and how many
members a company is permitted ƚo haǀe͘ FinallLJ͕ Kelǀin aƐkƐ ͞How does a person cease to be a
member of a company?͟
Required: Advise Kelvin.
Week 8 – Question 3 (10 marks)
Borisda Builder Pty Ltd has five (5) directors: Vesna, Sergey, Ilyych, Mikhail and Zviad. Mikhail and
Zviad are working directors. They manage the day-to-day operations of Borisda Builder Pty Ltd. The
company is engaged in all aspects of home building.
Ilyych is an accountant and he helps out with the production of monthly financial reports for all the
(This question is continued over the page)
Week 8 – Question 3 (10 marks) (Cont’d)
Vesna has attended University and holds an engineering degree and a Masters of Business
Administration (MBA). She has a good knowledge of the building industry and the way company
finances work.
SergeLJ iƐ Zǀiad͛Ɛ broƚher and haƐ had a long hiƐƚorLJ of depreƐƐion and lack of Ɛelf-esteem. Zviad
ƐƵpporƚed SergeLJ͛Ɛ ǁiƐh ƚo become a board member eǀen ƚhoƵgh he offered little by way of expertise.
Zǀiad ƚhoƵghƚ ƚhaƚ iƚ ǁoƵld help SergeLJ͛Ɛ perƐonal deǀelopmenƚ bLJ giǀing him a differenƚ focƵƐ͘
BoriƐda BƵilder PƚLJ Lƚd had a record LJear in ϮϬϭϬ͘ The goǀernmenƚ͛Ɛ firƐƚ home bƵLJer͛Ɛ grant meant
that the company had many building contracts. The directors met in July and decided to pay a dividend
of 9c per share.
The company has experienced a severe decline in new contracts in the last two months. This is due in
part to a number of cut-price builders offering cheap building contracts. This has placed the company
in financial difficulties. Mikhail and Zviad have been with the company since day one and are attached
to the company. It is their main focus and provides them with emotional and financial wellbeing.
Sergey has never read any financial statements that have been sent to him. He did not check the
companLJ͛Ɛ financial reƚƵrnƐ for anLJ of ƚhe LJearƐ before he ǁaƐ appoinƚed and he haƐ neǀer read anLJ
reports since he was appointed.
Shareholders of Borisda Builder Pty Ltd number 15 and include the directors and members of the
founding family who have held onto shares but take little interest otherwise.
VeƐna͛Ɛ broƚher DoƵg haƐ a bƵilding deƐign companLJ͕ DoƵg ƚhe DeƐigner PƚLJ Lƚd͕ and VeƐna aƚƚendƐ
its Board meetings and gives advice. Because of her education and experience the Board of Doug the
Designer Pty Ltd follows her directions. Recently, Borisda Builder Pty Ltd contracted with this
company. It was Vesna that convinced the rest of the Board of Borisda Builder Pty Ltd to enter this
contract. It was Vesna that had collected all the quotes for this work and they all exceeded the Doug
the Designer Pty Ltd quote. This was due to the fact that Doug the Designer Pty Ltd had put in a quote
below the cost price of the work because Vesna had promised more work from Borisda Builder Pty Ltd
in the future.
Ilyych attended a Board meeting a few months ago and brought with him what he believed was a great
idea. His proposal was that the company become involved in constructing cubby houses for children
out of the leftover materials from around their building sites. The other Board members were not so
convinced but Ilyych being an accountant produced some very impressive figures based on
informaƚion from ƚhe companLJ͛Ɛ fileƐ͘ The board ǀoƚed against the proposal after Vesna, with her MBA
training, argued the company should focus on its main game of house building.
Ilyych is disappointed but yesterday signed a deal with another building company known as
Canweafixdat? Pty Ltd. The deal involves Ilyych being paid a commission of 10% for every cubby house
sold and a place on their Board.
Borisda Builder Pty Ltd is having financial problems yet the Board continues to allow the company to
trade without considering the consequences.
Discuss the statutory and common law positions of the directors in the case study above.
Week 9 – Question 4 (10 marks)
Joe is a company director in a proprietary company. He is proposing to put a resolution to his company
that it buy out the smaller holdings. Joe reasons that there are a number of quite large shareholdings
and many of the smaller members have little interest in the company. Joe does not want to force any
member ƚo Ɛell ƚheir ƐhareƐ bƵƚ ǁoƵld like ƚo ͚clean Ƶp ƚhe regiƐƚer͛ bLJ bƵLJing oƵƚ ƚhe Ɛmaller holdings.
Advise Joe on the legal implications of his plan.
Week 10 – Question 5 (10 marks)
Flywell Ltd is the owner of an Australian domestic airline. The Australian travel market is very
competitive. The management of Flywell Ltd is concerned about the plans of a rival airline company
intending to expand its Australian domestic operations. The board of directors of Flywell Ltd decides
to revamp its fleet of aircraft and purchase extra planes, but the company does not have the capital.
Flywell Ltd wishes to induce each investor to invest $10,000 with the company in exchange for shares
in the company. The company aims to raise between $9 million and $11 million in new funds. The
company has approached you for advice.
Advise Flywell Ltd of its fundraising obligations under the Corporations Act, paying particular attention
to the specified facts.
Submission Directions
The assignment has to be submitted via Blackboard. Each student will be permitted one submission
to Blackboard only. Each student needs to ensure that the document submitted is the correct one.
Academic Integrity
Academic honesty is highly valued at Holmes Institute. Students must always submit work that
represents their original words or ideas. If any words or ideas used in a class posting or assignment
ƐƵbmiƐƐion do noƚ repreƐenƚ ƚhe ƐƚƵdenƚ͛Ɛ original ǁordƐ or ideaƐ͕ ƚhe ƐƚƵdenƚ mƵƐƚ ciƚe all releǀanƚ
sources and make clear the extent to which such sources were used. Written assignments that include
material similar to course reading materials or other sources should include a citation including source,
author, and page number.
In addition, written assignments that are similar or identical to those of another student in the class is
also a violation of the HolmeƐ InƐƚiƚƵƚe͛Ɛ Academic CondƵcƚ and InƚegriƚLJ PolicLJ͘ The conƐeqƵence for
a violation of this policy can incur a range of penalties varying from a 50% penalty through to
suspension of enrolment. The penalty would be dependent on the extent of academic misconduct
and ƚhe ƐƚƵdenƚ͛Ɛ hiƐƚorLJ of academic misconduct issues. All assessments will be automatically
submitted to Safe-Assign to assess their originality.
Further Information
For further information and additional learning resources, students should refer to their Discussion
Board for the unit.

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