ILAC corporations example Essay

951 Words Oct 27th, 2014 4 Pages
ISSUES:
Issue 1: Is Patricia an officer of Stadium Enterprises Pty Ltd? And is Dan an officer of Fancy Pants Pty Ltd?
Issue 2: Has Patricia breached her duty to act in good faith in the best interests of the company when advising her sister Faye, that SEPL were buying a large amount of shares in FPPL?
Issue 3: Has Patricia improperly used company information to gain advantage for herself and/or her sister?
Issue 4: Has Patricia improperly used her position to gain advantage for herself and/or her sister?
Issue 5: Has Patricia breached the prohibition of insider trading through the use of price-sensitive information when engaging her sister to buy shares in FPPL?
Issue 6: Has Dan breached the director’s duty to prevent insolvent
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6. S.588G states, “Directors are under a duty to prevent a company from incurring debts while it is insolvent” (slides). After Dan found out about SEPL buying shares in FPPL he bought a new fabric cutter machine at $300,000 with the company’s credit card, when he was sure that he would not be able to pay all the Company’s current bills. Although Dan was under the impression the company was about to make a lot of money, he went and purchased the fabric cutter while the company was still insolvent and thus breached s588G under the CA by not exercising his duty to prevent the company from incurring debts while insolvent.
CONCLUSION
We can advise ASIC that on the balance of probabilities, as an officer of SEPL Pty Ltd, that Patricia has breached s.181 by not acting in good faith, s.183 by improper use of information, s.182 by improper use of position, and s.1043A by insider trading. She has done this by sharing price sensitive information she had gained as director, with her sister, advising her to buy shares in a company to gain advantage and make a profit. We can also advise ASIC that on the balance of probabilities, as an officer of FPPL Pty Ltd, that Dan has breached s.588G of the CA by insolvent trading through purchasing a $300,000 machine when he knew the company was in debt and insolvent. Accordingly, the court may order Pat and Dan to pay a fine of up to

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