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Company Law Assignment

Non observance of this provision will attract both fine and imprisonment. (Walton & Henderson 2005:17). Under s 195(2), an interested director of a public company may vote and even present in the board meeting provided if the board passes a resolution before such matter is voted upon The nature and magnitude of the director’s interest in that business are taken into recognition by the board The board resolution should mention that director’s voting for the interested resolution are satisfied that the director’s interest should not bar the director from voting or considering on the business matter. Directors of public company are now accountable by s 191. The Australian Securities and Investment Commission (ASIC) can under s 196 may order that a director with a material personal interest as defined in s 195(1) can present and vote on such interested matters if there is no proper quorum is available and due to urgency of the issue or due to some other compelling reason, that board can approve the same despite the fact of board’s conflict of interest instead of passing in Annual General Meeting. (Cassidy 2005:244). Since, the company has no constitution, replaceable rule in the Act will be applicable. In The Queen v District Council of Victor Harbour , Ex Parte Costain Australia Ltd [1983] 54 SASR 188 at 190, it was held that when a director’s interest is both material and personal ,such director is prohibited from attending and voting at the board meeting. In the Bell Group Limited (in liq) v Westpac Banking Corporation (2008) 70 ACSR I, it was held that an interest which has the potential to sway the voting by a director would be regarded as material interest. In Grand Enterprises Pty Ltd v Aurium Resources Ltd (2009) 256 ALR I , it was observed that the term “ material “ implied that kind of interest that requires to be of some value or substance instead of just a slight interest. (ASIC 2011:10). It is advisable that Betty should inform her interest in the business to the all the directors and should desist from attending the board meeting and voting on the resolution in which she is interested as held in Queen v District Council of Victor Harbour except where her participation will be of more advantageous to the company due to her expert knowledge on the subject. Answer to question B (a) (ii) As regards to an interested matter by a director that is being considered by the board, directors who do not have a material personal interest in such transaction will be known as “ non-interested directors.” A non-interested director should, when making a decision to offer financial advantages to a related party; To conduct proper investigation of management and should get proper advise, to the magnitude needed about the interested proposal. He should appraise the information provided to him independently As held in HIH Insurance Ltd and HIH Casualty and General Insurance Ltd , ASIC v Adler and others (2002) 41 ACSR , non-interested director should exercise “ special caution “ with conscientious concern to make sure that required corporate approval are received . For passing a resolution in which a director is interested, there should be adequate quorum of non-interested directors as stipulated in the constitution of the company or Corporation Act. In the absence of any valid quorum of non-int ...Show more

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Word count 2039 words (excluding list of references) Answer to question (a) (i) Under Australian Corporation Act, a director may escape from the accountability of conflict of interest by the following ways. To inform the conflict of interest to all interested parties To abstain from involving or participation in making decision that may be or be seen to be, impacted by the conflict…
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Company Law Assignment essay example
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