Recent Question/Assignment

Course Code and Title LAW2001 - Corporate Law
Assessment Description Assessment 2 – Assignment on Modules 3 and 4
Individual/Group Individual
Modules 3 and 4
Length 2000 Words
Learning Outcomes 5. Identify the risks of liability arising from diverse sources for both the company and its officers and, in particular, define directors’ duties and the consequences of breaching those duties;
6. Describe the financing of companies by debt and equity, the rules and restrictions in place to protect creditors and shareholders as well as the rules regulating fundraising;
10. Use skills, including analytical and deductive reasoning, in applying the above knowledge, rules and principles of corporations law to factual situations which could arise in practice, in order to solve a problem perceptively and creatively or to have sufficient understanding of the legal issues to know what questions to ask when referring the matter for legal advice.
Submission By 11:55 p.m AEST/AEDT Sunday of Week 9
Weighting 30%
Total Marks 100 marks
Task Description
Students will be presented with two case studies on directors' and officers' duties incorporating legal issues taken from Modules 3 and 4.
Students are required to answer all questions on each of these case studies and submit their written responses via SafeAssign on Blackboard.
LAW2001: Assessment 2: Individual Assignment (Modules 3-4)

Assessment conditions
This is an unsupervised assessment.
Each individual assignment submitted is to be a student’s own work. Any other sources used (including by consultation with any other person) are to be acknowledged and appropriately referenced.
• The assignment is to contain a header which includes the following:
o Student’s name o Course title and code o Assessment type o Trimester and year.
• Pages are to be numbered.
• The assignment is to be referenced using footnotes in accordance with the Australian Guide to Legal Citation (‘AGLC’).
• A bibliography is to be provided in accordance with the AGLC.
Assessment of answers
The following factors will have an impact on the assessment of answers to the assignment questions (please refer to the assessment rubric on Blackboard for detail):
1. Knowledge, content and application
• demonstration of knowledge of the relevant course material
• correct application of course concepts and the law
• conclusions to be based on legal reasoning
• relevance to the questions
• evidence of critical thinking and analysis
• appropriate use of authority (case law and legislation) to support analysis and conclusions
• completeness / comprehensiveness of the answer
2. Expression
• logic and clarity of expression
• use of academic and professional conventions (e.g., correct use of legal terminology, appropriate referencing according to the AGLC)
LAW2001: Assessment 2: Individual Assignment (Modules 3-4)

Lawrence, Bernard and Donald were all executive directors of an insurance company called InsureIt Ltd. Donald was the finance director and Bernard was the Chief Executive Officer of the company. In addition to being a director, Lawrence also owned a substantial amount of shares in InsureIt Ltd which was a publicly listed company on the ASX. Lawrence’s wife was a director and shareholder of another company called Prime Earnings Pty Ltd. Lawrence requested from Bernard and Donald an advance of $10 million from InsureIt Ltd to be paid to Prime Earnings, in return for $10 million worth of the shares of Prime Earnings. Lawrence had a reputation as a finance guru and he told Bernard and Donald that he would use the money to buy sub-prime securities that were doing well overseas. His banker friends were making lots of money by trading these securities. He said that this would make the shares of Prime Earnings very valuable.
Prime Earnings had no other assets. Bernard and Donald also knew that Lawrence’s wife was a director and shareholder of Prime Earnings and that there were no other assets in Prime Earnings. As Bernard and Donald trusted Lawrence’s judgement they did not ask for any security. None of the other directors of InsureIt Ltd knew of this advance. They also did not let the investment committee of the company know of the transfer of the funds.
The $10 million was spent as follows:
• $5 million was given to Prime Earnings and was used to buy the securities overseas;
• $3 million was used by Lawrence to buy more shares in InsureIt Ltd to support its share price on the ASX; and
• The remaining $2 million was invested into other private companies where Lawrence and his family had an interest.
Lawrence thought he could make a quick profit as he had done in the past. He did not investigate any of these investments in any real way. Soon after this, the news from overseas was that the securities were worthless and were causing the collapse of many U.S. companies. This made the Prime Earnings shares, now owned by InsureIt Ltd, worthless. The other directors of InsureIt found out about the $10 million given to Prime Earnings and they were furious. They have reported the matter to ASIC and want ASIC to investigate Lawrence, Bernard and Donald for breaches of the Corporations Act.
(a) Advise the other directors of InsureIt Ltd as to any breaches of directors’ duties under the Corporations Act 2001 (Cth) by Lawrence, Bernard and Donald and any defences that may be
available to them (30 marks)
(b) Advise as to any other breaches of the Corporations Act 2001 (Cth) relating to the use of the funds by Lawrence. (20 marks)
Total (50 marks)
Valerie is a non-executive director of an investment company for retirees along the Bellarine peninsula called The Millenial Retirees Pty Ltd. She has basic accounting knowledge and can read a balance sheet. One of the executive directors, Samantha, put forward a proposal at a board meeting to invest $600,000 in a company in India. The company was noted as the most successful IT company for 2020 in India in an independent investment report commissioned by Samantha. Valerie however thought further investigation was needed before the money was invested. Valerie made her own inquiries and rang the authors of the investment report and questioned them further regarding the nature of the IT company in India and its financial status. She was told that there were management problems in the company at the moment but it appeared the company was running well. Valerie suggested to Samantha that she invites one of the representatives of the financial investment company who wrote the report to a board meeting, so the directors could ask questions before any decisions were made. Samantha agreed. At the meeting most of the directors did not ask any questions. It seemed most of the directors had not read the report or they did not understand it. The other board members also did not make any of their own inquiries as Valerie had done. Instead they chose to rely on the advice of the representative of the investment company and their report. The resolution by a majority of the board was to invest the $600,000. Nine weeks later the Indian company went into liquidation. Fortunately for the The Millenial Retirees Pty Ltd, it survived this crisis because of a dynamic advertising campaign that secured 100 new retirees who bought property and concluded long term leasing contracts with The Millenial Retirees Pty Ltd.
(a) Explain whether Valerie has breached any of her duties owed to the company? If so, discuss the defences (if any) that may be available to her. (15 marks)
(b) Explain whether Samantha has breached any of her duties owed to the company? If so, discuss the defences (if any) that may be available to her. (15 marks)
(c) Explain whether the other directors have breached any of their duties owed to the company?
If so, discuss the defences (if any) that may be available to them. (15 marks)
(d) ASIC wishes to take action against the directors of The Millenial Retirees Pty Ltd. Advise ASIC as to the relevant consequences for breach of the duties discussed in your answers to (a), (b) and (c) above. (5 marks)
Total (50 marks)
Module 3 to Module 4
• The general law consists of common law and equity. Statutory duties are those found in legislation. In this instance the relevant legislation is the Corporations Act 2001 (Cth) (‘the Act’).
• Do not mix the general law and statutory duties in your answer – deal with one at a time.
• In your answer, deal with the general law duty first and then the statutory duty (unless only one is asked for).
• If the general law duty and statutory duties are the same and you are asked for both duties, you need not repeat the principles and analysis of the law, but need merely state that they are the same.
• If more than one general law or statutory duty is applicable to a case study then identify, analyse and apply the dominant duty in your answer and refer to the other duties in passing only.
• You need not include remedies in your answer, unless this is required by the question.
• Where possible, cite at least one case as authority for each key principle, key statement, rule, test, etc. in your answer.
• Study the key cases and case examples in the textbook to gain a better understanding of how the legal principles are applied in practice and also to familiarise yourself with different factual scenarios, which might be of assistance when answering case study questions.
• Use the Flowchart of Directors’ and Officers’ Duties and Remedies in the textbook, Australian Corporate Law, 6th edition, as a starting point. The general law duties are in the top half of the flowchart and the statutory duties (Corporations Act provisions) are in the bottom half.
• See too the flowcharts in the textbook:
o Overview of Fiduciary Duties
o Comparison between Fiduciary Duties and Statutory Duties
• Read the following portions of the textbook as an introduction:
o ‘Overview of duties’ - Chapter 15
o ‘Fiduciary Duties – Overview’ Chapter 15
1. Identify the directors’ duty which is relevant to the facts in the case study, based on the conduct of the director/s. State the name of the duty. Identify both the general law duty and statutory duty (unless only one is required in the question).
a. Classify the directors’ duty as general law (common law or equitable; fiduciary or non---fiduciary) or statutory.
b. Define the duty: state the general law definition or the statutory definition from the relevant section of the Act and explain the meaning of the duty.
2. Analyse the duty:
a. State the principles which apply to the duty,
b. State any rules which may apply,
c. Examine the tests used to determine compliance with or breach of the duty,
d. State what standard is used in certain circumstances, for example, for assessing a director’s conduct or state of mind,
e. Provide authority as support for the law you have analysed, in the form of relevant case law and/or statutory law. Cite at least one case for every key principle, key statement, rule, test, etc.
3. Apply the law to the facts
a. Apply only the relevant law to the facts of the case study.Choose only the situation/s relevant to the facts of the case study.
b. Ensure that you have applied the law to all the relevant facts in the case study, without omitting any relevant facts.
c. In developing an argument for both parties, what follows below should be taken into account. The extent of detail required in dealing with defences and relief from liability will depend on the scope of the assignment, as determined by the wording of the assignment question. If you are not specifically required by the assignment question to deal with defences and/or relief in your answer, you need only include them, or either of them, briefly and not in detail. It appears that defences relate to the issue of breach, whereas relief applies to the issue of liability.
d. Remedies and penalties will apply if the director is liable. Remedies and penalties need only be included in your answer if specifically required by the assignment question.
4. Conclusion
This is the short answer to the question posed in the case study and should follow
logically from the reasoning in part 3 of your answer. Ver 2
In your assessments, in order to avoid plagiarism, you are to use your own words and not merely copy from other sources, eg. the textbook. You will be penalised for plagiarism and in serious cases you may fail the assessment.
The usual copyright provision is that you may directly quote up to 10% of your assessment from other sources, however, as you need to provide authority in the form of case law and legislation in law assessments, a further allowance will be made when you are quoting directly from case law and statutory law.
A reference in accordance with the Australian Guide to Legal Citation (AGLC) is to be provided for every quotation. All quotations must be in quotation marks:
---for short quotations of three lines or less, use single quotation marks;
---for long quotations of more than three full lines, do not use quotation marks but indent the quotation and type it in a smaller font size.
You are also to provide a reference for every idea which is not your own and which is taken from another source, even if the idea is expressed in your own words.
All quotations and sources referred to in the body of your assessment are to be referenced in footnotes at the bottom of the page. In addition, a bibliography is to be provided at the end of the assessment, which is a list of all resources read or consulted, whether or not you actually used or referred to them in the body of your assessment.
The referencing system to be used, Australian Guide to Legal Citation (‘AGLC’). The portions of the AGLC which you are most likely to need for referencing are:
? Footnotes
? Subsequent references
? Quotations
? Cases
? Legislation
? Journal articles
? Books
? Newspaper Articles
? Internet Materials
Ver 2
1.Identify legal issue/s
---Identify the legal issue/s correctly
---Interpret the given facts holistically, where applicable, to identify multiple legal issues arising from different areas of law TOTAL
2. Analyse the duty
A. Analysis
---identify relevant law
---break down into essential parts/components including rules, principles, tests and/or standards (must be comprehensive)
---define and explain legal rules, principles, tests and/or standards
--- show knowledge, understanding and correct interpretation of legal concepts
---explain different interpretations of the law, where applicable
B. Authority
---support principles, rules, tests and standards with relevant statutory law and/or case law
---use case law for interpretation of statutory law, where applicable
---show evidence of reading beyond key readings (for higher grades)
3. Apply law to facts
Synthesis of law and facts:
---select relevant facts (show understanding of legal significance of relevant facts)
---make assumptions (‘if … then’) in order to clarify the facts, if and when necessary, in order to apply a particular rule or principle of law
---apply relevant law to the relevant facts
--- show understanding and correct interpretation in applying law to facts
---show relevance of key case/s to facts
of case study
---use logic and reasoning in applying law to the facts
---provide legal argument, position or point of view of each party
---take into account defences and/or exceptions
---take into account different interpretations of the law, where applicable
Distinguish between personal opinion and information supported by evidence/authority
4. Conclusion
Arrive at correct conclusion using analytical reasoning; use critical reasoning where appropriate.
5. Language, structure, Referencing
Ability to explain legal concepts
(communication skills)
See Assessment Rubric on Blackboard
See Assessment Rubric on Blackboard
TOTAL 100%
Ver 2