2007GIR Assessment 2 ILAC Assignment V6

977 words 4 pages
Course Name: Legal Issues for Managers
Assessment No. 2: Hypothetical ILAC Assignment

Student Name:
Student ID:
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Tutorial: Tuesday 10am-11am
Issue
1. Is Patricia an Officer of Stadium Enterprises Pty Ltd (SEPL)?
2. Has Patricia breached her duty to act with due care and diligence?
3. Has Patricia breached her duty to act in good faith in the best interests of SEPL?
4. Did Patricia improperly use information to gain an advantage, causing detriment to SEPL?
5. Has Patricia acted recklessly, dishonestly, and failed to exercise and discharge her duties for a proper purpose and in the best interests of SEPL?
6. Did Patricia engage in insider trading?
7. Is Dan an Officer of Fancy Pants Pty Ltd (FPPL)?
8. Did Dan
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Patricia provided information to her sister Faye about SEPL’s intention to make a takeover bid to FPPL, and Patricia directed Faye to buy shares in FPPL while they were cheap so she could make some money. As a result, her sister Faye purchased a large amount of shares in FPPL and she made $250,000 profit. Consequently, it is likely Patricia will be found to have violated section 1043. R v Rivkin [2004] NSWCCA 7: Mason P Wood CJ at CL and Sully J, ordered the high profile Sydney stockbroker Rene Rivkin, be prosecuted for the insider trading of Qantas shares, hence sentenced him to imprisonment for a term of 9 months to be served by way of periodic detention, and fined him in the sum of $30,000. (fact)
6. Section 9 defines an Officer to include a Director of a company. (slides) We are told Dan is a Director of FPPL so he will be an Officer within the Corporations Law.
7. Section 588G prescribes that an Officer has a duty to prevent insolvent trading by a company. They should not allow the company to become insolvent by incurring debts, or incur a debt while it is insolvent. Dan used FPPL’s credit to purchase a $300,000 machine even though he knew FPPL was unable to pay company’s bills, which illustrates that Dan traded whilst FPPL was in an insolvent position. Thus, Dan is likely to have breached section 588G. R v Hannes (2002) 173 FLR 1. Hannes bought TNT options and realised a profit of $2million when a takeover of TNT was announced during their

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