* Duty of care and dillgence – statute law – s180
* S588G imposes a duty upon directors to prevent their company trading whle it is insolvent . s588G requires directors to be continually monitoring the financial status of their coy (* only apply to directors)
* S181 – duties to act in good faith in the interest of coy and for a proper purpose
* S 191 – duties to avoid conflicts of interest
* S182&S183 – not to make improper use of position or information (* apply to employee)
* S9 – define officer of coy- have management responsibility relation to a coy in financial difficulties
* Generally the duty will be owed to the members as a collective whole (not a ...view middle of the document...
• Guide and monitor the management of the company, Daniels
• What does Director need to do to guide and monitor co?
• Look at frequency of board meetings Daniels
• Conform to professional standards Daniels
• Conform to an objective standard of care which is not affected by considerations such as lack of knowledge or lack of experience Daniels
• Supervise managers and practices.Daniels– Cannot shut eyes to corporate misconduct
• Maintain familiarity with financial status of co Daniels
• Review management where there is mismanagement and where investment imposes a risk Daniels
• Supervise managers and practices to determine whether business methods are safe and proper Daniels
* Standard of skill – breach directors duty --- the conduct of the director is tested v.s. an objective body of expertise and knowledge possessed by people in the same type of position.
---ASIC v Vines pp214
* Diligence -- Daniels v AWA-- required all directors to exercise the amount of diligence that would allow them to be familiar with the operation of the coy’s business and keep informed about the finance status of the coy
* Delegation and reliance
– S198D allows the directors of coy to delegate any of their powers
---S190 commences the directors can be personally liable for the exercise of the powers by the delegate in a negligent way
--- S189 states that the director has not breached a duty by relying on information or advice.
* ASIC v.s. ADLER
‘Whether an honest and intelligent person in the position of [director] of [company concerned] could have reasonably believed in all circumstances that the transaction was for the commercial benefit of [company]’:
There will be a breach of this standard where [director] considers the company interest but expends [company’s] money irrationally (referred to as the honest lunatic director).
There will also be a breach when the director acts in a way that no reasonable director would have considered to be in the best interests of the company:
--S180(1) – a reasonably careful and diligent director or officer in the position of defendant would not have caused ..
-- S181—the duties to act in good faith in the best interest of the coy and for a proper purpose
--S182 – the duty not to improperly use his position as a director
* S 180(2) – business judgement rule – Australian Securities and Investments Commission v Rich pp224
duty to prevent insolvent trading
* 588G --Only imposed on directors ( include de facto directors & shadow directors)
Standard Chartered Bank of Australia v Antico – held to be a shadow director and breach act
* 588V – imposed on the parent coy of the subsidiary
* Hawkins v Bank of China – contingent debt is a debt to which s588G applies
--the debt incurred when the gurantee of a debt is first given
* Credit Corporation Australian Pty Ltd v Atkins – debt incurred when the...