LAW OF BUSINESS ASSOCIATIONS

Law of business associations



Law of business associations

Case Background

Retailer Ltd is a large public company operating many retail stores throughout Australia. Members of the board of Retailer include Smith and Jones. Smith is the Chairman of the board and Managing Director of Retailer. Myco Pty Ltd (Myco) is a large private company in which Smith holds 30% of the issued shares. The directors of Myco are Smith's wife and his brother in law.

Most directors of Retailer are already aware from previous occasions that Smith is a shareholder in Myco. They also know that he is not a director of that company. At the Retailer board meeting, Jones (who has known Smith for many years) states: 'A supplier we know and can rely on will always be the best long-term choice for Retailer in these situations'. Although he says this to the board, Jones is privately aware that Myco has had financial difficulties in recent times and needs to secure this contract with Retailer.

Analysis

The Corporations Act 2001 (Cth), sometimes referred to just as the Corporations Act (or informally as the 'Corps' Act), is an act of the Commonwealth of Australia that sets out the laws dealing with business entities in Australia at federal and interstate level. It focuses primarily on companies, although it also covers some laws relating to other entities such as partnerships and managed investment schemes.

It is presently the largest corporations statute in the world. The CLERP reforms simplified the statute. At several thousand pages long, the statute dwarfs those of other nations such as Sweden, whose corporations statute, comparatively, is less than 200 pages long.

The Corporations Act is the principal legislation regulating companies in Australia. It regulates matters such as the formation and operation of companies (in conjunction with a constitution that may be adopted by a company), duties of officers, takeovers and fundraising.

Question 1) Have Smith, Jones and the other directors of Retailer fully discharged their legal duties to Retailer? In your answer you should consider their duties under the Corporations Act and under relevant case law.

The Statement of reason for the business is:

“The Association of head Police agents (ACPO) is an independent, professionally led strategic body. In the public interest and, in equal and active partnership with Government and the Association of Police Authorities, ACPO leads and coordinates the direction and development of the police service in Austrailia, . In times of nationwide need ACPO, on behalf of all head agents, coordinates the strategic policing response.”

The objects for which the business lives are:

(a) To provide strong and visible leadership to the Police Service of Austrailia,inspiring confidence in those we lead, our partners and the diverse communities we serve.

(b) To double-check, with our partners, that the development of Doctrine for the service is conducted in a professional and co-ordinated kind, supporting the relentless enhancement of policing for the advantage of the communities that we serve.

(c) To be recognised as a principal voice of the service by those searching a professional view on ...