Directors Duties

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Hampton Park Pty Ltd (HP) Synopsis. In the case study of Hampton Park Pty Ltd (HP) has four directors; William (Managing Director); Susan, Jack and Gail (Non-executive directors). As HP’s financial position begins to deteriorate, George, the Chief Financial Officer of the company advises the accounts still show a profit and the company would have a solid base to pay out a dividend to its members. In July 2010cHP’s financial state worsens however George declares a technical profit and advises HP can still declare the dividend. June 2010 there was a change in the law for the declaration of dividends however George did not find out about this until late September 2010, the same time the board signed off the financial reports and therefore…show more content…
In the case Vrisakis v Australian Securities Commission10 it is stated that “a director is expected to attend all meetings unless exceptional circumstances such as illness or absence from the State prevent him or her doing so”. Following this precedent, Susan has breached her common law and statutory duties by failing to attend meetings especially before HP became insolvent. Under section 198D, it states that, “Unless the company’s constitution provides otherwise, directors may delegate any of their powers to a committee of directors, a single director, an employee of the company or any other person. 11 Under s190(1), it states that “ If the directors delegate a power under sect 198D, a director is responsible for the exercise of the power by the delegate as if the power had been exercised by the directors themselves.”12 Susan has delegated her power to run the company to William, and if William had any questions he would let her know. There was still a business relationship between the two and therefore Susan will face the same charges as the other directors would. Now knowing the whole story, facts and law precedents, the remedies for breaching section 180-183 of the corporations act is a civil penalty provision: s 1317E13. Under ASIC, the penalty for breaching a director’s duty of care is a court order that the director be disqualified from managing corporations.14 George and William have
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