The relevant issue of this question is related to taking business decisions by Angie as one of the directors of the partnership business of Organics Farm Pty Ltd. The prime issue is associated with the final disagreement between Angie with other board members Brad and Jen, about the corporate funds for appropriate usage within the business.
The relevant law for this question can be addressed as the Phoenixing Act, 2020 incorporated by the ATO, also known as Australian taxation office. Passed by the Australian government in the month of February, 2020, the Treasury amendment act is the relevant regulatory act for this given scenario (Loewenstein 2017).
Answer to part (a)
In essence with this particular scenario, Angie believes in a potential breach by Jen and Brad regarding their statutory duties as the board members of Organics Farm Pty Ltd. According to the given scenario, there has been a significant disagreement between Brad and Jen with the other director of the board, Angie. The disagreement lies within the use of corporate funds provided by the investors for the growth of their business. In context with this situation, Angie can reach out for the guidelines of ASIC, also known as Australian securities and investments commissions in this regards (Fields, 2016). Being the prime regulatory body during the construction of a joint venture company, ASIC guidelines can be effectively used by Angie to find out the defensive statements in relation to fund donation. Angie can also highlight on the extensive benefits presented by channeling the company funds for the market research purposes in their business.
Based on the Corporation Act 2001, Angie can effectively apply for a reconsideration of the final decisions of directors of the board for Organics Farm. Angie can also focus on her expertise on her previous university knowledge on commerce which is a major subject for business finance (LoPucki, 2018). In essence with this given context, Angie can also highlight the regulatory guidelines of the Corporation Act 2001, which strictly states the requirement of multiple board directors for a better transition of company resources. Being an existing director of the board and an active business partner of Organics Farm, Angie can also summon additional board meetings showing the exclusive benefits of channeling the resources in market research. Being a staff from a commerce background, Angie can also incorporate the issue of ASX listing for their company by developing a better market for their business
Answer to part (b)
In context with the given question, Angie can take separate decision by summoning additional board meetings for highlighting the issue of non payment for the dividends. Angie can effectively register legal complaint against Jen and Brad for taking one sided decision regarding the channeling of company surplus funds. Angie can also take action as informing the ATO or Australian taxation office for checking any due to being paid to the dividends of Organics Farm. Angie can take another action of presenting a commerce-based presentation in front of other board members to show the respective benefits of having external dividends for a medium-sized business (legal vision, 2020). Angie can also introduce Brad’s intentions of channeling the company surplus funds for an irrelevant reason for building a swimming pool for a local school. Angie can use her existing director power to demonstrate the business profit that can be acquired by applying the company profit to market research for Asia-based markets.
In addition to these steps, Angie can also withdraw any and all financial responsibilities as the financial handler for Organics Farm. Angie can also approach to the local authorities of Queensland for the relevant decisions regarding this matter. In essence with this scenario, Angie can also lodge complaint against the company for not paying the shareholders of Organics Farm. Angie can also lodge a direct financial fraud case against Brad and Jen by assessing her database for company dividend payments (Sunshine et al. 2019). She can also attract the attention of investors and shareholders of this business by focusing on the irrelevant channeling of company funds. Angie can also take actions by approaching to local taxation authorities for checking the unpaid and due dividend payments for Organics Farm.
Conclusively, it can be evidently stated that there are a number of significant steps regarding the given scenario of Organics Farm that can be taken by Angie. Being a prior student of commerce, Angie can come up with multiple steps in this regards. Although the intentions of Bred present a social responsibility to the local schools, the company funds must be channeled for the prime reason of company benefits.
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The issue of this question is related to the different duties and actions for the executive board members for an ASX listed company like Big Beef Ltd. According to the given case study, there have been a number of mismatch between the final statements of the board members regarding their business in Erewon, Queensland. The prime issue in this regards can be developed as the potential statutory breach by the executive board members of Big Beef Ltd.
Different ASX related legislations and regulatory guidelines are applied for this given scenario as Big Beef Ltd is a renowned ASX listed organization. Section 792D under the Corporation act is also relevant in this regards as the scenario is constructed with am ASX listed company (Goodwin, 2017). Section 471 of the Corporation acts by the extensive guidelines of ASIC can also be related to the given scenario.
Taking example of the given case study for the board of directors for Big Beef Ltd, it is clearly observable that all of the 7 board members or directors breached statutory directors’ duties. Taking a brief recapitulation of the scenario, Big Beef Ltd consists of a board of 7 members among which 4 are executive directors and others are the non executive directors. According to the general legislation framework developed by the ASIC, the executive members are the prime responsible figures for taking significant business decisions in given business (O’Rourke & Antioch, 2016). Taking example of this respective case study, the CEO, CFO and the company secretary are the 3 chief hierarchies for Big Beef Ltd who idealize, assess and implements business ideas for the business. The non-executive directors include 3 board members along with a chair of the board who is responsible for hearing all the arguments and agreeing for a final decision for the business.
Hence, it is evident that all the 3 executive directors of the board such as company CEO, which is Peter, CFO, which is Colin and business secretary Stella; all have significantly breached directors’ duties. However, the chair of the directors and non-executive director Meredith has also breached officers’ duties. The remaining 3 non-executive directors also have breached officers’ duties by supporting the alteration of decisions taken in the recent board meeting. Taking example of the company CEO Peter, the consequences of his breach for directors’ duties can have serious impacts on Big Beef Ltd by getting legal notice to the company itself from ASIC (McClure, Lanis & Govendir 2017). The prime consequence in this regards can be addressed as the lodging of fraud case against the company CEO according to the Consumer Act 2011 focusing on the mismatch of the CEO statements.
The immediate and inevitable consequences of this action can be observed as the possible drop in the business traffic for Big Beef Ltd within Australia. Taking example of the breach by the CFO Colin, the possible consequences can be addressed as minimum of 5 years of jail for the individual for ignoring own stated facts. The immediate consequence of this responsibility breach can also result in fie amounts to be paid by Big Beef Ltd up to $200,000. The consequences of the actions of the chair of the board, Meredith can be addressed as suspension of the further business operations of Big Beef Ltd within Queens land and surrounding localities. Being a registered business under the ASX, this particular act of breach of officers’ responsibilities can also cause potential fine from the ASX authority for being non-compliant with their own statements. Taking consideration of Stella, who is the company secretary, an immediate corporate criminal action might be taken against her as she was the prime board member who suggested the continuation of their business in Erewon.
The consequences of her actions can also cost her position to be general secretary of the business along with a personal penalty amount of approximately $ 50000 claimed by the ASIC. The consequences of the breach of the other board members such as Ben, David and Alex can result into an immediate suspension of their positions from the company. The aggregated consequence of these board members can be assessed as potential suspension of the company form ASX listing and degradation of company’s share value in the market (Williams, 2018).
Considering the above case study, it is evident that the Australian regulatory authorities can directly interfere with the existing business transition for Big Beef Ltd due to a direct non compliance of all the directors. Conclusively, it can be stated that the business might be suspended along with deposition of a huge penalty amount for the breach of officers’ duties for all of the board members.
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The legal issue in this regards can be addressed as the unexpected financial exceeding of the Kremlin while paying the debt amounts to creditors of the business. Being a successful vodka business in Brisbane, Kremlin Spirits has recently exceeded in its financial operations due to a lame financial consideration. In spite of the recent arrangement for paying of company debts, Vasili along with other board members have arranged for a final liquidation of the business in 2020.
The prime law that can be related to this chosen scenario is the section 556 of Corporation act 2001 of Australian parliament. The Australian bankruptcy code under the Insolvency act is another relevant regulatory guideline that falls directly in line with this scenario. In essence with the given context, Ipso and Facto regulatory guidelines are also applicable for the company directors for assessing the requirement for liquidation (WANG, 2020).
Answer to part (a)
In order to elaborate on the desired answer for this question a basic knowledge of company liquidation is a must. According to the general guidelines of Limited liability act, at the time of company liquidation, the liquidation process must be properly addressed either by a civil court or by a liquidator (Carroll, 2020). In essence with this regards, the liquidators in this case must be advised for a personal recovering of funds from few of the company directors. The relevance of this statement can be found through the prior debt for Kremlin Spirits while paying tax creditors of the business in March 2020. The liquidator must be advised to recover remaining funds during the liquidation period, personally from Vasili. The basis of collecting the recoverable funds from one of the directors can be found through the engagement status of Svetlana, who is the other director of Kremlin. Although Svetlana is a director of the board of their vodka business, she is still is student and perusing her commerce course from local University.
Hence, the liquidator must advised to collect any remaining recovery funds from the final winding of the business as Vasili has always been the prime director involved in all of the business activities for Kremlin. There is no actual defense on which Vasili can rely on due to a significant amount of previous unpaid tax amount that was recently managed by one of the close friends of Vasili. Hence, the final liquidation of this business still remains with a number of dues that must be settled with different parties (aph.gov.au, 2020). Vasili only can appeal to the local court for an extension or compensation for settling the final dues to the liquidator.
Answer to part (b)
In this regards, the liquidator must also advised for collecting the entire due exclusively from Vasili as there is a prior record of financial support presented by Mikhail at the start of this business. According to the given information, Mikhail demanded for his due that he lend for this business in the month of January, 2020. In essence with the situation, Vasili along with his niece planned on returning half of the due to Mikhail which leaves the other half of the loan amount for the business. Besides, Mikhail has always been the prime investor for the business who must have his fare square from the liquidation of the business (Carroll, 2020). According to the Insolvency act of Australian parliament, a prime investor for a given business must also be questioned by the liquidator for additional information regarding company finance.
Answer to part (c)
This section of the question reveals another aspect for the liquidator for collection of remaining amount from only one of the directors. According to the given section, Kremlin borrowed a loan amount of $100,000 from the Large Bank of Australia at the beginning of their business. According to the Australian bankruptcy guidelines, all the previous financial dues along with every loan must be cleared by any possible means at the time of declaring financial bankruptcy for a final liquidation of a business (Steele & Ramsay, 2019). Besides, at the time of the loan acquisition, both Svetlana and Vasili provided personal guarantees to the bank for returning of the loan amount. However, at the time of circulating security interests, none of the parties registered this incident in their financial registers which leaves this loan amount ignored by the directors (Rawling & Schofield-Georgeson 2018)
The above discussion presents the clear result regarding the sole responsibility of Vasili for returning all the dues and debts in the business for the final liquidation of their vodka business. All the suggestions and discussions for the above question are developed based on the Insolvency act along with liquidation acts by Australian parliament.