The Final Exam is a formal summative assessment for 2 hours duration. You will be allowed 15 minutes reading time before commitment of exam.
The Final Exam is a formal summative assessment for 2 hours duration. You will be allowed 15 minutes reading time before commitment of exam.
All the students must log in through Computer/laptop. Login from mobile is strictly prohibited.
All students required to use a computer with a webcam and have this switch on for the whole duration of the exam. The camera must be positioned so it provides a head and shoulders type picture. All microphones must be switch on and the students must remain unmuted for the duration of the exam.
Disciplinary action will be taken if students infringe the APIC Academic Integrity Policy. Penalties for examination misconduct are severe ranging from zero marks for the examination to suspension or exclusion from APIC.
Students are required to be seated in a quiet location suitable for the taking of a formal examination
Internal communication among students or with third party during exam is strictly prohibited.
The students are required to assure that they have all the technical facilities for examination like computer, internet etc.
1. Robert and Smith actively involved in running a profitable partnership business that had an annual turnover of $100 million. They inherited their business from their parents. They eventually would like their respective spouses and children to have share in the business, Robert and Smith want to maintain managerial control. They appreciate that their business needs additional money to grow and would be happy to sell 20 percent of their business for a significant cash injection from one or more investors. They confidently expect that with additional funding their business would quickly achieve a $200 million turnover and control 30 percent of the market.
Advise Robert and Smith whether they should continue to operate their business as partnership. Would another type of structure be more appropriate for them in the future?
Explain your reason fully (400-500 words).
1. Simpson is the managing director of Developers Ltd., a company engaged in the business of acquiring and developing building sites. Developers Ltd. wishes to buy a piece of land on which to erect a factory. Simpson, whilst out looking for a site which would suit the company for this purpose, discovers a piece of land which will soon adjoin a new main highway. Realising the value of the land for development as a factory site, Simpson, without informing the shareholders in Developers Ltd., purchases the land on his own behalf and subsequently sells it to an engineering company at a substantial profit. Hawkins, a major shareholder in Developers Ltd. learns of these transactions and tells Simpson that he objects to his conduct and intends to raise the matter at the forthcoming annual general meeting. Simpson replies that he is not aware that he has done anything improper, especially as Developers Ltd. might not have been able to raise sufficient funds to purchase this site itself.
(i) Advise Hawkins generally and state what action, if any, can be taken against Simpson for any possible breaches of his duties as a director. (200-300 words).
(ii) What penalties (civil penalty regime) may be imposed on Simpson for breaching the common law and Statutory duties under the Corporations Act? What are the possible remedies available to Developers Ltd if Simpson is found to have breached such duties?
(200-300 words).
2. Adam and Poh, two young entrepreneurs wish to form a small proprietary limited company operate a restaurant Master Plate Pty Ltd. On 22 February, Adam entered a contract with Irish Linen Ltd to purchase 18 monogrammed tablecloths and he executed the contract in the name of Master Plate Pty Ltd (Master Plate).
On 24 February, the company was registered. The company did not adopt a constitution and each of them took 50% share, and both were appointed as directors. Due to dispute between Adam and Poh regarding the contract with Irish Linen Ltd, that contract was not ratified by Master Plate until 30 March.
On May 1, tablecloths were supplied by Irish Linen Ltd but not paid. Explain who may be liable to pay for them.
Explain who may be liable to pay for them (400-500 words).
3. Harriet Ford is a director and 60% shareholder of Ford s catering Services Pty Ltd. Her sisters Cheryl and Margaret are the other directors and each own 20 percent of the shares. For most of the Year Fords catering Services Pty limited has suffered acute financial Problems. It has been continually late in paying debts due to its major suppliers.
The directors soon realise that companys liquidation is imminent, but they want to continue trading using the companys name as it was well known to the companys numerous customers. At the suggestion of the companys account, a shareholders meeting of the Fords catering Services Pty Ltd is convened a resolution is passed changing the companys name to Black Pudding Pty Ltd. At the same time a new company is incorporated called Fords catering services (Aust) Pty Ltd, with Harriet, Cheryl and Margaret as its directors and shareholders. After the name change, Black Pudding Pty Ltd ceases operations and the new company simply takes over the business formerly conducted by Black Pudding Pty Ltd.
Recently the court orders, on the application of Acme Food Suppliers Ltd, that Black Pudding Pty Ltd be wound up in insolvency.
Advise the liquidator what legal action, if any, can be taken against Harriet, Cheryl and Margaret in connection with the transfer of the business and the name, Fords Catering Services to Fords Catering Services (Aust) Pty Ltd.
Explain in (400-500 words).
4. Kelly Building Pty Ltd is registered builder. Its managing director, John, controls the company business activities. Johns wife, Marsha, is the other director but she does not concern herself with the day-to-day management of Kelly Building Pty Ltds business. She is aware, however, that Kelly Building Pty Ltd has severe financial problems. In June, John, on Kelly Building Pty Ltds behalf, purchased $150,000 worth of building supplies on 30 credit term from Collins Manufacturing Ltd. Despite numerous demands $150,000 has not been paid. In October, Collins Manufacturing Ltd successfully applied to wind up Kelly Building Pty Ltd.
Explain whether the liquidator of Kelly Building Pty Ltd can make John and Marsha personally liable for their companys unpaid debts. Can John and Marsha rely on any of the S588H defences?
Provide your answer in 400-500 words.
5. Sweet, Ness and Light Pty ltd has been making chocolates in Perth since 1923. The company was commenced by Ivan Light (now deceased) and had a member of the Light family as chair of the board ever since. Presently William (Bill) Light is chair. The other shareholders are Bills sons Jack and Daniel and their wives, Yvette, and Jacinta. There are two non-shareholders: the long-time company secretary Maxwell sweet and Ivan Lights former business associate Elliot ness.
Jacinta has harboured feelings of powerlessness as Bills sons lamely follow whatever their father wants with company matters. Elliot takes no active interest in the company, and Maxwell maintains absolute loyalty to bill when it comes to company decisions.
At a general meeting last week, members voted on Bills proposal to not pay dividends out of recent profits, but to reinvest them. This is the fourth year in a row that Bill has done this with the members approval. In another resolution, the company decided to restructure its shares. There are to be additional shares that will only be available to Bill, jack, Daniel, Maxwell, and Elliot. The reason is that Yvette and Jacinta are seen as threats to the company if their marriages should fail. Maxwell and Elliot are unlikely to take up the additional shares and jack and Daniel are speaking to their financial advisers about their ability to invest more money into the company. Jacinta sees this latest move as the last straw.
Advise Jacinta on her legal position as a member.
Provide your answer in 400-500 words.
7. The directors of a company are planning to change the business of their company significantly from that of fast-food retailer, to a company that supplies fine foods, and exotic tasting delicacies. The company does several studies on behalf of the directors before embarking on the new business, the reports appear that this will be very profitable as a venture. The company invests a lot of money into the new project, and the executive directors are very busy a whole year getting up the business.
Things do not go well, and at the end of the year it is quite evident that this new venture is not going to succeed due to the number of competitors, the high costs and the small target market. The company has lost a lot of money and owes quite a bit as well. The Chief Financial Officer tells the directors that the company is in serious financial trouble, but he will see if he can fix it! The directors leave it to the CFO to come up with a solution. But one month later the creditors move in on the company and place it under external administration. The creditors discover the company has been unsustainable for more than six months and should not have been trading. Explain with reference to law.
What are the liabilities of the directors in this situation for the losses and the poor business decisions?
Do the directors have any defences to the fact that so much money has been lost on this venture.
Will the directors be liable to creditors for the insolvency of the company? Refer to appropriate law in your answer.
Provide your answer in 400-500 words.
