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Tutorial 5 Week 6 Oral Presentation

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Alana Stone

on 11 September 2012

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Transcript of Tutorial 5 Week 6 Oral Presentation

Case Outline Natasha Hinayat
Lucy Moore
Juhyeon Jin (Matthew)
Alana Stone Week 6 Tutorial 5 1994 - 2006 Amelie was a shadow director of Zenron and KIK
2006 Companies wound up by liquidator from poor management
Currently, Amelie is a director and secretary of Dodgy Brothers
Dodgy Brothers have not lodged their financial reports for the past two years
ASIC gives Amelie an notice to demonstrate why she should not be disqualified. An officer of a corporation can be either a:
Director of the corporation
Secretary of the corporation
Shadow Director - a person whose instructions or wishes are followed by the directors of a corporation Issue 1 - Can ASIC rely on the failed companies provsion to disqualify Amelie? Law: Section 206 D - Person may be disqualified if:
Within 7 years they have been an officer of 2 or more corporations that have failed AND
Management were responsible for the failings Law:
Section 206 E (1) (a) (i)
If person of interest has been an officer of a company that has breached the Corporations Act at least twice.

Section 206 E (1) (a) (ii)
If a person has breached the Corporation Act whilst an officer of a company. Issue 2: Can ASIC rely on the repeated contraventions provision to disqualify Amelie? Section 533 - Liquidator's obligation to lodge report if it appears that a past or present officer has taken part in the management of a company and may have been guilty of negligence.
Section 319 - A company that has to prepare or obtain a report for a financial year must lodge the report with ASIC.
Section 188 (1) (i) - A secretary of a company contravenes this subsection if the company contravenes subsection 319 (1) lodgement of financial reports.
Disqualificaion justified?
Under S206D(3) ASIC would justify that Amelie could be disqualified due to her conduct of the management of Dodgy Brothers Pty Ltd Law Continued... Section 533 - Liquidator's obligation to lodge report if it appears that a past or present officer has taken part in the management of a company and may have been guilty of negligence.
Section 319 - A company that has to prepare or obtain a report for a financial year must lodge the report with ASIC.
Section 188 (1) (i) - A secretary of a company contravenes this subsection if the company contravenes subsection 319 (1) lodgement of financial reports.
Disqualificaion justified?
ASIC could justify that Amelie could be disqualified due to her poor judgment and misconduct whilst performing her directors duties. Law Continued... Law:
Section 206 F (1)- ASIC may disqualify Amelie if:
ASIC may disqualified a person from managing corporations for up to 5 years if within 7 years.
Person involved was an officer of 2 or more corporations.
Companies were wound up by a liquidator who lodged a report under section 533 (1).
ASIC has given appropriate notice to the person
Issue 3: Can ASIC decide to disqualify Amelie from managing corporation.
The 2 corporations are unrelated and ASIC has provided Amelie with a proper notice in prescribed form.

Amelie's management or instructions led to the corporations' inability to pay its debts under 533 (1).

The disqualification is justified by the court and ASIC as Amelie continues to break ASIC's rules as director of Dodgy Brothers Pty Ltd.

Under Section 206D, the court may disqualify Amelie as a director for up to 20 years because she was a director of two corporations in the last 7 years that failed. Under Section 206E, there is no limit on disqualification period for multiple contraventions of the CA. Under Section 206F, ASIC may disqualify Amelie as a director for up to 5 years. Conclusion ASIC should rely on Section 206F to disqualify Amelie as it has already complied with the provisions of the subsection. The onus is on Amelie to give evidence why she should not be disqualified from her director's position. ASIC also does not have to apply to the courts to let the law decide if she should be disqualified, saving time and money.

The maximum disqualification period is 5 years, which could be a disadvantage of using 206F as Section 206D and E have longer disqualifcation periods. Part 2 Definitions
Section 9 CA Quiz How many failed companies does a person need to be an officer of in order to be disqualified under Section 206D?

a) 2 or more
b) 10 or more
c) 100 or more
d) 0 Quiz Who decides if a person is disqualified from managing corporations under Section 206F?
a) Julia Gillard
b) The courts
c) ASIC
d) The Privy Council THE END What is Amelie?

a) Director
b) Shadow Director
c) Officer
d) Secretary
e) All of the above Quiz How long can a person be disqualified under Section 206E repeated contraventions of the CA?

a) They can't be disqualified
b) 1 week
c) 100 years
d) There is no limit on disqualification period Quiz Law:
Section 206D(3) : the court must hae regard to the person's conduct in relation to the management, business or property of any corporation and any other maters that court will consider appropriate.

Disqualification is justified Issue 3: Can ASIC decide to disqualify Amelie from managing corporation..cont
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