AUSTRALIAN CORPORATIONS LAW
QUESTION 1
The Hayne Royal Commission was critical of the role of industry regulators, ASIC and APRA. In the Commission’s Final Report (https://financialservices.royalcommission.gov.au/Pages/reports.aspx), Hayne argued that ASIC’s enforcement culture needed to change.
In no more than 1000 words, explain your views concerning the effectiveness of ASIC as a corporate regulator and enforcer of the Corporations Act 2001.
- Your answer should carefully consider the enforcement methods available to ASIC under the Act and may take into consideration additional resources, especially relevant legal academic journal articles and case law. (20 marks).
QUESTION 2
Lew is the managing director and major shareholder of Fruitiest Fruit Ltd. (FF) a company that sources and sells gourmet preserved fruits. During his recent holidays, Lew attended a food festival where he met up with other food producers and manufacturers, including Alice. Alice has a range of orchards and specialises in growing cherries and blueberries. She approached Lew and asked him if he would help her market her new line of frozen cherries and berries. Lew told her that FF would not be interested as they had shown only vague interest in diversifying into frozen fruits in the past. However, Lew suggested that he and Alice form a private company and nominate themselves as directors, and Alice agrees. They set up a company called Beny Good Berries Pty. Ltd. (BGB) and have considerable success.
Ten months later, at a Board meeting of FF, Lew proposes that FF enter into a long term contract with BGB, marketing their products. Lew convinces the board that diversifying into frozen foods would be good for FF, and the Board voted in agreement. Sales progress well. Lew never disclosed that he is a shareholder or director at BGB. Later the Board of FF is surprised to discover that Lew is the majority shareholder and a director of BGB and they think they should take some action against Lew, but they are notsure what to do and what they could achieve.
Using relevant legislation and case examples to support your arguments, discuss whether or not the board of FF has any reason to take legal action against Lew and if they are likely to be successful if they do. (20 marks).