Securities and Investments Commission Act †Assignmenthelp.com

Question: Discuss about the Securities and Investments Commission Act. Answer: Introduction: The issue was basically between the Australian Securities and Investment Commission (ASIC) and the directors of Storm Financial Limited (SFL). It was basically due to the fact that it was considered that the directors, i.e. Mr. And Mrs. Cassimatis were not following their respective duties with diligence and with Ethical aspects. Before the financial crisis struck the world economy, SFL was under good amount of profits, having revenue of $77 million and the value of gross assets, crossing $120 million. According to Mr. And Mrs. Cassimatis, this case is unique in the Australian Corporate History, namely because of the three factors: The allegation of breach regarding the care and diligence rely upon the single provision of the Companies Act 2001. The breach regarding the same had occurred, when both were the only shareholders of the company and the company was in full solvency. There has been no dispute that both of them were not handling the company with best interests, even during the time of recession. (Federal Court of Australia, 2016) According to the provisions of the Companies Act, the directors of the company, who are the sole shareholders of a solvent company, could not really breach the section 180(1), by a course of conduct, which is highly likely to contravene provisions of the Corporation Act. Hence, it can be said that the main issue regarding the situation of a solvency company was regarding the car and diligence of the directors of the company, who were the sole shareholders of the company. (ASIC, 2016) As per the Section 180(1) of the Corporations Act 2001, the directors of the company should discharge all its duty with due respect and care. It should be done with proper diligence as in the absence of the same; it would become difficult for the company to operate its activities with full professionalism. Coming to the professionalism of the whole scenario, the directors of the company were not doing their respective duties in an appropriate manner and hence, it was required by the corporations act or the law to intervene in the situation. (ASIC, 2015) Apart from this the other law, which is applicable in this scenario is the Section 945A (1) (B), related to the direct contravention of the directors of the company. (ASIC, 2015) Coming to the application of the both the laws, in the current scenario, it should be noted in the absences of these laws, the company would not be able to make sure that it is actually making any sort of an issue, with the current situation. As the lawmakers of the country had stated that in the presence of a solvent company, the directors of the company should make sure that all their activities are taken place with due care and diligence. Proper ethics are to be followed in the most effective manner and hence, it became an important point for most of the current situation to make sure that all these cases do not arise in the long run. (ASIC, 2015) The main point of comparison in this scenario has been because of the comparison, being made regarding the situations before and after the period of recession. It is because of this reasons that the higher authorities are taking an action against the company, as both the directors of the company are not performing its respective activities with the utmost care. This has been under the scrutiny of the law and therefore, it is to be noted that in the presence of these laws, all the companies would be required to make sure that all the necessary laws and rules are to be effectively followed by them. Hence, it can be said that all the companies, be it a public or a private company, should make sure that their management is taking up decisions effectively with proper care and diligence, as in the presence of the same, the company should be operating its activities in the best possible manner and no fraudulent activities are conducted in the long run. (Commonwealth Consolidated Acts, 2014) In order to conclude, it can be said that, in the presence of these laws, all the companies will have to make sure that they are complying with the laws, efficiently as in the presence of these laws, all the activities of the company will be labelled. In the present scenario as well, it can be said that Mr. And Mrs. Casemates, did not break any law, as there was no sign of non-diligence and all the work and activities were done with proper care. Hence, it can be said that in the presence of these laws, no company will be able to execute its activities as it will lead them to have a non-existent scenario for the perfection of the company in leading the best example. Therefore, it can be said that the Corporations Act, does play an important role in keeping a check on all the companies under them. (Australian Government, 2017) In this particular case, Kanye is being directed to leave the company as he had opposed the other directors or the siblings of the same. For this reason, he even had held a meeting with the other directors of the company and had given a proposal to become the managing director of the company. Due to some grievances with the family, he had called for a board meeting and had suggested himself to be the managing director of the company. For this reason, the remaining partners of the Koala Ltd. Were even more against him and had stated for a fact that he should be terminated from the company. Following this, the remaining partners of the company had called for a board meeting, where all the current partners were present and it was decided that the company will issue additional shares and 25 shares were open to be purchased for $1,000 each. And the remaining 75 shares were distributed amongst Keith, Kylie and Khaled. Significantly, there was no share distribution to Kanye, which stated th at the company is taking away the shares from him and making it available to others. Koala Ltd. as per the new formation, Kanye would not be a part of the company. (ASIC, 2016) Not only this, the company also had held a meeting, where the remaining directors of the company had stated that the kanye would not be the part of the company anymore and had passed a resolution accordingly. After the meeting was concluded, the remaining directors even stated that they would distribute the dividends of the company and along with it had increased their respective salaries, or directors remuneration. After this meeting, Keith and Kylie had even initiated the process of having a new company, which would aid them to sell their respective products across the world. This wills double their respective profits and hence, the proposal was readily accepted by both the directors of the company. They had named the new company as koala2 Ltd. The main objective of the company was to buy the products from the local sources and sell the product to the foreign market. Therefore, one of the major reasons for the company to make profits was the fact that the company would be engaging itself in the process of buying the local items and selling the same in the international market. (afr, 2017) Coming to the current scenario, Kanye would not go against the current directors of the company as it becomes difficult to go against the majority. The decision was taken by the remaining directors of the company. And hence the majority was against Kanye and his deed of going against the company, the higher authority had discovered that the current directors of the company are following the protocol to make sure that they are taking this decision in the benefit of the company as a whole. Therefore, it can be said that, the Corporations Act allows the directors of the company to go against its team if the majority allows for the same. According to the Section 12, the director can oppose the decision as taken, but if the majority of the management is favouring one decision, it is important to follow the same and hence, Kanye cannot really go against the management of the company. Therefore, it can be said that the Kanye would not be part of the company Koala Ltd. anymore. Kanye was already not a part of the company when the new organization was formed. So therefore, it can be said that Kanye did not really have any rights towards the company. As the new company was formed, Kanye was not even in the management of the company and hence, he cannot enforce his decision or opinion anyway towards the decision making process of the company. Considering the situation of Khaled, he can go against both of his siblings only because of the fact that they are using the same name of the company. Though there is no objection that in no way the other two partners, Keith and Kylie, can open a partnership company, yet it is not allowed for them to use the same name as of the existing company. Therefore, Khaled can actually take the company to the court, as the name Koala has already being in use. And even if they had to use the name, proper prior permission is to be taken from the existing company in order to make sure that there is no confusion with the parties dealin g in with the same. Either they should have included Khaled in the new company, or prior permission was to be taken effectively from the existing shareholders of Koala Ltd. Conclusion In order to conclude, we can say that it is important for any company to make sure that in order to use the name of any company, it is important to be aware of the fact that prior permission is to be taken from the management of the parent company. In the absence of the same, the existent management can take certain action against the same. Therefore, it was an important thing to be observed, with the help of which the second company as formed would only be able to execute its operations successfully. Koala Ltd. being the parent company can take an action against Koala2 Ltd. as it would be leading the breaching of the law. This breaching of law would be considered as an offence and legal action would be taken against the concerned parties, i.e. Koala2 Ltd. (ODwyer, 2016) Bibliography afr. (2017). ASIC alleges Westpac breached responsible mortgage lending laws. Retrieved August 27, 2017, from www.afr.com: https://www.afr.com/business/banking-and-finance/financial-services/asic-alleges-westpac-breached-responsible-mortgage-lending-laws-20170301-guo6xl ASIC. (2015). ASIC. Retrieved August 27, 2017, from https://asic.gov.au/: https://asic.gov.au/ ASIC. (2016). ASIC Corporations (CSSF-Regulated Financial Services Providers) Instrument 2016/1109. Retrieved August 27, 2017, from www.legislation.gov.au: https://www.legislation.gov.au/Details/F2016L01757 ASIC. (2016). Laws we administer. Retrieved August 27, 2017, from asic.gov.au: https://asic.gov.au/about-asic/what-we-do/laws-we-administer/ ASIC. (2015). Our role. Retrieved August 27, 2017, from asic.gov.au: https://asic.gov.au/about-asic/what-we-do/our-role/ ASIC. (2015). Your company and the law. Retrieved August 27, 2017, from asic.gov.au: https://asic.gov.au/for-business/running-a-company/company-officeholder-duties/your-company-and-the-law/ Australian Government. (2017). Australian Securities and Investments Commission Act 2001. Retrieved August 27, 2017, from www.legislation.gov.au: https://www.legislation.gov.au/Details/C2017C00246 Commonwealth Consolidated Acts. (2014). AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION ACT 2001. Retrieved August 27, 2017, from www.austlii.edu.au: https://www.austlii.edu.au/cgi-bin/viewdb/au/legis/cth/consol_act/asaica2001529/ Federal Court of Australia. (2016). Australian Securities and Investments Commission v Cassimatis (No 8) [2016] FCA 1023 (26 August 2016). Retrieved August 27, 2017, from www.austlii.edu.au: https://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2016/1023.html?stem=0synonyms=0query=Cassimatis ODwyer, K. (2016). THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA. Retrieved August 27, 2017, from www.treasury.gov.au: https://www.treasury.gov.au/~/media/Treasury/Consultations%20and%20Reviews/Consultations/2016/ASIC%20ATO%20Information%20Sharing/Key%20Documents/PDF/EM-ASIC-ATO-Information-Sharing.ashx