ASIC v Adler Essay Example for Free

ASIC v Adler Essay The case of ASIC v Adler is very unique as well as complicated since it involved several breach of duties in the Corporations Act 2001. The HIH collapse was caused by very bad corporate governance. Such breach of duties are, section 9 (director’s duties), section 180 (duty to act with care and diligence), section 181 (duty to act in good faith and for a proper purpose), section 182 (improper use of position), section 182(2) (business judgement rule), section 183 (duty not to improperly use information) and section 260A (financial assistance). All of these contraventions under the Corporations Act 2001 will be discussed in detail below. Section 9 – Who Is A Director And Their Duties Under section 9, a director of a company is defined as a person who is appointed to that position such as a director or alternate director, regardless of what name it is given to that position. Section 9 also includes certain people to be directors even though they are not properly appointed. Such people can act as a director even though without proper appointment of director position. This is where they act in the position of a director (which can be also known as de facto director) or the directors are used to act in accordance with the person’s instructions (which also known as a â€Å"shadow director†). Directors’ duties need to be existed in order to protect shareholders from the risks of directors giving harm towards the company. Shareholders basically have risks such as fraud, where the directors took control over the assets belonging to the company by using it for their personal interest, and mismanagement, whereby directors made an incompetent decision with the financial standing of the company. Furthermore, section 9 also defines the â€Å"officer of a corporation†, which basically includes company executives who held senior positions in the board  level. Such persons can be identified in certain situations where that person (the executives) makes or joins participation into making decisions in which affects the whole or substantial part of the company’s business activities or, the person who has the authority to affect in a significant way towards the company’s financial standings or, basically the same definition of a â€Å"shadow director† where the person are acting towards the instructions given to them to act. In the case of ASIC v Adler, the court held that Adler, the director of HIH, was also an officer of wholly-owned HIH subsidiary which can be related under the section 9 definition of directors. This applies to Adler even though he was not properly appointed as a director or an officer of the subsidiary. Since he has the role of director, the subsidiary holding company and also a member of HIH investment committee, this has showed that he participated in the decision making of the company’s business in which affected it the whole or substantial part of the business. As Santow J gave his judgement on this case, he gave a good summary of principles applicable to directors’ duties. Some of it are; a director must continuously kept informed of the activities of the company, they must be familiar with the fundamentals of the business whereby the company is doing. Section 180 – Duty To Act With Care And Diligence In the section 180(1), it provides that a director or other officer of a company need to exercise their powers and discharge their duties with a standard of care and diligence in which a reasonable person will do if they were the director or officer of a company due to company’s circumstances (section 180(1)(a)) and occupied the office and had the same responsibilities in the company as the director or officer (section 180(1)(b)). Executive directors are full time employees of the company who involved in the day-to-day management of the company. They have special responsibilities with their position and have a high knowledge of daily operations of the company. Non-executive directors, on the other hand, do part-time and have regular involvements in the company. In the case of ASIC v Adler, Williams who was the managing director for HIH and HIHC as well, contravened section 180(1) as he failed to ensure there were proper safeguard before HIHC gave the loan to PEE. Fodera, who was the finance director of HIH, contravened section 180 as he failed to discuss a proposal to give $10 million loan to PEE to the HIH board or its investment committee. As the executive directors of the company, both Fodera and Williams failed to carry out their role properly without informing the HIH board of their intention. Section 180 (2) – The Business Judgement Rule In the section of 180(2), the section provides that a director or any other officer who makes a business judgement rule, will not be held liable in respect of the judgement under the statutory, common law or equitable duties of care and diligence, in which all of the elements can be shown. Such elements are, the judgement was properly made in good faith and for proper purpose, there was not material personal interest in the subject as of the matter of the judgement, the directors and the officers informed themselves about the subject matter of the judgement to the extent they appropriately believed to be reasonable and also the judgement was believed to be in rational in the best interest of the whole company. All of these would be reasonably justified unless any other person in such position thinks that it is completely unreasonable. The business judgement rule basically gives the directors with a â€Å"safe protection† from a personal liability in the relation of the business judgements that they take are valid which is in a good faith and in the best interest of the company. This is because some of their business decisions may turn out to be profit-making or a total loss in honest and rational way. Some of the main reasons for the business judgement rule defences are risk taking and activities in entrepreneurial activities will be encouraged since directors are aware of the specific legislation that if they act honestly,  they will not be punished or personally liable as a result of adverse judicial review. Another rule defence is that better business judgement will be made as a result of removing of some uncertainty of liability under the statutory duty of care and finally, the shareholders interest are better provided by engaging risk taking activities. To make directors be liable for such small erro rs of decision will promote risk-adverse decision-making with contrast effect on the economy. If the directors or other officers are able to satisfy the above requirements, they will have â€Å"safe protection† which makes them to be protected from liability for any breach of their duties of care and diligence. This means that their business judgement in such situations will be reviewed by court. Under section 180(3), the business judgement is defined that any decisions to take or not to take action with respect to matter that is relevant to business activities of the company. This only refers to business decisions that has made relevant to the business activities. It does not include any decisions made in the position of directors powers such as the power to issue shares or pay dividends. By referring to the case ASIC v Adler, the court held that all three Adler, Williams and Fodera breached their statutory duty of care as stated in section 180(1). They also, however could not rely on the business judgement rule as their defence. Firstly for Adler, the business judgement rule did not applicable for him since he cannot satisfy the section 180(2)(b) since he had a conflict of interest in the relation of his decision to invest the $10 million payment from HIHC in PEE. Secondly for Williams, the business judgement rule did not apply to him because of his failed to ensure the correct safeguards were enforced was not business judgement for the purpose in section 180(3). However, even this was a business judgement, since he was a major shareholder of HIH, he basically has material personal interest as in the section 180(2)(b). Other than that, Williams also failed to present any evidence that his judgement was done in good faith for the proper purpose as stated in section 18 0(2)(a). Finally, Fodera cannot rely on his business judgement rule as he failed to refer the transaction of PEE to the HIH board or its investment committee. This was not a business judgement as  stated in section 180(3). Section 181 – Statutory Duty To Act In Good Faith And For A Proper Purpose Under section 181(1), it says that a director or other officer of a corporation to exercise their powers and discharge their duties in bona fide (good faith) for the best interest of the company and also for a proper purpose. The section 181(1) can be contravened if the director thinks that they are actually doing their duties for the best interest of the company in which any other director, in that situation, thinks that is clearly unacceptable approach to do it. This may be happen when a director have a conflict of interest personally with the interest of the company they are handling. In the case of ASIC v Adler, it can clearly be seen that Adler, had contravened the section 181(1) to act in good faith by properly excising his powers and discharging his duties for the best interest of the company. This is because, the transactions that occurred in the HIH, HIHC and PEE had been improperly used, for the sake of his personal interest. Section 182 – Improper Use Of Position Under section 182, the section states that it restricts officers or the employees of a company from improperly using their power to gain advantage for themselves or for any other persons to the company. In the case of ASIC v Adler, the court held that Adler had contravened the section 182 due to the arrangement of $10 million loan from HIHC to PEE which was then to be used to acquire HIH shares on the stock market. This transaction was merely done for the purpose of supporting the HIH shares to increase the price and thereby selling the HIH shares owned by Adler Corporation before PEE could sell off their HIH shares. Because of this transaction, PEE had incurred a total loss of investment by reselling on the HIH shares. In regard of this transaction, Adler was held that he had improperly used his position as a director of HIH, officer of HIHC and director of PEE to gain advantage for the Adler Corporation. The court also held that Williams, also had breached his duties as a director for both HIH and HIHC under section 182, to help gaining advantage for Adler Corporation. This is because Williams, used his position improperly by authorising the $10 million load payment without proper approval from the HIH’s investment committee, which he was required to disclose under the HIH’s investment guidelines. Other than that, the court also held that Adler improperly used his position as a director in the PEE transactions of acquiring a number of unlisted capitals at the cost price from Adler Corporation without obtaining independent valuations of these ventures. With these transactions successful, Adler and Adler Corporation was able to exclude himself from these commercially unviable business operations. Adler basically knew that each of those businesses were having major cash flow problems and each had a significant risk that they would ultimately collapse. Adler, however, failed to disclose his personal interest to the HIH board other than Williams and Fodera. Section 183 – Improper Use of Information As stated in section 183, a person who gets information because they are or are not director, officer or employee of a company, must not misuse the information just to gain advantage for themselves or to any other person whereby causing failure in the company. Section 183 also applies towards resigned or retired directors, officers and employees as well. Informations such as insider information can be taken as an advantage by any person in order to gain benefit by using it to themselves or by giving to other person. In the case of ASIC v Vizard, the court held that Vizard involved in the contravention of section 183, whereby he gained the insider information as he was the non-executive director of Telstra. He misused the information in order to gain advantage for CTI, Brigham and himself as well whereby based on the information that he receives (Telstra board’s decision to acquire  other company and selling their interest on another company), he would act accordingly to buy or sell off his shares ahead of Telstra. S260A – Financial Assistance In section 260A, the section states that it forbids a company financially assisting a person to obtain or acquire shares in the same company of its holding company. However, if some of the conditions are met then the company may proceed to do such transaction. Some of the conditions are, giving the financial assistance will not materially prejudice the interest of the company, its shareholders or the company’s ability to pay its creditors (under section 260A(1)(a)), the financial assistance is validated by the shareholders (under section 260B) or the financial assistance is relieved or exempted (under section 260C). Financial assistance is can be basically referred to where a company is lending money to a person to buy the company shares. This means that the company gives a certain amount of money to a person so that the person buys some of the company’s shares. Another example is where a company gives a surety or guaranteed a person’s loan in which the sum of the loan will be proceeded to buy shares in the company. The company is basically providing a loan to a person for the sake of buying back its own shares off the stock market. Another example is where the company is giving its own assets as a security to a person’s loan in which the loan money will be used to buy the shares of the company given its assets as security. The section 260A clearly states that a company is restricted from giving financial assistance to a person to buy its own shares in the stock market as it will cause material prejudice. By analysing the case of ASIC V Adler, it can be seen that Adler, who was controlling PEE, was clearly contravened the section of 260A by which giving financial assistance to PEE through HIHC, a subsdiary of HIH, which is also a company controlled by Adler. This financial assistance given to PEE, was then used to buy the HIH shares on the stock market. This transaction gives a false impression over the stock market as well as its investors that Adler was supporting the falling share  price of its company, HIH, by buying the shares personally. However, the court found out that Adler does not have the intention to make easy profit and reselling the HIH shares. The real purpose was to increase the HIH share price in benefit of Alder Corporation Limited as substantial shareholding in HIH. The actual evidence is that when PEE went to sell off the HIH shares, it was done only after Adler Corporation decided to sell off its HIH shares in which leads to total loss for PEE’s investment. The Supreme Court of New South Wales held that the main intention of the transaction was that HIHC gave PEE financial assistance in order to acquire the shares in HIH which is HIHC’s holding company. Due to this transaction, according to Santow J, both HIHC and HIH suffered material prejudice, which therefore, contravening section 260A.

My Life :: essays research papers

To be given the chance to play little league was one of the greatest times of my life. I played little league for four years, and every year I made the all-star team. My best friend and I played on every regular season team and every all-star team together. The final game of our career was unforgettable. It had been 4 years of great enjoyment with my best friend, Cody Smith. We always clowned around in practice, but when the game would start we had a high intensity. Cody would pitch, and I would play second base. When he wasn’t pitching, I would, and he would play third base. We were the top players in little league, or so we thought. Our all-star team had made it to the championship of our state tournament. Before our team took the field our coach John Zamouski gave us a talk. He said, â€Å"Well men, we’ve came a long way. Today’s the day we’ve all practiced so hard for, but I want to have fun with it. Lets treat this like every other game we have won. You’re all winners, win or lose. I want you all to know that I feel privileged to have coached such a fine bunch of men. So lets go out and play this game as hard as you can. What do you say, lets go have FUN.† We all got up and yelled, â€Å"YEA.† â€Å"Let’s play hard.† â€Å"Yea† As we all got more pumped up. â€Å"Who are we?† â€Å"N.I.† As we got more loud and more intense. Coach said, â€Å"Bring it in. Win on 3. One, two, three† as we all yelled together â€Å"WIN.† As I ran on to that field I recalled all the practicing I had done, and I knew I owed most of it to my father. He started me throwing and hitting when I was about four-years-old. As my passion grew more and more I wanted to go practice all the time. So I would ask my father to practice with me. Even though my father was tired or in the middle of a good TV show he would practice with me. I remembered my father sitting on an old milk crate while I pitched to him. This made me chuckle a little because I would throw a low wild pitch on accident that would hit him in the legs, but he kept positive. Cody was pitching a 3 hitter and I was playing well too. The score kept going back and forth. There were a lot of errors because the field was all dirt and

Critical thinking Essay

1. How does critical thinking affect you as a reader and writer? How can thinking critically improve your writing? Critical thinking affects a person as a reader and writer in that it is essential to be able to absorb and assimilate knowledge from the environment as well as organize one’s own thoughts and express oneself in a clear and comprehensive manner. It is important to consider critical thinking as being a twofold process. As a reader, one is able to utilize critical thinking as a tool to analyze information being taken in from the outside. Not all information is useful or truthful to a person, and critical thinking is a method of filtering out what is incomprehensible or untruthful and absorbing what is meaningful and valid. As a writer, critical thinking is used in relation to one’s own personal creative thoughts, coming to subjective conclusions about what one believes about the world and expressing these beliefs through writing. Critical thinking is able to improve people’s writing in that the ideas one wants to express become central to the writing process, to develop the perfect way of stating what one desires to say. It is essential to utilize critical thinking in both reading and writing, so that one is able to take in and organize the information from the external environment and make personal judgments and assertions about what one believes. All situations and experiences are both objective and subjective, in that people experience events within the context of the external world. It is important to be able to digest and process information from the external world in an organized fashion, so that one is able to accurately describe and share one’s experiences with others. 2. Read the following Discussion Question response written by Owen, a fictional student. Identify areas of vagueness and ambiguity and discuss how you might clarify the e-mail message using the writing principles addressed in the text. In the response written by Owen, the writing style is such that the reader is not able to clearly understand what is being said. There are instances of vagueness and ambiguity in the writing, and Owen is left appearing as if he does not truly understand what he is supposed to be writing about. For instance, Owen states that critical thinking affects him in â€Å"all ways†. Although this may be true, there is not enough information describing in which ways he is affected. It is important to include enough detail in writing, so that the reader is able to fully comprehend what is being claimed. Owen goes on to say that clear writing is the â€Å"hardest thing in the world†. Although Owen may be having difficulty with his own writing, clear writing is not the hardest thing in the world for all people. Instead of generalizing and making blanket statements, Owen should be plain and honest in saying that clear writing is difficult for him personally. Further on, Owen claims that critical writing is like business writing in that they both need a certain amount of structure, yet then claims that â€Å"structure is harder†. These ideas are simply uncorrelated and do not logically proceed from one another. One cannot compare two styles of writing as being similar and then immediately state that they are dissimilar, at least not without a clear explanation and transition. Overall, Owen could improve his own writing style by paying attention to explaining himself in detail, by taking the necessary time to organize his own thoughts before writing them down. It is vital to express oneself in a clear and comprehensive manner, so that other people are able to easily understand what is being conveyed.

America Needs Censorship Essay - 1567 Words

Being frustrated is disagreeable, but the real disasters in life begin when you get what you want. For almost a century now, a great many intelligent, well-meaning and articulate people have argued eloquently against any kind of censorship of art and entertainment. Within the past twenty years, courts and legislatures have found these arguments so persuasive that censorship is now a relative rarity in most states. Is there triumphant exhilaration in the land? Hardly. Somehow, things have not worked out as they were supposed to, and many civil-libertarians have said this was not what they meant. They wanted a world in which Eugene ONeills Desire under the Elms could be produced, or James Joyces Ulysses published, without interference.†¦show more content†¦That those who certainly know this are moved to deny it merely indicates how a dogmatic resistance to the idea of censorship can result in a mindless insistence on the absurd. For the plain fact is that we all believe that there is a point at which the public authorities ought to step in to limit the self-expression of an individual or a group. A theatrical director might find someone willing to commit suicide on the stage. We would not allow that. And I know of no one who argues that we ought to permit public gladiatorial contests, even between consenting adults. No society can be utterly indifferent to the ways its citizens publicly entertain themselves. Bearbaiting and cockfighting are prohibited only in part out of compassion for the animals; the main reason is that such spectacles, were felt to debase and brutalize the citizenry who flocked to witness them. The question with regard to pornography and obscenity is whether they will brutalize and debase our citizenry. We are, after all, not dealing with one book or one movie. We are dealing with a general tendency that is suffusing our entire culture. Pornographys whole purpose, it seems to me, is to treat human beings obscenely, to deprive them of their specifically human dimension. Imagine a well-known man in a hospital ward, dying an agonizing death. His bladder and bowels empty themselves of their own accord. His consciousness isShow MoreRelatedEssay on America Needs Music Censorship550 Words   |  3 PagesAmerica Needs Music Censorship â€Å"Obscene: so excessive as to be offensive† (http://www.webster.com/cgi-bin/dictionary). This is the way the Webster dictionary defines obscene. How do you? Some say obscene is vulgar; others say the best way to describe obscene is through disgust. No matter how it is thought of, obscene material is everywhere in society. Television is becoming more liberal, magazines are less edited, and music is more abrasive. 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