Liam and Peta is a shareholder for the company ME pty ltd. Peta as an active partner takes care of the business whereas Liam is a non executive director of the firm. Due to their negligence of not paying attention to balance sheet they were not aware that the company current liabilities have exceeded the current asset by the end of June 2017.
Liam and Peta the shareholder of the company has been found of breaching the duty as the director of the company in paying the company debt. As the company is itself a separate legal entity, it has its own rights, and obligation that is to be adhered by the director. Breaching director’s duties allows ACSI to take civil actions under Corporation Act 2001.
As a senior analyst, it is advisable, that ASIC must ensure that ME Enterprises Pty Ltd must pays the debt on time, breaching the duties would make the shareholder personally liable for the outstanding. There are three cases that have arise over here firstly as the Australian Taxation Office sends legal notice to Peta to pay the unpaid taxes this should be further investigated. Here Peta will have to pay the outstanding amount with general interest charge (GIC) compounded on the amount. The office will take stringent action for further non cooperation.
Similar to the case study of Omnilab Media Pty Limited v Digital Cinema Network Pty Ltd , failing to abide by the rules of the company, ASIC must seek the penalty for the wrong doers under criminal offence asking them to pay maximum of $200,000 or an imprisonment upto five years , or both.
This made the supplier to demand for the debt amount, which were not Paid. The Company received the notice from Australian Taxation office demanding to pay the unpaid company taxes. Liam the other shareholder was not aware of this as he was undergoing cancer treatment in months of May and June 2017.
As for the registered company the legal status, liabilities and rights are looked by ASIC until it deregisters the company. The director can be held personally liable for the entire outstanding amount incurred by the company. The shareholder obligation as a directorship still may continues which makes the breached director liable for all the company’s outstanding debt and losses that a company suffers.
Second case is associated with the company unable to pay the outstanding amount to the suppliers, this needs judgment on looking on to the ways through which the supplier would be able to recover their outstanding amount from shareholders of the company. Third case, investigation should be there to find the liability associated with Liam, as he undergoing cancer treatment, and was unaware of it. The ASIC must investigate that Liam was aware of the fact that his company is debt ridden or not. The commission must further look that whether Liam was really had cancer and whether he is getting treatment for the same.
The directors are liable to compensate the company or others if they receive any loss and damage and they might be prohibited to manage any company in the future. Further, if it is proven that Liam had cancer and he was receiving treatment then ASIC must not level charges against him.
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