Includes Duty Not To Misuse The Position †Myassignmenthelp.Com

Question: Discuss About The Includes Duty Not To Misuse The Position? Answer: Introduction This report is about ASIC vs Adler, 2002 case. In this case, an unsecured loan of $10 million was given by HIH casuality and general insurance ltd. to Pacific Eagle Equity private limited (PEE). The controller of PEE was Adler. Adler and Williams were the managing directors of HIH and HIHC and Fodera was the finance director of HIH. Adler was also a shareholder of HIH through the Adler Corporation Limited (Kourula, et al., 2017). This report explains in detail the tribunal decision of the court and the reasons behind this decision as per the corporation act. Courts tribunal decision The court gave the decision that Adler has breached various duties under the Corporation act, 2001. The duties breached by Adler includes duty not to misuse the position, duty not to use the information in improper manner, duty related to good faith, duties as a director, duty of care. For the breach of these duties, the court has given the decision to ban Adler to be appointed as a director of any company for at least 20 years and the other director William, was banned for 10 years. The court also imposed penalties on all of them and the amount of penalty was $450000 for Adler, $250000 for William, $450000 for Adler Corporation and $5000 for Fodera. In addition to this, the court has ordered that William, Adler and Adler Corporation were required to pay a sum of $7,986,402 as a compensation to HIHC (Bainbridge and Connor, 2016). Reasons behind this decision There are a number of reasons behind this decision. The first reason was inability of directors to perform their duties which means they have given the loan to PEE withount any legal documentation. Fodera as the finance director of HIH failed to perform his duties as he gave the loan of $10 million to PEE without any information to the board of HIH. As per this case, Adler had breached the duty to act with deligence by granting the loan to PEE and then using the amount for purchasing the shares of HIH (Peden, 2017). This was done by Adler to increases the prices of shares of HIH. This resulted in a total loss of investment to PEE. One more reason behind the decision was improper use of the position. In this case, Adler misued his powers because all the transactions whether they were related to granting of loan or buying and selling of HIH shares, these all transactions took place for the personal benefit of Adler. He misused his position to take personal benefit. Adler, Williams and Fodera breached the rule of business judgement. Business judgement means that the directors are required to make any decision related to the company with honesty and without thinking about their personal benefits but here in this case, the decision is taken by all the three directors for their personal benefits (Yoshikawa and Hu, 2017). Conclusion At last it is concluded that this loan was given by HIHC to PEE with an intention that PEE acquire the shares of HIH which was the holding company of HIHC. But because of this a material loss was suffered by HIHC and HIH. References Bainbridge, W. and Connor, T. (2016) Another Way Forward? The Scope for an Appellate Court to Reinterpret the Statutory Business Judgment Rule, COMPANY AND SECURITIES LAW JOURNAL, 34(6), pp.415-437. Kourula, A., Pisani, N. and Kolk, A. (2017) Corporate sustainability and inclusive development: highlights from international business and management research, Current Opinion in Environmental Sustainability, 24, pp.14-18. Peden, E. (2017) Civil and criminal liability of directors and officers of sporting clubs, Commercial Law Quarterly: The Journal of the Commercial Law Association of Australia, 31(1), p.12. Yoshikawa, T. and Hu, H.W. (2017) Organizational citizenship behaviors of directors: an integrated framework of director role-identity and boardroom structure, Journal of Business Ethics, 143(1), pp.99-109.