Superannuation Corporation law

Corporation law

Executive Summary

Australian Corporation Act basically depicts the basic responsibilities and duties that must be maintained by a director of a company. The violation of these rules and the punishment for the violation of these rules can be best cited from the case study of ASIC v Parker. The case was basically launched by the customers and the shareholders of the company QLS Superannuation Pvt. LTD and at that time the director of the company was G.L Parker. The case was mainly launched for the corrupting activities of G.L Parker and his incompetent as a director of the company ASIC had approved and allocated the compensation money after the case and parker had penalized and suspended by Australian federal court.

Case introduction

The following report contains a brief discussion about the case ASIC v Parker and also about the court decisions that are taken for the case. Along with these how Australian Corporation Act 2001 amended by this case is also discussed with some implication of Australian Corporation Act 2001. In the case of the ASIC v Parker plaintiff was G.L Parker and the defender were first defender was Anthony Aston Starr, Second defender was B.M Frankcombe and the third defendant was M. Barrie. In term of the case G.L Parker along with some other board trustee members of QLS Superannuation Pvt. LTD were unable to manage the superannuation fund and due to this reason Australian Security Commission had launched the case against those trustee members. 
This was actually a fraud case and those trustee board members of QLS Superannuation Pvt. LTD were trying to curb the money of the worker. The federal court had lastly decided to penalize G.L. Parker for his guilt and forbid his directorship of a company for 4 years. Lastly the ASIC had allocated the compensation fund to the worker for their superannuation fund. Australian Corporation Act 2001 helped to find a profound solution and reflection of this act can be found in the decision of the Federal Case for the case. This case can be an example of provisions of compensation and the law regarding to the basic duties and responsibilities of a director.

Explanation of the duties breached

The main objection on G.L Parker was the violation of the basic codes of the company including mismanagement and lack of consciousness about the board meeting (Tolhurst, 2016). Along with this some issues related to the repayment of the borrowing amount also had been launched against G.L. Parker. Thus this issues are showing that G.L Parker by violating this norms of the Corporations Act 2001 had breached section 1317EA (3) (a) of Corporation Act 2001. G.L Parker was working as the board of director of QLS Superannuation Pvt. LTD and it was a popular finance company (Watts, 2015). The main service of this company is to assure the pension of the workers. The main allegation on this company was fail of repayment of the borrowed amount (In between the year 1997-2000). The main reason behind this non repayment of the borrowing amount was the mismanagement of the board of directors of the company (Curtin, 2016). 
G.L Parker as the director was incompetent and his action was corrupted. G.L Parker was not maintaining the basic codes of the company and also was not attending the board meeting regularly. This action of GL. Parker thus was violating the regulations of Corporation Act 2001 section 232(2) were in he should have been more attentive towards the financial condition of the company and should have had knowledge about the operational conditions of the company (Stiglitz & Rosengard, 2015). Mr. Prague also had alleged Mr. G.L Parker that after requesting many times Mr. Parker was not repaying the borrowed amount. Along with this many customers of QLS Superannuation Pvt. LTD also had launched an objection on the ASIC that they were not getting their assured money at the time thus indicating breach of duty of public welfare (Samra, 2016). 
After this ASIC had taken a step against QLS Superannuation Pvt. LTD and had launched a case against this company. This type mismanagement of the board of directors which can also be seen in the case of Australian Securities Commission v Corplan Nominees Pty Ltd. G.L Parker by violating these basic codes of conducts had proven his failure as a board of director thus he had lastly penalized by the court (Strine, 2015). QLS Superannuation Pvt. LTD was issuing long term bond with such a time period that cannot be sanctioned. After maturity period of this bonds company was not returning the sum assured of the bonds and thus QLS Superannuation Pvt. LTD was acting like a cheat fund at that time. Due to such action the director breached the criterion of Australian Corporation Act 2001 section 232(6). The action of G.L Parker was corrupted and due to this reason as a board of director he was curbing the money from general people at that time (Jacobs, 2015). At that time he was misleading other employees of the company and he was not acting as a proper leader and company. Due to this reason company was running at a loss at that time and it was one of the main reasons behind the non repayment of assured and borrowed of the company (Cox, 2015). Thus G.L parker had breached Section 1317EA (3) (b) of Corporation Act 2001. 
Mr. Praidu also claimed that G.L Parker had not given any kind of success fee after the issuance of the loan. This success fee is related to the procedure of sanctions of any kind of loan and by not paying this G.L Parker had also violated the section 232(6) of Australian Corporation Act 2001 (Tolhurst, 2016). G.L. Parker also was not maintaining the basic diligence of the company and he was also violating basic norms and was showing carelessness like he was not properly attending the party’s conference and was not giving his statement about business strategy properly. This is showing his indifferent attitude towards his business and his lack of liability. Due to this reason he had breached the regulation of Australian Corporation Act 2001 section 232(4). 
As per the case mismanagement of G.L. Parker was that he was not concerned about the public interest and thus the main rules regarding a public corporate sector was violated. At that time due to the order of G.L Parker the company was not attending the customers complain and dissatisfaction and this incident were violating the public interest rule (Watts, 2015). Thus it can be said that for this reason Mr. G.L Parker had breached the regulation of Australian Corporation Act 2001 section 1317EA (3) (b). On the other hand G.L Parker had taken a detrimental action on the public interest and had declared that his intention behind this activity was corrupted. Thus it can be stated that he had breached the regulation of Australian Corporation Act 2001 section 232(4). Similar incident can be found in the case of Wilkinson v Feldworth Financial Services Pty Ltd (1998) 

Discussion of the court decision 

As per the Australian Corporation Act 2001 it can be stated that one of the main duty of a board of director is to solve the internal conflicts of a company (Curtin, 2016). G.L. Parker was acting diversely from this point of view. Not only was he avoiding the internal conflicts but also he was fueling the conflicts and was acting as a reagent at that time. Thus the court’s decision relating to the penalization of G.L Parker was according to the Australian Corporation Act 2001. It is the basic duty of a director of a company is to establish the fiduciary in between the trustee members and G.L. Parker in this case was not securing the fiduciary in between the trustee members (Stiglitz & Rosengard, 2015). One of the main reasons behind this was the corrupted activities of G.L Parker and lack of consciousness about the board meeting and activities. Thus by doing this G.L Parker was violating the regulation of Australian Corporation Act 200 thus the decision of the court for his suspension. Similar decision of court can be found in the case of Australian Securities Commission v Donovan (1998). Another flaw of G.L Parker was that he was not maintaining the public interest properly along with this he also was showing mismanagement of shareholders. Although as per the sub section 191 and 195 of Australian Corporation Act 2001 director of a company must be concern about the public interest and the management of the shareholders (Samra, 2016). Thus this regulation is showing that G.L. Parker was guilty and his activities were corrupted. Due to this reason the decision of the federal court to suspend G.L Parker from directorship for four year was right and was as per the regulation of Australian Corporation Act 2001. Moreover as per Australian Corporation Act 2001 section 192 (2) the interest must be sanctioned by a company whenever the company is taking a loan from other financial institute (Strine Jr, 2015). In this case G.L Parker was not enjoining to pay the success fee to Mr. Predau for the advancement of the loan. Due to this reason he was penalized by Australian federal court as per the rules of Australian Corporation Act 2001. Similar decision of court can be found in the case of Australian Securities and Investments Commission v Forge [2002].

Application of the decision to Australian corporation law 

As per the case of ASIC v parker the main impact that it had on the operations of companies is that as per the section 180 of the Corporations Act 2001 it clearly described the fact that the liability of a director of a company is not only restricted to the financial obligation rather it also includes the ethical obligations (Jacobs, 2015). In addition it clearly demonstrated the fact that making decisions is the only thing that entitles the director of a company towards taking any decision without being liable. Any director who has the power to take decision has the liability of that decision. This case illustrated the point in the section 180 and 181 that a director is liable for their decisions and the ventures that they are undertaking. 
As per this case the liability of a director is the public liability and thus breaching of this liability is also a breach of public welfare (Cox, 2015). It describes the public duty that a director has towards the society. From the case it can noted that as per the section 1318 a director if had acted honestly and still needs to face breach of duty accusation then that person can be exempted from the liability and will not be punishable. This indicates that a director cannot be made responsible without supporting incidents and documents and the breach of liability needs to be proved through examples and supporting documents (Curtin, 2016). Such exemplary clause as made to invite more entrepreneurs into the business. This will in turn improve the economic conditions of the country. Thus from the case of ASIC v Parker to can be seen that although the ASIC has provisions to prove a director honest but with proper proof and documents and appropriate explanation of the breach a director can be made liable for their duty and can be proved guilty. However from this case it can be seen that ASIC due to its section 1318 has a loophole which can even make the directors escape the liability (Stiglitz & Rosengard, 2015). 
Thus the ASIC can be unsuccessful in proving the breach of duty. Change in the legal duties of a director needs to be brought about were in the director should not only take decision but also guide in implementation of the decisions (Strine, 2015). This is liability of the director and should be done along with their proper role play in the governance structure of the company. A director needs to have sufficient knowledge about the financial operations of the company. Any director accused of taking financial decisions without prior knowledge of the company’s financial condition will be guilty of breach of duty. Apart from this it is the duty of the directors to monitor all the operational activities of a company and thus any miscommunication and issues in operation will be taken as a breach of duty if the director (Samra, 2016). 

Conclusion

Thus it can be concluded from the above report that the decision of federal in the ASIC v Parker case was according to the Australian Corporation Act 2001. Moreover the overall scenario of the case depicts that as a director G.L Parker had shown lack of duties and responsibilities that is violating the regulation of Australian Corporation Act 2001. Thus lastly it can be concluded that the court decision related to the suspension and penalization of G.L Parker was according to Australian Corporation Act 2001.

Reference

Tolhurst, G. J. (2016). The assignment of contractual rights. Bloomsbury Publishing: London
Watts, P. G. (2015). Directors' powers and duties. LexisNexis NZ Limited: New Zealand 
Journal
Curtin, B. G. (2016). A Framework for the Valuation of Loss of a Commercial Opportunity.
Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the Public Sector: Fourth International Student Edition. WW Norton & Company.
Samra, E. (2016). Corporate governance in Islamic financial institutions.
Strine Jr, L. E. (2015). The dangers of denial: The need for a clear-eyed understanding of the power and accountability structure established by the Delaware general corporation law. Wake Forest L. Rev., 50, 761.
Jacobs, J. B. (2015). Fifty Years of Corporate Law Evolution: A Delaware Judge's Retrospective. Harv. Bus. L. Rev., 5, 141.
Cox, J. D. (2015). Corporate Law and the Limits of Private Ordering. Wash. UL Rev., 93, 257.
Case Examples
Australian Securities Commission v Corplan Nominees Pty Ltd (Drummond J, unreported, 29 April 1994)
Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642
Australian Securities Commission v Donovan (1998) 28 ACSR 583
Australian Securities and Investments Commission v Forge [2002] NSWSC 760

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