Has Freddy breached his statutory obligations under the Corporations Act (Cth) 2001

Question - Freddy is a director of Ace Finance Ltd. The board of directors for Ace Finance Ltd have unanimously agreed to have a marketing campaign to attract new clients to their financial business. Has Freddy breached his statutory obligations under the Corporations Act (Cth) 2001? Explain your answer.

Answer -

In case, Freddie has breached his statutory obligations under the corporations act of 2001. Freddie, being a director in ace finance Limited, has to follow certain duties. These duties are defined in the corporation act which form part of the general duties of directors. These duties are -

1. The director is required to act with a certain degree of care and diligence as expected by a reasonable person. This is required under section 180 of the corporations act.

2. Under section 181, he is required to act in good faith and in the best interest of the company and for a proper purpose. His duty is to avoid any conflicts of interest and to reveal or manage such conflicts if they arise. Such fiduciary duty is required under the act

3. A director should not use his position improperly to gain an advantage for himself or for someone else which leads to a detrimental effect on the company as described under section 182.

4. A director should not use any company information improperly to gain an advantage for themselves or someone else as described under section 183.

In the given case, Freddie has breached the above section 182 and 183 of the corporations act. He has used his position to bring in information and provide the same to his nephew Frank. Also, he has not disclosed his connection with his nephew and have voted Frank for the marketing campaign and he has been selected. Also, Freddy has used the information of themarketing contract and provided the same to Frank which has made him capable of obtaining the contract with Ace finance Limited. Therefore, he has violated two provisions of the Corporation Act.

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