BLO 2205 Corporate Law Assignment Sample
Here’s the best sample of BLO 2205 Corporate Law Assignment, written by the expert.
Issue
There are different issues that are faced by Austin Retail in its business and create the problems for their business and to develop the customer base as well. The one of the major issues that is faced by the firm was to show the high value of the forward book in its prospectus. It is because in this, the current share price was 12 million $1.00 shares and in the prospectus, it was presented $15 million over the next three years. It was the major issues that are shown by the firm due to increasing the interest of the investors towards the firm and it will also provide the competitive advantage for the firm in the business (Barnett, 2011). Because of this, it was the major issue that was raised in the firm to get the additional advantage in the business. At the same time, the other issue that is faced by the firm was the unclearness of the information between the DB Consultants and the Bob Brown (who was the sales manager of the firm).
The reason behind this is that the all ratio related to the share price and the investment was different from the actual one and these all were provided by the DB Consultants. The sales manager Bob Brown was responsible to change this and to have a proper look on this but he also didn’t give his major concern on that. Because of this, it was also the major issue for the firm in the business. This type of wrong information among the al members of the firm and the market can affect the overall market of the firm and sometime, it also make the cause of high business loss for the firm (Strine, 2010). Because of this, it can be determined that not sharing the information was also one of the major issues for the firm in this case. Apart from this, $ new entrant into the market was also one of the major issue that is also faced by the firm and affect the market value as well as also collapsed $7 million share issue in over two years. Because of this, it is also one of the major issues that is also faced by the firm in the given case and affect the business of the firm as well (Patel, 2010).
Law
There are different acts that are related to the misstatement in prospectus according to Corporations Act 2001 and have to follow the firm in its business practices. In like manner, as per the Corporations Act 2001- sec – 56, it can be determined that there is a need for the firm to disclose the matters specified in Schedule II of the Act in its prospectus. It is because provide the fair and the clear information for the customers and the investors is one of the major work of the firm and it help the firm to get the competitive advantage and to perform well in the market as well. Because of this, it can be determined that there is a need for the firm Corporations Act 2001- sec – 56 are quite necessary for the firm. Apart from this, as per the corporation act- Sec-60(A), it can be stated that it is compulsory for any financial firms and the public sector firm is to main object is financing to file a shelf prospectus. The basic means of this is that the all information related to the debt, bank, investment, etc should be clear and there should not be any issue related to the securities (Branson, 2011). It helps to provide the fair information and also increases the trust of the investors on the firm by mitigating the lots of internal and the external issues.
In like manner, as per the sec 2 (19-B) by the Amendment Act 2000, there are some strict rules and the regulations that should also be followed by the firm for the better management of the prospectus as well as the price and the terms of issue for such securities should also be clear and the fair. This act also shows that if there is any change in the security price and other things then there should be proper change and should clear the information for the all stakeholders of the firm. In like manner, Sec-65 also states that there should also not any fake information in the prospectus and the all information will be exactly (Coulton, and Ruddock, 2011).
There are different cases that are also defined the same problem with the same prospectus DERRY vs. PEEK. In this case, there is an issue in the firm tramway and the issue is that this firm had the right to run tram cars with steam power instead of with horses as before. In this, as per the act incorporating, it is necessary for the firm to provide the such power of the lights for the with the sanction of the Board of Trade but at the same time, there is not any permission that is given by the Board of Trade and now in this condition, the firm has to wound up. At the same time, the one of the shareholders was not happy and he thought to do the sued for the directors regarding the all damages and the fraud. But in like manner, from the House of Lords, it is stated that the directors are not liable to provide any compensation for any fraud and it is also stated by them that the prospectus to be true (DiMatteo, 2010). From the overall situation, it is observed by the Lord Herschel that there is a possibility to prove the fraud in case when the firm made the false representation, recklessly, knowingly, etc. That is why, House of Lords denied to give the any compensation for anyone.
In like manner, as per the Companies Act, 1956 there are only some person that are only responsible for the compensation in the nay share of the debenture on the behalf of the faith related to the prospectus in the concern of any loss and the damage. At the same time, in this list of getting the companion are promoters of the company and the director of the company (Strine, 2010). It is because these are the major asset of the firm and play a major role in the success of the firm that is why they will be on the major priority on the compensation.
Case of Edington vs. Fitzmaurice
In order to inviting people for the subscription of shares and debentures, a company offered a prospectus. A statement was contained by the prospectus that “the main aims to issue the debentures are (a) to buy horses and vans and, (b) to complete maintenance in the company’s building, (c) to develop the business of the company. Apart from this, the core objective of the organization was to pay the complete liabilities of the company. By believing on the prospectus’s stamen, a person provided advance to the company and bought its debentures. After that, the company was faced the insolvency and the person was unable to sue the fraud case against the company. As per the conditions, the directors were responsible for fraud. Thus, that statement was the cause of existing situation as the director made the state of mind misrepresented.
Application
Protect the right of the mislead shareholders who performed upon the incorrect statement that is provided in the prospectus, is the provision of given section. This provision constricts the director’s duties as well as other who are connected with the issues of the prospectus (Coulton, and Ruddock,, 2011). So, it can be said that the statutory civil liability towards false statement are provided by this section.
Conditions towards invoking section 62:
- A prospectus had been issued by the company in context to invite the public to apply for its debentures as well as its shares
- The prospectus involved a false statement.
- The shares and the debentures that are offered in the prospectus had been subscribed by the person who is claims for the damages.
- By depending on false statement provided in prospectus, shares and the debentures has been subscribed by such person.
- After subscribing for the company’s shares and debentures, a loss and damage has been sustained by such person.
Conclusion
In the concern of Austin Retail, it can be stated that there is a need for the firm to use the outcomes of the different cases and to act according to that. It is because the follow the all outcomes will suggest the appropriate ways for the firm to perform better and to handle the all work effectively. From the Companies Act, 1956, it can be determined that there are only few reason that should be implemented on the people related to the prospectus. In the concern of Austin retail, it can be determined that Bob Brown is not on fault and he will not be any more responsible for the compensation.
As well as, it can also be suggested for the firm that there is a need for the firm to follow the each and every low in the firm related to the prospectus. It is because it will helpful for the firm to handle the all work related to the prospectus and will also keep safe the firm from the different issues Thus, it can be determined that the use of companies act is quite helpful for the firm in the future. Apart from this, it can also be determined that there is also a need for the firm to provide the fair and effective information for the people and the all stakeholders in regard to the prospectus. It is because there are different cases related to the prospectus that shows that all information related to the firm and the investment of the firm should be clear and the effective for the firm. The false statement of the firm will create the issue for the firm and affect the business performance of the firm as well. It can also be suggested that there is also a need for the firm to get the some understanding about the prospectus from the case of Edington vs. Fitzmaurice. It is because if there is any issues and false error in the prospectus then it will affect the shares and the debentures of the person as well so firm should and provide the correct information.
References
Barnett, H., 2011. Constitutional & administrative law. UK: Routledge.
Strine Jr, L.E., 2010. One Fundamental Corporate Governance Question We Face: Can Corporations Be Managed for the Long Term Unless Their Powerful Electorates Also Act and Think Long Term?. The Business Lawyer, pp.1-26.
Patel, R.I., 2010. Facilitating Stakeholder-Interest Maximization: Accommodating Beneficial Corporations in the Model Business Corporation Act. . Thomas L. Rev., 23, p.135.
Branson, D.M., 2011. Holding Multinational Corporations Accountable-Achilles’ Heels in Alien Tort Claims Act Litigation. Santa Clara J. Int’l L., 9, p.227.
Coulton, J.J. and Ruddock, C., 2011. Corporate payout policy in Australia and a test of the life‐cycle theory. Accounting & Finance, 51(2), pp.381-407.
DiMatteo, L.A., 2010. Strategic contracting: contract law as a source of competitive advantage. American Business Law Journal, 47(4), pp.727-794.
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