Polyester is a director of Style Pty. Limited involved in making women's clothing.

Situation 1. She arranges with the company's bank to transfer an amount of 65000$ from the company account into a personal bank account held by her in her own name. She uses the funds to finalise some outstanding personal debts.

Situation 2. As a director she receives information that the company is in a serious financial position. She arranges to transfer a larger amount of the assets of the company over a new proprietary company that she formed with the intention of caring on the same business.

Situation 3. Contrary to a resolution of the Board and notwithstanding established business practice that limits the credit to $20,000 she allows a trade debtor (who has a history of bad debts) to exceed its credit limits by $25,000. The debtor fails to pay the outstanding amount of $45,000. Can she rely on the business judgment rule in this situation?

Required: 

Has she breached any duties under the Corporation Act in the three (3) situations listed above?

Answer rating: 100% (QA)

Situation 1 Yes she has infringed the contract Being the companys director she trans... View the full answer