Clive palmar case study

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Introduction

Whilst the office of director holds great significance in the management of the company and highest powers are available with the Board of Directors to manage the affairs of the company as they deem fit, this also comes with the responsibility to exercise the powers and discharge duties and responsibilities in good faith, with great care and for a proper purpose. Directors are entrusted with the funds and assets of the company and the shareholders expect them to act in ways that would be in the best interest of the company. Accordingly, for the protection of stakeholders and public interest in case of public companies, regulators must intervene to bring charges if they feel that the provisions of law have been breached or are not being applied in their true spirit. This duty of directors to act with honesty, integrity and good faith in all matters dealing with the affairs of the company emanates from section 181 of the Corporations Act 2001 (“CA2001”). The subject article from ABC news website is an example of one such instance wherein a famous Australian billionaire Clive Palmer was accused of misusing his position that he occupied as a Director of a company seven years ago in 2013 (Clive Palmer charged with more offences, ABC.net.au, 2020).

Charges brought against the Director 

In the instant case, Mr Palmer was charged by the Australian corporate laws regulator – The Australian Securities and Investments Commission (ASIC) with four offences of which two pertained to contravention of section 408C(1d) of the Criminal Code of Queensland, and two pertained to the breach of section 184 of the Corporations Act 2001 (excerpt from the article annexed to this report). With respect to charges brought under the corporate laws he was accused of misusing his influential position to gain an unfair advantage from the company. Earlier in February there had been other news items wherein Mr Palmers appeal before Supreme Court against the charges confirmed by the Magistrate Court were dismissed on the breach of the substantial acquisition of shares and takeover law arising from the proposed acquisition of the company The President's Club Ltd (Clive Palmer's appeals dismissed - 9News, 2020).

These multiple accounts of charges brought against the director Mr Palmer is a reminder that the Australian corporate watchdog is on surveillance and has the powers of investigation and inquiry under the law. Therefore, monitoring of actions is done on a continuous basis by ASIC and whenever there are parameters that indicate that someone has breached the duty of care in a responsible position of a Director, there are high chances that questions will be asked or charges will be instituted once offence is confirmed.

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