Corporation Law for Russell Kinsela Pty Ltd- MyAssignmenthelp

Question: Discuss about theCorporation Law for Russell Kinsela Pty Ltd. Answer: The article which is discussed in this paper is about how directors of the company do not act in the best interest of the company and bring detriment to the company. The article has be retrieved from The Sydney Morning Herald dates 11th march 2017. The papers discuss the duties of the directors towards their company (Cormack 2017). In the case of Kinsela v Russell Kinsela Pty Ltd(1986) 4 NSWLR 722 the question before the court was to determine whether a director of the company can transfer the interest of the company and to another person and make terms which are favorable to themselves. In this case the court provided that it is the duty of the directors of the company to take note of the interest of the creditors of the company when the company becomes insolvent. In the current article it has been provided that the creditors of Shakuhachi a company registered in Australia have almost $1 million owed to its creditors. It is a clear case of mismanagement of a company. The directors of the company have duties both under common law and parliamentary statues to act in a way which is best for a company. They also have the duty to take into account the interest of the shareholders when the company is solvent and when the interest of the creditors of the company when the company is insolvent as provided by the case o f Parke v Daily News Ltd: 1962. The creditors of a company invest in it so that they can profit out of their investment. The power to control the working of the company is not in the hand of the creditors but of the directors. Thus, it becomes all the more important for the directors of the company to manage the company in a way where the interest of the shareholders and creditors is given utmost importance. The Corporation Act 2001, section 101 provides that the best interest of the company has to be assured by the directors and section 182 rules that the directors must not use their position in such a way which harms the position of the company in order to gain personally. In the given article it has been provided that the one of the director owes the company an amount of $476,397. It has also been reported that there are various transpired from the companys accounts which are unexplained. The directors have further demanded $20,000 to $40,000 from the creditors in order to investigate the fund transfers. It can clearly be said that the directors have breached the duty to act for the benefits of the company. Their actions have only been towards achieving personal interest at the cost of the company and its creditors. Thus it can be concluded that the directors have not complied with their duties. The creditors in this case have not taken any actions against the directors but they have the right to do so. In case actions are taken by the creditors the directors have to account for their actions and may be subjected to penalties as pert the Corporation Act 2001. References Cormack, L. (2017). Shoppers, creditors wait while fashion designer Jessica White lives it up in Bali. [online] The Sydney Morning Herald. Available at: https://www.smh.com.au/business/consumer-affairs/shakuhachi-liquidation-shows-almost-1-million-owed-to-creditors-20170310-guvbce.html [Accessed 22 May 2017]. Corporation Act 2001 Kinsela v Russell Kinsela Pty Ltd(1986) 4 NSWLR 722 Parke v Daily News Ltd: 1962