Garden Enterprises Pty Ltd

You are a senior analyst working for the Australian Securities and Investments Commission (ASIC). Part of your role involves investigating possible breaches of directors' duties, and you have been made aware of Garden Enterprises Pty Ltd (Garden). Jiang and Linda are the shareholders and directors of Garden. Jiang is actively involved in the day-to-day running of the company (Executive Director).She spends most of her time marketing and growing the business. She relies on the company's employees to pay creditors on time. Possible defence?

Linda is a non-executive director. Every quarter they meet to review the financial position of the company. A simple balance sheet is prepared by an employee, but they usually do not ask any questions.Possible breach?

In May 2019, Jiang has started receiving angry calls from her suppliers that have not yet been paid. She instructs her staff to prioritise paying the suppliers that are critical to the business, and delay paying those that are not. Insolvent trading?

In June 2019, Garden receives a notice from the Australian Taxation Office of unpaid taxes. However, there is no change to the expenditure - and Garden continues to operate until the end of June. Breach of director duties? Discuss s. 588G

he balance sheet prepared for the end of June 2015 shows that current liabilities exceed current assets. Discuss s95A You discover that Linda is unaware of these events of May and June 2019 because he was diagnosed with cancer, and was undergoing treatment. Discuss possible defences REQUIRED: a) Referencing provisions of the Corporations Act and relevant case law, advise your manager about whether there are grounds for ASIC to bring civil or criminal action against the directors. b) If ASIC's prosecutions team decides to pursue action, what penalties could ASIC seek from the court?