Question 1 (10 marks)

Section 95A of the Corporations Act 2001 (Cth) defines insolvency as "A person is solvent if, and only if, the person is able to pay all the person's debts, as and when they become due and payable. A person who is not solvent is insolvent".

Discuss the elements that need to be proved to find a director liable for insolvent trading under s 588G of the Corporations Act 2001 (Cth).

Question 2 (10 marks)

Myles is one of the directors of Fitness Apparel Ltd (FA) and a CEO of Shoes for Life Pty Ltd (SFL). SFL enters into a contract with FA to supply $10,000 worth of running shoes to be sold at FA stores.

Myles is not sure whether he is required to disclose his material personal interest and if so whether he can be present and vote at the meeting where his personal interest is being discussed.

With reference to the Corporations Act 2001 (Cth) and relevant case law, advise Myles.

(You do not need to discuss remedies)

Question 3 (10 marks)

Explain with reference to the Corporations Act 2001 (Cth) and relevant case law the difference between:

a.Actual authority;

b.Apparent/Ostensible authority; and

c.Authority by ratification.

Question 4 (10 marks)

In January this year Jessica was appointed administrator of Deli Delights Pty Ltd (DD). Since being appointed Jessica has determined that some DD stores are viable and should continue to trade whilst others will need to be closed. Jessica has also requested financial documents from the directors of DD but this information has not been supplied and the directors are not returning her calls.

Larry is the owner of several commercial fridges leased by DD. When Larry hears that DD has appointed an administrator he demands for the immediate return of his fridges.

Advise Jessica as to her rights and obligations as an administrator.

Question 5 (10 marks)

In the decision of Gambotto v WCP Ltd (1995) 182 CLR 432 the High Court established a two step test. Explain the importance of this test in protecting minority shareholders.

Question 6 (10 marks)

Accelerate Ltd (Accelerate) is a public company listed on the ASX. Accelerate has 5 directors all of whom are over 18 and reside in Australia.

On 1 January 2020, one of the directors Damien, provided notice to the other directors of a general meeting to be held on 1 February 2020. One of the resolutions proposed by Damien is to remove two of the other directors.

Damien argues his notice for the general meeting and the proposed resolution are valid.With reference to the Corporations Act 2001 (Cth) advise Accelerate. (You do not need to the ASX Listing Rules)