Question
Question 1 (12 marks) Kyle owns a small company called Prime. Kyle also sits on the board of a large proprietary company called Destiny as
Question 1 (12 marks)
Kyle owns a small company called Prime. Kyle also sits on the board of a large proprietary company called Destiny as a nonexecutive director. Unfortunately, Kyle has a gambling addiction and is in significant personal debt. A financial trader tells Kyle that he can make a lot of money if he uses his position as director to gain access to the company cheques, forge a loan from Destiny to Prime, and then use this money to buy shares in Destiny. Kyle follows this advice, and within one week returns enough money to discharge all his personal debts. Kyle then sells the shares that Prime bought in Destiny and pays back the total amount loaned from Destiny. ASIC discovers the fraud and takes action against Kyle for contravening his duties as company director. Kyle argues that since the loan was paid back in its entirety, Destiny has not suffered any detriment.
Explain, with reference to the Corporations Act 2001 (Cth) and case law, whether Kyle has acted in accordance with his duties as a director. (DO NOT discuss penalties.)
Country of Jurisdiction: Australia
USE IRAC formula to answer
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started