Question:ILAC 1 of 1

The directors of Sandy's Surf Shop Pty Ltd are anxious about a downturn in sales over winter. As it currently stands, the Company has serious financial problems. As the Managing Director, Sandy is responsible for overseeing the Company's bank accounts, however, Sandy has not personally checked these accounts in over 6 months.

Unbeknownst to Sandy, one of the Company's employees, Dave, has been making unauthorised withdrawals totaling $10,000 to pay for his gambling addiction. When Sandy finds out about these unauthorised withdrawals from his accountant, he is furious and says to him, "Why didn't you tell me about this months ago! This was your responsibility, not mine!" Sandy promptly terminates Dave's employment, but the detriment to the Company has already been done.Sandy decides not to tell the other directors about the stolen money.

Sandy's wife, Sunny, is a director of a company called "Surf Wear Ltd" which manufactures and sells beachwear.Over dinner, Sunny tells Sandy that her company has just secured a "massive deal" with an American company which will allow them to expand their business.She tells Sandy that the investors are "bound to make some serious money".Without telling Sunny, Sandy buys shares in Surf Wear Ltd the next day.

Advise ASIC about Sandy's potential liability using the Corporations Act 2001 (Cth) and the common law.

Note:You do not need to refer to s184 Corporations Act 2001 (Cth)

Answer:

ISSUES:

LAW:

Statute: Corporations Act 2001 (Cth)

Common Law: