Question
The mark for your assignment will be determined by reference to the quality of its analysis, its clarity and organisation, and its presentation, including its
The mark for your assignment will be determined by reference to the quality of its analysis, its clarity and organisation, and its presentation, including its freedom from distracting stylistic errors (grammatical, spelling, punctuation and typographical). Where appropriate, reference should be made to legislation, cases, texts and other commentary. The Chicago or APA style of referencing is preferred. Full case and/or legislation citation is expected. See the Library guide on Chicago referencing of legal materials, at http:// libguides.murdoch.edu.au/Chicago/legal.
Question 1 - Short essay question (10 marks)
Compare and contrast the shareholder theory and the stakeholder theory. Discuss which theory you agree with more and why. Give examples to support your discussion.
Question 2 - Problem Solving (10 marks)
Harold and Gracie are the directors of FinanceYou Ltd, a company that specializes in helping small businesses get set up and off their feet. The company was set up five years ago and has had some good success over the years. However in the last year the company has struggled. One of their more successful sales representatives left to work for a competing company and as a result the new influx of clients has been slow. The directors are quite worried about this as they have quite a few monthly payments coming up. One is for the rent of the office, another is for their newspaper advertisements and a third is for employee wages. The directors are confident that they can pay each of these payments, but are very worried about any further payments that may arise and need immediate payment. Harold suggests to Gracie that they hire a marketing team to shoot a television commercial for them and in this way they can perhaps get more clients through ads. Gracie thinks it is a good idea and they hire BeSeen Ltd to do the commercial. The ad goes up and a bill from BeSeen comes in. A day later FinanceYou Ltd receives a fine for excessive noise and disruption due to the shooting of a very loud television commercial. FinanceYou Ltd are not able to pay for the television commercial or the associated fine. A week later, Geraldine, an auditor, comes to do an audit on FinanceYou Ltd. Do you think she will find that the company is insolvent and if so, at what stage do this occur? What possible steps forward can be taken and which is the most suitable?
Question 3 - Problem Solving (10 marks)
Tuana runs a small financial services business and operates under an Australian Financial Services Licence. Lillian comes to see her one day to seek some financial advice on investing $45,000 she had recently inherited. Lillian says that she wants the money to be available for her son when he turns 18 and tells Tuana that she wants the investment to grow at a reliable and steady rate. Lillian also makes it clear that she is nor interested in risky investment or taking unnecessary risks. Tuana receives a substantial commission for selling units in a managed investment scheme - PD Ltd. PD Ltd was established in 2005 and is a property trust that invests in high risk, speculative real estate. PD Ltd has been very successful since it was established and returned high short term profits to investors. Knowing how important is it that she does well for Lillian so that Lillian will recommend her serviced, Tuana recommends that Lillian should invest 90% of her money in PD Ltd, and tells Lillian that this is the best way for her to secure a good financial future for her son stating that PD Ltd has a very strong history in bringing in strong returns. Tuana doesn't really provide Lillian with any documentation or written information about her investment. Lillian considers the proposition and ultimately decides to invest the money with PD Ltd. Within the year, PD Ltd is declared insolvent after losing millions in the sloth in the real estate market due to Covid.
a) Advise Lillian as to her possible causes of action against Tuana.
b) Discuss the potential breached of Tuana's statutory and common law duties
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