Important Points Submission Is Well Organized And Has A Tigh ✓ Solved

```html

Important Points Submission Is Well Organized And Has A Tight

Submission is well organized and has a tight and cohesive focus that is integrated throughout the document. Submission has an organizational structure and the focus is clear throughout. Submission lacks focus or contains major drifts in focus. Demonstrates understanding of course content and knowledge. Demonstrates some understanding of course content and knowledge. Strongly demonstrates the practical application, or ability to apply, of course objectives within a work environment.

You are a graduate rotating through the Commercial Law Department of Flinders Partners, a national corporate advisory firm. Your submission is to be made on the Assignment Two page on Canvas. You must acknowledge all the sources of information you have used in your assessments. Compliance with a specific citation style is not required. Harvard style (author, date) or Oxford Style (footnotes) can be used – but should be consistent throughout the document. Refer to the RMIT Easy Cite referencing tool to see examples and tips on how to reference in the appropriated style.

Our client, Hydro Fracking Limited (‘HFL’), has received an information request from the Australian Securities and Investments Commission (‘ASIC’) relating to conduct of the company and some of its directors. The CEO requires our urgent advice. Your task is to review the client file and the client instructions and provide a memorandum containing your written analysis in response to the questions raised.

The analysis will help inform our client’s response to ASIC. Please keep your analysis to a maximum of 1,500 words.

Paper For Above Instructions

Memorandum

To: Michelle M. Moorehouse,

From: [Your name], Graduate Analyst,

Date: 21 September 2020,

Subject: Legal Analysis Regarding Corporate Governance Issues at HFL

1. Duty to Mitigate Climate Change Risks

The assertion that directors have a duty under the Corporations Act to ensure their company mitigates against the risks of climate change deserves careful analysis. Under Section 180 of the Corporations Act 2001 (Cth), directors are required to act with due care and diligence. While this does not explicitly mention climate change, many legal scholars and practitioners argue that the duty can extend to considering environmental and climate-related risks. The case of Australian Conservation Foundation v Commonwealth (2004) illustrates the increasing recognition of corporate responsibility regarding climate issues. Directors can be held accountable for failing to consider significant risks—like climate change—that could impact the company's long-term sustainability and profitability (Harrison, 2019).

Thus, the statement holds merit as directors, including Louise, should indeed take into account climate-related risks in their decision-making processes to comply with their statutory duties.

2. Potential Actions by ASIC Against Directors

In evaluating whether ASIC could take action against the directors for breaches of statutory duties, several issues arise. Directors have a fiduciary duty to act in the best interest of the company (s. 181), a duty to be honest and avoid conflicts of interest (s. 182), and a duty to prevent insolvent trading (s. 588G). Given the financial irregularities and allegations of fraud pertaining to Edward, it seems plausible that ASIC might have grounds for action against him and possibly other directors for permitting or failing to detect these issues.

In terms of potential penalties, ASIC can pursue both civil and criminal actions against directors. Under s. 1307, the maximum penalties can include significant fines and disqualification from managing corporations. As evidenced in ASIC v Healey (2011), directors can be held liable for failing to act on information that would alert them to potential misconduct (Parker, 2018). If found guilty, the courts have the authority to require directors to pay compensation for losses incurred by the company, illustrating the gravity of breaches.

3. Removing Edward from the Board

In examining whether Edward can be removed from the Board of Directors, we consider the following:

(a) If Victoria Police charge Edward with “obtaining financial advantage by deception,” he does not automatically cease to be a director unless the company’s constitution or relevant regulations state otherwise. However, such charges would bolster the case for his removal.

(b) The Board can remove Edward as a director per the provisions laid out in s. 203D of the Corporations Act, which allows directors to be removed by a simple majority vote at a general meeting. Proper procedural requirements must be adhered to in calling for such a vote.

(c) GFC, as the majority shareholder, has the authority to remove Edward as a director, assuming they comply with the relevant rules of the company's constitution. A straightforward board resolution or shareholder meeting could achieve this.

4. Validity of Monique's Resignation

Analyzing Monique’s resignation, the general rule is that directors can resign verbally or in writing. The sudden nature of her resignation does not inherently make it invalid unless the company’s constitution stipulates otherwise. If no formal process was violated, Louise should consider Monique's resignation effective as of the time it was communicated.

In conclusion, the issues at hand require careful consideration and adherence to relevant statutory duties as well as company policies. Correct advice and prompt action are crucial for the board's stability and the company's obligations to ASIC. Should you need further information or clarification, I am available for discussions.

References

  • Harrison, J. (2019). Climate Change and Corporate Governance. Australian Journal of Corporate Law.
  • Parker, C. (2018). Director's Duty: Risk Management and the Law. Corporate Governance Review.
  • ASIC v Healey, [2011] FCA 717.
  • Australian Conservation Foundation v Commonwealth, [2004] FCA 208.
  • Corporations Act 2001 (Cth).
  • RMIT Easy Cite referencing tool. Available at: [RMIT referencing page]
  • Flinders Partners Consultants and Corporate Advisors Internals. (2020). Client Instructions Document.
  • Hydraulic Fracturing Resources: Risks and Benefits. CSIRO Reports.
  • Company Filings and SEC Reports. Global Fracking Corporation.
  • Not-for-profit regulations on governance. [Relevant legislation]

```

Related Assignments