Law Case

Dated 28 Oct, 2013

To,

The Owners,

Stone Pty Ltd.

Subject:

Respected Entrepreneurs,

It is clear that your company faces numerous challenges that threaten to put you out of business. For instance, pressured cash flows are a major problem for the company because of pending receivables, which in itself is a cause for concern for your company. However, the pressured receivables are mainly the result of pending receivables that have yet to be debited. As your company has encouraged buyers to purchase food items on credit, its accounts receivables has increased significantly and this has ended up putting a lot of pressure on the cash flows. Closely connected with the cash flows problems is another major issue that your company is facing. Poor cash flows have meant that the company is not able to pay major expenses such as monthly rent of the warehouse.

Hence, the owner of the rented premises threatens to eject your employees from the warehouse and this can prove to be catastrophic to your business. These problems have been further exacerbated by the employees working for your company who have threatened to take industrial action to push you for a pay raise. This action has affected the company's operations by disrupting deliveries and prompting several buyers to cancel their contracts. Cash flow problems have also meant that the company is unable to make its monthly payment of interest to which the crediting bank has threatened to appoint a receiver. Hence, it is clear that all the problems faced by your company stem from its poor cash flows.

In this regard, the Corporations Act 2001 is very detailed and can provide a range of benefits to the owners of the company. Also referred to as the Corporations Act, the act sets out the laws that deal with business entities in Australia at both the federal as well as interstate level (Dooley & Goldman, 2001, p. 739). Even though the Corporations Act of 2001 mainly focuses on companies, it also covers some laws relating to other entities such as partnerships and managed investment schemes. Under the external administration procedures of the act, Australian directors are liable to comparative callings discovered in different jurisdictions, especially the obligation of unwaveringness and the job of forethought (Dooley & Goldman, 2001, p. 739).

Under the act, directors have an obligation to act to the greatest advantage of the organization. This is principally recognized as being for the profit of shareholders, and studies prescribe that Australian directors, more than in different nations see their essential commitment as being to make shareholder quality. Directors have the obligation to strictly dodge clashes of investment (Veasey, 2001, p. 2180). The point when directors have any investment in a transaction (i.e. they stand on both sides of an arrangement an organization makes) they should give full revelation under Ca 2001 SS 191-193. A critical enlargement to the UK law, there is also, criminal punishments under Schedule 3 of the 2001 Act.

Directors who are working in the same organization but have clashing interests must announce they ...