Have the directors violated any of their DUTIES under Corporations Act 2001 (Cth)

Home, - Have the directors violated any of their DUTIES

Question - Octagon Supplements is a company registered in Australia. It is a seller of organic health and nutrition supplements. The company's directors approve a resolution to invest the company's money in a new business venture. This resolution was approved only after the company hired a management consultant, someone who possessed expert knowledge of the health and nutrition supplement industry who researched and prepared a report on the viability of the new business venture. The expert advised the company that the new business venture would very likely be successful and make the company $5 million in the first year.

Eight months after the company has made this investment, the company has lost money on it. The expert's revenue projections now look impossible. And in hindsight, it is now clear to the directors that investing in the new business venture was a bad idea. The shareholders now blame the directors for their decision. Have the directors violated any of their DUTIES under Corporations Act 2001 (Cth)? If so, which DUTY or DUTIES did they violate? Is there any DEFENCE available to the directors? If so, is this DEFENCE valid? Explain your answer citing specific sections of the Corporations Act.

Answer -

The octagon supplements company directors have not gone through the corporation act 2001, it is an act of commonwealth of Australia that gives the rules that relates the corporations of octagon. Some of the duties were followed through the octagon, duty like acting with the good faith through the best interests of the corporation and for the best purpose, duty to been act with the care and diligence, duty for avoiding the improper information usages, duty to avoid the use of position as improper way, duty to disclose some of the interests on the organization.

Some defence were valid for the octagon supplements, directors concerns about the exposure of the lost money. The provision will not be able to reject the liability over the director, any kind of the breach of the director's duty of loyalty with the corporation over the stakeholder, this will omission the good faith which will have the some misunderstanding for the law of violation.

After the money loss the government campaigns the notation for the needy for increasing the risk taking for which the company would grow. Some of the judgement was not good through proper policy, there was no proper interest over the subject making judgement which could inform the organization in means of the issues. The directors make the believe on judgement over the best interests for the corporation over the rational which would hold it for the mone loss.

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