Corporate Governance Index & Dd Notes

CORPORATE GOVERNANCE PAGE NUMBER A AAMI Customer Charter - Internal corporate code Accountability Accounting Survelliance Project Acquistion Creep - s 611 Advertising Advisory Board Agency Cost - Impact of Agency Cost - Impact of Corporate Governance Agency Theory - Assumptions - Defintions ASX Corporate Governance Council (ASXCGC) - Objectives - 10 Recommendation on Corporate Governance Anglo - Saxon Model Annual General Meeting - Role Annual Report - CG statement & policies ASEAN Asia Financial Crisis Asia Pacific Economic Cooperation (APEC) Asian Roundtable Countries (Aim & Recommendations) Audit Committee - Role & Responsibility Australia & New Zealand - Corporate Collapse - Takeover code in New Zealand Australia Standard (AS 8000) - Coporate Governance Principles Australian Accounting Standards Board (AASB) - Role in CG Australian Broadcasting Authority (ABA) Australian Competition and Consumer Commission (ACCC) - Role Australian Institute of Company Directors (AICD) - Codes of conduct - Corporate Governance - Suggestion on the role of the board - Response on CLERP proposal Australian Securities and Investment Commission (ASIC) - Role in CG Australian Shareholder Association (ASA) Australian Stock Exchange (ASX) - ASX Listing Rules on corporate governance Australian Taxation Office (ATO) Authorisation (TPA) - s 88 TP A

5.45B 3.30M Read 1.6 5.13B 6.40B 7.47T 2.22 2.24 2.24B

Notes Notes

2.21B 2.21M 4.14M 4.14 7.31M 2.31B 4.13B 7.38B 7.33B 1.13 7.42M 2.18 Read 2.2.11 7.12 7.22 7.14T 1.15 1.16 1.16B 5.42B 1.19T 6.4M 6.10M 4.6B 5.43B Read 4.2.1 Ans 4.1 Read 4.2.4 4.7 1.16 1.16M Read 1.4 2.30B 4.8B Read 4.3.1 1.17 Read 4.5.1 1.18B 6.11B

B Bait advertising - s 52 TPA Berlin Initiative Group (Code for supervisory board) Board / Board of Directors (BOD) - ASXCGC's view on its responsibility - Combined Code's view on its responsibility - Conduct - OECD's view on its reponsibility - Performance Evaluation - Responsibility - Role Bosch Committee Boycotts Bribe & Undisclosed benefit - Civil & Criminal consequences for accepting bribe - Custom or tradition - Offering bribe Business Judgement Rule - s 180 (2) Business Roundtable (BRT) - View on Corporate Governance "But-For" Test

6.48 7.44B

Ans 6.9

2.14B 2.13 4.4 2.12 Read 2.1.11 4.28T 2.4B 4.4 2.16 4.4 1.10 6.18 Ans 6.3 3.23 5.28 5.29M 5.31T 5.30 3.35B 1.13 2.12T 4.12M 3.18M

C Cadbury Committee California Public Employees Retirement System (CalPERS) - CalPERS comment on corporate governance issue California Public Pension Funds Chicaco School of Law and Economics Chief Executive Officer (CEO) - Role China - Corporate governance problems - Financial institutions - Role of chair of BOD - Shares in listed company China Securities Regulatory Commission Chinese Wall - s 1043F Civil Penalty Provision - s 206, s 1317 Code for supervising board Codes of conduct - Benefits to the organisations Coles Myer - Corporate governance statements Collusion in the market place Combined Code & Turnbull Report - Corporate Governance Issues - Shareholders' rights - Stakeholders rights

1.11 1.12 4.11M 7.9T 7.14M 4.6 7.38B 7.40B 7.4 7.40T 7.40T 7.39B 5.19B 5.20T 3.34 7.44B 5.42 5.45 Read 4.7.1 6.14 1.12 7.11M 2.9M Read 2.2.1 2.9M 2.11M

7.22

Committee - Benefits of committee structure - Role in Board Structure Common Aims of CG organisations, reports & Committees Commonwealth Association for Corporate Governance (CACG) - Summary of CACG Guidelines Commonwealth Bank of Australia Company Companies and Securities Advisory Committee (CASAC) Company Ethics Companies limited by guarantee Compensation / Remuneration's base - Guidelines - Performance Based compensation Compensation Committee Competition Law Competition Policy - Goals - Objectives Compliance Program - Benefits of having compliace program - Cost of not having compliance program - Elements of compliance program - Reasons for adopting Conflict minimisation factors Convergence & Diversity Corporate Ethics Corporate Governance - Dedicated capital investment system (Germany, Japan) - Definitions - Development in East Asia - Disclosure based - Expectations - European Insider model - Family based insider system - Fluid Capital investment system (U.S.) - Global Focus - Government's role - Harmonizations - Inclusive relationship - Insider Model - International capital market - Internationalisation - Listing rule by ASX - Managerial capitalism - Market-based system for CG - Not-for-Profit Organisations - Principles - Principles (Australia Standard AS 8000)

2.21T 2.17B 1.16T 2.7B Read 2.4.1 2.34 1.4 - 1.5 4.9 Read 4.4.1 1.19M 1.4 Ans 2.3B 2.25 Notes 2.29 2.25 Ans 2.4T 2.20 6.9M 6.7B 6.9M 6.8M 6.4B 6.6T Read 6.1.2 Read 6.1.4 6.6M Read 6.1.3 6.5M 6.5B 2.30 Notes 7.48 5.4 7.14B 1.7 7.35M 7.6B 1.8 7.24M 7.32 7.14B 1.9 1.14 7.30B 7.21M 7.24M 7.4B 7.4 Read 4.5.1 7.16M 7.5M 2.34 1.10 1.15

Read 1.1

Ans 7.3B

2.8

- Problems in Asian Countries - Public sector - Reform in Asia - Rating Agencies - Relationship-based systems for CG (Insider Model) - Role - Role of bank (market-based system) - Shareholder value orientation - Small & Medium Enterprises (SME) - Stakeholders model - Statements Corporate Governance Council (CGC) Corporation Law & Economic Reform Program (CLERP) - Aim - Auditor independence - Corporate governance issues - Regulation for company disclosure Corporate Social Reporting (CSR) Corporate social responsibility Council of Institutional Shareholders Creating or destroying voting power Criminal Penalty provision - S 184 CSR Ltd

7.43M 2.37 7.41B 2.32T 7.24 2.9T 7.7T 7.14 2.41B 7.21M Ans 4.2 1.18 7.13T 5.7M 7.23M 5.7M 4.20T 4.17 7.9T 3.19B 3.34B 2.33

D Damages & Compensation Deregulation VS Regulation Derivative Duties Differences between each code regarding Shareholders' rights Disclosure & Transperency - Advantages & Disadvantages - Material information disclosure - Voluntary disclosure Disqualification of directors - Automatic disqualification - s 206B - By ASIC - s 206F - By court order - s 206 C, D, E Director - Alternate Directors - De Facto Directors s 9b (i ) - Definition - Disqualification - Independence - Interest - Nominee Directors - Non-executive directors (Benefits of using Non-exe directors) - Number of directors - Removal of director

3.32 1.21 2.12M Ans 2.2 Read 2.1.7 Read 2.1.7 Read 2.1.8 3.31M 5.35 5.36T 5.39B 5.37T 3.10T 3.8 3.7M 5.35 Read 2.2.5 4.6 3.12 Ans 3.1 3.7T 3.34

5.41

3.16

- Shadow Directors s 9b(i i) Director's Duties - Bribe & Undisclosed benefits - Business Judgement Rule - s 180 (2 ) - But for test - Civil penalty provision - s 206, s 1317 - Competing with the company - Contracts with company - Creating or destroying voting power - Criminal Penalty provision - s 184 - Damages & Compensation - Disclosure of remuneration - Duty for a proper purpose - s 181 (1 ) (b ) - Duty not to make personal or secret profit (Common law) - Duty to act bona fide in the best interest of the company (Common) - Duty to act in good faith (s 181 (1 ) (a )) - Duty to avoid conflict of interest (Common law) - Duty to disclose material personal interest ( s 191(1)) - Duty to exercise care, skill & diligence (Common law) - Duty to exercise care, skill & diligence (s 180) - Duty to exercise powers for proper purpose (common law) - Duty to prevent insolvent trading (Common law) - Duty to prevent insolvent trading - s 588G - Duty to retain discretion (Common law) - Financial benefits (Definitions) - s 229 - General Law Duties - Improper use of position in the company - s 182 - Indirect personal interest - Injunction - Insolvent trading - Defences to directors - s 588H - Insolvency - Definition - s 95A - Material personal interest - Misuse of company funds - Payment to directors - Ratification - Reasonable person test - Related party transactions - s 228 - Reliance on delegates or experts - s 189 - Remedies - Removal of director - s 203C, D - Respsonsible for delegates' action - s 190 - Statutory derivative actions - s 236 - Takeover - Taking up corporate opportunities - s 182 - To whom the duties owed - Use of confidential information - s 183 E

3.9 3.23 3.35B 3.18M 3.34 3.25 3.21 3.19B 3.34B 3.32 3.26M 3.18B 3.23T 3.14B 3.17M 3.21M 3.22 3.27M 3.28M 3.17B 3.28 3.28 3.19B 3.27T 3.14 3.25M 3.22T 3.32 3.29M 3.28B 3.22M 3.23B 3.26T 3.35 3.28M 3.26B 3.21T 3.32 3.34 3.20B 3.33 3.19T 3.24T 3.15B 3.24B

Effective Competition Egoism Employees (Directors' Duty) Enron (Case Study) Environmental management system (EMS) Environmental reporting Environmental reporting - s 299 (1 ) Esanda case Ethical conduct Ethical principles Ethics - Why important? Ethics - Corporate ethics - Acquistion Creep - s 611 - Bribe - Chinese Wall - s 1043F - Due diligence defences - s 731 - False or misleading statements regarding securities - s 1041E - False trading & market rigging transactions - s 1041B, C - Financial Product (Definition) - s 764A - Fraudulently inducing persons to deal in securities - s 1041F - Insider Trading - s 1043A - Manipulation of the market - s 1041A - Misapproiation of corporate funds - s 181 - Misleading or deceptive conduct regarding corporate securities - s 1041H - Omission of material info from disclosure document - s 728 (b ) - Personal Liability of director - s 729 (1) - Phoenix Companies - Prospectuses - Relavent interest - s 608 (1 ) - Secret Commission - Securites (Definition) - s 92 - Share BuyBack - s 257A - Takeover - s 606 (1 ) Evaluating board performance Executive Incentive Scheme

6.8 5.5 3.17T 7.5 4.17B 4.17M 4.18M 6.49M 5.2 5.5 5.3M 5.13B 5.28T 5.19B 5.10M 5.24M 2.22M 5.8M 5.25M 5.15 5.21T 5.31M

5.4

5.20T 5.11

5.8 5.10T 5.10M 5.32 5.10B 5.14M 5.26 5.9M 5.22T 5.11 4.28 2.29M

F False trading & market rigging transactions - s 1041 B, C False and misleading representation - s 53 & 55 TPA False or misleading statements regarding securities - s 1 041E Family based insider system (Asian Approach) - Developed capital market - Less-developed capital market Family Firm's features

Ans 7.4

5.22M 6.52 5.24M 7.32 7.34B 7.34B 2.42B

Notes

Federation des Experts Compatables European (FEE) Financial Benefits - s 229 Financial Reporting Council (FRC) France - Corporate governance issue Franchsing Fraudently inducing person to deal in securities - s 1041F Friedman Milton FTSE of UK - Good Index

7.28B 3.27T 1.12 7.27M 7.30M 6.30M 5.25M 5.5B 4.22T

7.29

G Germany - Corporate governance regime Good Reputation index Government's Role in Corporate Governance Greenbury Committee - Recommendation on director remuneration

7.26M 7.31B 5.3T 1.14 1.11 4.26

1.19 7.11M

H Hampel Committee / Report - Accountability & Disclosure - Board's responsibility - Shareholders' responsibility - Suggestions on shareholders Harmonizations Hermalin & Weisbach Higgs Report (Non-Executive Directors) HIH Insurance Hilmer Report (Benefits of competition)

1.11 4.13M 2.14M 2.10 4.10M 7.30B 7.46T 1.9 7.52B 6.7M

7.11M

1.12 Ans 7.4

I IASC Foundation Inclusive relationship Independence of Auditor (How to achieve) Independence of Director Indirect personal interest (Directors' duties) Industry and Trade Association Information Asymmetry Information management - technology Information technology - benefits & obligations Injunction Insider Information Insider Trading Intellectual property and s 52 TPA Internal Corporate code International Accounting Standards Board (IASB)

1.15 7.21M Read 2.1.10 Read 2.2.5 3.22T 1.20B 2.21B 4.23M 4.24 3.32 5.17M 5.15 6.49 5.45B 1.15

Ans 6.9

International Federation of Accountants (IFAC) International Monetary Fund (IMF) Internationalisation Investment and Financial Services Association (IFSA) Investor - Individual investor / shareholder - Instituitional investor / shareholder - Interests - International investor / shareholder Irrational Exuberance Italy - Corporate governance issue

1.9 1.14 7.4 4.11M 4.8 4.10 4.8 4.11B 7.18M 7.27M 7.30M

4.12T

J Japan - Bank System - Japanese Commercial Code - Keiretsu - Role of Board - Statutory Auditor - Welfare Capitalism Joint Ventures

7.35M 7.37 7.36B 7.37M 7.36 7.36B 7.38M 7.39

K Kantian Ethics Keiretsu

5.5M 7.37M

L Lane, Christel Latitude Leveraged Buy-out (LBO) Limited liability companies Lipton & Lorsch proposal Listed companies - recommendation by CASAC Listed public companies - CG Matter Lobbying

7.31 7.42B 7.16B 1.4 7.8B Read 4.4.2 4.16 1.20

M Management Buy-outs (MBO) Management Compensation Management Duties Management Objectives Management oversight (Difference between 3 principles) Managerial capitalism Manipulation of the market - s 1041A

7.16B 2.25 4.5B 4.5 Ans 2.2B 7.16M 5.21T

Notes Notes

Market-based system of corporate governance - Advantages & Weaknesses - Characteristics Material Information Material personal interest Media's role in Corporate Governance Metcalfe's law Misappriation of corporate funds Misleading or deceptive conduct Misuse of company funds Modern Company Law Review Monopoly Multinational corporations

7.5M Ans 7.2B 7.8T Read 2.1.8 3.22 2.32M 7.18T 5.31M 5.8 3.23B 7.11B 6.8T 7.46B

6.40M

N NASDAQ Nationala Association of Pension Fund (NAPF) New Issues Committee New York Stock Exchange (NYSE) - Recommendation on audit committee requirement No Liability companies Nomiation Committee Nominee Directors Not for Profit Organisations (NFP) - Corporate Governance Issues - Features

7.17B 7.21B Ans 2.4 7.17B 2.19M 1.5 2.20B 3.12 2.34B 2.36 2.36

Notes

4.27B 3.16 Notes

O Opportunistic Behaviour Organisation for Economic Cooperation & Development (OECD) - Board's responsibilities - Principles 2004 - Principles D & E - Principle Based approach - Shareholders Rights - Stakeholders Rights Organisations - Types

2.23 1.10 2.12M 7.49M 2.9T 7.49M 2.9T 2.10B 1.6

Read 2.11

P Payment to directors Penalties - contravention of TPA Performance Based Compensation Phoenix companies President Director General (PDG) Price Fixing Agreement Principles based approaches (UK, Aus)

3.26T 6.12M 2.25 5.32 7.27B 6.16M 7.21T

Ans 2.4T

Proprietary companies Prospectused Public benefit test (TPA) Public companies Public sector Corporate governance - Best Practice guidance for board - Principles - Recommendations - Uhrig Report Pyramid structure

1.5 5.10B 6.11B 1.5 2.36 2.41T 2.39B 2.40 2.38 7.25M

R Ramsay Report (Auditor Independence) Ratification (Director's duty) Regulation VS Deregulation Related party transactions - s 228 Relief from breach of director's duty Remedies for breach of directors' duty Remuneration Committee Remuneration - Greenbury's Code Remuneration Policy Relationship based system of CG (European approach) - Advantages & Disadvantages - Comparison with other system - Winter committee Relationship based system of CD (Asia-Pacific Approach) - Advantages & Weaknesses Relationship between members Resale price maintenance - s 48 TPA Risk Committee Risk Management Risk Management - Functions Risk Management Standard Role for accounting Role of CEO - United States Role of Directors Role of the Annual General Meeting (AGM) Role of the board Role of the Committee Role of the media Rule Based approach (US)

1.9M 3.35 1.21 3.26B 3.34B 3.32 2.20 4.26 Read 2.2.9 7.24 Ans 7.3 7.25B 7.28M 7.32 Ans 7.3 1.7 6.22M Ans 2.4 4.22M 4.23T 4.22B 2.23B 4.6 7.8B 3.3 2.31B 2.16 2.17B 2.32M 7.21T

S Santos Ltd - corporate governance statements Sarbanes Oxley Act - Audit committee

Read 4.6.1 7.19M 2.19

4.27T 7.44

7.26

Notes Notes

Notes Notes

- Criticism Secret Commission Secretary's Responsibilities Security Act 1933 Security Exchange Commission (SEC) Seperation of CEO and Chair Self Regulation Share Buy-back s 257A Share Capital Shareholder - Agreement - Equitable treatment - Rights - Rights as suggested by OECD - Rights suggested by Combined Code - Rights suggested by ASXGCG Shareholder activism Shareholder capitalism Small & Medium Enterprises (SME) - Barriers to growth - Corporate Governance issues - Distinctive Features of family firms - Recommendations Smith Report (Audit Committees) Social Accounting Social Responsibility Southcorp Ltd Stakeholders - ASXCGC's view - Combined Code's view - OECD's view - Impact of good corporate governance on stakeholders - Model State economic trade commission State-owned enterprised (SOE) - Characteristics of SOE Stock Option - Accounting treatment - Compensation for executives - Disclosure Strategic Alliance / Partnering System of Environmental Economics Accounts (SEEA)

7.19B 5.26 Read 2.2.7 7.15B 7.15B Ans 2.2 Notes 5.42 5.22T 1.4 2.5 2.43M Read 2.1.3 Read 2.1.4 2.8B 2.9T 2.9B Ans 2.1 2.10M 1.8 2.30M 7.20M 2.41B 2.42B Ans 2.6 2.42 2.43T 1.9 1.12 4.20 4.17 2.33 2.6 2.11B 2.11M 2.10B Read 2.1.6 2.12T Ans 2.2 7.21M 7.39B 7.39 7.47M 7.39B 2.27M 2.27 Read 7.2.8 2.28 6.20M 4.19B

T Takeover Takeovers (improper use of power) Technology - information management The Combined Code & The Turnbull Report

5.11 3.19T 4.23 1.12

7.25M

Read 2.1

Town & Village Enterprises (TVEs) Trade Practice Act (TPA) - Absolute Prohabitions - Approval misrepresentation - s 53 C - Auditors & s 52 (Esanda Case) - Authorisations - s 88 TPA - Bait Advertising - s 56 TPA - Boycott - s 45 TP A - Brand name, logo, packaging - Business consumer transactions - Collusion in marketplace - s 45 TP A - Comparative Advertising - Contract, arrangement or understanding - Country of origin - s 53 (eb) TP A - Exclusive Dealings - s 47 TP A - False & misleading representation - s 53 & 55 TPA - Financial penalty for breaching TPA - Franchising - Goods & Services (Misrepresentation) - s 53(a ), (aa) - Imitation - Inducement - s 48 - Information exchange agreement - Intention to misled - Intellectual property - s 52 TPA - Marketing & Advertising - Mergers - s 50 TP A - Misleading & deceptive conduct in business - S 52 TPA - Misuse of market power - s 46 TPA - Notifications - Overall impressions - Part V breaching & penalty - Penalty - Penalty - breach of Part V - Predatory Pricing - Price fixing agreement - s 45 TP A - Pricing of goods - Puffery - Reasonable man - Relevant Market - Resale price maintenance - s 48 TP A - Slack Filling - s 55 TPA - Strategic Alliance - Substantial lessening of competition prohibitions - Substantial market power (Definition) - Third line forcing - s 47 TPA - Trade Associations - Unconscionable conduct - s 51 AA, AB, AC TPA - Withholding Supplies - s 48

7.39 6.4 6.11M 6.54T 6.49T 6.11B 6.30B 6.48 Ans 6.9 6.18 Ans 6.3 6.50M Ans 6.9 6.59 6.14 6.45M Ans 6.8M 6.14M 6.55B Ans 6.10M 6.28T Ans 6.5 6.52T 6.4M 6.30M 6.53 6.50B 6.23M 6.20M 6.41B Ans 6.7 6.49 Ans 6.9 6.40B 6.37B 6.40M 6.31M Ans 6.5B 6.30B 6.47M Ans 6.9T 6.40T 6.12M 6.60M 6.35M 6.36 6.16M Ans 6.3 6.54 Ans 6.10T 6.44M Ans 6.8 6.43M 6.32 6.22M Ans 6.4 6.57B Ans 6.11 6.20M 6.11M 6.33T 6.29B 6.20B 6.57B 6.24

Triple bottom line reporting Turnbull report Types of Company

4.17M 1.12 1.4

5.5 7.11M 1.6

U Uhrig Report (Public sector) Unconscionable conduct - s 51 AB, AA, AC TP A United Kingdom - Combined Code - Corporate governance reprorts - Higgs Report (Non-Executive Director) - Inclusive Relationship - Modern Company Law Review - Principles-base approach - Smith Report (Audit Committee) United States - Corporate Collapse - Corporate reform and the regulation - Economy during 1990 - Rule Based Approach - Security Act 1933 - Wall Street Crash Unlimited liability companies Use of confidential information Utilitarianism

2.38B 6.57B 1.9 7.22 7.11M 1.9 7.11M 7.11B 7.21T 1.9 7.8M 7.18M 7.15 7.17M 7.21T 7.15B 7.15M 1.4 3.24B 5.5T

V Voluntary Disclosure Voting power

3.31M 3.19B

W Welfare Capitalism Winter Committee World Bank & International Monetary Fund (IMF) World Bank in China World Bank Survey World Business Council for Sustainable Development (WBCSD) Workable competition - Requirement

7.38M 7.28M 1.14 7.40M 7.49T 4.21T 6.8M 6.8B

7.10

Corporation Act 2001 (Directors Duties) SECTION 9 53 180 181 182 183 184 185 187 189 190 191 198A 198D 588G 588H 588J 588K 588L 588M 1317H 1317J

DESCRIPTIONS

REFERENCES

Definition of directors Affairs of body corporate Care and Diligence (Civil Obligations) Good Faith (Civil Obligations) & Proper Purpose Use of Position (Civil Obligations) Use of Information (Civil Obligations) Good Faith, Use of position, information (Criminal Offences) Interactions of sections 180- 184 Directors of wholly-owned subsidiaries (Relief to Nominee Director) Reliance on information or advice provided by others Responsibilities for actions of delegate Material personal interest - Directors' duty to disclose Powers of directors (Replaceable rule - s 135) Delegation of powers Directors' duty to prevent insolvent trading Defences to breach of s 588G On application for civil penalty orders, court may order compensation Criminal court may order compensation Enforcement of order under s 588J or 588K Recovery of compensation for loss resulting from insolvent trading Compensation order - Corporation / scheme civil penalty provisions Who may apply for a declaration or order

S.G.16 S.G.17 S.G.18 S.G.19 S.G.19 S.G.20 S.G.20 S.G.21 S.G.21 S.G.22 S.G.22 S.G.23 S.G.24 S.G.25 S.G.25 S.G.27 S.G.28 S.G.28 S.G.29 S.G.29 S.G.30 S.G.30

DIRECTORS DUTIES REF Directors owed both Common Law & Statutory duties to the company

A) To whom is the duty owed? Normally to the company, but in some occassions…… To shareholders? Brunninghausen v Glavanics (1999) To creditors? Normally in the case of insolvency -> Darvall V North Sydney Brick & Tile Co. Ltd (1989) To Employees? Normally Not! -> Parke v Daily News (1962)

3.15B 3.16T 3.16M 3.17T

B) Common Law Duties 1) Duty to act bona fide in the best interest of the company - Subjective test - Case: Smith V Fawcett Ltd (1942)

3.14

2) Duty to exercise powers for proper purposes - Objective test - Case: Whitehouse V Carlton Hotel Pty ltd (1987)

3.17

3) Duty to retain discretionary power - Directors delegates to another, a power which the director should themselves exercised. If the delegates cause the company to suffer loss, the director may be liable for such loss - Case: Gould v Mt Oxide Mines Ltd (1916) - s 18 9: Relian ce -> Directors are entitled to rely on employee, professional expert or delegates -> If the reliance is made in good faith & after making independent assessment of the information or advice, then the reliance is to be taken to be reasonable - s 19 0: Place the director in the position that they are responsible for the exercise of power by the delegates as if the director had exercised the power themselves (Exceptions to s 190) - s 19 8c : Permit Directors to confer on a managing director any of the powers that the director may exercise, with the power to revoke or vary the delegation

3.15

3.18M 3.19B

3.20T

3.21T

3.20B 3.20B 3.20B

4) Duty to avoid conflict of interest - Arise where a director has a personal interest in a contract to which the company is also a party (Not necessary that there has to be a fraud or dishonesty or loss to the company for there to be a breach of this duty) - The only defences for the director is the company is fully informed and consented to the transaction - Indirect interest could also be caught (Victors Ltd v Linguard (1927)) - Material personal interest - Definition (Aberdeen Ry v Blaikie) - Bribes & Undisclosed Benefits - Competing with the company - Misuse of company funds

3.21M

5) Duty not to make personal or secret profit as a position of directors

3.23T

3.21M

3.22T 3.22M 3.23M 3.25B 3.23B

- Case : Regal Hastings Ltd v Gulliver (1942) - Bribes & Undisclosed Benefits - Competing with the company - Disclosure of remuneration - s 2 02 A - Improper use of position in the company - Misuse of company funds - Taking up corporate opportunites - Payment to Directors - s 20 2A - Use of confidential information

3.23M 3.25B 3.26 3.25 3.23B 3.24 3.26T 3.24B

6) Duty to use care, skill & diligence -Case : City Equitable fire Insurance Ltd (1925): Established 3 basic requirements for directors

3.27 3.27M

7) Duty to prevent insolvent trading

3.28

C) Statutory Duties 1) Statutory Duty of good faith - s 181 (1)(a) - Civil penalty provision - s 18 4 (Criminal provision) applies where the breach was intentionally dishonest or reckless

3.17 3.17M

2) Statutory Duty for a proper purpose - s 181 (1) (b) - Civil penalty provision - s 184 (Criminal provision) applies where the breach was intentionally dishonest or reckless

3.18B 3.18B

- Creating or Destroying majority voting power - Takeover (Advance Bank Australia Ltf v FAI Insurances Ltd (1987))

3.19B 3.19T

- Ratification at General Meeting of director's wrongdoing is allowed (NOT applied if director is acting fradulently or dishonestly)

3.19M 3.19M

3) S tatu tory Du ty to d is clo se material p ers onal interest to directors - s 1 91 (1) (Exceptions to s 191(1) - s 19 1 (2))

oth er

3.18B

3.22M 3.22M

4) Statutory Duty to use of information - s 183 - Case: McNamara v Flavel (1988) - s 184 (Criminal provision) applies where the breach was intentionally dishonest or reckless - s 13 17 G or s 2 06 c (Disqualification) may be applies if breach of s 183 occurred

3.24B 3.25T

5) Statutory Duty not to improper use of position in the company - s 182 - s 13 17 G or s 2 06 c (Disqualification) may be applied if breach of s 183 occurred

3.25M 3.25M

6) Related Party Transations (s 228)

3.26B

7) Statutory Duty to exercise power with care & diligence - s 180 - Objective Reasonable person test - s 1317G or s 206c (Disqualification) may be applied if breach of s 183 occurred

3.25T

3.28

3.35

- s 1 80 (2 ): Business Judgement Rule

3.35B

8) Statutory to prevent insolvent trading - s 588G - s 95A: Definition of Insolvency - s 588H: Defences for breach in s 588G Case: Tourprint International Pty LTd v Bott (1999) - Reasonable ground that the company is solvent when trading - Reasonable ground that the person who was competent and reliable to supply the information - Good reason that the person did not take part in the mgt of the company - Take all reasonable steps to prevent the company from incurring the debt

3.28B 3.28B 3.29 3.30