The Case of Australian Securities and Investment Commission Essay

The Case of Australian Securities and Investment Commission - Essay Example The issues in the cases about Paul, Kim, and Karen in the texts involve the following scenarios; Paul suggested that Properties One Pty Ltd (PO) should be the consultants for their company SIL to investigate the most appropriate place for a new power plant in Toowoomba region. Whilst doing this Paul did not inform the other directors that his wife was a director and a major shareholder at PO. Paul also hired the Security One Pty Ltd (SO) on the basis that it had a nice website instead of doing a thorough background check on the company to find out if it was a registered company, the management and even the track record of the company. The other issue is that Kim informed Judy the sister-in-law about SIL proposal and she went ahead to buy shares at PO. Karen’s issue is that she entered into a contract with Conveyers Australia Ltd after she was informed by the Chief Financial Officer that the prices of coal would go up by 25% because of the cold weather but she ignored as she on ly saw it as a short-term issue and used it to benefit herself. According to the Corporations Act (2001) of ASIC, directors are officers of a corporation and are supposed to oblige to the duties they are entitled to in section 9 CA. â€Å"Section 182 states that a director must not improperly use their position to gain an advantage for themselves or someone else, or cause detriment to the corporation.† Paul broke this law by suggesting the PO Company be used by SIL to promote the company of which his wife is a major shareholder and a director. Additionally, Paul breached section 180(1) which stated that â€Å"directors must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would in that position.† Paul used his power to hire the security firm that was not registered and hired the firm based on the fact it had an attractive website, therefore, leading to theft in the company. Kim and Karen improperly used their powers in order to make a selfish gain.