ACC220
Law of Business Associations
Semester Two, 2015
ASSIGNMENT
Word Count: 1500 words
Due Date: On or Before midnight (AEST) Thursday 17 September 2015
Coordinator: Sharn Hobill
Total Marks: 30%
Reference Guide: Australian Guide to Legal Citation
PLEASE USE THE FOLLOWING:
- TIMES NEW ROMAN
- FONT SIZE 12
- DOUBLE LINE SPACING
- FOOTNOTES
- PAGE NUMBERS
YOUR ASSIGNMENT MUST BE SUBMITED VIA SAFEASSIGN BY THE DUE DATE.
Late penalties will apply. See the course outline.
You are allowed 10% leeway either side of the word count. Your word count does not include footnotes. However, any substantive information that is included in your footnotes will not attract marks. You need to ensure you include all substantive information in the body of your assignment and reserve the footnotes for referencing only.
Assignment Question:
MRS SCRUGIE AND THE AUSTRALIAN BANK LIMITED
Mrs Scrugie is employed by Australia Bank Limited which is a public company limited by shares (ABLtd). Its ordinary shares are listed for quotation on the Australian Securities Exchange (ASX). Mrs Scrugie’s position description is that of Chief Financial Officer and she heads up a division of ten staff who are responsible for maintaining and reporting on the finances of the company to the board. The board heavily relies upon Mrs Scrugie’s reports to plan their investment strategies.
With your background in accounting, you have recently been appointed as one of Mrs Scrugie’s employees. Since your appointment a couple of months ago, office changes and renovations have been taking place. In the interim, with limited offices available, Mrs Scrugie allowed you to use her office while she was not there.
One day, Mrs Scrugie didn’t log off her computer and all her personal emails popped up. Out of curiosity you read them and learnt Mrs Scrugie had elicited a relationship with one of the IT support staff and had learnt how to gain access to some of the customers accounts. Upon entering the accounts she had automatically changed the customers preference to have their bank funds changed from “low risk” investment to the “highest risk” investment. Overriding investment preferences is in contravention of the bank’s personal information security policy. Customers are usually required to complete a form nominating their investment risk choice and this is returned with certified copies of identification documents.
Mrs Scrugie is a highly organised person and being the Chief Financial Officer has meticulous records. On the day you were reading her personal emails, you also opened her second draw to find a pen. Instead, you found a ledger detailing the names of 108 customers whose investment funds had been changed from “low risk” to the “highest risk” category. The funds transferred equated to close to 5 million dollars. The funds were being deposited into an account simply entitled “Eco”.
Upon reading the figure of 5 million dollars you remembered that last time you audited the investment schemes you had noticed something very unusual. There was a deficit in the figures from last month to this month. In that some of the customers’ investment funds were actually rapidly decreasing instead of increasing. You returned to your notes and looked up the names of the customers. You were not surprised to see that it was the same 108 customers which were listed in Mrs Scrugie’s ledger and in total they had lost 2.5 million dollars from their investments with a company called “Eco Shares”.
You perform some research on the ASIC website to see if you can locate a company called “Eco Shares”. Your research reveals that Eco Shares is a new proprietary company only registered a few months ago with 90% of the shares belonging to a Mrs Bee Scrugie and 10% of the shares belonging to a Mr Don Scrugie. You then search the public electoral roll and births, deaths and marriages registers and find that Mrs Bee Scrugie is married to Mr Don Scrugie.
Upon learning this information, you print out Mrs Scrugie’s personal emails, photocopy the ledger, print out your audit documents and immediately book a confidential appointment to speak with the Chief Executive Officer of ABLtd.
1. Advise as to what company law mechanisms are in place to protect the ABLtd in this situation and what General and Statutory Duties Mrs Scrugie has breached in relation to her conduct at the ABLtd. (1000 words)
2. Discuss what remedies may be available to the ABLtd. In relation to the remedies highlight which ones will be pursued by ASIC and which ones will be pursued by ABLtd. (250 words)
3. Advise what is likely to happen with the company “Eco Shares”. (250 words)
LIMIT YOUR ANSWER TO THE RELEVANT CORPORATIONS LAW (eg: The Corporations Act 2001 and General Law). THERE IS NO NEED TO DISCUSS CRIMINAL LAW IN DETAIL. YOU CAN BRIEFLY DISCUSS CRIMINAL PENALTIES BUT ONLY IN THE CONTEXT OF HOW THEY RELATE TO THE CORPORATIONS LAW.