1 AYB230 CORPORATIONS LAW ASSIGNMENT SEMESTER 2, 2018 QUEENSLAND UNIVERSITY OF TECHNOLOGY QUT Business School School of Accountancy AYB230 Corporations Law SEMESTER 2, 2018 ASSESSMENT 2: Problem solving assignment (Weighting total: 20%) Due: Thursday 11 October 2018, 11:59PM Submission: Turnitin via Blackboard Type: Individual Length: 1000 words This assessment item assesses the following unit learning AOL goals. Higher Order Thinking (HO) 2.2 Exercise independent judgement and initiative in adapting and applying knowledge and skills for effective planning, problem solving and decision making in diverse contexts. Social, Ethical and Global Understanding (SE) 5.1 Demonstrate and apply knowledge of ethical and legal principles and practices in analysing and responding to business issues Assignment Overview This assessment requires each student to submit a written answer to a problem style question. The assignment builds on the skills learned in tutorials. The assignment question aligns with QUT’s expectation that you are provided with ‘authentic’ assessment experiences. It provides an opportunity for feedback on your problem solving ability prior to the final exam. • Use the ILAC method. See the criteria sheet as to how the marks (20) are allocated. • You are expected to do additional, independent research beyond the textbook and lecture material in order to complete the assignment. • You must cite legislation and case law (as appropriate) to support statements of law and your application to the facts. Present your argument / application in a clear, concise and logical manner. Make sure that you reach a conclusion. Please refer to the assessment criteria sheet for further information. • The task requires you to outline any further information that you need from the clients to draw a conclusion so there shouldn’t be the need to ask for clarification of the facts.  For assistance with writing and referencing, see the QUT library’s cite|write site. 2 AYB230 CORPORATIONS LAW ASSIGNMENT SEMESTER 2, 2018 Task Congratulations, you have started your new graduate position at Directing Success Pty Ltd, a small consulting firm providing both practical and legal advice to company directors. You were recruited due to your highly developed communication skills, your interest in insolvency, and your excellent technical knowledge in accounting and business law. You have received the attached file memo from your supervisor [me], requiring you to write a memorandum outlining everything I need to know to prepare for my next meeting with the clients. At this meeting I will be providing preliminary advice to the clients on the questions asked and gathering further information from them to finalise our opinion. Keep your memorandum to 1,000 words maximum. Your audience is a senior director with legal and accounting qualifications, so include sources of law and referencing. Finally, s 588GA is a new area of law. Prepare one powerpoint slide outlining the key elements of the defence which can be shown to the clients to help them understand the provision. Background reading Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill 2017 explanatory memorandum, available at http://www.austlii.edu.au/cgi-bin/viewdoc/au/legis/cth/bill_em/tla2017ein2b2017537/memo_0.html 3 AYB230 CORPORATIONS LAW ASSIGNMENT SEMESTER 2, 2018 FILE MEMO To: [you] From: Nathan Lindemann Client: Bill, Amy and Paul Date: 1 August 2018 Deadline: Thursday 11 October 2018 at 11:59PM Sensitivity: Confidential What is required: Please write me a memo which addresses the following: • Outlines preliminary advice for our clients on the questions listed below. • Identifies any further information or clarification that I should obtain from the clients to finalise our advice. Background: Bill, Amy and Paul are the directors of Mind Your Mine Pty Ltd (“MYMâ€�) which owns a number of upmarket retreats in Australia. The retreats typically charge $2,000+ per person, per night. Business was going well, and the company was looking to expand. Bill’s niece owned vacant land near Mt Tambourine, Queensland. The niece was having financial difficulties after a marriage breakdown and was struggling to support her 5 children. Bill wanted to help his niece and thought her land near Mt Tambourine would be a good expansion opportunity for MYM so he approached the board with the suggestion they purchase her land. Bill did not disclose that the vendor was his niece. Although Bill hadn’t done any due diligence his informed the board he had researched the land and believed it was perfect for their next retreat. Bill knew that $2 million would pay off all his niece’s debts and be enough money for her educate and care for the children so he suggested MYM pay $2 million for the land. Bill didn’t research the market where the land was located but $2 million was the amount paid for the land of the last site the company acquired. As Bill was the oldest and most experienced director. Amy and Paul looked up to him and trusted him implicitly. They both voted in favour of the purchase and in April 2018 MYM signed a contract to purchase the land. Bill instructed the lawyer engaged to transfer the property on behalf of MYM not to do any of the usual searches. Bill assumed his niece would have informed him of any significant matters and not doing the searches saved MYM $550 in search fees. In June 2018, after the land purchase was complete, MYM engaged Building Works Pty Ltd to draw up architectural plans, conduct soil testing, and get building plans certified. Building Works Pty Ltd has issued MYM with an invoice for $45,000 for the work completed. 4 AYB230 CORPORATIONS LAW ASSIGNMENT SEMESTER 2, 2018 On 1 July 2018 MYM received a letter from the Queensland Government about 600m2 of the land which it was resuming to put in a major highway. Although the remaining land would be large enough for the development planned by MYM, a highway in that location makes the land unsuitable for a upmarket retreat business. Had the Queensland Transport and Main Roads search been completed MYM would have been aware that a portion of land was being resumed by the government and could have terminated the purchase contract. Realising the land could not be used MYM as intended, Amy immediately appointed a real estate agent (“Homes Pty Ltdâ€�) to sell the land. The agent informed Amy that due to the freeway the land would probably sell for around $800,000. Fearing suppliers might stop trading with the company when they hear about the amount of money the company would lose on the land transaction Amy quickly ordered extra product from all suppliers and 6 massage beds. Amy believed that if the current facilities increased their services the Company may be able to trade out of its financial difficulties. On 30 July 2018 a liquidator was appointed. The liquidator cancelled the contract with Homes Pty Ltd and appointed a company with more sales experience in the area. We have been advised of the following additional information: • The shareholders are seeking compensation for breach of directors’ duties. • Building Works Pty Ltd’s invoice has not been paid. • Massage Plus Pty Ltd, the supplier of the massage beds, is currently owed $30,000 for the 6 massage beds ordered by the company. • Homes Pty Ltd is owed $3,000 in marking expenses for the land. Advice requested: 1. In relation to the claims made by shareholders, have any of the directors breached the directors’ duties under s 180 of the Corporations Act 2001 (Cth)? In considering this, also address any potential liability the directors may face. 2. Have any of the directors breached s 588G of the Corporations Act 2001 (Cth) in relation to the transactions involving Building Works Pty Ltd, Massage Plus Pty Ltd Ltd and/or Homes Pty Ltd? 3. Would Amy have a defence under s 588GA for any action by Massage Plus Pty Ltd or Homes Pty Ltd? 5 AYB230 CORPORATIONS LAW ASSIGNMENT SEMESTER 2, 2018 Instructions Referencing You are expected to reference your work and provide a bibliography. You should use the QUT cite/write QUT Legal referencing systems. Your footnotes must be sequential and must not contain substantial material or argument (which should appear in the body of your assignment). The only content in your footnotes should be either a case name or legislative references. Footnotes are not included in the word count. Case Citations You must cite a reference (case or legislative section) as authority to any primary source legal principles. All cases cited should include the full name of the case and its citation, in the first instance it is referred to. Any case names or legislation titles should be in italics. You do not need to refer to the Corporations Act 2001 repeatedly. It will be assumed that sections mentioned are from that Act, unless otherwise indicated. The assignment is based on Australian law so only refer to the current version of the Australian Corporations Act 2001. Sections Do not ‘waste’ your words by writing out sections in full – your audience will expect you to paraphrase. If you feel it is necessary to provide ‘word for word’ quotes or material, put it in an appendix – this is what you would do in practice. Note that appendices are not marked. Formatting You must present your problem solving task is a professional format – here you are asked for a memorandum of advice so you will need to give some thought as to what that would look like. A professional format includes submitting a document in an easily readable font with appropriate margins and headings. For the purposes of assessment, include a title page with your name and student number, word count, and a descriptive title for your assignment. Insert page numbers. I suggest the following format for your memorandum: File Number: xxx To: Nathan Lindemann From: [your name] Date: Re: [include short statement of what the matter is about] Although a memorandum will often include a summary of facts at the start this is not necessary for your assessment task and no marks will be awarded for this. Your memo should include headings to help guide the reader through the issues. Style Use plain English, as this will help you to be concise. The use of colloquial expressions and jargon is inappropriate. The use of ‘SMS speak’ (for example, the letter ‘u’ instead of ‘you’) is particularly inappropriate for formal business communication – use correct spelling and grammar. The use of tables, diagrams etc to communicate your answer is permitted, but not required. Submit – upload through Blackboard You must upload your answer to Turnitin via the AYB230 Blackboard site by the due date. Note QUT’s policy on late assignments and extensions: late assignments are not accepted and if not submitted by the due date and time, the student will be awarded a mark of zero. 6 AYB230 CORPORATIONS LAW ASSIGNMENT SEMESTER 2, 2018 Please make sure that the document that you upload to Turnitin includes both your name and student number on the title page. IT IS YOUR RESPONSIBILTY TO CONFIRM THAT YOUR ASSIGNMENT HAS BEEN UPLOADED SUCCESSFULLY. AFTER YOU SUBMIT YOUR ASSIGNMENT YOU SHOULD CONFIRM THAT IT CAN BE READ. 7 AYB230 CORPORATIONS LAW ASSIGNMENT SEMESTER 2, 2018 Tips & Frequently Asked Questions 1. What is included in the word limit and is it plus 10%? In this subject we are allowing a general tolerance up to 10% for assessment. The word count does not include any figures, tables, footnotes, cover page, appendices or reference list. (Note you cannot have any argument in the footnotes or appendices. The only material in the footnotes should be references). 2. Is the 1 x PowerPoint slide included in the word count? No. The slide contains the key messages, which should be summarised from the content from your answer, so no need to count twice. 3. What makes a good PowerPoint slide? Visual communication. You may have noticed that people in business do not use ppt the way we do in universities. Students (seem to) expect ppt to contain lots of notes and content and do not want colour or images (probably because these do not tend to print well). People in business expect the opposite – key messages, less words, visually stimulating and memorable. People in business always identify themselves, their organisation -> branding. You will be marked on the business standard of presentation. See http://www.garrreynolds.com/preso-tips/design/ (I suggest that you do what I say, not what I do). 4. How do I cite the law? If you are referring to a section in the Corporations Act 2001 you only need to write the section number. If you are referring to case law you should use the case name and the legal principle the case stands for. For example, the law section in your assignment may look like the following: Law • s 140 – Statutory contract between member and company. • A v B [1932] 2 AC 1938 – A company is a separate legal entity. 5. Can I use dot points in my assignment? The assignment is required to be presented in a professional format. It is up to you what you consider to be a professional format. This may include dot points if this communicates to the reader in a clear and concise manner. 6. How do I write the issue? When you are writing the issue, it should be reasonably general but helpful if party specific. Simply writing out the question is not the same as identifying the issue. NO MARKS WILL BE AWARDED IF YOU COPY THE QUESTION FROM THE ASSIGNMENT AS THE ISSUE. • The following is not a good issue ‘Has director breached a director duty?’ • The following is a good issue ‘Has Thomas, a director, breached his duty to prevent the company from engaging in insolvent trading?’