1. 1.8k


    The most common category of fraud offence dealt with in both courts was obtain benefit by deception. This charge is used when a person is alleged to have obtained a financial or other gain for themselves or a third party, knowingly, by dishonest means.


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    Should any of the directors be seeking legal advice now?

    Think hard...

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    Duty of good faith
    Directors must exercise their powers and discharge their duties in good faith in the best interests of the company as a whole. At a minimum, this duty requires directors to act in what they honestly believe
    to be the company’s best interests. In addition, a director’s conduct may be assessed objectively by reference to what a reasonable director would consider to be the company’s best interests.

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    Duty to act for a proper purpose
    Directors must exercise their powers and discharge their duties for a proper purpose:
    The company’s constitution may specify the proper purposes of a power, otherwise the proper purposes must be determined based on the particular circumstances and the usual function of such a power. For example, one proper purpose of the power to issue shares is to raise capital. By contrast, issuing shares for the substantial purpose of diluting an existing shareholder’s voting power is likely to be an improper exercise of the power.
    It is not sufficient that a director honestly believes their actions are for a proper purpose if a court considers that purpose to be improper.
    A director may have exercised a power for both improper and proper purposes. If the director would not have exercised the power “but for” an improper purpose, they may be found to have breached this duty.

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    How are we doing so far CTP directors?

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    The key duties of directors are to:
    ■ act in good faith in the best interests of the company;
    ■ exercise their powers for the purposes for which they were conferred;
    ■ act with reasonable care and diligence;
    ■ avoid conflicts of interest; and
    ■ not improperly use company information or their position to gain an advantage for themselves or someone else or to cause detriment to the company.

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    Duty of care and diligence:

    A director must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they:
    ■ were a director of a company in the same circumstances; and
    ■ occupied the same office and had the same responsibilities within the company as the director.
    The conduct required to satisfy this duty depends on the company’s circumstances and the particular director’s position and responsibilities. Executive directors, and other directors with special skills or experience, are held to a higher standard. For example, a finance director who is insufficiently diligent in relation to financial matters may breach this duty even though identical conduct by a non‐executive director may not constitute a breach. Similarly, any special responsibilities held by the chair of the board may affect the scope of their duty of care.
    However, a director’s conduct will not necessarily be excused due to a lack of skills or experience. All directors are required to meet a minimum objective standard. For example, all directors are expected
    to take reasonable steps to be in a position to guide and monitor the management of the company. This is likely to mean that directors should not be absent from board meetings without good reason. All directors must have sufficient financial literacy at least to understand the company’s financial position and any financial statements the company is required to prepare.
    Business judgment rule
    A director who makes a “business judgment” is taken to satisfy their duty of care and diligence in respect of the judgment if they:
    ■ make the judgment in good faith for a proper purpose;
    ■ do not have a material personal interest in the subject matter of the judgment;
    ■ inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and
    ■ rationally believe that the judgment is in the best interests of the company.
    A “business judgment” is any decision to take or not take action with respect to a matter relevant to the business operations of the company. For example, decisions to enter into transactions and matters of planning and forecasting are likely to constitute “business judgments”, but not the mere performance of directors’ oversight responsibilities.
    To benefit from the rule, a director must make a conscious decision, even if it is a decision not to take action. A director who simply fails to turn their mind to a matter has not made a business judgment and is not protected by the rule.
    This statutory business judgment rule provides a defence in relation to the duty of care and diligence only. It does not apply in relation to a director’s other duties (although a court may still be reluctant
    to review a director’s business judgments). The rule also does not apply to other potential liabilities of directors, including liability for misstatement in a prospectus or takeover document, insolvent trading or misleading or deceptive conduct.

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    Anybody sweating yet?

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    Reliance on information or advice:

    In certain circumstances, a director is entitled to rely on information or professional or expert advice given or prepared by:
    ■ an employee of the company whom the director reasonably believes to be reliable and competent in relation to the relevant matters;
    ■ a professional adviser or expert if the director reasonably believes that the relevant matters are within that person’s professional or expert competence;
    ■ another director or officer in relation to matters within that person’s authority; or
    ■ a committee of directors on which the director did not serve in relation to matters within the
    committee’s authority.
    A director’s reliance on such information or advice is presumed to be reasonable if the reliance was made in good faith and after the director made an independent assessment of the information or advice (having regard to the director’s knowledge of the company and the complexity of the structure and operations of the company).
    That is, directors must bring an independent mind to bear and must not simply accept the views of others who may be more concerned in the administration of the company. Directors also should not automatically expect to be kept properly informed by senior management or others of all important matters relating to the company.

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    Financial benefits to related parties of public companies (interesting about the children of directors):

    For a public company, or an entity controlled by a public company, to give a financial benefit to a related party of the public company:
    ■ the public company or controlled entity must obtain the approval of the public company’s members and give the benefit within 15 months after approval; or
    ■ the giving of the benefit must fall within an exception under the Corporations Act (outlined below). “Giving a financial benefit” is to be interpreted broadly and includes arrangements that are indirect,
    informal or involve conferring a financial advantage rather than paying money. Examples include:
    ■ providing a related party with finance or property;
    ■ buying an asset from or selling an asset to a related party;
    ■ leasing an asset from or to a related party;
    ■ supplying services to or receiving services from a related party; and
    ■ issuing securities or granting an option to a related party. “Related parties” of a public company include:
    ■ directors of the public company or an entity that controls the public company;
    ■ the spouses of those directors and the parents and children of the directors or their spouses; and
    ■ entities controlled by any of those people,
    at the relevant time, in the previous six months, or if likely in the future.
    There are several exceptions to the requirement for member approval, for example if the financial benefit is:
    ■ on arm’s length terms;
    ■ reasonable remuneration to an officer or employee of the public company or a related company;
    ■ payment of expenses incurred by such an officer or employee in performing their duties; or
    ■ no more than $5000 in a financial year.

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    Payment for loss or retirement from office:

    A company (and its associates) must not give anyone a benefit in connection with a person’s retirement or resignation from, or loss of, an office or position of employment in the company or a related company if:
    ■ the office or position is a managerial or executive office; or
    ■ the retiree has held a managerial or executive office in the company or a related company in the
    previous three years,
    unless certain shareholder approvals are obtained. If this prohibition is contravened, the provider of the benefit and, in many cases, the recipient of the benefit both commit an offence.
    Duties and liabilities of directors of Australian companies | 11
    For a listed company, a “managerial or executive office” is one held by a member of the key management personnel. For an unlisted company, “managerial or executive office” means the office of director or any other office or position held by a person who is also a director of the company or a related company.
    The prohibition does not apply to certain benefits including:
    ■ exempt benefits such as certain deferred bonuses and redundancy payments; and
    ■ benefits which are:
    – genuine payments by way of damages for breach of contract;
    – given under an agreement entered into before the person began to hold the office or position
    from which they are retiring; or
    – payments by way of pension or lump sum for past services to the company or a related company,
    provided the total value of all benefits does not exceed the retiree’s average annual base salary (pro rata if the person held the office or position for less than a year).

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    Continuous disclosure obligations:

    In addition to the periodic reporting obligations outlined above, listed companies and other disclosing entities have continuous disclosure obligations under the Corporations Act and the ASX Listing Rules (if applicable).
    A company listed on ASX must immediately notify ASX of any information concerning the company that would reasonably be expected to have a material effect on the price of its securities. Unlisted disclosing entities must similarly notify ASIC as soon as possible of materially price‐sensitive information that is not generally available (or follow ASIC’s published guidance regarding website disclosure). In both cases, there is a limited exception in relation to certain confidential information.
    A director (or any other person) who is involved in a breach of these obligations may also be liable. However, a “due diligence” defence is available if the person took all reasonable steps to ensure that the entity complied with its continuous disclosure obligations and reasonably believed that the entity was complying.
    A company listed on ASX must also disclose other specific information to ASX, such as the material terms of employment, service and consultancy agreements with directors or their related parties, and details of directors’ interests in securities of the company or a related company. If details of a director’s interests in securities are not disclosed to ASX by the company, the director is personally obliged to notify ASX and commits an offence if they fail to do so.

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    Still with us?

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    10.1 Liability for involvement in a contravention
    Where certain provisions of the Corporations Act (such as those discussed in sections 6 and 9) are contravened, a director (or any other person) who is “involved” in the contravention may also be liable. A person is involved in a contravention if they aid, abet, counsel, procure or induce the contravention, are knowingly concerned in or party to the contravention, or conspire with others to effect the contravention.
    Similarly, a director (or any other person) who aids, abets, counsels or procures the commission of any criminal offence is taken to have committed the same offence themselves.

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    Consequences of contravention:

    A director who breaches their duties or other obligations may be liable to significant consequences including:
    ■ pecuniary penalties (fines);
    ■ liability to compensate the company or others for loss suffered;
    ■ liability to account to the company for profits made by the director; and
    ■ disqualification from managing companies.
    If a director’s breach of duty constitutes an offence (which often, but not always, involves dishonesty), the director is also liable to substantial criminal penalties.
    In civil proceedings only, the court has discretion to excuse a director from certain liabilities if the director acted honestly and ought fairly to be excused for a contravention.

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    I think there should be a number of directors who should be concerned...if not...you will a bit later

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    Where does the act of wanting to sell out share holders via an SoA, and retain one's employment with the one wanting to Take over sit in the scheme of things ?

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    Yes big mistake by Mr No Comment’s and his previous effective words....the Market doesn’t get it. Better to privatize the company....
    That’s what he set out to do and he organized the low valuation and tried to sell us the story we have no choice but to sell out with a bunch of lies why including gas composition at Mereenie was not good for sale purposes etc etc. We only knew he was to continue on working with the TO company and likely got a deal with them we were not made aware of. Traitor...organised to steal company away from shareholders cheap. Son of a Bit’h!
    Not to forget the Board voted to support that....

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    Then after TO failed Mr No Comment indicated how rosy everything looked and company has great assets which contradicted his deceptive sales pitch to us....
    You have to wonder why Chairman just left...much infighting likely of Board not doing the right thing and he had enough and wanted out...especially that Mr No Comment ran leaving the rest of directors holding the bag (of deception) and with their necks on the chopping block as knowing or involved with certain directors who breached fiduciary duties ...

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