ASIC v Hellicar- Corporate Social Responsiveness

In the year 2012 an appeal was filed against the company that each director of the company is involved in misleading of the shareholders of the company and also the stakeholders by non performance and breach of the duties & responsibilities of the director. Appeal included that the Directors were liable for the funding of the Asbestos disease liability to which they were short of one billion dollars. The directors also did not follow the board minutes and also they did not formally record the whole meeting . The directors did not inform about the meeting that was suppose to take place and later they were misleading the facts. The directors were asked by the shareholders and other persons to inform and give the true details of the meeting and convey all the details required to be known by them. The directors by misusing their position, did not disclose any certain details. They started misleading the shareholders and manipulating facts.

Under the Corporation Act 2001 of Australia, there are majorly four responsibilities of the directors mentioned. Firstly, it is the duty of the directors to act with due care and diligence. Secondly, directors must always act in good faith of the company and in best interest of the company. Thirdly, it the main duty of the directors to not misuse the position as directors. Lastly and fourthly, they must not use the information of the company in an improper way.

Apart from the above duties of a director, there are many more duties and responsibilities for which directors are obligatory under the Companies Act 2006. The directors must always promote the success of the company. If there are many directors in one single company then they must avoid the conflicts which may arise while making decisions or any management related activities. They must not indulge in any activity which involves any benefits from third party. There are many duties to which a director of a company is obliged with. The directors must perform his duties in accordance to the laws and the duties which are specifically mentioned in the article of association i.e. AOA of the company. Every company although have difference in there AOA but most of the duties and responsibilities are almost same in every organisation.

Section. 180 of the corporation Act 2001

Section. 180 is all about the duties and responsibilities of a director in a company.

This sections provides with the civil obligations of the directors or other authorities of the company. Under this section it is the duty of directors to exercise care and diligence. The directors must discharge their duties reasonable. The directors of the company must act in good faith and for the best interest of the company. The directors must always make decisions which is for the best interest of the company and the judgements must not affect the operations of the business activities in a corporation. The director should also make sure that he should always work for the company and shall not go behind the company and make deals with other third party. The director must comply with his duties specifically mentioned in the AOA of the company.

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Legal Issues

• Whether there was breach of duties by the directors?
• Whether there was misleading advertisement of information in the case?

Decision

It was held by the supreme court that all the directors were involved in the breach towards the company as they mislead the shareholders and stakeholder that they had created a trust for funding Asbestos related disease. They also made people believe that the funds that sufficient balance to meet all the future and present claims for the same. Later on finding that they were short of amount they actually claimed. The court imposed fine along with an order to disqualify all the directors for breach under section. 180(1) of the Act.

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Appeals were made by the parties in many other courts and at last the final appeal was heard by the high court. High court is the Supreme and the highest court in Australia.

The High court of Australia after considering all the facts and information related to the case analysed that the directors while performing their duties ignored the company's benefit. Court ordered directors to recheck all the slips and errors made by them.

It was held by the High Court that the directors failed to contravene with their obligations towards the company under section. 180 of the corporation Act 2001.