ACC204 Corporations Law Assignment 3T 2015 Due: 5th February 2016 (5 pm) Length: 1500 words +/--‐ 10% Note the following when answering the assignment question 1. Use the IRAC method to answer this question. A good answer will (a) Identify the issue/s in the question by discussing them in order of importance (b) Be structured in a clear and logical manner that it is easy to read and understand. (c) Cite relevant authority to support your arguments (d) Present good arguments that demonstrate clear understanding of the legal principles raised in the questions 2. It is your responsibility to be familiar with Kaplan’s policy on Plagiarism Referencing – acknowledging source of research materials Student misconduct Turnitin - similarity QUESTION (20 MARKS) Flyway Pty Ltd is a small private small airline company operating charted flights for small groups of up to 12 people between Adelaide and Mount Gambier. Peter, Paul John and Joseph are Directors of Flyaway. Recently one of their charted flights disappeared without a trace during flight. Two months later another flight was shot down by a terrorist group. These two incidents had a major impact on Flyaway’s profitability. Business was on a rapid decline and if things didn’t improve Flyaway was going into liquidation. Flyaway decides to repackage its image and expand its business to a wider market in an effort to rescue the company. To do this Flyaway borrows $10 million from Citibank. 8 months later Flyaway goes into liquidation as it was unable to pay its bills. About this time a new high--‐speed train company, Speed Bullet Pty Ltd, had started operations in Adelaide covering the very same routes that Flyaway was doing and was also offering more routes and destinations. This new train service which cuts down train journey times by nearly half the usual time was proving to be very popular and was significantly cheaper than flying. This had a major impact on Flyaway’s business. Paul was not present at the meeting when the decision to expand was made as he was in hospital recovering from a serious accident. Peter, as was his usual practice, had not attended the meeting but signed the required documentation for obtaining the loan. It was later discovered that John was approached by Speed Bullet Pty Ltd when the company was being formed and was now a significant shareholder of Speed Bullet. The rest of the directors of Flyaway were unaware of this. In the meantime, Mary, a Flyaway shareholder, who is unhappy with Flyaway’s expansion decision convinces a few other shareholders and calls for a meeting and a resolution is passed disapproving the Citibank loan and the expansion plans. Advise the directors of Flyaway if they may have breached any of their directors’ duties and if they have to follow the resolution passed at the shareholders’ meeting.
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