Company Law Select Vaccines Limited

Question: Discuss about theCompany Law for Select Vaccines Limited. Answer: Issues and Facts The issues refer here in this case of ASIC V SOUST is that Mr. Martin Soust (defendant), was the Chief Executive Officer as well as the Managing director of Select Vaccines Limited ( Select Vaccines). Mr.Martin Soust was the active member of the Board of directors of the company. The said company was a listed company as the fully paid ordinary shares of the company are listed with the ASX (Australian Securities Exchange Limited). On the other hand, Mr. Soust was also acting as a director of a company named as Martin Soust Co Pty Ltd. This company was also known as Martin Soust Co. The said company was the trustee of a trust called Soust Trust, and the beneficiaries were the wife and children of Mr. Soust. There was an executive service agreement between the Select Vaccines, Martin Soust co and the defendant where Martin Soust co. was in the position to receive bonus on short term performance(Austin et al., 2012). On 31st December 2007, Mr. Soust was actively in the position of the Managing Director and CEO of the Select Vaccines. At around 1:45 pm of the same day, he gave a call to Bell Potter and had a conversation with Ms Midolo. In the conversation, he asked Ms Midolo to purchase shares of Select Vaccines worth $2,550 on behalf of his mother Mrs Bohumira Soust. The rate of the shares is as follows: 50,000 shares @ 2.4 cents 18,166 shares @ 2.5 cents 35,834 shares @ 2.5 cents. This action of Mr. Soust made the value of the shares of the Select Vaccines to fall down causing a loss to the company. He did not reveal any of his transactions to the other fellow directors. By doing this act, he has committed an offence under section 1317E, 1317G, 1041A, 1041B, 206C (1), 181 (1), 182 (2) of the corporation Act. Relevant Laws and Principles In this case, Mr. Soust has contravened certain provisions of the Corporation Act. He has contravened section 181 (1) where it has been stated that the director of a company or any other officer of the company should execute their duties and powers with an honest intention and for an appropriate purpose which will be proved as benefit for the company. Section 182(2) contains certain civil obligations. It states that the director or the officer of the company should not utilize their position in order to get profit either for himself or for any other person and which should not create any loss for the company. In section 206C (1), it has been stated that the court may disqualify an officer from managing a company if the application given by the ASIC contains a declaration that the person is guilty of contravening the section 1317E. The court may do so if it is satisfied by the proofs provided. In order to get satisfied, the court will look into the internal management of the company. The section 1041A states that any person should not involve in any activities or more than one transaction at a time which will create an artificial price in the market. This offence has a civil penalty which is mentioned in section 1317E. Section 1041B states that, a person should not get into any such act that will create a false price on the trading of financial product which will mislead the market. This is a criminal offence(CorporationAct, 2016). Arguments of the Parties and Analysis It has been found in the case that the defendant has confessed that he was involved in the purchasing of the shares of Select Vaccines but he did not purchase it on his name or does not have any information of it. He has just done the work according to the instruction given by his mother. But later it was found in his laptop that there was a document which was containing some question and answers that were relevant to the facts of the case. These documents were handed over to the ASIC and have been investigated by the same. The ASIC has requested for a declaration on the basis of the case that he has contravened Sec.181(1) 182(2) by not providing any information to the other directors. He has contravened sec.1041A 1041B by manipulating the trading market, should be disqualified from his position and should pay penalty for each of this offence prescribed in sec.1317G(Austlii, 2001). The defendant put up his case by denying the fact that at the time of the transaction he was the director of the company and has done the transaction on his personal power to get into the transaction. He said that the transaction was done on behalf of his mother and he doesnt have any personal interest in those shares. The decision of purchasing shares of Select Vaccines has been made by his mother without having any conversation with him. He also denied the fact that he was present in the meeting on 19th March 2008 for the making of decision by the Remuneration Committee. But he did not provided any evidence in support of his saying(Austlii, 2011). The analysis can be made that the defendant is guilty as the ASIC has provided its evidence that the defendant has made a call to Bell Potter in order to purchase shares but there is no proof that the shares was purchased on behalf of his mother and there is no proof that the defendant has done the act as per the instruction given by someone else. Conclusion From the whole discussion of the case, it is clear that Mr. Soust being an active member of the company is involved in trading of the shares of Select Vaccines leading to his own indirect benefit. He should have let the other members to know about whatever transaction he was into. But he did not do so rather he dishonestly purchased the shares of the said company in the name of his mother of which there is no proof. But the wrong intention was proved by the QA.doc that he was misusing his position for his own intention which has caused loss to the company. Hence Mr. Martin Soust is guilty of contravening the section 181(1), 182(2) 206C (1), 1041A B, 1317E 1317G of the Corporation Act. References: Austin, R., Standen, M. Reynolds, C., 2012. The High Court decides theJames Hardie case. [Online] Available at: https://www.minterellison.com/files/Uploads/Documents/Publications/Alerts/NA_20120509_JamesHardieDecision.pdf [Accessed 22 September 2016]. Austlii, 2001. Corporations Act 2001 - SECT 45A. [Online] Available at: https://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s45a.html [Accessed 09 September 2016]. Austlii, 2011. Commonwealth Consolidated Acts. [Online] Available at: https://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s181.html [Accessed 22 September 2016]. CorporationAct, 2016. Corporations Act2001 - NOTES. [Online] Available at: https://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/notes.html [Accessed 17 September 2016].