corporations law

Assignment Topic:
One of the main ways in which the ‘veil of incorporation’ can be lifted is when directors breach their duties. This essay question is set around the duty to prevent insolvent trading. You will need to have read the chapter in your prescribed text that deals with this duty and have then researched more widely by looking at other textbooks, the relevant CCH online library, articles from the internet and journal articles. You must answer both parts of this topic. Please make sure you have REFERENCED in the body of your work ACCURATELY. Remember, referencing shows you have researched and thought about what material will be relevant to assist you in answering the questions.

Read the following scenario and answer BOTH parts (questions) at the end.
OHS Solutions Pty. Ltd. is a company formed by three friends (Des, Satish and Emma) who bring different skills and abilities to the business. Emma is an accounting graduate, Des has expertise in occupational health and safety (OHS) and Satish has an IT degree. They decided to start up a business which would provide a portal through which the public and businesses could access (for free) information on all aspects of OHS. OHS Solutions would finance its business, and make profits, by charging businesses to advertise via their website.
The directors of OHS Solutions are:
Managing Director – Des
Finance Director – Emma (non executive)
Director – Satish (executive – employed also to run the technological side of the business)
Director – Ying (non executive) – a friend of Des’ and director of Support Pty. Ltd. (Support Pty. Ltd. has gone guarantor for a $50,000 loan from the Business Bank Ltd. to OHS Solutions)

YOUR TASK
Part A – (approx 800-1,000 words) 10 marks
Write a brief explanation about why the directors’ duty to prevent insolvent trading exists and the circumstances and consequences of the ‘veil of incorporation’ being lifted for insolvent trading. (Do not just repeat the words of the relevant sections in the Corporations Act).

And

Part B (approx 1,500-1,700 words) 10 marks
From what you know of OHS Solutions’ predicament, DISCUSS whether any of the directors may be about to breach or have already breached the duty to prevent insolvent trading. (In order to do this you will need to compare what is happening in OHS Solutions case with other precedent cases and refer to the relevant sections in the Corporations Act.) What will you advise Ying?

(Note: you do not have full information, so state briefly in the essay what information you need and make reasonable assumptions that will allow you to give your advice. ONLY DISCUSS INSOLVENT TRADING – THAT IS THE QUESTION AND YOU DON’T HAVE ENOUGH WORDS TO GO INTO OTHER AREAS)

PLEASE NOTE THE FOLLOWING INSTRUCTIONS:
References must be cited in Harvard referencing style (eg Smith 1992) .The assignment must include a bibliography (list of references used in the assignment). The Internet may be used for authoritative reference material provided the source, author, date of access, and site address is clearly shown in footnote format.
In addition to sources from the Internet, at least three hard-copy sources must also be used. These can be either books or articles or both. Materials from any common law jurisdiction may be used.