Describe the procedure under the corporations act

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Reference no: EM133314103

Part (a)

Christine, Sharni and Mandy are the directors of Layabout Ltd, a company that manufactures camping equipment. Sales are falling and the directors are worried about the future prospects of the company. At a directors' meeting, it is resolved that a marketing campaign to promote the company's products will be created.

Part of the campaign will involve television advertising and Christine wants the company to employ her husband Sunil to appear in television commercials as he has experience modelling and has taken acting lessons. It is expected that Sunil will be paid $100,000 by Layabout Ltd to be the 'face' of the company in the television commercials.

Using your knowledge from studying director's duties, describe the procedure under the Corporations Act that the company AND Christine must follow in order to employ Sunil for the advertising campaign

Part (b)

Using your knowledge of director's duties, discuss the correctness of the below statement.

"Company directors have to exercise a very high standard of care and diligence under both the Corporations Act and case law because if they make a decision that causes any damage to the company, they will be personally liable to creditors."

NOTE: In order to determine whether the statement is correct or not, you must discuss the scope and meaning of the duty of care and diligence as well as describe the potential liability for breach of this duty. You must state whether the statement is correct or not in either the introduction or the conclusion of your answer.

Reference no: EM133314103

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