Australian Commercial Law Corporations Act 2001

Question: Describe about the Australian Commercial Law for Corporations Act 2001. Answer: Issue: Whether the liquidator of Johnson Manufacturers Pty Ltd would be able to recover any money, by using the provisions of the Corporations Act, from the managing director or his sister in the above circumstances, or not? Rule: Section 588 FDA of this act contains the provisions regarding the unreasonable director related transactions (Australasian Legal Information Institute, 2016). Such a transaction of the corporation would be treated as an unreasonable transaction related to the director of such a corporation, when: Such a transaction contains a payment which has been made by such a corporation; or the property of the company is conveyed, transferred or some other disposition is made on such property; such a transaction involves the issuing of the securities by such a corporation; or the transaction relates to the an obligation being taken up by the company regarding the disposition, issue or payment. Such a disposition, issue or the payment has been made to a close associate of such a director, or a director, or for the benefit of the previously mentioned people. And, a prudent person in similar circumstances would have restrained from entering into such a transaction, due to such a transaction being detrimental or beneficial to the company or regarding the relevant benefits attained by the other party as a result of such a transaction. Section 588 FE, makes such a transaction voidable (Australasian Legal Information Institute, 2016). And section 588 FF, of this act gives the liquidator of the company, the power to apply to the court regarding such a voidable transaction, and if the court is satisfied, the court can order a person to pay equal money which the company has paid under such a voidable transaction. Such transaction has to be entered during the last 6 months. But, for an unreasonable director related transaction, the time period is last four years, as stated in subsection 6A (Australasian Legal Information Institute, 2016). Application: Applying the above sections to this case, the managing director of this company deposited company funds into his sister's bank account, and this was an unreasonable director related transaction. And is a voidable transaction, so the liquidator would have to make an application to the court, to recover such amount from the managing director, since such an unreasonable director related transaction was entered 7 months back and the time limit for such transactions is 4 years. Conclusion: So, the liquidator would be able to recover money from the managing director as per the above mentioned sections of the Corporations Act. References Australasian Legal Information Institute. (2016) Corporations Act 2001 - Sect 588FF. [Online] Australasian Legal Information Institute. Available from: https://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588ff.html [Accessed on 22/10/16] Australasian Legal Information Institute. (2016) Corporations Act 2001 - Sect 588FDA. [Online] Australasian Legal Information Institute. Available from: https://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fda.html [Accessed on 22/10/16] Australasian Legal Information Institute. (2016) Corporations Act 2001 - Sect 588FE. [Online] Australasian Legal Information Institute. Available from: https://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fe.html [Accessed on 22/10/16]