The duties/responsibilities breached
The aim of this report is to develop understanding on the case of Fame Decorator Agencies Pty Ltd v Jeffries Industries Ltd (1998) which is based on the Australian case. This report is focuses on the responsibility and duties of breached. It also focuses on the critically analyze decision of court as well as it discusses the reason for the decision in the view of the Corporation Act. This report also focuses on the possible and applicable the consequence to development of the decision of Australian Corporation law. It also focuses on the impact of the decision on the operation of the business in Australia.
There are two parties, which are involved in this case. These two parties are Fame who is the appellant of this case. On the other hand, another party is the Australian Securities Commission (ASC) who acts as third respondent of the case (Lowry, 2012). This case mainly raises queries on the meaning and effects of the ss 995 and 998 of Corporations Law. Jeffries is a public company having its shares is listed on Stock Exchange. The appellant Fame holds all time-shares of the company. Mr JF O’ Halloran who holds the position of Chairman of Directors of the company is engaged in the activity of controlling the business. He has discharged from his duty on April 1995. Along with the ordinary shares, the capital of the company constitutes of convertible preference shares. The appellant of the case Fame holds preference shares of the company in 1995. 4 February 1999 is expected to be the conversion date.
On this date, the preference shares are converted into ordinary shares. Along with this, Articles of Association of the company provides facility of earlier conversion on certain special circumstances. If the Jeffries Company failed to pay a specified amount of dividend to the shareholders, then the holder of the shares has an opportunity to accelerate the process of conversion of shares either for all parties or for some other parties (Latimer, 2012). In this case, the number of shares that are required to be allotted in place of conversion process is determining on the basis of a formula. This formula assumes for present purpose which states that weighted average price of shares, which constitutes any of the elements of fully paid ordinary shares, which are traded in Stock Exchange within twenty days immediately before the date of conversion. There is an inverse relationship between the selling price of trading period and allotment of shares. It implies that if the selling price of ordinary shares remains lower during the period of twenty days, higher the number of shares that are allotted to the holder of the preference share at the time of conversion. On the date of Thursday 27 April 1995, Mr O’ Halloran come to know that the intentions of the directors were the announcement the conversion on Friday 28 April 1995 and no dividends have been paid for the conversion of preference shares for the period which is ending on Sunday 30 April 1995. This situation has a potential of accelerating the process of conversion of shares.
Discuss and critically ANALYSE the court/tribunal decision
The shares of the company Jeffries have shorter and lesser trading and the sales records of the shares of the company are not good. This creates the situation of liable to manipulation in the stock market. Mr O’ Halloran makes contact to Mr. Powell on two consecutive days i.e. 27 April and 28 April, who is holding the position of stockbroker. Cohen J. Discussion does not notice the variations that provide evidence for the differences of the communications that take place between Mr. O’ Halloran and Mr. Powell on the selling a significant number of shares of the company are made by these parties (Kairupan, 2013). After doing all the discussion and understanding all the situation, it has been found that the price of the share has risen during the period of these twenty days which lowers down the number of shares that are required to be allotted on the conversion. Stock Exchange Automated Trading System (SEATS) has been evidenced the method of operations (Hendershott and Moulton, 2011). This method provides a systematic place for the trading of the shares using the online medium. There are many times that the shares are accepted by the buyers at different prices.
At the initial instance of this case, Mr O’ Halloran has provided evidence in order to explain his activities relating to the case. He tries to convince Cohen J by stating that he was under great pressure of generating cash, which is required to meet certain financial requirements, and he was unable to place the order for the selling of the shares (SKUDRA, 2012). But no believe has been shown in his statements. In order to challenge the facts and findings of the Cohen J, none of the attempt has been made. It is known to Cohen J that Mr Halloran holds a significant amount of cash and there is no such kind of situation arises, which demands the urgent supply of cash. It is also observed that there is no situation arises that requires the selling of shares at a lower price. Cohen states that Mr Halloran has willingly sold around 94000 shares which results in artificially lowering down the price of shares so that the calculations can be made in favour of preference shares.
All the offers relating to Halloran on behalf of Fame made trading of shares only three minutes prior to the closing time of market on the date of 28 April 1995. It assumes that all the transactions are pre decided by both Powell and Halloran. This can be said on the basis of entry of additional buyers of the shares of the company when the offer for sale has been made. The prices of the shares of the company were exceeded by the 14c on the next working day. The aim of Halloran seems abnormal because he is intending to sell the shares at a lower price rather than selling the shares at a comparatively higher price. This situation would favour the Fame because number of ordinary shares is required to allot when the market price of the shares stays low in the market. This situation happens because of operating of conversion formula in the situation. The occurrence of this transaction results in exciting the official interest and an investigation is required to undertake (Fernandez, 2012). This will results in raising the conflicts between Jeffries and different peoples for the purpose of conversion of preference shares into ordinary shares. It does not require going in depth in this case in order to evaluate the outcomes of this case. Senior team of this company has stated that nothing has been misleading in this transaction and market has not been manipulated at all.
Relevance of the decision to the development of Australian corporations law or the impact of the decision on the operation of companies in Australia
Along with this, it has also been stated that this act has been done just to take the advantages of the opportunities, which are prevailing, in the market. And this also had been stated that appellant cannot hold responsible for the happening of this situation. The appellant had creating this situation for the sake of his personal interest. All the acts were about the acceptance of various offers that are made in the market for the purpose of buying the shares and the offer has been placed in the market prior to the date of 28 April and the offer is still going on. The appellant has addressed to the market just prior to the closing of trading time and tries to cover all the transactions in his favour.
The Act of Corporation includes the act of Commonwealth of Australia. It defines the laws of production used by the business individuals during the level of interstate and federal inside Australia (De Bakker, et al., 2013). As per this law, the court and tribunal decision for this case, “market” for the reason of this case, it means the place where shares within Jeffries, which is Industries Limited, can be acquired as well as advertised mutually by the sum of publicly accessible information, which is related to the sellers and buyers of that shares. In the market, there is nothing the plaintiff, which is beyond advertising share with the way and for prices publicly provide to every holder of that shares who think that the shares put up for sale to that prices (Sharma and Liu, 2013). On Friday 28 April 1995, Jeffries sales start after 3.52 pm and finished at 4 pm. The market price was dropped for the close of trading. The last eight minutes of the event, it can be evaluated that the trading on Friday which implicated the whole publicly accessibility of the specified facts that related to Jeffries shares could not be misled about the market price of that shares with that what happens in that eight minutes.
Its own benefit of the appellant’s purpose has not been making a misleading and false appearance to the admiration to the price of and the market of Jeffries share. Their aim has to convey on the shut of the market price that will be the benefit for it when Jeffries has not the calculation to vital it formula of conversion. There are some facts which are engaged during the not accomplish by the deceptive and misleading (Cassie and Knight, 2013). It is also likely to trick and misinform the every people, which alert the visibly existing facts. The lack of several deceptive effects of its manner is to appear the established with that what has happened with the industry. For the closure, if market there is not the sale of the market when the price of 28. On the other hand, in April, next sale of the day, there is maximum price of the sales. At that time the appellant, the exclusive grouping of the situations has put up for sale its shares should not have been forecast with Jeffries as well as it has the disadvantage of the Jeffries. Jeffries has made the agreement ahead of that which market events have occupational (Cassie, and Knight, 2013).
From UK company law, Australian corporation law was historically scrounged profoundly. Australian corporate law has a legal structure. Now, it is called as a national statute, consists of a single and the act of corporation 2001. There are two federal statutes such Australian Securities and Investment Commission Act 2001 and the Corporation Act 2001. The corporation legislation has managed with the “ASIC” (Australian Securities and investment commission) that information to the Treasurer (Klettner, et al., 2014). According to the case, Australian corporation law has conduct related to the securities. At the same, many of case law that is developed approximately s 52. The s 52 has also applied to the s 995. After the case of Fame Decorator Agencies Pty Limited v Jeffries, the Australian corporation law has to develop and change their law (Taylor and Thrift, 2012).
Conclusion:
On the basis of above, this report it can be observed that there are two parties, which are involved in this case. These two parties are Fame who is the appellant in this case. This case mainly raises queries on the meaning and effects of the sub section (SS) 995 and 998 of Corporations Law. On the other hand, there is also evaluation on conveying on shutting off the market price that can be the benefitted for it when Jeffries has not the calculation to vital it formula of conversion. At the same, it is also observed that how to Australian corporation law was developed and changed in legal terms.
References:
Cassie, J. and Knight, D., (2013) The scope of judicial review: Who and what may be reviewed, Retrieved on, 19.
Cassie, J. and Knight, D. (2013) The scope of judicial review: Who and what may be reviewed. Retrieved on, 19.
De Bakker, F.G., Den Hond, F., King, B. and Weber, K. (2013) Social movements, civil society and corporations: Taking stock and looking ahead, Organization Studies, 34(5-6), pp.573-593.
Fernandez, J.A., Adolphsen, C., Akay, A.N., Aksakal, H., Albacete, J.L., Alekhin, S., Allport, P., Andreev, V., Appleby, R.B., Arikan, E. and Armesto, N. (2012) A Large Hadron Electron Collider at CERNReport on the Physics and Design Concepts for Machine and Detector, Journal of Physics G: Nuclear and Particle Physics, 39(7), pp.075001.
Hendershott, T. and Moulton, P.C. (2011) Automation, speed, and stock market quality: The NYSE’s hybrid, Journal of Financial Markets, 14(4), pp.568-604.
Kairupan, D. (2013) Comparison of Market Manipulation Regulation Under Australian Law and Indonesian Law, Law Review, 2(1).
Klettner, A., Clarke, T. and Boersma, M. (2014) The governance of corporate sustainability: Empirical insights into the development, leadership and implementation of responsible business strategy, Journal of Business Ethics, 122(1), pp.145-165.
Latimer, P. (2012) False Trading and Market Rigging on the Stock Exchange (Australia, Hong Kong, Malaysia, Singapore).
Lowry, J. (2012) The Irreducible Core of the Duty of Care, Skill and Diligence of Company Directors: Australian Securities and Investments Commission v Healey, The Modern Law Review, 75(2), pp.249-260.
Sharma, N. and Liu, M. (2013) Prevention is better than cure, Medical teacher, 35(4), pp.339-339.
SKUDRA, H. (2012) An Analysis of the Statutory Regulation of Fraudulent Trading (Doctoral dissertation, Durham University).
Taylor, M. and Thrift, N. (2012) The geography of multinationals: Studies in the spatial development and economic consequences of multinational corporations (Vol. 37). USA: Routledge.
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