Case Study of Retail Food Group-Free-Samples -Myassignmenthelp.com

Questions: 1.Identify key news reports which capture the major issues and developments and write a brief report of what has happened and what are those issues? Do not make any judgments (especially not about the people involved) but do show an understanding of what has occurred and why it is legally significant. 2.Which regulatory authority(ies) in your view might be involved in any possible investigation and why? 3.What are some of the possible remedies open in this situation for issues of this kind? Answers: 1.It has been seen in the case study that Retail Food Group may soon be subjected to a class action from its shareholders with respect to allegations regarding misleading investors towards the effects of the business model of the company to store owners. The class action may be covered by any shareholder who has purchased the shares of the company between 2nd June 2015 and 28 February 2017. There is a belief that when an announcement has been made on 2nd June 2015 the company knowledge or had reasons to know that the business model proposed by them would exploit the franchises. In addition there were also a few actions which the company had indulged into since the announcement had been made, which would have surely had an impact on the franchises and was a kind of information which would material affect the share price of the company and was not available to the public. Under the Corporation Act 2001 (Cth) it is a requirement of a listed company with the ASX under the provisions of s ection 728 to ensure that no omission is made or any misstatement has been included in the prospects document. In addition to this provision under the provisions of section 674 it is the obligation of the organisation to continuously disclose any situation which would have had an effect on the price of its shares according to a reasonable person and is not generally available to the public. There has been a significant decline in the share price of the company as reports had been provided by Fairfax media that the company was involved in a secret deal with one of its former directors Alicia Atkinson. In this situation also although nothing has been specifically alleged there can be breach of duties by the directors under section 181 which provides that the directors of a company have to act in good faith and for the best interest of the company. It has been further identified that this deal with the company of which former director has not been disclosed in the Annual report of the company since the last 4 years. This situation may also lead to the breach of disclosure obligations of a listed organisation. It has been further seen that because of this situation the company has suffered significant losses and it had to close about 200 stores and reported a loss of $87.8 million in the first half of 2018. The deal with the former directors company known as Exit 57 had been highlighted only when the latter collapsed financially last year (Danckert, 2018). Where a loss to the company or shareholders has been identified due to the breach of duties by the directors the corporate veil of the company may be lifted and the directors may be personally liable with respect to the losses which have been incurred by the shareholders of the company. In this situation it has been seen that the share price of the company has significantly declined and as a result substantial losses have been incurred by the shareholders who invested in the shares of the company. In case it is proved that the directors of the company have violated any duty which was imposed on them by law in relation to the company they may be liable for any losses with the shareholders have borne in relation to the fall in share price of the company. 2.The matters which have been discussed above are primarily related to corporation law. The organisation which investigates into such matters in Australia is known as the Australian Securities and Investment Commission. This is an independent regulatory body which had been brought to existence through the provisions of the Australian Securities and Investment Commission Act 2001. Another organisation which may be concerned in relation to the situation is the Australian Securities Exchange. The Australian Securities Exchange imposes corporate governance principles for organisations which are listed with it in Australia (Lipton, Herzberg Welsh, 2018). Any company which does not follow the corporate governance issues provided by the Australian securities exchange has to give a written notice to the organisation that why are they not adopting the rules laid down by the ASX. The ASIC is an independent government body in Australia which acts as the countrys primary corporate regulator. Th e primary purpose of this body is to regulate and impose financial and company services law to protect Australian creditors, investors and consumers. The body had been established on 1st July 1998 and its scope and authority had been determined to the above identified legislation. The body directly reports to the treasurer and is responsible for the purpose of Administrative all parts of the Corporation Act 2001. The key areas of responsibility of this body include financial services, corporate governance, derivatives and securities, Consumer Protection, financial literacy and insurance. The organisation has been involved in punishing various operations which have been found to have violated the provisions of the Corporation Act. In the given situation it is the role of the body to make investigation into the matter that weather the provisions of section 728, 674 and directors duties have been violated in the above discuss situation or not. In case it is found that any members of the members of the food retail group have not complied with the provisions of the Corporation Act the body has the authority to initiate proceedings against the organisation and its directors in the court of law (Fitzpatrick et al., 2017). The vision of the ASIC is to ensure economic growth by making provisions for the markets to be able to fund the economy. In relation to its funcstions and the purpose of contributing to the financial well being of Australians the organisation promotes the confidence and trust of the consumers and investors. It also ensures efficient and fair markets and provides appropriate registration services. The functions of the body include facilitating improving and maintaining the functioning of the financial systems and the organisations which operate within it. It also operates to enhance informed and confident participation by consumers and investors in the financial system. The organisation also enforces and provides effect to the law and tries to effectively administrate legal requirements by involving low level of procedural needs. Therefore in order to comply with its functions it is the duty of the Australian Securities and Investment Commission to investigate into the above discussed matter (Graw et al., 2015). 3.Several beaches of Corporation law as provided by the Corporation Act 2001 which has been identified in the first section of this paper mane have been potentially made by the organisation and its directors. These breaches include section 728 to ensure that no omission is made or any misstatement has been included in the prospects document. Section 674 where it is the obligation of the organisation to continuously disclose any situation which would have had an effect on the price of its shares according to a reasonable person and is not generally available to the public may also be violated. Provisions of duties of directors under the provisions of 180-183 which includes due diligence and care, to act in good faith and proper purpose, not to misuse position and not to misuse information have been violate. In the given situation for civil and criminal sanctions are both applicable in relation to the allegations in case they have actually been made. It has been provided by the provisi ons of section 1317 E of the Corporation Act that where the directors have violated the duties imposed on them by the Act they may be liable under the provisions of civil penalty and in relation to such provisions may have to pay a pecuniary penalty and may also be barred in the future from managing a company within Australia. The provisions for barring a director from managing operation in Australia are provided under section 206C of the Act. The court has the right to decide in this situation that to how much time the suspension of the directors has to be done with respect to the circumstances in which the violation of duty have been made by them. In addition it has been provided through the provisions of section 1317S that where the breach of directors duties have led to losses incurred by the shareholders directors may be personally liable to compensate for such losses. One of the primary cases in Australia where the same kind of situation was seen is the case of Australian Secu rities and Investment Commission v Sino Australia Oil and Gas Limited (in liq) [2016] FC. In this case also the ASIC was able to make a successful claim against the company who had made a statements and omissions in a prospectus document and had misled the public in relation to material information which may have had a considerable effect on the share price of the company if they would have been this close to the public. The court suspended the wrongdoing direct from managing corporations in the country for 20 years. References Corporation Act 2001 (Cth) Danckert, S. (2018). Troubled Retail Food Group faces potential class action. The Sydney Morning Herald. Retrieved 21 April 2018, from https://www.smh.com.au/business/consumer-affairs/troubled-retail-food-group-faces-potential-class-action-20180306-p4z32w.html Fitzpatrick, Symes, Veljanovski, Parker (2017), Business and Corporations Law; LexisNexis 3rd edition Graw, Parker, Whitford, Sangkuhl and Do (2015), Understanding Business Law 7th ed LexisNexis Butterworths. Lipton, P., and Herzberg, A., Welsh, M, (2018) Understanding Company Law, 18 edition Thomson Reuters. Our role | ASIC - Australian Securities and Investments Commission. (2018). Asic.gov.au. Retrieved 21 April 2018, from https://asic.gov.au/about-asic/what-we-do/our-role/