Question

Munir is the Vice President for Finance and a Director in his company. Munir finds out that his company will be holding a big conference in a few months and will be needing a caterer to prepare food for the event. The company has set aside a budget of $50,000 for catering. The company plans to call for tenders from qualified caterers in the coming week.

Munir’s brother-in-law happens to be in the food catering business. Munir tells him to organise a bid for the catering job. Munir also tells him to enter a bid at $49,000 because this will increase his chances of winning. He also shares with his brother-in-law some information about the other caterers who have entered bids and what food they are planning to prepare. He tells his brother-in-law to make sure to plan a better menu than the other caterers.

Munir attends the directors’ meeting where they consider who will get the tender for the catering work, but does not disclose his relationship with his brother-in-law, who has put in a bid and actually gets awarded the job.

Does Munir have any potential liability for what he has done or not done? Explain your answer. Cite relevant provisions of the Corporations Act 2001 (Cth).

Answer 1

In the given scenario, Munir has passed on some confidential informations and supported to get the contract of catering to his relative. Under corporation Act 2001 (Cth) , there are duties imposed on all stakeholder of the company. The following duties are given to all stakeholders.

1. Duty to act in good faith in the best interest of the company and for a proper purpose.

2, Duty to act with care and intelligence

3. Duty to avoid improper use of information

4. Duty to avoid improper use of position

5. Duty to disclose certain interest

Above duties are to be followed without any mistake hence in the case given, there are breach of many duties and even all duties.

Munir has not disclosed the relationship with his brother in law and also he helped him with critical information about other bidding details. As per act, he is liable as shown below as per act.

"Breach of statutory duties draws penalties under the corporation act which range upto $200000. He will have to pay this from his income (out of pocket) and he may loose his job"