Question

can you please provide answers. related to cooperation law.

ASX is Australian securities exchange

directors of company is such as Aussi Bank

1.What are the advantages and disadvantages for directors of an ASX listed company to raise funds by issuing shares from shareholders?

2. is it possible to enforce decisions made by shareholders on the directors of the company?

Answer 1

1.

Disadvantages:

1. Each Director shall provide statutory declaration affirming that they have not been the subject of disciplinary or enforcement actions by an exchange or regulator.

2. May face allegation of inside trading

3. the director is aware that there are reasonable grounds for suspecting that the company is insolvent or would become insolvent by incurring the debt, or a reasonable person in the circumstances would be so aware; and

4. If the company becomes insolvent by incurring the debt. A debt may be incurred not only by incurring a liability in the course of trading but also, for example, by declaring or paying a dividend or making a capital reduction.

5. A director who breaches this duty may be ordered by a court to pay a civil penalty and/or to pay to the company, its liquidator or the relevant creditor compensation equal to the amount of loss suffered by the creditor. In addition, a director who breaches this duty dishonestly may incur criminal penalties.

6. If a director receives a benefit from the company which is “unreasonable” (i.e. uncommercial from the company’s point of view) and a winding up of the company begins within the following four years, a court may order the director to return some or all of the benefit and/or pay the company a fair amount for some or all of the benefit (in addition to other possible orders). This rule applies whether the benefit is a payment, company property, securities in the company, or the right to such a benefit (such as an option over shares), and whether the benefit is given to a director, a close associate of a director or another person on behalf of a director or their close associates.

Advantages:

1. More funds can be used for the growth of the company

2. The Company reasonably relied on a competent and reliable person to provideDisadvantages:

1. Each Director shall provide statutory declaration affirming that they have not been the subject of disciplinary or enforcement actions by an exchange or regulator.

2. May face allegation of inside trading

3. the director is aware that there are reasonable grounds for suspecting that the company is insolvent or would become insolvent by incurring the debt, or a reasonable person in the circumstances would be so aware; and

4. If the company becomes insolvent by incurring the debt. A debt may be incurred not only by incurring a liability in the course of trading but also, for example, by declaring or paying a dividend or making a capital reduction.

5. A director who breaches this duty may be ordered by a court to pay a civil penalty and/or to pay to the company, its liquidator or the relevant creditor compensation equal to the amount of loss suffered by the creditor. In addition, a director who breaches this duty dishonestly may incur criminal penalties.

Advantages:

1. More funds can be used for the growth of the company

2.  The Company reasonably relied on a competent and reliable person to provide

3. the company follows certain procedures involving shareholder approvals and lodging documents with ASIC;

4. an exception applies, for example if the assistance is given under an employee share scheme approved by shareholders.

Note: Listed companies are generally limited to issuing new shares equal to no more than 15% of their issued share capital over a rolling 12 month period, unless shareholder approval is obtained or one of a number of specified exceptions apply. Small and mid-cap companies may issue additional shares equal to a further 10% of their issued share capital, subject to meeting certain conditions.'

2.It depends on shares hold by the share holder,if the share holder holds sharesthat can influence the decisions in the board meetings .