The paper "Financial Accounting of Sambal Pty Ltd" is a perfect example of a finance and accounting assignment. Jim and Peter are directors of Sambal Pty Ltd. Sambal Pty Ltd has a constitution that restricts the amount of money the company can borrow at any one time to $10m. The company already has a bank loan outstanding from the bank for $10m. The company recently took out another $2m loan from ABC Bank. The loan contract was signed by two of the company's directors and had been authorised by the board.
The company is now claiming that the loan contract with ABC Bank is invalid as it contravenes the constitution. The company is refusing to pay interest to ABC Bank in relation to the $2m loan. Rule The corporation's act of 2001 spells out the duties of the directors of a company. According to this law, the directors of a company are required to make a judgment for a proper purpose and in good faith (Blackshield & Williams, 2010). Secondly, the directors of a company are supposed to make judgments that they rationally believe is in the best interest of the company.
Furthermore, they are supposed not to have any personal interest in the subject matter of any judgment they make. The directors are prohibited by this law from using their position to gain personal benefit in a manner that may be detrimental to the interests of the company (Blackshield & Williams, 2010). The law also prohibits them from using information gained through their position to gain the personal benefit at the expense of the company. Section 248C requires that a director may convene a meeting after giving reasonable notice to all other directors.
Part E of the same sections requires the directors to elect a chair to be chairing their meetings. The length of the service of the chair is to be determined by the directors. Part F of the same section deals with a quorum (Parkinson, 2002). The section indicates that, unless the directors make another determination, the quorum for any directors’ meeting is two directors. This quorum must be present every time. Part G of section 248 requires a resolution of the directors to be passed by a majority of the votes that have been cast by directors, who have voting entitlement (Blackshield & Williams, 2010).
The chair is allowed to vote; when necessary in addition to any other vote they may be entitled in their capacity as a company director.
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