Case of Decorator Agencies Pty Ltd v Jeffries Industries Ltd

Question: Discuss about the Case of Decorator Agencies Pty Ltd v Jeffries Industries Ltd. Answer: Case Introduction The case involves a dispute between a couple of parties, namely, Fame and The Australian Securities Commission, better known simple as the ASC, though it has played the lawful role of a third respondent (Lowry, 2012). The following case made the section 995 and section 998 of Corporations Law of the ASC. The company named Jefferies has its share capital which is totally composed of preference shares, in the year 1995, and decided that the exchange date of their shares would be fixed to the 4th of February 1999. It was seen, that the director of the company, Mr. JF O Halloran had been disposed and left the company for good. A chairman is expected to hold and control the directorial board of the company and manage it strongly, though, in his case, after termination, he had to give away his shares. On the same year, it was seen that Fame had acquired the companys time-shares for its own. It was clearly stated in the Article of Association of the said company, that, on the stated date, all the companys share will, by all means be converted to Normal Shares, from the initial preference shares, thought the article makes it a point that in abnormal or special circumstances, the date of conversion can be shifted. If, by any means, the company is unable to pay off the promised dividends to its stock holders, then they, by the article, have the right to accelerate the procedures (Latimer, 2012). Though, the company has its formula that it uses to predict the number of shares that can be allotted. The basic application of it would be assumption of the weighted average stock prices including normal shares, traded before there are 20 days left for the commencement of the conversion process keeping an inverse relation between number of shares necessary for allotment procedure and the sales prices of shares while trading. Hence, if the SP of the preference shares is low, there w ill be a high allotment rate. It was seen by the Chairman that the Directorial Board had made its decision to accelerate the conversion procedure by shifting it to 28th of April 1995, on the 27th of April 1995. This decision was taken a couple of days before the dividend pay rate on the 30th of April 1995, though no dividend was yet paid. The company, Jeffries has a weak stand in the financial market with considerable low stock and trading records. The facts stated clearly imply that their position is stagnant and quite manipulative. On both 27th and 28th of April, the chairman had made contact with the company stock broker, Mr. Powell. The occurrences and details of the conversation where left unnoticed by the sources until the chairman along with the stock broker had given away a large number of the companys share in the market by sale (Kairupan, 2013). The company noted an increase in the share price, which in accordance to the formula would lower the number of shares for allotment when converted within the mentioned time-limit of 20 days. It was seen by the Stock Exchange Automated Trading System(SEATS) what a certain online trading method was used by the couple in order to sell the excess off in different prices that the online consumers can prefer (Hendershott and Moulton, 2011). The duties/responsibilities breached (ex. CA sections 181 or 588G) and explain why the duties were breached. The Chairman had most evidently made excuses for his actions to the company; most of them were vague and unbelievable. He had stated that he was in need if cash, and that too, most urgently, so, instead of placing the order for sales, he decided to take it upon himself to sell of the shares online. It was seen by Cohen J. that the facts stated by the chairman were untrue, as he had proper evidence that such futile attempts were actually never met. The chairmans wealth was well estimated and was seen that he owned sufficient capital himself, so, such drastic need for wealth might never have come so suddenly. Even so, selling shares at such a low price was, out of the blue, was clearly redundant. Hence, Cohen J. concluded that over 94000 shares were most deliberately sold off by the chairman, not for the welfare of the company, but to intentionally decrease the number of shares allotted for personal reasons. It was further noticed that the deals sanctioned by the chairman were met by Fame only three minutes before the 28th of April 1995, conversion time, hence, further proving the fact that all the transactions might have been preplanned. The chairman had the goal of increasing the share sales price in order to decrease the allotment. The change was quite stubble, as there was a significant increase in the selling price then next day. Fame was mostly benefitted by this action as they got to purchase more normal shares at a low price in the market, due to the application of the formula. This act then led to investigation and an expected exit of the official interest of the company (Fernandez, 2012). This incident would most certainly lead to worsening the situation of the company in the market and among the dealers. Further analysis of the situation would futile as it is quite clear what might happen next. The company, as expected, denied all claims of market manipulation in order to keep its goodwill steady. The whole act was done by the appellant in only for his person gain, though it was stated as an act of utilizing the market situation. Even so, the chairman cannot be blamed or dealt with. The actions taken were done before the apparent date of closure before the 28th of April, and so were the actions taken by the appellant. All the deals were made before the given date of closure with any other party of company. Discuss and critically ANALYSE the court/tribunal decision and the reason for the decision in view of the Corporations Act Commonwealth act of Australia falls under the Corporations act; it defines the production laws which are applicable in the state levels of the country (De Bakker, et al., 2013). In this case, Market would be the main focus of the court and the prime target of judgement, since, market would be perfect for advertising the shares and stocks of the company, independently and for the public to see and buy from. It is clear that the chairman, if wanted to advertise the companys information to the public, that is the stockholders and buyers, he would most definitely resort to selling them in the market at a price that he would select himself (Sharma and Liu, 2013). It was seen that the sudden sale occurred between 3:52 pm till 4:00 pm on the 28th of April 1995. The traffic at these 8 minutes clearly proves the fact that the sale happened in the market subjected to the public. It is most evident that the actions done were to done to personally benefit the appellant, hence selling the shares at a lower price in the market, not caring about the interests of the company at any degree at all. A few facts stated were most definitely misleading, false and deceptive (Cassie and Knight, 2013). Such an act can be called an act of misrepresentation, which can also be taken as acts of trickery and deceptions by the general public. Hence, it was seen that the prices in the market were different on both the sale day and on the 28th, where, for the former it was minimum and for the latter it went to maximum. It is also clear that such sale was not told to the Jefferies and neither could they predict that such an incident might occur in the first place. The events were placed prior to what the Jefferies might have placed in the market for an expected occupation. Where possible and applicable, the relevance of the decision to the development of Australian corporations law or the impact of the decision on the operation of companies in Australia. The acts,laws and duties in Australia were mostly taken from the laws in the United Kingdom as Australia is a part of its common wealth and has historical and political similarities and political connections. Now, the UKs companies act is renamed to the annotation statute that consists of single laws and also the Corporations Act 2001. The statutes can be divided into two that will hold the Corporations Act, the Investments Act and the Securities Act of Australia. The following information was then transferred to treasurer with the help of the ASIC (Klettner, et al., 2014). In this case though, the laws were taken into consideration on the basis of the securities. It was most evident that in this case; sever laws including the Sections 52 and 995 were most definitely applied to in order forlaw to get enforced upon the company and also the chairman. This situation has not only transformed the said company in this case, but has most certainly affected the entire financial hub of all th e states and the entire country and changed the outlook of the laws that guide them, and also the companies that uphold the law. Cases like these, help the financial society to grow and mature as a single being and develop while learning from the mistakes made by the companies and several business entities that came before and will come in the near future of the country. After this case between the companies, Fame and Jefferies, which was christened as, the case of Fame Decorator Agencies Pty Limited v Jeffries, the Australian government and securities had no other options remaining, but to calculate the future events and take into consideration that crimes such as these can most evidently occur. So, the authorities had to transform their law and make something new that would stop the any chance of similar acts to repeat them, or, at the very least, reduce the chances of such activities happening again the financial state of affairs of the country (Taylor and Thrift, 2012). Conclusion: The following case that is given for us to study on, most certainly involved two parties, one of them is most evidently Fame, a private limited company which had played its part in the buying off of shares from the public sales organised unlawfully by the said chairperson the organisation, hance, it can be branded as the company that is the defendant, and on the hand there is the company called Jefferies whos shares were sold off unlawfully and without the consent of the directorial board, by its own chairperson, not for the benefit of the company, but for personal interest. It was discussed in this case, the futility of the section section 995 and section 998 of the corporations act that falls under the statute that was discussed earlier on in this case. It was then discussed how the shutting off of prices in the market would drastically effect the company resulting to its use of a formula in order to calculate the allotment rate of shares. In the end, it was then concluded how the Australian laws along with the whole financial situation has developed gradually after. References: 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. 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