What Is the Usual Consequence of a Director Breaching a Common

question 25

Multiple Choice

What is the usual consequence of a director breaching a common law duty to the company?

• A)The director will be required to pay damages to the company.
• B)ASIC will take action against the director.
• C)The director will be sent to jail.
• D)The company will not be bound by any contracts they enter into in breach of their duties to the company.

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Definitions:

Net Working Capital

The difference between a company's current assets and current liabilities, indicating its short-term liquidity and operational efficiency.

Marketable Securities

Financial instruments that are easily convertible into cash at close to their original value, often used for short-term investments.

Accounts Payable

Accounts payable is the amount of money that a company owes to its suppliers or creditors for goods and services received but not yet paid for, typically due within a short period, like 30 or 60 days.

Use of Cash

Refers to how a business or individual employs their cash resources, including spending, investing, or saving activities.