Trading Whilst Insolvent

Disqualification proceedings were commenced against directors of a company which had gone into liquidation. Following the disqualification, the liquidator used the evidence generated by the disqualification proceedings and commenced an action against the directors. The action concerned repayment of loans provided by the directors to the company. The loans were repaid just prior to the company going into liquidation. In addition the liquidator alleged that directors continued to trade after they knew, or ought to have known, that the company could not avoid insolvent liquidation. Elements of this case are ongoing, but the directors will be afforded indemnity by their policy up until any finding of fraud, dishonest, or improper gain on their part. The potential defence costs for this case are substantial and could easily exceed the US$437,125 (RM 1,661,075)

Covered by BusinessGuard First?               Yes

Minority Shareholders

A former shareholder in a textile manufacturing company brought an action against the board of directors alleging they had breached their fiduciary duty to act in the best interest of all shareholders. The action arose out of the sale of assets to a competitor after the former shareholder had sold his shares to the major shareholder. The action alleged that at the time the former shareholders sold his shares, the major shareholder was aware of the impending sale of assets but declined to pass this information onto the former shareholder, thus including the former shareholder to sell his shares at a lower price than would have been realised after the asset sale. The court held that the directors had breached their fiduciary duty towards the minority shareholder and ordered the directors to pay US$223,580 (RM 849,984)

Covered by BusinessGuard First?                Yes

Sexual Discrimination

A telecommunication company had employed the complainant as a receptionist for 2 years. After becoming pregnant the complainant approached one of the senior managers of the company to put arrangements on place for maternity leave. She suggested a 'job sharing' arrangement be put in place until she could return to full-time work in about six months. On her last day before starting maternity leave, the senior manager called the complainant into a meeting and told her that there was no longer a position for her at the company as they wanted someone who could work full-time. The Human Rights and Equal Opportunity Commission awarded the complainant US$7,458 (RM 28,340).

Covered by BusinessGuard First?                Yes

Unfair Dismissal

A cleaning company had held a long-term contract to provide cleaning services to a suburban shopping centre. The unexpected loss of this contract led the company to decide to make its work force of 10 full-time and part-time cleaners redundant. A claim for unfair dismissal was brought by the workers against the company. Despite the unique position that the company found itself in, the Industrial Relations Commission (IRC) said that the company should have done more to find alternative employment for the workers at one of its other work sites. The IRC awarded the workers approximately US$44,748 (RM 170,042)

Covered by BusinessGuard First?                 Yes

Pollution Defence Costs Cover

An oil spill occurred into a stream next to two business premises, one of which belonged to company A. Initially it was unclear as to which site was the origin of the spill. The Environment Agency was called in and conducted an investigation into both sites. Initial findings indicated that the spill was caused by oil leaking into the drainage from machinery on company A's site. Costs were incurred for legal representation at formal interviews with the Environment Agency, where company A was later cleared of any blame.

Covered by BusinessGuard First?               Yes

Inquiry into Occupational Health and Safety Practices

A site workman was killed when a building collapsed following the removal of a load-bearing wall. There were clear instructions to the effect that the load-bearing wall should not be removed. A health and safety investigation was commenced which resulted in a public inquiry into the construction company's work practices. A senior manager of the company gave evidence at the public inquiry and was represented separately by his own legal advisors. The Legal advisors, by questioning the senior manager, were able to show that he was not responsible for the loading-bearing wall being removed, and had in fact given clear instructions for that work not to be carried out. As a consequence, both he and the company were acquitted of any prosecution. Costs that incurred were US$11,186 (RM 42,507).

Covered by BusinessGuard First?              Yes

Reports suggested that a publicly listed company had overstated its profit performance by over US$18 million (RM 68.4 million) over a three year period. Based on these reports, the securities regulator commenced an investigation into the affairs of the company. Interviews were conducted with some former directors, who had resigned as a result of the disclosures. Each Director was represented by a different law firm to avoid any conflict of interest and were finally acquitted of any wrong doing. Final costs in this case exceeded US$1,491,400 (RM 5,667,320).

Covered by BusinessGuard First?              Yes