Will Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure which came into force on 5th July 2016 have any impact on the common law action of breach of confidence?
I am asked to address the following issues in this opinion:
What is the purpose of Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure?
What impact can Directive (EU) 2016/943 have on the common law action of breach of confidence?
The problems dealt with here are only indirectly addressed by statutory provisions dealing with transactions undertaken by companies that reduce their ability to satisfy creditor claims. These provisions include: Corporations Act 2001 (Cth) Chap 2J, which restricts the circumstances in which the assets of the company might be diminished by transfers to shareholders; Chap 2E, which restricts the circumstances in which financial benefits can be paid to parties related to corporate controllers; and Part 5.7B Division 2, dealing with uncommercial transactions and unfair preferences. The provisions on uncommercial transactions are aimed at preventing transactions in insolvency that would prejudice creditors.
Perhaps of greater relevance are the statutory directors’ duties, which determine the standards of conduct expected of directors in decision making and which aim to prevent insolvent trading. Corporations Act 2001 (Cth) s 588V makes a holding company liable for the debts of a subsidiary in circumstances where there are ‘reasonable grounds for suspecting that the [subsidiary] company is insolvent’ or would become insolvent by incurring further debt and that the holding company or one of its directors should have been aware of those grounds for suspicion. The liquidator of the subsidiary company is empowered to bring proceedings for recovery of the losses of the subsidiary and unsecured creditors. The principal provision is accompanied by s 588G, which imposes a duty upon directors to prevent insolvent trading by their companies. Section 588G creates rights to bring proceedings for compensation against directors for losses caused to the company and to unsecured creditors
 Corporations Act 2001 (Cth), s 588W(1).
 A parent or other company within a group might be treated as a director for these purposes where the board of the subsidiary is accustomed to act on the directions of that other company. Corporations Act 2001 (Cth), s 9. See Standard Chartered Bank of Australia v Antico (1995) 38 NSWLR 290, 328 and Abogados de accidentes
The Enterprise Act 2002 reformed insolvency law to provide the legal milieu for the fostering of a rescue culture. Critically evaluate how the new Administration regime was redesigned to assist financially distressed businesses
The reform of administration orders under the Enterprise Act 2002 has gone a long way in aiding companies in financial distress, one which with foresight of the banking crisis of 2007 was very helpful indeed. The Enterprise Act 2002 was designed to facilitate company rescue in order to produce better returns for creditors and “even up the playing field” a bit in respect of the competing interests of creditors. In order to assess how the reform has assisted financial distressed companies, it will be necessary to evaluate three main areas. Firstly, in order to establish why reform is needed, the situation prior to the 2002 Act will be analysed, focusing on the Insolvency Act 1986. Secondly, one will detail what was reformed and what significant changes that have been brought forward as a result. Finally, one will assess how effective the Enterprise Act has been in helping those companies in financial difficulty and whether or not there are any weaknesses and conclude whether said reform was successful in its attempts to assist financially distressed businesses.
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