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Australian Corporate Law

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RESEARCH ASSIGNMENT

Directors of companies have an obligation to act in the best interests of the company. Elaborate on how the courts approach this duty and explain whether the corporation’s law in Australia has made this duty onerous.
According to the common law, the duties of the directors are duty of care and the duty of loyalty. In the duty of loyalty, the directors should maintain the fiduciary relationship with the company in order to follow the fiduciary duties accompanied by them. The main objective of this duty in equity is to act for corporate purposes, to act in good faith in the best interests of company and to avoid conflicts of interests . The duty of care could be extended to both executive and non executive …show more content…
With reference to this context of best interests, the directors have some obligation to take into consideration about the interests of creditors. At last, the court have examined that the interests of non shareholder stakeholders have given more priority by directors than the interests of shareholders is when the company is in liquidating state or close to liquidation , or the transactions intimidate the solvency of the company . This determination of Australian corporate law has been proven that the directors are exercising their duties significantly in nature. This situation is only consistent with limited stakeholder approach in order to attain corporate governance. If this fails in case of full stakeholder approach, it allows the directors to discharge of employee and other stakeholder rights and interests. Hence, it can be named as long term shareholder wealth creation . The directors should focus on the external shareholders than benefits derived from the shareholders of the company. But the current law on the directors, to act in the best interests of their companies are more enough to access corporate decision makers to control the social and environmental impacts of the director’s decisions . The decisions may include the changes about the role of companies and how they conduct their business …show more content…
The main duty should not focus on profit from the board of companies. The social conflicts under the common law that the duty of loyalty should address and concealed in more jurisdictions. The reasons for such conflicts are self dealing or inter party transactions i.e. the transactions take place directly or indirectly between the company and director. Next one is corporate opportunities, i.e. the exploitation of information that should be related to the company and maintain commercial interest to the company. In other words, the important aspects of the director have more expectation towards the company is act loyal. It is necessary to note that company should not accept benefits from third parties when they are granted or should not use the powers vested in the directors for ulterior purpose. These are the two main applications of the duty of

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