BUSM4157_1510
Corporate Governance and Regulation

Individual Assignment:
David Jones

Adam Golding
S3468032

Words: 2156

Executive Summary

This essay examines the example of two former directors of retailer David Jones – Leigh Clapham and Steve Vamos. The two directors made the decision to purchase shares in the company during a delicate period for the company and while decisions were being made about it’s future. Discussion on the damage this decision caused to David Jones and the ensuing fallout, whereby the two directors and the chairman of the board were put in a position where they had no choice but to resign.

This essay will address the role of a board within a company and the value-add component, as well as addressing the requirements for a company under the Corporations Act 2001.

We will also examine the issue of insider trading and whether the actions of these board members could amount to a breach of the law, as well as speaking about ASIC and their investigation into the men. ASIC conducted a thorough, two month long investigation, only to find themselves no choice but to declare no further action could be taken.

The area of risk management frameworks and whether the David Jones board members even followed their own stated frameworks, as set out in their constitution and printed yearly in their annual report were followed to the best of their ability.

Finally, continual disclosure as a provision of the Corporations Act and the issue of David Jones’ board decision not to disclose the merger offer with Myer constitutes a breach of the act. David Jones’ board were clear in their explanation that the merger offer was incomplete and still to be negotiated – an area in which they are protected by ASX rules.

1. Introduction

Corporate governance in Australia has become one of the more hostile areas of debate this century.