...Directors of a company normally have exclusive power to manage the company’s business and exercise its powers. At common law, the duties were owed to the company, to employees, to individual shareholders and creditors. 1.0 Duties of Directors to the company It is convenient to categorise the duties of directors into fiduciary duties which arise because they are quasi-trustees of the assets of the company. The word ‘fiduciary’ refers to trust and confidence. ‘A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence’(Bristol and West Building Society v Mothew [1998] Ch1 per Millet LJ at p.18). Fiduciary duties of the directors of a company considered are imposed on them by equity for the protection of the persons for whom they act. Directors’ fiduciary duties are mandatory element of company law; they are imposed by the courts all directors of all companies. A director of a company holds an office not an employment, and is on duty all the time while holding the office: there are no off-duty hours when the director is free from his or her fiduciary duties (Gwembe Valley Development Co. Ltd v Koshy [1998] 2 BCLC 613) Some people argue that that is inappropriate to apply the concept of a fiduciary, which is derived from the concept of trustee, to company directors. Trustees are supposed to be prudent, risk-averse people whose priority is to preserve the capital value...
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...law Section 228(1) of the Companies Act 2014 details the eight fiduciary duties directors of companies are obliged and compelled by law to comply with. The question is why it is necessary through the application of law to limit director’s decision making responsibility. The potential for directors to abuse their positions of power with regards to company’s assets in the daily running of the company seems limitless even when directors are in their own perception acting bona fides with regards to their decisions. Section 228(1) is so important and appropriate to business law as Directors are persons who according to Callanan(2007,p207) ‘have been entrusted with powers for the benefit of others’ but the potential to damage one person or persons to benefit another is so highly possible that the law is compelled to control directors decisions. Section 228(1) (d) addresses a directors duties ‘to not use the company’s property, information or opportunities for his or her own or anyone else’s benefit’. The case of Regal Hastings v Gulliver (1942) is one which has involved much debate throughout the years. The directors of Regal although acting in their opinion bona fides, through holding a position as directors were privy to information that, had they not held their position as directors would not have been able to benefit from the transaction that they undertook. The key point behind this case was that directors are exposed to sensitive and sometimes exclusive information and such information...
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...Executive Summary ________________________________________ ‘Do directors have to be accounting standard gurus?’ ‘How do directors spot the ticking bomb buried deep in a massive board pack? These are some of the questions making top headlines following the Centro case decision made by Justice Middleton of the Federal Court on the 27 June 2011. The issue of contention was whether the directors had sufficiently carried out a review of the financial statements, and if they had, whether the information was consistent with the directors’ knowledge of the company’s operations and whether the accounts contained all material information that should have been reported on and known to the directors. ASIC successfully won the case with the eight defendants (Chief Executive Officer, Chief Financial Officer, Chairman and 5 other non-executive directors) found guilty of failing to identify and disclose significant errors in the 2007 consolidated financial statements of Centro Properties Limited, Centro Property Trust and Centro Retail Trust (collectively referred to as Centro). Financial statements are essential for the accurate assessment of risks faced by any company. The decision in the Centro case clearly emphasises this point. Directors should be well equipped with basic accounting knowledge and be conscious of their duty to properly assess and review financial statements. It was also highlighted that directors should be warned against simply delegating financial reporting...
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...discussing the issues that are confronted by the directors of Hampton Park Pty Ltd (HP). The directors, William, Jack, Susan and Gail had their company liquidated shortly after declaring the dividend to their members. Unbeknown to the directors, the Chief Financial Officer of HP, George has been withholding information regarding the company’s deterioration of their financial position. Although late in realizing, George also failed to inform the board regarding the change in the dividend payment rules before the signed off their financial statement in 2010. The new payment rules that was enforced on 28 June 2010 stated in s254T of the Corporations Act 2001 points out that the company’s asset must exceed the liabilities immediately before the dividend is declared and the excess must be sufficient for the payment of the dividend. The company than went into liquidation after the dividend was paid. These issues will be discussed in further detail throughout the essay by examining the directors’ duty of care and the directors’ duty to not trade whilst insolvent and whether there is any breaches of these duties. These duties are set up to allow directors hold accountability and to minimize risk of wrongful or illegal behavior. Duties of a “Director” The term “director” is clarified under s 9 of the Corporations Act 2001, which states that “definition of a 'director' includes those appointed to the position of a director, an alternate director and those acting in the position even if not...
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...Duties of Director: The duties of directors of a company have been elaborately explained by Romer L. J in Re City Equitable Fire Insurance Co[1]. The important duties are quoted from this case and summarized below: 1. Distribution of work: The manner in which the work of a company is to be distributed between the board of directors and the staff is a business matter to be decided on business lines. 2. Good faith: Every director must act honestly and in the interest of the company. 3. Reasonable care: A director “must exercise such degree of skill and diligence as would amount to the reasonable care which an ordinary man might be expected to take in the circumstances on his own behalf.” 4. Degree of skill: A director “need not exhibit in performance of his duties a greater degree of skill than what can be reasonably expected from a person of his knowledge and experience; in other words he is not liable for mere errors of judgment.” 5. To attend meetings: A director “ is not bound to give continuous attention to the affairs of his company; his duties are of an intermittent nature to be performed at periodical board meetings and the meetings of any committee to which he appointed, and though not bound to attend all such meetings, he ought to attent them when reasonably able to do so.” 6. The director’s duty of disclosure: The Companies Act of 1956 maakes it obligatory upon directors to disclose certain facts to the company: (1) If a director is interested...
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...Directors perform various duties within a company and these involve the coordination, leading, controlling and planning of a company’s resources so that set objectives and targeted are achieved. According to Abbort (1996), Directors are persons to whom the management of the company is entrusted. In Zimbabwe every company has the statutory obligation to have at least two directors of them one shall be a true ordinary resident of Zimbabwe; this requirement is according to the Companies Act (24:03) section 169(1). Some of the duties of directors are discussed below: To select competent executive officers It is the primary duty of a board of directors to select and appoint executive officers who are qualified to administer the company’s affairs effectively and soundly. It is also the responsibilities of the board of directors to dispense with the services of officers who prove to be unable to meet reasonable standards of executive ability and professionalism. A good example was portrayed by Econet PVT LTD directors who selected a highly educated directorate of executive officers with the likes of DouglasMboweni who is qualified and competent. To effectively supervise the company’s affairs The charter and degree of supervision required of an organization’s board of directors to assure a soundly managed organization involves reasonable business judgement and competent and sufficient time to become informed of the organization’s affairs. Directors cannot avoid responsibility for...
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...1. Introduction Directors play vital role in corporate governance in which their poor management will lead to a significant change of shareholders value, measured by the company share prices. For example, ABC Learning Centre share price dropped 60% in 2 hours after it announced its profit fell 42% (Couriermail 2008). The purpose of this report is to outline the reasons of the collapses of ABC Learning Centre, Centro Properties Ltd and Hastie Group and the main financial disclosure issues raised. This report also includes amendments done by the Australian regulator to prevent such collapses and a discussion of directors’ duties to ensure the true and fair view of financial statements. 2. Brief background and the cause of financial problem 3.1 ABC Learning Centre In 2008, the ABC wrote off a loss of $437million, an amount which exceeds total profits of $300million in previous years (Schwab 2008). This means that ABC was indeed making losses since it was listed in 2001. The problem arose when new audit company, Ernst &Young, the new appointed audit team, found out that the company had reported payments from the developers as normal revenue hindering the fact that most centres were actually losing money. Moreover, an approximately of $206million indirect subsidy from the Federal Government via Child Care Benefit were reported (Rush & Downie 2006). Another problem is that its intangible assets consisted of various operating licenses worth $3.05billion...
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...com/shop/ba-260-week-6/ BA 260 WEEK 6 BREACH OF DUTY BA 260 WEEK 6 BREACH OF DUTY, In the case of the Mississippi Beef Plant case, duty of loyalty was breached. Mr. Hall duties and obligation were to get the beef plant built and running based on the $22 million budget he estimated. This did not happen and initial estimated price rose to $55 million dollars upon completion. In this situation, the issue of self-interest arose in the form of Mr. Hall paying his family member nearly $45,000 dollars to act as a consultant on the project. Secondly, as a means of providing and supporting his family, and maybe for financial gain, Mr. Hall also gave $269,000 or fraudulent obtained grant money to other family members. To make matters worse, Mr. Hall also had the construction company building the beef plant to pay him a 1% consulting fee totaling $173,130 and allegedly had the same construction company to perform nearly $20,000 in work on his personal home. According to the article, nearly $270,000 in false invoices were submitted to the Mississippi Development Authority and Community Bank for equipment and other items and demanded more than a $87,000 payment for several other miscellaneous items. In the end, the plant only functioned for several months and shortly afterwards, Mr. Hall defaulted on the $35 million loan and the bank and the state were unable to sell the property. In the situation, Mr. Hall had a responsibility as a director to make financial decisions in regards to the...
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...BA 260 WEEK 6 BREACH OF DUTY, A+ Graded Tutorial Available At: http://hwsoloutions.com/?product=week-7-consideration Visit Our website: http://hwsoloutions.com/ Product Description BA 260 WEEK 6 BREACH OF DUTY, In the case of the Mississippi Beef Plant case, duty of loyalty was breached. Mr. Hall duties and obligation were to get the beef plant built and running based on the $22 million budget he estimated. This did not happen and initial estimated price rose to $55 million dollars upon completion. In this situation, the issue of self-interest arose in the form of Mr. Hall paying his family member nearly $45,000 dollars to act as a consultant on the project. Secondly, as a means of providing and supporting his family, and maybe for financial gain, Mr. Hall also gave $269,000 or fraudulent obtained grant money to other family members. To make matters worse, Mr. Hall also had the construction company building the beef plant to pay him a 1% consulting fee totaling $173,130 and allegedly had the same construction company to perform nearly $20,000 in work on his personal home. According to the article, nearly $270,000 in false invoices were submitted to the Mississippi Development Authority and Community Bank for equipment and other items and demanded more than a $87,000 payment for several other miscellaneous items. In the end, the plant only functioned for several months and shortly afterwards, Mr. Hall defaulted on the $35 million loan and the bank and the state were...
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...statutory duty of care and diligence as a director One of the issues raised in the case study is whether Rachael has breached her duties as a director under the common law or statutory duties. Statutory duties are enforced by ROC while common law duties are enforced by the company according to its Memorandum of Association (MOA) and Article of Association (AA) (Mohd Sulaiman & Bidin, 2008). Common law duties are owned by the directors and they must act in the best interest of the company and will be liable for any breach of duties obligated by the MOA and AA. A breach of the common law duty of care will usually result in the payment of compensation or damages to the company. On the other hand, director’s statutory duties are mentioned in Section 132(1A) of the Companies Act. Under Section 132(1A), a director of a company shall exercise reasonable care, skill and diligence with the knowledge, skill and experience which may reasonably be expected of a director having the same responsibilities and any additional knowledge, skill and experience which the director in fact has. Section 132(1A) was further elaborated into four categories of duties. The first category is that the director must exercise reasonable care (Mohd Sulaiman & Bidin, 2008). Under this provision a director is required to take reasonable steps to acquaint themselves with information concerning the company’s financial status and business. Referring to the case of Lim Weng Kee v PP, the managing director of three...
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...and duty between shareholder and management. Delima Enterprise Sdn. Bhd. was a large company due to these reasons; the company had been awarded with several engineering projects and its cumulative revenue for 2004 and 2005 were nearly RM 1 million and RM 1.7 million respectively. By referring that reasons, we can say that it was a large company. As a large company, the shareholders are separated from Board of Director and management. However, in this case, there is no separation or segregations of rights and duties between shareholder and management. Segregation of right and duties means assign two or more competent and qualified individuals in a way that provides reasonable assurance comply with the standards. It means, at any time , no one person should be in position of doing the primary functions of authorizing, recording and taking care the custody of assets. Besides, shareholders and director have two completely different roles in company. Shareholders are owner of the company while director manage the company. From what we can see in this case, Encik Zayed is the shareholder of Delima Enterprise Sdn. Bhd., in the same time he act as Managing Director. Meanwhile Puan Hashimah is the shareholder of Delima Enterprise, in the same time she act as Chief Operating Officer. Before the company hire Cik Amy as Finance Executive, Puan Hashimah was responsible for all finance related matters. There is clearly stated that they do not have segregation of rights and duties between...
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...Wisdom and Action Scenario The known facts are that the organization needs $10,000 in order to hire a part-time administrative assistant. The director of the agency applied to seven different foundations for $10,000 hoping that one of them would give the assistance that was needed. Three of the foundations accepted the proposal which left the director with $30,000 which was 20,000 more than was needed. Each of the foundations granting the money had different requirements had different requirements on the use of the money. Two of the foundations required that the money be used for what it was intended. Everyone that has anything to do with the organization is the stake holders such as the agency, granters, director, workers, and the clients that are served. Being truthful with the foundations could open up more doors for the organization. Let the foundations know what has happened and ask a couple of them if the money could be used in another part of the organization or if they would want their money refunded. Many foundations like that will let the funds be used in another part of the organization. You do not know if you can use it elsewhere if you do not find out the facts. It is your moral duty to let the foundations know what has happened. By doing this the organization will not end up with a black mark against it. One of the forces to be considered would be the law and running the organization within it. Trust is a valuable asset to many organizations. When lost it...
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...Key Features of Budget 2010-2011 CHALLENGES ! ! ! To quickly revert to the high GDP growth path of 9 per cent and then find the means to cross the ‘double digit growth barrier’. To harness economic growth to consolidate the recent gains in making development more inclusive. To address the weaknesses in government systems, structures and institutions at different levels of governance. OVERVIEW OF THE ECONOMY ! India among the first few countries in the world to implement a broad-based counter-cyclic policy package to respond to the negative fallout of the global slowdown. The Advance Estimates for Gross Domestic Product (GDP) growth for 2009-10 pegged at 7.2 per cent. The final figure expected to be higher when the third and fourth quarter GDP estimates for 2009-10 become available. The growth rate in manufacturing sector in December 2009 was 18.5 per cent – the highest in the past two decades. A major concern during the second half of 2009-10 has been the emergence of double digit food inflation. Government has set in motion steps, in consultation with the State Chief Ministers, which should bring down the inflation in the next few months and ensure that there is better management of food security in the country. ! ! ! CONSOLIDATING GROWTH Fiscal Consolidation ! ! With recovery taking root, there is a need to review public spending, mobilise resources and gear them towards building the productivity of the economy. Fiscal policy shaped with reference to the recommendations...
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...Running Head: Peter Singer’s Beliefs 1 In reading his article “Famine, Affluence, and Morality” Peter Singer gives us a seemingly devastating critiques of our ordinary ways of thinking in regards to famine relief, charity, and morality in general. In the spite of this there are some very few people that have accepted, or at any rate acted on, the conclusions he has reached. In aspect of these facts one could possible say of Singer’s arguments, as Hume said of Berkeley’s arguments for immaterialism, that “ they admit of no answer and produce no conviction.” In which I believe that Singer’s considerations show that people should do what would be considerably more than most people would actually do, people do not establish Singer’s conclusions in their full strength or generality. So Singer’s arguments may admit to partial answers, and possibly once properly qualified may produce some conviction. In the article Singer argues that the people who live in affluent countries must radically change their way of life as well as their conception of morality, so that they will become committed to helping those that are in need. Singer begins by asking us to consider cases of famine, like that in Bengal in 1971, Singer argues that the majority of people have a moral obligation to donate all we can possibly to the famine relief, and seeing that the people were suffering tremendously and either the government nor the individuals was doing anything near what was required to help...
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...at 19:25 Date & Time of Removal of Goods 23-Aug-2014 at 1955 Mode/Terms of Payment Dated 23-Aug-2014 Dated 23-Aug-2014 Dated Despatch Document No. Destination Delhi Motor Vehicle No. VAT TIN : 07766906454 CST No. : 07766906454 Excise Regn No. : AAHCP4632MEM001 Buyer (if other than consignee) Premium Graphite Pvt Ltd F-26R,First Floor, Kalkaji, New Delhi-110019 VAT TIN : 07766906454 CST No. : 07766906454 AAHCP4632MEM001 Excise Regn No. : Sl No. 1 No. & Kind of Pkgs. 1 Description of Goods Machined Graphite Components Cavity Ele Hse266159 C008_d Excise Duty 12% ( Output) Education Cess 2% (Output) S & H Edu.Cess 1% (Output) CST @ 2.0 % Against Form"C" (8,207.00) 60 Days Tariff / HSN Classification 38019000 Quantity 1 pcs Rate 7,304.00 per pcs Amount 7,304.00 12 2 1 2 % % % % 876.00 18.00 9.00 164.00 Total Amount Chargeable (in words) : INR Eight Thousand Three Hundred Seventy One Only Amount of Duty (in words) : INR Eight Hundred Seventy Six Only Amount of Cess (in words) : INR Twenty Seven Only 1 pcs 8,371.00 Form to Receive : C Form Dt: VAT Declaration : We declare that this invoice shows the actual price of the...
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