...The outcomes sought by the various employee associations seek for firstly, the imposition of the Australian-based wage of Jetair Ltd.’s former senior managers and pilots upon the New Zealand-based staff of JetairNZ Ltd. The second outcome sought by the employee associations seeks for the retrenchment of the senior managers and pilots made redundant by Jetair Ltd. The third concern is with regards to ‘excessive’ remuneration of Jetair Ltd.’s board. In examining these concerns, there are a number of legal areas that must be examined: firstly the relationship between Jetair Ltd. and JetairNZ Ltd. as a related body corporate and the various duties owed to both companies by their Board of Directors; the duties owed by the Board of Directors to both companies and the body corporate as a whole and the possibility of conflict of interest; the duty of care owed by the Board of Directors to their employees and the company as a whole; and finally the exploration of the remuneration of Jetair Ltd.’s Board of Directors as a reflection of the current financial situation of the company. The argument for and against the pursuit of legal action will be based solely upon relevant legislation and case law; therefore the conclusions drawn will be the recommendation for the employee associations in regards to the pursuit of legal action. Related Bodies Corporate – Holding and Subsidiary Companies Given that conducting business with an Australian-based workforce operations, business proved to...
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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...
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...pwc.com.au A guide to directors’ duties and responsibilities for non-listed public companies and proprietary companies in Australia Contents 1 Executive summary 1.1 1.2 2 Sources of company law in Australia Summary 1 1 1 2 2 2 3 3 3 4 5 6 6 6 7 7 7 8 8 9 9 9 11 12 Common law duties 2.1 2.2 2.3 2.4 2.5 2.6 2.7 Duty to act bona fide (In good faith) in the interests of the company as a whole Duty not to act for an improper purpose Duties of care and diligence Duty to retain discretion Duty to avoid conflicts of interest Duty not to disclose confidential information Duty not to abuse corporate opportunities 3 Statutory duties 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 Section 180 – Duty of care and diligence and the business judgment rule Section 181 – Duty of good faith Section 182 – Duty not to make improper use of position Section 183 – Duty not to make improper use of information Section 184 – Criminal offences Section 588G – Duty not to trade while insolvent Section 191–195 – Disclosure of material personal interests Section 208–210 – Financial benefits to related parties of public companies Section 285–318 – Financial reporting 3.10 Others 4 5 Company constitution Penalties PwC i Contents 5.1 5.2 6 Criminal penalties Civil penalties 12 12 13 13 13 14 14 14 Duties in practice – Examples of breaches in Australia 6.1 6.2 6.3 6.4 6.5 The Australian Securities and Investments Commission’s (ASIC) Power to Ban directors ASIC v Adler and Ors ASIC...
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...Why Depreciate Fixed Assets? Fixed assets are items that a company purchases for long term use in the business. Vehicles, machinery, equipment, furniture, land, etc. are some examples of fixed assets. The article discusses the rationale behind calculating depreciation of fixed assets. Depreciation of Fixed Assets Fixed assets must be revalued regularly to ensure that the right cost is included in the accounting books. Depreciation is very much necessary for fixed assets because the fixed asset would lose its residual value due to the wear and tear, depletion, passage of time, obsolescence or accidents over a time period. Therefore, the actual value of the asset cannot be determined if we take the purchase amount in the books every year. Fixed assets are major expenses of any business and have a set life period of their own when used commercially. After a certain time period they become obsolete for use, and require the business to buy that particular asset again. In terms of realization of cash, fixed assets have a longer liquidity time period. For example, if the business has purchased land and buildings, it will take a longer time to be realized in cash. In contrast, the current assets of the company – including money receivable, inventory, etc. – have a shorter time frame to be realized in cash. In order to reduce the burden on the business accounting bodies all over the world, the depreciation tool is used to determine the actual value of the asset and use it as a sinking...
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...1a) Advise Rachael on her position in respect of any breaches of her common law or 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...
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...CMS_LawTax_CMYK_28-100.eps Duties & Responsibilities of Directors September 2012 With increased consolidation of business across Europe, executives of multinational groups can find that they are required to become directors of companies in a variety of jurisdictions, often at short notice. The rules relating to directorships vary considerably from jurisdiction to jurisdiction. This guide is intended to provide an overview of the duties and responsibilities of directors across 23 countries in Europe, answering the most frequently asked questions for directors coming from another jurisdiction. In many jurisdictions, there are various forms of company available, and there are different rules for directors according to the type of company used. This guide focuses for each jurisdiction on the most common form of company, and on the rules which apply to executive / managing directors. CMS is the organisation of independent European law and tax firms of choice for organisations based in, or looking to move into, Europe. CMS provides a deep local understanding of legal, tax and business issues and delivers client-focused services through a joint strategy executed locally across 28 countries with 52 offices in Western and Central Europe and beyond. CMS was established in 1999 and today comprises ten CMS firms, employing over 2,800 fee earners and is headquartered in Frankfurt, Germany. This guide is intended only to provide a general overview of the matters covered. It is based...
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...Duties of Corporate People BUS670: Legal Environment of Business Prof. Kim Stock-Foster Duties of Corporate People A corporation’s main goals are to achieve outstanding corporate profits and an increase in shareholder returns (Mallor, Barnes, Bowers, & Langvandt, 2010). However, these goals can not be accomplished with out the participation of a board of directors, officers, and shareholders. According to the corporate Director’s guidebook,”Directors are elected by the shareholders and have a duty to advance the interests of the corporation to the exclusion of their own interests” (Anonymous, 2011). Although shareholders are unable to manage the corporation, they put a board of directors in place to “manage the business and affairs of the corporation” and “delegate the day-to-day operation of the corporation to the officers” (Anonymous, 2011). According to Mallor, Barnes, Bowers, and Langvandt (2010), “Officers are appointed by the board of directors” (p. 1054), and must use their power to complete assigned tasks. Ownership of a corporation belongs to the shareholders. Shareholders have the task of ensuring that corporate managers are compliant with corporate statute and bylaws (Mallor, et al., 2010, p. 1083). The purpose of this paper is to present a detailed description of the duties of the board of directors, corporate officers, and shareholders within a corporation. This paper will also include an analysis of the difference between a policy held and...
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...with no allegiance (duty) to any particular company. Each director signed something to this effect. Therefore, the ethical issue is: Is this a conflict of interest, where the board of directors would be using their positions for personal gains? Or, since they have signed a statement to the effect that they have no duty to any particular company, does this negate the conflict of interest? In other words, the members of the broad directors would be using their position to gain new clients if when calling their personal potential clients, they would be able to state," I am calling as director of the Energy Cooperative." To support this, taken from one Code of Ethics for a Board of Director developed to avoid conflicts of interest: "Directors may not: (a) take for themselves opportunities that are discovered through the use of Company property or information or through the director's position; (b) use the Company's property or information or the director's position for personal gain; or (c) compete with the Company, directly or indirectly, for business opportunities that the Company is pursuing" (http://www.airproducts.com/Responsibility/Governance/Code_of_Conduct/BoardCodeofConduct/directors.htm) 2. How can this be resolved applying KANT"s Categorical Imperative? Kantianism is a rights-based theory that holds that rational agents should follow a basic moral principle known as the categorical imperative. Kant believes only actions performed for the sake of duty have moral worth...
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...PART A INTRODUCTION The case discussed in this assignment is Forrest v Australian Securities and Investments Commission [2012] HCA 39. As a controversial case, in initial the judgment was made for ASIC. And then, the judge had given the verdict in favor of Forrest and Fortescue Metal Group in the Federal Court. But finally, in the High Court of Australia, the verdict found that both Forest was not guilty and the Company did not breach any sections of the Corporate Act in 2001. BACKGROUND Fortescue Metal Group Ltd (Fortescue), located in Western Australia, was a mining company (Fortescue Metal Group Ltd 2014). Mr Andrew Forest was chairman, chief executive and substantial shareholder in Fortescue (Fortescue Metal Group Ltd 2014). The Australian Securities and Investments Commission (ASIC) sued Fortescue and Forrest about a contract regarding the Port Hedland and a railway was to be built to connect the mine and the port. Fortescue signed a contract with three Chinese corporations, included China Railway Engineering Corporation (CREC), China Harbour Engineering Company (CHEC) and China Metallurgical Construction Corporation (CMCC) during August and November 2004. The three contracts were signed separately and being combined to be known as “Framework Agreement”. During August and November 2004, Forrest released a press that Fortescue had entered into a binding contract with CREC to build and finance a project which included construction of the railway. In...
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...Whether Anil, Ah Chong and Kombabawa have breached the duties of directors. 2. Whether Aaron has breached the duties of directors 3. Whether Duffy has breached the duties of directors. 4. Whether Frederick has breached the duties of directors Relevant Law Directors’ duties include statutory duties, common law duties, duties in equity and fiduciary duties. The court will probably examine all of them in determining whether the defendant has breached the duty of directors. Statutory duties Sections 180 to 1841 define the general duties of directors. Section 1802 states that directors should discharge their duties with care and diligence. Section 1813 states that the directors must discharge their duty in good faith in the best interest of the company, and for a proper purpose. Section 1824 states that directors should not improperly use their position to gain advantage for themselves or cause detriment to the corporation. Section 1835 states that the directors should not use the corporate information to gain advantage for themselves or cause detriment to the corporation. The obligations in ss. 180 to 183 are civil; however, if a director is reckless or intentionally dishonest when he/she breached ss. 180 to 183, he/she is liable for criminal charges6. Specific duties of directors include: directors should disclose material personal interest to other directors7. Section 1898 considers the director’s reliance on others to be reasonable if he satisfies three...
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...Austin J. in his final verdict said that ASIC’s case would have been stronger if they had assessed the breach of duty by the directors on the fiscal condition of the company at a specific point in time. For him, the case becomes quite irrelevant when a company’s financial situation is assessed for a period of five months as the company might had initiated some new ventures and some old ones might be getting successful during that time, giving company some great profits. Thus, in this case, for a fair judgment it was necessary for ASIC to probe the case against the breach of duties by the directors at a specific point in...
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...directors was a partner, was held to be void at the instance of the company, notwithstanding that its terms were perfectly fair. Brunninghausen v. Glavanics P 3.17 * Nature of the transaction may give rise to a fiduciary duty owed by the directors to the shareholders. Coleman v. Meyers P3.17 * Failure to disclose information within the knowledge of one director may amount to ‘special circumstances’ which can give rise to a duty of a fiduciary nature to individual shareholders and not just the company as a whole. Cooke v. Deeks P3.25 * Director cannot take up a corporate opportunity without fully disclosure Darvall v. North Sydney Brick and Tile Co. Ltd P3.17 * There is a greater obligation to take into account the interests of the creditors where the company is either insolvent or close to insolvency. Furs Ltd v. Tomkies P3.25 * Undisclosed benefits (to the shareholders) have to be returned to the company * Improperly use position in the company to his own advantage and to the detriment of Furs Ltd (P3.26) McNamara v. Flavel * A director of an insolvent company transferred assets of the company to his own company for no consideration so as to avoid claims by creditors. This was held to be a breach of duty (use of confidential information) Nguril Ltd v. McCann * Improper purpose: issuing shares to maintain the directors control over the company Paul A. Davies (Aust) Pty Ltd v. Davies * Any...
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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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...Western Australia government agency Healthway’s misuse of public funds, leading to the Corruption and Crime Commission delving deeper into the agencies affairs and increasing the spectre of charges against directors, board members and senior staff. Criminal Law Healthway’s directors, board members and senior staff members may face criminal charges for breaching their duties and codes of conduct, as the CCC’s investigation into the agencies affairs intensifies. Allegedly according to a Public Sector Commission report, Healthway grossly misused public funds in the procurement of thousands of tickets worth hundreds of thousand dollars, which in turn flawed to board members, senior staff and directors’ family...
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...be different requirements for directors of proprietary companies and directors of public companies? ANSWER Sections 201B(1) and 201B(2) of the Corporations Act 2001 stipulate that directors must satisfy a minimum age requirement of 18 years and are ineligible for appointment if they are disqualified from managing corporations. This qualifies a large proportion of the Australian population. Nonetheless, it is appropriate that there be no qualifications for directors; the corporate form should be available to everyone. The onerous obligations imposed on directors set a high benchmark for Australian directorship. To require positive qualifications would disqualify many competent directors. Qualifications would be inappropriate in many business contexts because the skills required of directors are specific to the corporation. Directors can rely on the expertise of employees with legal and financial qualifications in the performance of their duties. If qualifications were imposed on directors, a higher standard should be required of those in public companies. The actions of directors have a profound influence on the community, yet ‘[a director] is not bound to bring any special qualifications to his office.’ In AWA Ltd v...
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