...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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...Duties of Corporate People It is probably best to elaborate a little on what a corporation is before expounding on the duties of corporate people. A corporation is an organizational unit that is formed with the approval of the government and given the same legal rights as a real individual. A sole corporation comprises of a single person but an collective corporation is made up of a group of individual. This organization is approved to conduct business and/or other activities on behalf of the corporation such as issuing shares in an effort to increase capital or begin a business (Mallor, Barnes, Bowers and Langvardt, 2010). All corporations need someone to manage the business. While the shareholders assume shares in an organization, it is not customary for them to handle the business aspect of the corporation. A Board of Directors consists of individuals or members elected or appointed by the shareholders. This primal governing body performs as the entity; sets policies and guidelines; hold the power to appoint individuals as officers and safeguards the best interests of the corporation. This appointed body of individuals is charged to manage the company’s affairs and is ultimately accountable for the overall activities of the organization (Prado-Lorenzo & Garcia-Sanchez, 2010). Further responsibilities of the board encompass the “Duty of Care,” “Duty of Loyalty” and “Business Judgment Rule.” The most important of the three is the “Duty of Care” which defines that...
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...Introduction Corporations need management. “Management of the corporation must be consistent with the objectives and powers of the corporation, and they owe duties to the corporation to manage it prudently in the best interests of the corporation and the shareholders as a whole” (Mallor, et al, 2010, p. 1047). Corporations are too large to have one or two people manage all aspects of daily operations. Instead, there are people who hold important positions within the corporation. Many people work together in different areas with specific duties to perform in order to keep the operation running smoothly. Directors and Officers of Corporations The board of directors manages the corporation. “The Board of Directors sets a corporation’s policy and direction, and is empowered to elect and appoint officers and agents to act on behalf of the corporation, declare dividends, and act on other major matters affecting the corporation” ( Corporate Structure, 2012 ). The board of directors is made up of a group of directors. Those people can be appointed or elected. The group works together to make decisions within the corporation. They are responsible for the well-being of the corporation. While making these decisions, directors have to treat all the shareholders equally, being honest and fair while practicing good judgment in management. “The duty of care requires a director to act with the same care that a person in a similar position under similar circumstances” (Kim, 2010). Before making any...
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...Duties of Corporate People Duties of Corporate People Corporations are businesses that are seen as separate entities from their owners. Corporations have shareholders which can be privately or publicly held. To create a corporation where stockholders interest is looked after, a corporate hierarchy is established. This hierarchy is divided up into groups between ownership and management. Each group has a set of responsibilities and duties that must be carried out as part of the corporate process. Corporations are divided into three classes, for profit, not for profit, and government owned. For profit organization issue stock to shareholders who expect to earn a profit on their investment (James Mallor, 2010, p. 1010). Corporations can be large or small. Some for-profit organizations like, General Motors, is an example of a publicly held corporation. Publicly held organizations have shares that are available to the public. Other organizations have shares that are held closely. Close corporations have very few shares that are not available to the general public (James Mallor, 2010, p. 1010). Close corporations are held to the same rules as publicly held corporations under the law. There are a number of people critical to the corporate process. First, there are shareholders. Shareholders are the owners of a corporation. However, the business law text explains that traditionally, shareholders have no right to manage the business of the corporation (James Mallor, 2010, p. 1047)...
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...Running Head: Corporate Duties Corporate Duties Nicole Sherwood BUS670: Legal Environment Alexis Hooley March 26, 2012 Abstract Corporations are intricate entities and require many people to aid in its success. The main groups that actively contribute to the corporation are the directors, officers, and shareholders. Each group is vital to the success of the organization. A corporation is a company in the marketplace and is comprised of many people who have specific duties and responsibilities. All people who are part of the corporation are considered corporate people and are important to the day-to-day functioning of the corporation. Some corporate people are given duties that are necessary to achieve the mission of the organization. The key people within a corporation who are responsible for the mission of the organization are the directors, officers, and shareholders. The success of the corporation is largely due the work and success of these people. Duties of Directors of Corporations Directors of a corporation are largely responsible for the day-to-day operations and the direct success of the corporation. The main duty of the directors is to implement control and management within the corporation and to ensure that all functions are carried out in a smooth manger (McNamara, 2008). Part of ensure this is to define the policies and procedures of the organization so that company employees understand...
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...the legal and ethical behavior of an organization and its employees should support the long-term business strategy. It is imperative that ‘sustainable growth’ is the driving force of any organization… and this should be based on the People-Profit-Planet structure we have reviewed in the course. If we look to the advice of Karl Mann’s boss we could analyze it as following: 1. Profit: the decision/advice will support the short-term goal of profits, but not in a foreseeable and sustainable way; the risk which is embedded in his advice (i.e. possible death of people) is too high for the corporation! If something happens with injuries of workers the reputation of the corporation is damaged as such that the long-term profit is at risk… 2. People: this is clearly not the right advice in order to prevent damages and injuries at the people side. He reckons there have been accidents with dead people before, and still advices to go down that route ..; clearly an unethical decision where he –on purpose- risks the life of his workers. This cannot be the intent of a good sustainable policy; we cannot talk about good “corporate social responsible behavior” here …. It’s crystal clear that this is unacceptable managerial advice, not at all in line with good corporate governance in the DVC Construction organization either. This level of management is paid to look after the ‘best longterm interest for the organization’. Something we...
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...decision making. b. a set of relatively unclear principles regarding what we must do. c. a set of relatively unclear principles regarding what we should do. d. religious views about the world. 2. Laws must be static and unyielding in order to provide stability for a society. a. True b. False 3. Choose the statement regarding duty to rescue that is false: a. There is no general duty to rescue an individual. b. One basis for not imposing individual rescue liability is: An individual should have a right of freedom of action, privacy and personal autonomy not to intervene and perform rescue. c. Under a liberal–communitarian approach, citizens owe a duty to the state to rescue other citizens based on reciprocal rights and duties. d. When one taunts another person who then puts themselves in danger in response to the teasing, the teaser has a duty to rescue the other. 4. All of the following are considered exceptions to the general rule that there is no duty to rescue except: a. Contract – lifeguards, for example, have signed contracts agreeing to rescue people in exchange for pay and benefits. b. Witnessing an accident – this creates a duty to step in and help the injured c. Child abuse- statutes in nearly all states require that one report suspected child abuse. d. Endangerment – if one puts another in danger, then he/she is obligated to rescue that person. 5. Which of the following views on outsourcing would be consistent with the free market ethics approach advocated...
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...the powers of the Board of Directors of a corporation? a. Declaring a dividend, establishing the price for the sale of shares of stock, electing and removing officers, and filling vacancies on the board of directors. 3. What types of corporate actions generally require board initiative? a. Any fundamental changes in the corporation. 4. How are people nominated and elected to the Board of Directors? a. They are usually nominated by the current directors. 5. What are the 4 typical corporate officers of a corporation? a. President, vice President, Corporate Secretary, and Treasure. Just like we talked about partners of a partnership, and members of a LLC, owing duties to each other, so to do members of the Board of Directors and the corporate officers owe duties to the corporation. We’ll look at these duties in the following questions. 6. What is meant by the duty of a director or officer to act within their authority? a. The duty to act within ones authority and within the powers of the corporation. b. The duty to act diligently and with due care inconducting the affairs of the corporation. c. The duty to act with loyalty and good faith for the benefit of the corporation. 7. Under the duty of due care and diligence there are 2 standards that directors and officers must meet; the first is to measure up to the prudent person standard. What is the prudent person standard? a. Officers and directors are not liable to the corporation...
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...1. Identify and explain the four elements of proof necessary for a plaintiff to prove a negligence case. To begin with, when people think of professional liability in healthcare, they usually think of medical practice, a form of negligence. Negligence by definition is known as one of the most common type of malpractice that exists in the healthcare industry. However, in order for a negligence case to be proven, four elements are necessary: Duty of Care, Breach of that duty, Injury and Causation, (J. W. Showalter, 2007). The first element, duty of care, requires all persons to conduct themselves as a reasonably prudent person would do similar circumstances. Generally, duty of care is a legal notion that states that people owe anyone around them or anyone who could be around them a duty to no to place them in situations of undue risk of harm. For example, physicians have a duty to protect patients from foreseeable dangers that could lead to any injury. In case of a surgery, they have a duty to make sure all equipment are in good condition, so it does not lead to injury while the procedure is done. They also have a duty to take preventive measures which create a safer environment. The second element, breach of that duty, requires expert testimony, which normally comes from the defendant’s fellow practitioners because they know the standards of practice best. For example, a specialist may testify about the standards for general practitioners if she is knowledgeable about...
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...Agency Codes: Exacting Duties and Responsibilities Leading To Exacting and Expanded Liabilities READ: In providing for a system of governance, a legal jurisdiction usually chooses between the principles-based approach where the code of corporate governance provides general principles (like the OECD Code), and the rule-based approach, where the duties and responsibilities are detailed out (perhaps like the Sarbanes-Oxley Act of United States). * Organization for Economic Co-operation and Development (OECD)-promote policies that will improve the economic and social well-being of people around the world. OECD provides a forum in which governments can work together to share experiences and seek solutions to common problems. We work with governments to understand what drives economic, social and environmental change. * Sarbanes–Oxley Act of 2002 also known as the 'Public Company Accounting Reform and Investor Protection Act' (in the Senate) and 'Corporate and Auditing Accountability and Responsibility Act' (in the House) and more commonly called Sarbanes–Oxley, Sarbox or SOX- It is a United States federal law that set new or enhanced standards for all U.S. public company boards, management and public accounting firms. As a result of SOX, top management must now individually certify the accuracy of financial information. In addition, penalties for fraudulent financial activity are much more severe. Also, SOX increased the independence of the outside auditors who review...
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... 1/22/2013 Suneel Younis Mughal Ub 300 92 001 1.0 Corporate Governance Corporate Governance practice aim to ensure that the board is accountable to stakeholders, especially shareholders, and that management is accountable to the board (Lipton, Herzberg & Welsh, 2010).It is helpful to an understanding of corporate governance to appreciate that it is concerned with how corporate entities are governed as distinct from the way the businesses within those entities are managed. Governance relates to where the company is going. Management is concerned with getting the company there. This distinction is central is determining the role and function of the board and its relationship with management (Lipton et al., 2003). In the ASX Corporate Governance is described as “the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations. It encompasses the mechanisms by which companies, and those in control, are held to account. Corporate governance influence how the objectives of the company are set and achieved, how risk is monitored and assessed, and how performance is optimised (Lipton et al., 2003). There is no single model of good corporate governance. The eight core principles that the ASX Corporate Governance Council believes underlie good corporate governance. 1. Lay solid foundation for management and oversight-Fundamental to any corporate governance structure is establishing the roles of senior...
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...Many people are familiar with the role of the ethics in the auditing profession which basically is integrity and objectivity for the auditors. This essay addresses dimension of the ethics in the profession of auditing main demands for them in the profession is to assess the integrity and the ethical value of their customers or clients. This is indeed very difficult task for the auditors in practice and demands a deep and robust understanding the value of ethics, ethical infrastructure with their products. According to roger D, martin auditors face ethics issues from two perspectives among which one is well known and other being known and appreciated by the people who are familiar with auditors knowing their work and responsibility. The prospective of this is to deal among the ethical foundation of the auditing profession and to show the integrity and get appreciated with the job they do. This indicates ethics prospective as seeking within their profession on how to manage and achieve their targets with no difficulty. The other prospective, which the auditors face, is to understand and get the solution for the current and new clients. This is generally referred as an assessment, which demands a complete attention and understanding of ethics, ethical infrastructure and the solution of that infrastructure. This essay will give a complete picture on why ethics is important to the auditors and how significant is the contribution of auditors is to the effective corporate governance...
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...reus is a criminal act, and coupled with mens rea, ‘the guilty mind’, liability can often be imposed. However actus reus, deceivingly, does not have to be an ‘act’. There are certain circumstances where a failure to act, or an ‘omission’, is enough to place criminal liability. The general rule in English criminal law is that an omission will not result in criminal liability, for example if a by-passer witnesses someone being stabbed, but does not intervene, then the victim dies, they will not be liable, even though they may have reasonably been able to help. This is because there is no ‘constructed situation’ where it says there is a duty to act. However, there are certain situations where liability will be found, because it is expressed in statute, this is called direct liability; where a statute specifically states that there is a duty to act; for example the Road Traffic Act 1988 s.6 which provides that a motorist upon request of a uniformed constable provides a specimen of their breath. There is also a form of liability called ‘derivative liability’ a form which usually exists where a person is in a ‘special position’; for example a police officer who fails to intervene in a situation where the public would be put at danger, were he not to act. The very first step we must take...
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...Corporate governance Corporate governance can be defined as communication of audit matters with those charged with governance (ISA 260). Governance itself describes the role of person entrusted with the supervision, control and direction of an entity. Different company may have different bodies who responsible for the corporate governance. But nowadays, audit committee has been the important components of this responsibility as most of the company placed this role to audit committee. Even in ISA 260 requires auditor to actually determine who is in charge in corporate governance. As audit committee plays this role, they would deal with company’s internal control where in the end, company’s financial statement will be produced. So, how IFRS will ensure that the corporate governance will be achieved? Basically, corporate governance comes with 2 categories, firstly in term of non financial and another one is in term of financial. Here, we will focus more on financial since the financial statement is directly touched this category. Company’s financial statement is very important for the external users especially investors to make a decision and understand the business. Figures in the financial statement may not be very helpful, therefore, most of this investors will rely more on the disclosures or notes provided in the financial statement. Basically, IFRS promote corporate governance through this additional information by providing relevant and reliable information. In the notes...
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...the benefits of corporate social responsibility, for employees, management, organisation, society and the environment? An organisation have the leading and progressively essential role in our daily life, for example, the growing of most of the large firm and increase globalisation that refer to the organisation operating their businesses competing with the corporation in the world. One of an idea that has been the concern of the people in the recent years is the social responsibility. Social responsibility is one of the main problems in the business world. There has a link in between society, business and the government. In the past decade, the economic result of the decisions made by them is a major concern. “Currently, the organisations must also think about the authorization, honourable, ethical along with developmental outcomes with their selections.” (Anderson 15). This essay will discuss “ what the dangers and the benefits of corporate social responsibility, for employees, management, organisation, society and the environment. It will argue about the importance for an organisation to have corporate social responsibilities, which bring the advantages and the disadvantages to the society, cooperation and the government. Corporate social responsibility (CSR) is not explain that how much profit that the firm may earn and then donate to some charity organisation, but it is the connection with several actions that bring the benefits to the society. Corporate social responsibility...
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