StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Fundamental Principle for the Beginning of Australian Civil Penalty Regime - Case Study Example

Cite this document
Summary
The paper "Fundamental Principle for the Beginning of Australian Civil Penalty Regime " is a perfect example of a finance and accounting case study. Scholars have been paying attention to the structural implications and differences of a dispersed shareholding system of governance and an insider system that has more concentrated ownership structures…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.3% of users find it useful

Extract of sample "Fundamental Principle for the Beginning of Australian Civil Penalty Regime"

CORPORATE ASSIGNMENT Name Tutor: Institution: Course: Date: Introduction Scholars have been paying attention in the structural implications and differences of a dispersed shareholding system of governance and an insider system that has more concentrated ownership structures. International organizations have also been occupied in the dissection and categorization of related corporate governance laws. In as much as outsider systems are specifically associated with a shareholder centered pattern of corporate governance, insider systems are associated to a stakeholder model. An important debate therefore emerges as to whether interests of shareholders and stakeholders other than shareholders paramount to be considered by directors and if these duties need to be changed to facilitate socially responsible behaviors. This paper identifies and explains the nature and extent of this tension in the Australian market particularly as it applies to the plight of stakeholders. Employee interests In the recent years the fallout of companies like, HIH Company, one. Tel and Ansett and the James Hardie episode explain the susceptibility of workers in the present corporate law of structure in Australia that resulted to the shareholders-directors tension. Employees’ interests have been overlooked in many other cases of restructures and corporate failures. Changes to corporate legislations have since been made as a result of these events, and the embracing of planning like the General Employee redundancy scheme and Entitlements (DeMoH, 2000). Imposing personal accountability on directors for behavior that may undermine the interest of stakeholders, dealing with the ethical hazard occasioned through the separate legal entity principle and this helps the directors as the employees of the firm to protect themselves against all the avoidable liabilities that thwart them from their work. These actions though do not go far enough. Employees are still regarded as not existing by law even though their massive investment of human capital contributes much to company the company. The current legal situation requires the directors to act with integrity and in the best welfare of the company. However Common regulation requires directors to give priority to shareholders’ interests. These employees’ interest or other stakeholders can only be considered if 7this would be in the concern of the company. Employee interest cannot supersede those of shareholders. Not even the interest of the company in retaining harmonious industrial dealings would warrant directors to undertake such an action (Herald, 2006). If a company becomes insolvent employees get laid off. These employees need to ally with other company creditors to claim their unpaid salary and other employment benefits. Workers find their due after secured creditors despite them posses the right to priority treatment over other creditors who are unsecured. Nevertheless, in most cases there are no assets left to meet claims of employee after settling of the debts of secured creditors. Business restructuring is widely experienced in the Australian economy over the last two decades leading to lying off millions of company workers. For example closures, relocations, and large-scale job cuts at main firms like Arnott’s, South Pacific Tyres and Coles Myer (M.Fordharizon, 1998). Creditors Creditors are also major contributors to the steadiness of the company and their interest should be upheld, but just like employees, they are also exposed to the risk due payment default incase a company bankruptcy. Even though most creditors are secured or are aware of price-protection against risk, others do not. These are the retail trade creditors who do not have perfect knowledge about the risks to which they are exposed. Some of them also lack the bargaining power to change a premium in order to reimburse for the risk. Directors are required by case law to consider the welfare of creditors when a company is insolvent or is facing insolvency. The cases however lack a duty that is enforceable to the creditors. It is only the company’s Australian Security and Investments Commission and liquidator that can claim for compensation or for the recovery of company finances to creditors. Tort victims Tort creditors are vulnerable due to unawareness of any legal obligations of corporate responsibility. This is because of lack of the ability to self- protecting or any recovery rights as stipulated in the Corporations Act. This problem arises when a holding company has intentionally incorporated an undercapitalized subsidiary to minimize loss of shareholders funds. The separate entity principle as illustrated in the James Hardie case is a hindrance to tort victims who are seeking to be compensated in corporate groups due to undermining of the Compensation Fund and Medical Research that had been recognized for the purpose (R.K, 1999). Special committee of Inquiry in to James Hardie identified loopholes in the Corporate law of Australian and raised questions on whether the existing laws of corporate covering among corporate groups effectively reflect on current public potential and standards. Tort victims are disadvantaged by the adversarial nature of the judicial system when it comes to launching claims against powerful corporations (Mcmark, 2008). The late Mrs. Rolah M cCabe demonstrated this when her allegiance against British American Tobacco was harshly hindered by the devastation of significant information by the company. Consequently, there is need for some form of ethical or moral charter so as to steer decision-making processes in corporations. The susceptibility is mostly affected by the approach of courts to claims against directors who act unlawfully under the company’s name. The law position has not clearly specified the four recognized tests used to determine the circumstances under which personal accountability can be imposed on directors of the company (H., 2000). Some courts also impose the principle of the limited liability to incorrectly rebuff tort victims their claims against a director of the company in his capacity as an administrator whereas it is important to protect shareholders. Environmental interests Rapid universal economic growth has left the natural environment vulnerable to corporate abuse. Rapid increase of human population and the western consumption routine due to industrial uprising has resulted to supremacy of the Earth’s ecosystems by human. This exceptionally includes crisis and water shortages and increased species destruction rates according to the vision of irreversible change climate. This shows clearly the current international concern on structure of universal agreements and national norms to safeguard the environment. Particularly the Company law explains the broader responsibility of the directors on how to operate in the best welfare of the company. It further stipulates that directors may only forfeit profits for fortification of the environment if the profit-making aims of the company coincide with it. (I., 1997 ) Control and commands has been the conventional model of environmental law. It has been based on strict government possession of natural resources. This move has become ineffective as a result of broad micro-economic laws that govern privatization, globalization, and deregulation of government-owned enterprises. These reforms have significantly reduced government mismanagement over the exploitation of natural resources. The conventional model is ineffective, due to increase in basic nature of environmental tribulations, on local industrial contamination which has been overcome by the universal concerns dealing with the extreme resource exploitation of under-developed countries, and alteration of climate resulting to loss of biodiversity. The responsibility of directors as stipulated by the Corporations Act requires directors to operate genuinely for the best welfare of the company. It should be amended to permit directors to consider the welfare of external stakeholders. Thus, changes corporate decision making and admission process by ensuring for all corporations superlative practice on environmental and social accountability (Graigs, 2010). To implement this civil rule punishment the following discussion will be comprehensive to provide for suitable non-shareholder stakeholders to seek redress which include civil penalties, declarations and injunctions. The new duties would incorporate the following elements. A liberal aspect having common application In this case it is stated clearly that directors should consider the wellbeing of consumers, creditors, environment, employees, and other stakeholders during the normal course of company decision-making, yet it would conflict the wellbeing of shareholders and their profit maximization goals. The legislation requires to providing some guidance to directors on when stakeholder welfare may be prioritized before those shareholders (R., 2001). This would be essential to guarantee the company certain its obligations under other related laws like occupational and employment health and safety standards. A mandatory aspect having specific application This requires directors to prioritize stakeholder welfare over those of shareholders; in case of the stakeholder welfare suffering adverse dealings is heightened. The stakeholders could thus be able to demonstrate that their wellbeing were substantially intolerant by the directors’ planned actions or dealings in order to explain violation of this phase of the new duties of directors. Reflection should be considered to ensure the acknowledgment of employee welfare when a company is performing restructure or reorganization that may have negative impact on employees like large-scale proprietors. This can be completed through the consideration of a explicit duty as stipulated in the Corporations Act, where directors could opt out of by considering lasting structures for continuing discussion with employees about most important venture and business decisions that has been recognized by the company (Company Act 1985 section-317, 1985). For example formation of specially-constituted panel of committees with employee representative’s councils that has privilege of accessing company confidential information relating to planned business decision. Therefore it will make it possible for the company to implement the opt out from the responsibility to prioritize employees welfare in reorganization situations. Conclusion Even though part of the fundamental principle for the beginning of Australian civil penalty regime which was largely to create clarity between non-criminal and criminal conduct, boundaries between civil penalties and criminal accountability has become indistinct. This blurring is evident in the remarkable increase in the quantum of common punishments against companies and administrators. The High Court petition relating to One.Tel, the blurring event worked in favor of corporate executive. The High Court in Australian rejected an order sought by ASIC for finding of documents relating to civil trials against the earlier CEO of One.Tel. References Company Act 1985 section-317, 2357c (New York Suprime court September 5th, 1985). DeMoH, D. A. (2000). Shareholder challenges to execative remuneration. Melbourne: FT Pitman Publishing. Graigs, P. (2010). Company and its environment. New York Times , 40-55. H., M. (2000). Corporate Governance and Workplace Partnership. Industrial Relations Journal , 200-207. Herald, S. (2006). Maintainig Harmoniours industrial Relations in the company. News limited journal , 26-45. I., F. (1997 ). The power of the competative board. FT Pitman Publishing: Melbourne. M.Fordharizon. (1998). Introduction to company law. Carlifonia: Coles Myer Publishers. Mcmark, B. K. (2008). How to minimise the shareholders funds. Free Management Library journal , 120-150. R., K. S. (2001). Partnership and control:The impact of corporate Governance on Employement relations. Carmridge: Carmbridge university press. R.K, M. (1999). An investigation of stakeholder Altributes and silence. Academy of management journal , 507-513. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Fundamental Principle for the Beginning of Australian Civil Penalty Case Study Example | Topics and Well Written Essays - 1500 words, n.d.)
Fundamental Principle for the Beginning of Australian Civil Penalty Case Study Example | Topics and Well Written Essays - 1500 words. https://studentshare.org/finance-accounting/2078499-corporate-assignment
(Fundamental Principle for the Beginning of Australian Civil Penalty Case Study Example | Topics and Well Written Essays - 1500 Words)
Fundamental Principle for the Beginning of Australian Civil Penalty Case Study Example | Topics and Well Written Essays - 1500 Words. https://studentshare.org/finance-accounting/2078499-corporate-assignment.
“Fundamental Principle for the Beginning of Australian Civil Penalty Case Study Example | Topics and Well Written Essays - 1500 Words”. https://studentshare.org/finance-accounting/2078499-corporate-assignment.
  • Cited: 0 times

CHECK THESE SAMPLES OF Fundamental Principle for the Beginning of Australian Civil Penalty Regime

WTO Principles: Australian International Trade Policies

… The paper "WTO Principles: australian International Trade Policies" is a wonderful example of a report on macro and microeconomics.... The paper "WTO Principles: australian International Trade Policies" is a wonderful example of a report on macro and microeconomics.... By opening the australian economy to international trade in the early 1980s, greater competition and increased trade were realized.... In addition, the continued growth of China which is a close trading partner of Australia greatly helped in averting recession on the australian economy....
7 Pages (1750 words)

Change Management in the Australian Post

… The paper "Change Management in the australian Post" is a perfect example of a management case study.... nbsp;This report looks into change management in the australian post.... The paper "Change Management in the australian Post" is a perfect example of a management case study.... nbsp;This report looks into change management in the australian post.... The approach taken by australian post depicts how the improvement in the market is achieved....
13 Pages (3250 words) Case Study

Australia`s International Responsibilities

Its capital city is Canberra, which is situated in the australian Capital Territory.... Its capital city is Canberra, which is situated in the australian Capital Territory.... Since 1945 when the UN Charter was drafted, Australia's foreign policy has been shaped by the fundamental philosophy and aims of the UN, which are to maintain global peace and security, to foster global cooperation, and to develop pleasant relations amongst countries (UNAA 2012; Commonwealth Bureau of Census and Statistics 1971, p....
6 Pages (1500 words) Case Study

Australian Trade Flows - Development of Policy

… The paper “australian Trade Flows - Development of Policy” is an outstanding variant of the statistics project on macro & microeconomics.... One can trace the history of contemporary australian trade flows to the australian policies during the Great Depression and the interwar period.... The paper “australian Trade Flows - Development of Policy” is an outstanding variant of the statistics project on macro & microeconomics....
8 Pages (2000 words) Statistics Project

Reserve Bank of Australia Interest Rate Regime

… The paper "Reserve Bank of Australia Interest Rate regime" is a perfect example of a micro and macroeconomic case study.... The paper "Reserve Bank of Australia Interest Rate regime" is a perfect example of a micro and macroeconomic case study.... nbsp;As of 2010, the australian economy has withstood the after-effects of the Global Financial Crisis (GFC) in a healthier economic standing than comparable western economies.... nbsp;As of 2010, the australian economy has withstood the after-effects of the Global Financial Crisis (GFC) in a healthier economic standing than comparable western economies....
5 Pages (1250 words) Case Study

The Features of Legal and Regulatory Frameworks

The paper seeks to explore the features of legal and regulatory frameworks that are effective in the course of offering financial products and services as well as indicates the characterization of the philosophy of the entire regime.... The disclosure regime is set to restore a significant number of existing disclosure regimes related to the numerous financial products like the SIS and RSA Acts.... In this regard, the emergence of a consistent disclosure standard needed for the application of all comparative information on financial products and services is the sole objective of the regime, which also strives to attain industry-specific efficiency as well as the lowering of compliance costs associated with this process (Fein, 2007)....
5 Pages (1250 words) Term Paper

Taxation Reforms in Australia

Such an approach is what has proved a complex strategy in Australia is owing to the historical battle of the choice of the tax regime to be implemented (Bajada, 2002).... The Australian neutrality regime was favored because of the need for the preservation of equality and the status quo.... It was necessary for Australia to focus on the effect of changes to the existing tax regime through a comparative approach (Evans, 2000; Bucovetsky & Haufler, 2007)....
6 Pages (1500 words) Case Study

Fundamental Principles of Business - Woolworths Limited

They are indispensable principle factors that form the basis for successful management.... They are indispensable principle factors that form the basis for successful management.... … The paper "fundamental Principles of Business - Woolworths Limited " is a perfect example of a business case study.... fundamental principles of management may be defined as the guiding principles used by managers in decision making.... The paper "fundamental Principles of Business - Woolworths Limited " is a perfect example of a business case study....
8 Pages (2000 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us