ISSUE: Did Paul breached his duty to the Company pursuant to section 181 of the Corporations Act by issuing the special category of shares? RULE: Section 181(1) of the Corporations Act 2001 [cth], the directors and the other officers of a corporation must exercise their powers and discharge their duties ‘in good faith in the best interest of the company‘ and ‘for a proper purpose’. The case of Hogg v Cramphorn Ltd(1967) states that the directors of Cramphorn Ltd issued shares for the only motive of spinning an intimidating majority into a minority to avoid takeover. The new shares that were issued by the directors were held to be invalid. The directors had violated their duties as directors by issuing shares for the purpose of preventing …show more content…
Paul on the other hand, all the power of the company. When Mavis died, she left her three “B” shares for her sons which gave them the voting rights in the company. Soon, Paul developed friendship with Cleo. He issued a special category of shares for Cleo that allowed her to have complete control over the company upon Paul’s death. His determination unquestionably neglects the voting rights of his sons in the company as they would attenuate upon his death and all the decision making power will go to Cleo who neither has the experience nor the qualifications in the manufacturing industry. With such a decision Paul is breaching the fiduciary and statutory duties under section 181(1) of the Corporations Act as he is not exercising his duties in good faith and for a proper purpose. This act of giving Cleo all the power without her having apt knowledge for the business may end up jeopardising the company and will definitely remove Paul’s sons from having any power which is not right as the directors are required to act in a good way for the company and the shareholders are a part of the company. Thus, Paul is breaching his duty to the company under section 181(1) of the corporations
Not only that but, believe that it is so awesome what Chief Executive Officer Amos, is allowing stockholders to vote on the pay package can include salary, bonus, stock options, and deferred compensation. There are not many top level managers that would put their livelihood in the hand of others. To me this speaks volumes about his leadership.
This created an unclear ethical dilemma for Vicki Vice-President. Even though Vicki Vice-President was told that the board no longer approved of the merger with Widget there were ambiguous features that clouded the choices she made. This dilemma caused Vicki Vice-President considerable stress, because a single choice would have to be made that may not feel well served as a result. Before Vicki Vice-President made her decision on whether or not she would ignore the board’s decision, she should have allocated herself sufficient time to think through the results of her actions. Vicki Vice-President also should have identified that the entity she owed primary allegiance too was the board, not Paul President. The board was the entity that appointed Vicki Vice-President; therefore she should have involved the board in her decision to support Paul President. If Vicki Vice-President would have thought the actions through, she possibly could have avoided any ethical dilemmas in this situation (Koocher, Spiegel,
Brian sees that Adam can continue with the company successfully and this is way he is giving him more and more responsibility. From Adam’s perspective, I think Brian’s role should not be as chair of the board or owner of Roberts Real Estate, he should now be more as a mentor for Adam. I think it is time to give those positions to Adam because he is basically giving him fully responsibility, for example, he has already delegated decision-making capabilities and day-to-day to operations to him. Also, by leaving Brian in these higher positions, it could potentially hold back Adam from growing the company because his dad might still be stuck in the old ways. From Adam’s perspective, I think that Julie should get some shares as part of her inheritance but not that many, maybe a 90/10 split, because it doesn’t seem like she has much interest to join the company and will probably not be working for the company.
It is my understanding that this will enable her to regain her authority and order of power so that the company can move forward and eliminate the conflict that is presently surfacing. It is here where it is also seems clear to me that Chris needs to take part of the coalition by respecting what the other employees are suggesting and by following the policies and procedures that become written and for him along with having him follow the chain of command within the organization. He needs to honor the authority and order of power that Elizabeth is entitled to by not only being the owner of Stover Industries but by being his boss as
The Corporations Act 2001 (Cth) (the Act) places great emphasis on good corporate governance. Along with the rights and powers conferred by the Act, directors are also subject to a wide range of duties that are owed to the company, including members and shareholders. The duties mentioned in the Act occur concurrently with the general law duties. In order to ensure compliance with the legislation, the Act has implemented the use of civil penalty provisions to target the perceived shortfall of the previous methods of corporate law administration. Actions for contravention can only be brought forth by the Australian Securities and Investments Commission (ASIC) in its role as watchdogs of corporate law.
The Caparo Industries Plc v Dickman was a case that regarding a test for a duty of care. In this case, an organization called Fidelity Plc which is manufacturers of electrical equipment, was the objective of a takeover by Caparo Industries Plc because of Fidelity Plc was not doing well. In May 1984 fidelity’s directors made an announcement in its yearly profits for the year up to March affirming the negative viewpoint, the share price fall. At the point, Caparo Industries had started purchasing up shares in huge numbers. In June 1984 the annual records, which done by the accountant Dickman, were issued to the shareholders which currently included Caparo Industries. Therefore, Caparo Industries who had a majority shares,
The corporate directors have a fiduciary duty of trust and confidence to its appointed leaders. Roger, as the director, was liable for his decisions, but is not liable because of unknown circumstances. The major oil supply disruption was out of his control. Directors are chosen to lead success of an
As a framework for identifying and analyzing many common business ethics problems, the contractual theory focuses our attention on the need to provide adequate safeguards for each constituency's interests. Corporate governance is concerned primarily with protecting shareholder interests, in part because the special contracting problems of shareholders are best met by the residual claims that the law of corporate governance creates. The comparative neglect of other constituencies in corporate law is not a matter of concern as long as their interests are adequately protected in some way. How the interests of each constituency are protected--whether by means of corporate governance structures or other means--is a matter of what works best in practice. Before we can devise means for protecting the interests of each ...
In response to the idea of a corporate responsibility, not an individual’s, many argue that if the corporation is not a person, how can it be held to the same moral guidelines as an individual? After all, don’t people make the decisions, and those same people make up the corporations, and should therefore be held accountable. This theory does not exclude the possibility of upper management being held responsible; rather it includes it for the sake of the company’s survival.
We need to consider the consequences of weak leadership, poor management of risks, inadequate training and relatively partial indulgent of the significances of such misconduct. The abuse by Barclays’ personnel of their positions of trust for the sake of corporate and indirect private gain was ethically corrupt behavior. It exposes weaknesses in corporate governance and
Despite parental efforts to control children, teenage rebellion proves as an unavoidable staple in individuals' maturation. For some, this rebellion proves brief; for others it results in devastation. Regardless, this necessary and natural process often includes defiance of societal expectation in addition to domestic contradiction. Society's typical rejection of teenage rebellion destroys innocence, disturbs peace, and often inhibits social progress.
The executive has a direct responsibility to his employers… which is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to the basic rules of society, both those embodied by law and ethical custom” (p. 34). Moreover, the Shareholder Theory asserts that shareholders are the ones who spend their money to employ the corporate executives, who are in return supposed to spend corporate funds only in ways that have been authorized by the shareholders. Primarily, this argument is based on the notion that corporations are only “artificial persons” and cannot have responsibilities like “natural persons” (p. 34). Instead, the argument is based on the basic principles of ownership and employment. In essence, the shareholders are the owners of the firm, and the corporate executives are those whom they employ.
In conclusion, it was established that corporate governance is a crucial aspect of running family-owned enterprises. This essay put forward three elements of good corporate governance practice, but there are many more elements that can be incorporated in having a successful family business. In the end it should be mentioned that not one solution (element) but a combination of elements shall be designed company specific for the enterprise to succeed.
According to Carol Padgett (2012, 1), “companies are important part of our daily lives…in today’s economy, we are bound together through a myriad of relationships with companies”. The board of directors remain the highest echelon of management in any company. It is the “group of executive and non-executive directors which forms corporate strategy and is responsible for monitoring performance on the behalf of shareholders” (Padgett, 2012:1). Boards are clearly critical to the operation of companies and they are endowed with substantial power in the statute (Companies Act, 2014). The board is responsible for directing and steering the company. The board accomplishes this by business planning and risk management through proper corporate governance.