Business and Corporation Answer 2022

Running Head: BUSINESS AND CORPORATION LAW
0
Corporate Governance And Ethics
7/24/2019
Student’s Name

ACC03043 1
Answer 1
In the world full of commerce, every business has a single objective that is to earn profits.
Market competition is very high and businesses use different methods and techniques in order to
be number one in the market. Not only the companies but also the personnel of the same i.e.
directors and top management focuses on wealth management. This is the reason that over the
past decade, many of the cases of corporate collapses have been reported there. These events
were a clear breach of corporate governance where management of the company breached their
duties and after these events, some changes have been made in corporate governance codes and
rules. These changes developed the current policies and regulations on this subject. Few of such
corporate collapse and reasons behind the same are mentioned in the below part.
The first collapse is of Bond Corporation Holdings Limited. The director of the company Alan
Bind played a crucial role in the whole collapse. The company was already heavily geared
because of the stock market crash of the year 1987 and the subjective person made the situation
even worse by taking over some other companies such as US brewer Heileman and Lonrho,
British-based mining conglomerate (Prior and Costa, 2018). Such takeovers increased debts of
the company as there were also some other subsequent purchases. As the recession was already
there in the economy in 1990, the same hit the company and because of this company became
insolvent. It was also been noted that the person hides some significant information during
purchase bids.
Another corporate collapse that is to be discussed here is related to Rothwells Ltd, a merchant
bank based in Perth. The business was as popular as it was known as the lender of the last resort;
however, a terrible corporate collapse has been reported later on. Laurie Connell, chairperson of

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the company set aside the interest of deposits taker and made some aggressive takeovers. The
situation became worse when local investors asked their investment back after the stock market
crash of 1987 (Duncan, 2012). The person developed a rescue package collecting funds from
different Australian businesspersons but despite this, the situation remained the same and
ultimately the company went into liquidation.
The third breakdown is related to Girvan Corporation, which is counted as one of the significant
and worst collapses in the history of corporate governance of Australia. A company is used to
run by its management that consists of directors and other top management officers of the
company. They act on behalf of the company and therefore is known as agents of the same
(Members.Tripod.Com, 2019). In such a situation, they are required to act in the best interest of
the stakeholders setting aside their personal interest. In the collapse selected here for the
discussion, i.e. collapse by Girvan Corporation, management of the company failed to act in the
best interest of stakeholders. This company was facing negative cash flow issue for years yet
management did nothing to resolve the issue. In fact, management of the same altered the
accounting policies and hidden the issues over a long time. Stakeholder of the company faced
huge loss out of this incident.
After the above-mentioned discussion, it is far clear that issue arises when the management of
the company forgets their duties and starts acting for self-interest or work in negligent behavior.
It has been realized that one of the lead reasons for such failures were weak laws and regulations.
This is the reason that many of the changes have taken place in the corporate governance
structure. These changes mainly include high reporting requirements and timely audits of the
management conducts. In addition to this, penalty and fine provisions also become critical at
present that spread fear among directors and top management of the company. Internal audits,