Assignment on the Law of Business Organization
Added on - 28 May 2020
Showing pages 1 to 3 of 7 pages
Running Head: LAW OF BUSINESS ORGANIZATIONLAW OF BUSINESS ORGANIZATIONName of the StudentName of the UniversityAuthor Note
1LAW OF BUSINESS ORGANIZATIONQuestion One: What are the Corporate Legal Issues faced by Rio Tinto Limited inAustralia?It can be said that he directors and officers of a company are required to act diligentlywhile exercising their powers in discharging the duties of the aforementioned parties as stated bySection 180 of the Corporations Act 2001 (Corporation Act, 2001). It is also to be said that adirector or officer’s duty is to be assessed by how a reasonable person acting in the same positionwould have discharged his duties. The officers and the directors of a company must take due carewhile exercising their powers. The directors are required toIt would be established that a director or officer acted without due care or withoutdiligence if any reasonably person acting in the same position would not have acted in the sameway in the same circumstance. The powers exercised by the director or Officer has to be in goodfaith as stated in Subsection 180(2) of the Corporations Act 2001. The directors and officersmust not exercise their powers in their self interests. It is also important to mention that thepowers exercised by the officers and directors of a company must be in the belief that thecompany would benefit the most from it as stated in subsection 180(2d). In the case the partieshave accused of committing fraud. Section 596 of the Corporations Act 2001 states that officersof a company would be considered to have acted fraudulently if his actions are intended todefraud the company or its creditors.In this chosen case the ex executives of the company Rio Tinto had been accused ofcommitting fraud by the U.S Securities and Exchange Commission. The names of the exexecutives who have faced the allegations are Tony Albanese and Guy Elliot. Theaforementioned parties have allegedly concealed from its investors the actual financial status of
2LAW OF BUSINESS ORGANIZATIONthe company (ABC News, 2018). They had also concealed an unsuccessful deal in which RioTinto suffered a huge loss amounting to three billion dollars from the investors which hadoccurred under the watch of the aforementioned parties. After analysis of the case it can be saidthe parties had been additionally charged with fraud as their actions were held to intentionallydefraud the investors by concealing the loss from them. The aforementioned parties had failed toact diligently and failed to take due care to inform the investors of the loss suffered. It can bestated that they had also failed to act in good faith and their actions were not in the best interestsof the company.Question Two: What avenues are open to the law authorities and the Directors in relationto this case?The power of governing and inspecting whether the provisions of the Corporations Act2001 are correctly implemented is granted to the government body, Australian SecuritiesInvestment Commission. The Australian Securities Investment commission derives authorityfrom the Australian Securities and Investment Commission Act. The U.S authorities can appealto the aforementioned government body to conduct the investigation of the details of the case.The aforementioned commission will eventually inspect the whether the provisions as stated inthe Corporations Act 2001 have been violated or not. The other government bodies which havebeen granted the powers to conduct investigations on corporations are Australian Competitionand Consumer Commission and the Australian Taxation Office. It can be said that theaforementioned government bodies have been granted a broad range of powers (Shekhar &Zheng, 2017). The powers of the aforementioned government bodies include conductinginvestigation in order to find evidence to pursue law enforcement.