Corporate Social Responsibility and Governance

The assignment delves into the complex interplay between corporate social responsibility (CSR) and governance. It examines various aspects of contemporary corporate governance principles, including their impact on ethical business practices and environmental reporting. The analysis also investigates how firms benefit from CSR initiatives and explores the role of alternative performance measures in evaluating corporate sustainability.

Research Assignment

Table of Contents
INTRODUCTION...........................................................................................................................3
A).....................................................................................................................................................3
Power of Board of Waldmart limited to issue bonus shares ......................................................3
B)......................................................................................................................................................6
Whether Shareholders can stop the shareholders from increasing and payment of dividend....6
C.......................................................................................................................................................8
Consequence of Waldmart's Ltd and its director in case of voting against in remuneration
report...........................................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES................................................................................................................................9

INTRODUCTION
In this present era, it has been evaluated that law has its great significance. It can be
further evaluated that law has a great significance. It can also be noted that law has different
parts and types. It can be characterised as business law, corporate law, commercial law etc. in
this report, various concepts of corporate law has been discussed 1. Also, different aspects ad
terms related to the corporate law and company law will also be demonstrated. In this report, it
can also be assessed that there are different terms and conditions which are need to be followed
by companies in order to comply with different provisions of company. Also, various terms
relating to the issue of onus shares and dividend to shareholders is also discussed.
A)
Power of Board of Waldmart limited to issue bonus shares
In accordance with the given scenario, in which there is a company namely Waldmart
Limited which is a corporation registered under Corporation act, 2001. It proposes to issue the
bonus shares which are been liable to be paid to existing shareholders. Also, a dividend is also
proposed to be paid its shareholders at the rate of $1.25 cents which is 25% greater than the rate
of dividend paid in last year. Also, the shareholders were of the opinion of that the company is
paying the dividend as just for the reason for rejection of the remuneration report presented by
directors in a AGM. The Constitution of Waldmart Ltd authorises the board to issue the bonus
shares in accordance with the decided rate of declaration of dividend 2. The Board of directors
have also issued a letter consisting of importance of shareholders which consist of importance of
shareholders in approving the remuneration report. In addition to this, it has been provided that
Jim Smith , the manager of the Better Super Ltd, holds 4% of the shares in the Waldmart Ltd.
1 Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate
sustainability: Empirical insights into the development, leadership and implementation
of responsible business strategy. Journal of Business Ethics. 122(1). pp.145-165.
2 Galbreath, J., 2010. How does corporate social responsibility benefit firms? Evidence
from Australia. European Business Review. 22(4). pp.411-431.

Also, there are number of shareholders who are unhappy regarding the proposal. They put up the
opinion that the the issue of bonus shares are not considered as the right decision taken by the
management of the board of directors as it is an unwise decision.
In accordance with the provisions of the Corporate law in Australia, it can be held that a
company is an institution which is formed in accordance with the concepts laid down in act.
Also, it is the corporation, which has been formed as a separate legal entity which has been
created by the charter , legislation or prescription. There are two types of companies which can
be characterised as Public company and Proprietary company. It can be further noted that a
public company is the one in which the ownership has been distributed among the public general
in the form of shares or stock which are able to be traded on a stock exchange and in the over
county market place. In accordance with the provisions laid down under the act, it can be
assessed that there are different provision which the company should comply while distribution
of the dividend 3. It can be further analysed that there are certain provisions which are liable to
be complied in order to declare the dividend to its shareholders. Bonus shares are those shares
which are issued by the company to its current shareholders in the context of their current
shareholding.
The constitution of a company which can also be named as the memorandum of
association, is a document which is consist of all the legal rules and regulations which the
company is liable to adhere. In addition to this, it is a document which is considered to govern
the internal management of the company. It is also treated as a vital written document which has
a control over the internal activities which the companies are liable to perform and also regulate
the internal and external relationship between its members, directors and shareholders. It is the
legal document which is necessary to be formulated by each and every company in accordance to
have their own constitution or to have adopted as per the rules and regulations of the Australian
Securities and Investment Commission (ASIC).
In conformity with the given provisions of the company law a company can distribute its
dividend in accordance with the following provisions :
A company can distribute its shares in accordance with the given laws and regulations as
specified under SECT 254T of Corporations Act, 2001.The situations in which the companies
can pay of off the dividend to its shareholders are as :
3 Du Plessis, J.J., Hargovan, A. and Bagaric, M., 2010. Principles of contemporary
corporate governance. Cambridge University Press.

(1) A company must not pay a dividend unless:
(a) The assets of a company exceeds its liabilities before the time at which the
directors of the company makes declaration regarding the payment of dividend and also clarifies
that the excess of profit is sufficient for the payment of dividend to its respective shareholders.
(b) The amount and payment of dividend is considered to be the reasonable and fair
in view point of perspective of shareholders in an entire manner.
(c) Also, the payment made in aspect of dividend does not prejudice the ability of
company to pay an amount to its creditors.
(2) In accordance with the provisions of the Act, for the purpose and intent for calculation
of assets and liabilities, it should be done in accordance with the applicable accounting standards
which are prevailing at that time in the time being in force.
Also, bonus shares are those shares which the management or Board of Directors of the
company proposes to issue to its existing shareholders on the Pro Rata basis with the shares
which they itself hold in company 4. It is being paid by the company to its existing shares from
the accumulated profits.
The power of the board of directors in the case of the issue of bonus shares and dividend
are as :
 The Board of directors has a power to issue the bonus shares from the profits,
undistributed profits and money provided by the central government to the state
government.
 It should be authorised by the board of directors and general members.
 Also, the issue of the bonus shares if it has been recommended by board, then it will not
be revoked back on the request of the shareholders.
 A board resolution needs to be passed in the context of the issuing of bonus shares to its
existing shareholders.
With reference to the given case scenario, it can be took that the Board of Waldmart has a
power to distribute the bonus shares in lieu of profits which have been earned in last years. The
constitution of the company has authorised to issue bonus shares and dividend to its
shareholders. As in accordance with the provisions, the company can perform all the tasks and
4 Clarkson, P.M., Overell, M.B. and Chapple, L., 2011. Environmental reporting and its
relation to corporate environmental performance. Abacus. 47(1). pp.27-60.

activities which are mentioned in the constitution of company, as it is the document which
specifies al, the internal management of the company. So, in this context the company can issue
the bonus shares and dividend to its shareholders , as the company is legally authorised to do so.
Also, the shareholders at the next Annual General Meeting can not compel the Board of directors
to not to issue the bonus shares. Also, the cited company is authorised to issue the bonus shares it
is being laid down in the provisions of the Corporations Act, that an institution can issue the
bonus shares by utilisation of its own profits instead of paying its shareholders for new shares. It
also cut down the value of the each share of the company in order to make it more marketable.
Also, it increases the share capital of company.
So, with reference to this case, the company can issue the bonus shares and dividend to
the shareholders of the company.
B)
Whether Shareholders can stop the shareholders from increasing and payment of dividend
In accordance with the provisions of the Corporation Act, 2001, each and every company
is liable to pay dividend in respect of its profits to its existing shareholders. The term dividend
can be treated as the amount which is the part of the entire profits distributable among
shareholders 5. It can furthermore evaluated that the amount and payment of dividend is declared
and recommended by the board of directors at the Annual General Meeting of the company to its
stake owners and shareholders. In the light of this provision, the board of directors of the said
company has issued the bonus shares and dividend at the rate of 25% to its respective
shareholders.
With reference to the given case scenario, Waldmart limited has declared an amount of
dividend at the rate higher than 25% from the last year. It can be further noted that there are
certain provisions which are related to the declaration of dividend. In this aspect the shareholders
can resist the board of directors to issue the shares as they have a power to do so. It can be
analysed in accordance with the rules and regulations specified as per the provisions of the said
act.
5 Pham, P.K., Suchard, J.A. and Zein, J., 2011. Corporate governance and alternative
performance measures: evidence from Australian firms. Australian Journal of
Management. 36(3). pp.371-386.

In accordance with the provisions, it can be evaluated that there are different rules and
regulations which are need to be considered in the context of the issue of bonus shares and
dividend. In accordance with the provisions of the legislations, it has been considered that board
of directors has a power to issue bonus shares. Also, when there is a recommendation of issue of
bonus shares then it will be considered that the decision can not be revoked by shareholders. I
other words, approval of shareholders is just treated as a formality. It does not create any
difference whether or not it has been approved by the shareholders or not.
So, in the light of the given scenario, The shareholders does not have a right to restrict the
issue of bonus shares and other dividend to its shareholders. It is the power of the board of
directors to issue the bonus shares 6. However, In accordance with the provisions specified, it can
be laid down that in case of declaration of dividend up to 10% of the paid capital, the board
resolution is required to be passed at the board. It signifies that the company has a right to issue
the bonus shares. Moreover, in the case of the issue of dividend more than 10 percent and up to
the 25 percent, then special resolution needs to be passed. There are also some conditions which
are specified in the laws and legislations for the issuance of bonus shares to the respective
shareholders. These can be summarised as under:
 These should be authorised by the articles of association of a business corporation.
 It should be authorised by the board of directors.
 Appropriate form should be filed with the board resolution in the company for issuance
of bonus shares.
Also, Various remedies are available for the shareholders in the form that they are
entitled for more shares at no costs. Also, issue of bonus shares results in the positive impact on
the minds of the shareholders. Through issue of bonus shares , the percentage of shareholding for
the shareholders have been increased.
C.
Consequence of Waldmart's Ltd and its director in case of voting against in remuneration report
With reference to the given scenario, it can be evaluated that shareholders rejected the
whole remuneration report that has been presented by the Board of directors for the approval of
shareholders.
6 Christensen, J., Kent, P. and Stewart, J., 2010. Corporate governance and company
performance in Australia. Australian Accounting Review. 20(4). pp.372-386.

The provisions of the law laid down that there are different situations in which the
shareholders can reject the remuneration report presented by the shareholders. It can be further
analysed that the remuneration report is the report which is consist of the details of the
remuneration paid to directors.
In accordance with the provisions, the shareholders of the company has a right to protest
the remuneration report presented by the directors for the approval of shareholders. In addition to
this, it can be analysed that there can be many reasons for which the shareholders can reject the
remuneration report. If the shareholders are of the opinion that the company is not in an effective
sound financial position, then the company can not distribute a huge amount of remuneration to
its shareholders 7. Also, if the calculation process for an appropriate remuneration is not correct
or true, then it can also serve as the basis of the rejection of the remuneration report. Also, if
stake owners and shareholders are of the opinion that the company is paying the huge amount to
its shareholders , then also the shareholders can reject or not accept the remuneration statement
proposed by directors of the company. Also, it has also a provision mentioned in the laws of
corporation act, that the shareholders of the company are exclusively authorised regarding the
remuneration report in the case of non satisfaction in context of the performance of the company
in the last year. The shareholders of the company are entitled for the rejection of the report of the
remuneration of the directors. The main consequence of the rejection of the remuneration report
is that the directors have to cut down their remuneration as in accordance to the manner as
specified by its shareholders.
So, in the light of the case, the shareholders of the company has a right to reject the
remuneration of the directors which is a big reason for the consideration. In this context the
company and directors of the said company should make the effective and appropriate corrective
actions for the purpose of remuneration in this light.
Section 232: It is a provision which protects to the directors from the liabilities which are related
to the negligence and breach of duty in the existence of the company. It can be helpful for the
director.
Section 233: It is a provision of insurance, court can make an order under this section. In these
orders company can wound up, company existing constitution would be modified.
7 Horrigan, B., 2010. Corporate social responsibility in the 21st century: Debates, models
and practices across government, law and business. Edward Elgar Publishing.

CONCLUSION
From the above report that has bee presented regarding the issue of bonus shares and
dividend, it can be comprehended that the company can issue the bonus shares and dividend to
its shareholders. Bonus shares are those shares which are issued by the companies in the context
of the extra shares to its shareholders. Also, dividend is the term which is distributed by company
to its shareholders in lieu of profit. In addition to this, it can also be evaluated that there are
different powers and duties of directors in case of issue of shares. Also, there are also some
powers f the shareholders in the case of approval of remuneration of report.

REFERENCES
Books and Journal
Horrigan, B., 2010. Corporate social responsibility in the 21st century: Debates, models and
practices across government, law and business. Edward Elgar Publishing.
Christensen, J., Kent, P. and Stewart, J., 2010. Corporate governance and company performance
in Australia. Australian Accounting Review. 20(4). pp.372-386.
Pham, P.K., Suchard, J.A. and Zein, J., 2011. Corporate governance and alternative performance
measures: evidence from Australian firms. Australian Journal of Management. 36(3).
pp.371-386.
Clarkson, P.M., Overell, M.B. and Chapple, L., 2011. Environmental reporting and its relation to
corporate environmental performance. Abacus. 47(1). pp.27-60.
Shum, P.K. and Yam, S.L., 2011. Ethics and law: Guiding the invisible hand to correct corporate
social responsibility externalities. Journal of business ethics. 98(4). pp.549-571.
Esposito, R.T., 2012. The social enterprise revolution in corporate law: A primer on emerging
corporate entities in Europe and the United States and the case for the benefit
corporation. Wm. & Mary Bus. L. Rev.. 4. p.639.
Du Plessis, J.J., Hargovan, A. and Bagaric, M., 2010. Principles of contemporary corporate
governance. Cambridge University Press.

Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible
business strategy. Journal of Business Ethics. 122(1). pp.145-165.
Galbreath, J., 2010. How does corporate social responsibility benefit firms? Evidence from
Australia. European Business Review. 22(4). pp.411-431.