Corporate Governance

Running head: CORPORATE GOVERNANCE
Corporate Governance
Name of the Student
Name of the University
Author’s Note

1CORPORATE GOVERNANCE
Executive Summary
This report involves in the analysis and evaluation of the duty and responsibilities of the
directors of the companies for considering the interest of the stakeholders. The first part of the
report sheds light on various aspects of Corporations Act related to the duty of the stakeholders
along with example. The second part states the negative implications of amending the
Corporations Act with including the duty to consider the interests of the stakeholders in the
decision-making process. It can be seen from the last part that the companies are needed to
include the interest of the stakeholders as the strategic objectives of the duties for overall
effectiveness of the businesses.

2CORPORATE GOVERNANCE
Table of Contents
Introduction......................................................................................................................................3
Present Framework for the Duty of the Directors...........................................................................3
The Effects of Over-Regulation on the Interests of the Companies................................................6
Self-Regulations and Law Imposed.................................................................................................7
Conclusion and Recommendations..................................................................................................9
References......................................................................................................................................10

3CORPORATE GOVERNANCE
Introduction
According to the Corporations Act, the main duties of the directors can be found in
discharging their duties and power in order to act in the best interest of the business ( Chan,
Watson & Woodliff 2014, p.59-73). It implies that the directors are needed to perform their
responsibilities in the best interests of the shareholders for the maximization of organizational
wealth. However, in the presence of some recent disputes, there is a major question whether
there is any need for the clarification of the laws so that the responsibility of the directors
becomes to consider all the stakeholders’ interest beyond the shareholders (Bottomley 2016).
More specifically, it is, whether the directors should take into consideration the interest of all the
stakeholders like customers, employees, suppliers, community people, environment and others.
The main aim of the report lies in the analysis of the responsibility of the board of directors for
taking into account every stakeholder of the companies. The report is developed aiming to the
Australian Institute of Company Directors (AICD). The report takes into consideration all the
relevant examples and recommendations related to the duty of the directors in order to come to a
suitable conclusion.
Present Framework for the Duty of the Directors
There is a recent call for the reformation in the Corporations Act related to the duty of the
directors; and the key reason is that the directors are simply focusing on the shareholders instead
of all the stakeholders (Hiller 2013, p.287-301). In this context, the example of the controversial
decision of James Hardie, a company, can be presented. The company suffered a reputational
loss as well as financial loss for the fall in the share price; and the management ignored the
interest of the asbestos victims for protecting the interest of the companies. However, later, the