Corporate Governance and Law Reform

This assignment delves into the realm of corporate governance and law reform in Australia. It analyzes the impact of ownership structures on intellectual capital efficiency and the influence of corporate failure on reform efforts. Additionally, it investigates the relationship between auditor independence and accounting conservatism. The assignment is a comprehensive review of existing literature on corporate governance reforms in Australia.

CORPORATE LAW

Table of Contents
INTRODUCTION...........................................................................................................................1
CORPORATE LAW .......................................................................................................................1
Remedies available to Tim to overcome from the available situation:.......................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
As per the Corporation Act, 2001 corporate law is enacted for the purpose of controlling
the business operational and their internal activities which is carried by the directors and
shareholders of the company. As the role of directors has the fiduciary position in the company
and their decision had crucial effect on smooth and effective working. Every business entity had
to work under the rules and regulation imposed by the government when the company is at the
time of formation, incorporation of their business identity and carry their activities for longer
term growth. As for not continuing their proper business liabilities, courts had powers to sue the
companies for not carrying their proper business activities. Present report is based on The
Grumpy Grande Pty Ltd. (TGG) which is formed by five brown brothers in 2010. Report will
include about the Equitable remedy and the one statutory remedy available to Tim (one of the
brown brother in TGG company) to overcome for the situation which is faced by their remaining
4 brothers in the business.
CORPORATE LAW
Remedies available to Tim to overcome from the available situation:
Issue: In the case of TGG which is a private company had 5 directors which are of same family.
In 2010, they establish the business and all the brother shared equal in terms of profits and
decision making (Appuhami and Bhuyan, 2015). As they all are the only directors and
shareholder of the company. The second rule is relating to wishing to sell shares in the company,
any directors can only sell share if they obtained permission for the other directors internally and
even to the existing directors. Lastly that all the business decision is made through majority of
voting.
As the business is growing with constant success in the market and each partners decide
to share their profits and decision making on equal basis. In last few years their business is
slowing down which results in affecting the relationship between the 5 brown bothers (Ramsay
and Tan, 2018). With this affect, younger brother Tim decides to resign from the post and also
sells their share at bargain rates to other directors. To stop the Tim, they plan against him so that
he cannot sell his shares to existing directors. As it is mentioned in the agreement which they
made before entering into the contract. That no directors can sell the shares to any person
without the majority vote of the remaining directors. Thus, Tim hears the conversation between
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his oldest brother which conveys that they didn't want Tim to sell his shares and also want him to
get angry so that they didn't have to pay anything to him. Tim is confused that which remedy is
available to him to overcome form the conflict arises by his brothers in selling shares and
resigning from the post.
Rules/Laws:
Equitable Remedy: In this remedy the court order the party to perform their duties exactly the
way which they are made in terms at the time of entering into the contract. In this, the court has
power to changed or modify the terms and condition which is in favour of both the parties. Thus,
equitable remedy is related to fairness which is available to parties in case of non performing of
their duties. There are mainly two types of equitable remedy: Injunction and specific
performance. Injunction remedy is mostly implemented to stop the party to commit such act or
force the party to perform their duty in right way. Specific performance is implemented on
parties to perform their duties which they agree to be performed at the time of entering into the
contract.
Statutory Remedy: In this remedy the court impose fine for not performing the duties as if the
matters related to civil cases such as breach in contract or not following the appropriate terms
and contract which are legal and bound by the laws (Mees and Smith, 2019). Thus, statutory
remedy is related to legal remedy which results in enforcing special amount for monetary
damages of breach in contract.
Directors duties: Directors plays an important role in the business and also had the
responsibility to manage the internal and external matters of the company. They play the
effective role in taking decision regarding the company success and future growth for longer
term(Hargovan, 2017). As their major role is to take care of their employees and shareholders
and also discharged their duties if they commit fraud in any matters of the business. They take
decision after taking judgement from all the important decision holders and then make a
decision. Mostly decision are taken through voting and in case of breach commit by any directors
they are to be terminated from their duties.
As under the Corporation Act, 2001 it set the rules and regulation which deal in business
entities at national and international level in Australia. As this Act is mainly based on Australian
corporation law which helps the companies to manage their internal and external matters and
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also their stakeholder which are engaged with this business (Jones, 2016). American Uniform
Companies Act, 1961 helps the companies to work with the statutory norms which is imposed by
the government and bound on the companies to follow with rules and regulation.
Application:
Directors duties:
Business is the separate legal entity formed for the purpose to create charter, legislation
and formation of the company on grounds of laws enacted by the government of the country. In
order to formation of the company there are directors, shareholders and investors in the company
(Miglani, Ahmed and Henry, 2015). Company success depends upon the stability and correct
decision of the directors. The duties of directors are to take care of their shareholders interest and
take the fair decision which helps companies to maintain their stability in the emerging market.
Through their decision and judgement companies’ stability is judged and their strategy and
techniques to enter into the market with new projects. Company whole life depends upon the
directors planning strategy and their relationship with their shareholders in the company.
Equitable remedy related to case study:
Thus, as the case related to applying equitable remedy, in this remedy specific
performance can be implemented. In this case the court grants specific performance against Tim
when they demand that something injustice is happening against him. As per the contract, no
directors can sell the share without having the majority through voting powers (Crockett and Ali,
2015). As that the only condition which the every directors have to fulfilled but in this case the
remaining director planning wrong against Tim and they want to infringement their rights which
Tim is had in the company. Thus, to overcome form such issue Tim can grant a specific
performance of equitable remedy so that their rights are secured under the company activities
and ha can easily sell his shares to other directors (Austin and Roberts, 2017). As voting done in
the four basis on the planning to compete others. In this case the four brother are planning to play
against Tim, so that he cannot sell his share to the existing directors at the bargain price.
In case of Beswick V Beswick As Peter Beswick assign his business to the nephew in
consideration that he will pay the weekly money to Mrs Beswick. After the contract is made,
nephew refuses to perform, his contract as he considered that this contract is made to someone
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and not party to the contract. Thus, nephew argued that Mrs Beswick was not a party to which he
enters into the contract, so he is not able to enforce the specific performance which is made by
courts under such contract.
Statutory remedy related to case study:
Statutory remedy specially implemented to the plaintiff so that their rights are secured in
the company and their decision are supported and executed by other members if they are based
on fairs and honest (Chen, Ramsay and Welsh, 2016). Thus, Statutory remedy is given by the
court on the ground of any exception to such cases which affects the rights of the parties. Tim
can also use the injunction right to stop his brother from planning against him. As it's his rights
to sell the share to any existing director at bargain price through this way he is not affecting any
one right and also the business is in continuous process.
As in the case study of Bunge SA V Nidera BV, the parties enter into the contract for
dealing in 25000 metric tonnes of wheat which is to be reached to the other party through ship.
After entering into the contract there are certain restriction by which they contract is cancelled.
The other party suffer the losses through which they reach court for relief under statutory
remedy.
Conclusion:
From the above study it can be concluded that corporate law help companies to deal in
certain matters regarding to formation of the company and their working to achieve goals in the
market. The parliament had passed this law so that it can run the business for longer term and
also maintain the trust of the investors, shareholder and lenders in the business. As the businesses
grow if the company fulfil the trust and maintain the loyalty with their customers who are
engaged with them (Bottomley, 2016). It is the duty of the directors to take care of their
employees and other persons who invested their money in the business for future growth. As if
the business grown the customers also earn profits and more trust is developed among them
regarding the activities which business carry forwards.
Directors responsibility in case of Tim:
The directors carry various powers which is mainly related to object clause of the
company as it is in the hands of the directors which they have to decide the objects of the
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company and also their vision and mission to see the company matters in the future growth
(McGregor, Wood and Vickery, 2019). They also emphasis on protecting their powers from the
decision of the third person. As directors are bound to follow the rules which is imposed for the
welfare of the company as it can be raised through decision by voting or any other important
decision raised thorough various judgement. The major duty which directors have to carry is
regarding to act with the constitution and of any person are bound to follow the rules than they
cannot imposed on such rules. As if the directors commit any crime or fraud in any matters of the
company internal mater or hide any important matters which is beneficial for the shareholder,
lenders and investors to know, than he is also punishable under the eyes of law.
Equitable remedy in case of Tim:
As in case of equitable remedy it is mainly established to the breach party to follow the
special performance to make such an agreement in which there rights are not affected (Equitable
Remedies, 2019). This remedy helps parties to make such rules and terms which protects their
rights and the opposite party is bound to follow such terms. Sometimes various parties follow the
injunction method to restrict other party to commit such act which is against the terms and
conditions. In this case, this remedy is properly imposed to save the liability of the time ( Finch
and Milman, 2017). As there are condition while at the time of entering into the contract and
establishing the company. But it's the own rights and liabilities of the time they can sell the share
to any person. No person can force him or plot any planning against him. As if he committed any
crime than he is liable to dispose of his duty but he wants to sell his shares in good concern.
Statutory remedy in case of Tim:
In case of statutory remedy is concern, then it includes such laws which are mentioned in
the statue are compulsory to be followed by every person. It is the decision and judgement of the
court that whether Tim is bound to follow such rules or not or they grant special permission to
avoid such rules. From the above study it is also concluded that Parliament grant special
permission to courts that they can amend the rules as per the cases but it must not avoid the
parties trust and the decision must be based on fair and effective manners.
CONCLUSION
From the above brief it can be concluded that to form a company, corporates law helps
the company to settle their internal and external matters to enter into the emerging market. With
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this law, they can establish the trust and honesty among the shareholder, investors and lenders to
invest money in the market and also earn more profits in the company. As the company which
work under the norms imposed by the parliament can be judged by their stability in the market
for longer term. The rules are strict if they commit any crime which results in committing fraud
in internal matters or relating to their information which they have to survey to public. They are
punished for such offence which affects the rights of any person.
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REFERENCES
Books and journals
Appuhami, R. and Bhuyan, M., 2015. Examining the influence of corporate governance on
intellectual capital efficiency: Evidence from top service firms in Australia. Managerial
Auditing Journal. 30(4/5). pp.347-372.
Austin, K. and Roberts, K., 2017. Corporate law: Is it time to revisit our class action
gateways?. Governance Directions. 69(4). p.238.
Bottomley, S., 2016. The constitutional corporation: Rethinking corporate governance.
Routledge.
Chen, V., Ramsay, I. and Welsh, M. A., 2016. Corporate law reform in Australia: An analysis of
the influence of ownership structures and corporate failure. Australian Business Law
Review. 44(1). pp.18-34.
Crockett, M. and Ali, M. J., 2015. Auditor independence and accounting conservatism: Evidence
from Australia following the corporate law economic reform program. International
Journal of Accounting & Information Management. 23(1). pp.80-104.
Finch, V. and Milman, D., 2017. Corporate insolvency law: perspectives and principles.
Cambridge University Press.
Hargovan, A., 2017. Corporate law: Foreign directors of Australian companies put on notice: No
leniency for ignorance of duties. Governance Directions. 69(1). p.37.
Jones, M., 2016. Australia as a good international citizen [Book Review]. Ethos: Official
Publication of the Law Society of the Australian Capital Territory. (240). p.58.
McGregor, A., Wood, J. P. and Vickery, G., 2019. Corporate law: What the modern slavery
legislation means for the governance professional. Governance Directions. 71(1). p.44.
Mees, B. and Smith, S. A., 2019. Corporate governance reform in Australia: a new institutional
approach. British Journal of Management. 30(1). pp.75-89.
Miglani, S., Ahmed, K. and Henry, D., 2015. Voluntary corporate governance structure and
financial distress: Evidence from Australia. Journal of Contemporary Accounting &
Economics. 11(1). pp.18-30.
Ramsay, I. and Tan, C., 2018. Social Impact Bonds in Australia. Journal of Banking and Finance
Law and Practice. 29(3). pp.248-257.
Online
Equitable Remedies. 2019. [Online]. Available through:
<https://www.lawctopus.com/academike/equitable-remedies/>.
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