Corporate Law: Issues and Impacts of Poor Corporate Governance on Commonwealth Bank of Australia

Running Head: COMMERCIAL LAW 0
Corporate Law
9/8/2018
Student’s Name

Corporate Law (BULAW5915) 1
Contents
Contents
Contents...........................................................................................................................................1
Introduction......................................................................................................................................2
Part A...............................................................................................................................................2
Corporate Governance:-...............................................................................................................2
Royal commission........................................................................................................................2
Commonwealth Bank: Good Corporate Governance..................................................................3
Commonwealth Bank: Poor Corporate Governance....................................................................3
Reasoning.....................................................................................................................................3
Part B...............................................................................................................................................4
Important of Good Corporate Governance..................................................................................4
Theories on Corporate Governance.............................................................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

Corporate Law (BULAW5915) 2
Introduction
A company is an artificial person and directors are the persons who act on behalf of the
same. In such a situation, there are chances that these people use unfair practices for their
personal benefits. Here the role of corporate governance comes into light. Corporate governance
is a guide that provides a working manner and standards to the management of the companies in
relation to conduct. Some of the banks proven failed to comply with corporate governance. The
chosen company for this report is one of the well-known banks of Australia “Commonwealth
Bank of Australia”. The bank is listed on Australian Stock Exchange (ASX) and therefore needs
to follow the corporate governance principles prescribed by ASX. This report is focused on the
issues involved in the corporate failure case of the chosen company and further includes the
reasons and impacts thereon. Before going ahead on topic directly, this is significant to know
that what exactly the corporate governance is.
Part A
Corporate Governance:-
Corporate governance is a well-defined system of process, rules, and practices through
which an organization is controlled and directed. It defines the procedure that a corporation
would follow in order to meet out their objectives ethically. This is a subject related to ethics. It
describes that what is and what it should be (Management Study Guide, 2018). In addition to this
corporate governance is a subject that provides a success to the company in a long run if follow
carefully.
Royal commission
Royal commission is an authority that looks after the conducts of bank, and other service
industry related to superannuation and finance. In the recent year, many of the cases have been
reported where banks of Australia has acted unethically. This issue brought negative impact on
the financial conditions of bank and affected the whole economy of the nation. This was the
reason that Australian Government felt the requirement to have a regulatory body in the area that
can control such issues. To resolve such requirement, Australian Government has established
Royal Commission in the year 2017 (The Guardian, 2018). The lead objective of this
commission is to check out the issues related to corporate governance failures in banking,
finance, and super annuation service industry of Australia.