BLO2205 - Corporate Law | Case study
Added on 2019-10-30
11 Pages2515 Words156 Views
Running head: CORPORATE LAWCorporate lawName of the StudentName of the UniversityAuthor Note
1CORPORATE LAWTable of ContentsQuestion A.......................................................................................................................................2Question B.......................................................................................................................................4Question C.......................................................................................................................................5Question D.......................................................................................................................................7Reference List..................................................................................................................................9
2CORPORATE LAWQuestion ACorporate Governance refers to the process by which the corporations and the authoritiesexercising control over the company are responsible for carrying out business operations inmanner that not only achieves the goal of the company but also cater to the need of the societyaltogether. a good corporate governance practice enables the company to build up confidence inthe investors which in turn, encourages the investors to make significant investments in thecompany1. The ASX have laid out certain principles of good corporate governance practice andrecommends all the corporations to follow the principle in order to ensure the company goals aswell as the goals of the society are achieved. The ASX has stipulated under Principle 7 of theCorporate Governance that every organization must establish an appropriate framework thatwould recognize the risks associated with the business operations of the company and mitigatethe risks. The board of directors shall be considered as the members of such risk managementframework who shall engage in various processes that would be deployed on identification of arisk, in order to mitigate such risk. In the event, the company fails to identify or mitigate therisks, it would not only affect the reputation and good will of the company in the society but itwould also discourage the investors from making significant investments within the company. In regards to the corporate governance practice of the company Ardent Leisure Pty Ltd inrelation to the Dream World project, it is perceived that the company is not only alleged to havefailed to identify the risks associated with its business operations but it has also failed to mitigatethe risks. The Board of the company has not taken any initiative to implement measures after the1 Pearson, Gail. "Failure in corporate governance: financial planning and greed." Handbook on CorporateGovernance in Financial Institutions (2016): 185.
3CORPORATE LAWDream world incident that claimed lives of many patrons. This establishes the fact that thecompany had failed to act in compliance with the Principle 7 of good corporate governance,which required the company to identify the risks and mitigate the same. The ASX has stipulated that the every company is required to establish a separatecommittee that would be engaged in recognizing the risks associated with the business activitiescarried out by the company2. Principle 7 of good corporate governance requires the Board toexamine the issues and implement precautionary measures with a view to mitigate the risks3. Thecommittee shall have three separate directors who are obligated to act in compliance with thelegal rules and are entitled to work independently. From the above discussion it can be inferred that the company Ardent leisure failed toestablish a risk management committee as a result of which it as incapable of implementing anyeffective measures to mitigate the risks that as associated with the Dream world theme park.Apart from failing to establish a committee that would have identified the risks, the company hadfailed to initiate any effective action to deal with the post accident in the Dream World themepark. The Board of the company can be held responsible for the failure of the company torecognize the risks and mitigate the same. It is imperative for every listed company to incorporate principles with respect to goodcorporate governance as it aims at ensuring the accountability of the employers and theemployees of the company4. It would further enable the company to attract the investors to makesignificant investments in the company. Ardent Leisure had failed to establish risk management2Council, ASX Corporate Governance, and A. S. Exchange. "Corporate governance principles and recommendations. ASX Corporate Governance Council." (2014).3Price, John. "ASIC report: The director's role in corporate governance." Company Director 30.1 (2014): 12.4Williams, Belinda Rachel, Simone Bingham, and Sonia Shimeld. "Corporate governance, the GFC and independentdirectors." Managerial Auditing Journal 30.4/5 (2015): 324-346.
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