Law of Finance Assignment PDF
Added on 2021-06-17
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Running Head: LAW OF FINANCE118Law of FinanceProblem 5: Comparison between Finance & Corporate law of China and AustraliaAndLegal Reforms in China and Australia
LAW OF FINANCE 2Introduction of Corporate Law Corporate law deals with the creation of the company and it is linked to the commercial law. Corporate law is the body of law which directs the rights, powers, relations and conduct of individual, companies, business and profession. Corporate governance code is framed in each nation according to social, legal and fiscal basis. The Corporate governance code reproduces corporate structure of each company. Each country has corporate structure having own features. The Corporation law of Australia has taken from the UK company law (Lyon & Plessis, 2018). In Australia, legal structure contains of The Corporation Act, 2001. The Australian Securities and Investments Commission (ASIC) is the supervisory body which controls the statueof Australia. And The Corporate law of China protects the legal rights and interest of the entity, individual, shareholders and creditors (Jensen, 2018). In this essay how Australian corporate law and China’s corporate law are compared to each other is discussed and critically examined (Borochin & Cu, 2018).Comparison between Australian corporate law and corporate law in the People’s Republic of China:The Australian Stock Exchange introduced Australian principles for best governance and practices recommendations in 2003. And in China, The China Securities Regulatory Commission’s corporate governance code is for listed company in China. There are some similarities between corporate code of Australia and corporate code of China in respect of rights of shareholders, powers of shareholders, duties of shareholders, formation of the board committee and name of the board committee, independent directors and risk management.
LAW OF FINANCE 3Chinese company is not required only BOD (board of directors) but supervisory board is also required. The Supervisory board supervises the functions of the management. But there is no requirement of supervisory board in Australia. In Australian companies, board of directors are itself responsible for their functions and conducts (Ciambrone, 2018).Following are the similarities between Australian corporate law and in the people’s republic of China- Particulars China AustraliaPowers and rights of ShareholdersIn Chinese companies, the Shareholdershave some powers and legal rights which are specified by law, rules and regulations and AOA (article of association). The Shareholders should entertain these rights. General rights of shareholders are to vote in meeting of shareholder, to get share of liquidation proceeds and to review memorandum ofcompany, article of association, minutesof shareholders, financial accounting report, consolidated financial statements, the resolution of the meeting of supervisory board and boardresolutions.In Australian companies, the Shareholders also have some rights to entertain. It is a duty of company to respect shareholder’s right and give all possible facilities to exerciserights in effective manner. Shareholders make a decision in respect of election of shareholders and director’s remuneration. The Shareholders can also take corporate actions. This includes further issue of shares, buy back of shares, mergerand de-merger with another company.Formation of board committees Company’s board of directors are authorized to establish board committees. They may create board committees as per the requirements of companies. The bylaws define the functions of board committees. The main functions of the Board committees are to plan the function of board. It also corrects responsibilities of members as per the guidelines.The formation of board committee issuggested to the several extent of theprinciple as it fits within the legal documents.Name of Following committees may recommendFollowing committees may
LAW OF FINANCE 4board committees recommended by board of directors (BOD)by the board of directors -- An audit committee - A nomination committee- A corporate strategy committee- A remuneration - Appraisal committee- Special committee which are required to be form as per the shareholders’ resolution pass in shareholder’s meetings.recommend by the board of directors-- An audit committee- A risk management committee- A remuneration committee- A nomination committeeSupervisory board As per mention in China code, there is aSupervisory board in all companies. Supervisory board is in an addition of management board. In China, a limited liability company requires supervisory board. It is necessary that it should havenot less than three persons. But a small scale company may have one or two person. The Supervisory board should include the representatives of shareholders and representative of employees at an appropriate ratio as defined in article of association. Furtherthe term of supervisory board is 3 years but after the expiry of term of office, the position may hold again at re-election. The supervisors may attend the meeting of board directors but cannot vote in meetings.There is no such provision of establishment of Supervisory board in Australia.Duty of supervisory board The Supervisory board is the grouping of individuals. The individuals are appointed by the stakeholders of the company to create interest through authority of company. It is a duty of Supervisory board to supervise the functions of management board, executive directors and CEO.As there is no such provision of the Supervisory board so no duty arises.Stakeholder’sinterest Some provisions are defined in chapter 6 of the China code for the protection ofthe interest of stakeholders.In the Australia, a stakeholder’s interest is included in the ethical and responsible decision making.
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