Legal Aspects of Samsung: Analysis of Legislative Framework and International Agreements
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This report analyzes the legal aspects of Samsung, including the legislative regulatory framework in Australia and the impact of international treaties and agreements on its products and services.
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Legal Aspects
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1 Executive Summary Since multinational companies (MNCs) operate in several nations, they have to comply with their regulations that apply to their operations. Samsung is an MNC that operates in the consumer electronics industry, and its example is analysed in this report to evaluate its legalaspects.Thelocationforglobalheadquarters,industry,andthenumberof employees of Samsung are analysed in this report. The legislative regulatory framework under which provisions are imposed on the operations of Samsung is analysed in this report as well. Lastly, the impact of treaties, conventions, and agreements on Samsung’s products and services is analysed in this report.
2 Contents Introduction of the MNC.........................................................................................................3 Legislative Regulatory Framework of MNC...........................................................................4 Treaties, conventions, and agreements................................................................................6 References.............................................................................................................................8
3 Introduction of the MNC Founded in 1969, Samsung has become a household name due to its high quality consumer products which are offered to its customers on a global stage. It is a company from South Korea that has become a global conglomerate (Bondarenko, 2019). The company operates in different industries such as semiconductors, consumer electronics, homeappliances,andothers.Itsproductssuchastelevisions,smartphones,and refrigerators are widely popular in many major markets, and Australia is one of them. The companyhashiredalargeworkforceof320,671employeesgloballytohandleits operations (Notesmatic, 2018). The location of its global headquarters is in Suwon, South Korea. Samsung has also employed 302 employees that are responsible for dealing with its operations in Australia (IBISWorld., 2017). The company has generated a competitive advantagethroughitseffectivesupplychainanddistributionnetworkthatreachits products to millions of people worldwide.
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4 Legislative Regulatory Framework of MNC Legislative regulations are imposed by the legislative body of a nation in order to provide guidelines which are enforced on specific parties. Specific provisions are implemented by governmentsforcompaniessomeofwhichspecificallyapplytotheoperationsof multinational corporations to make sure that they act within the regulations. Samsung is alsoobligatedtocomplywiththeregulatoryprovisionsgivenunderthelegislative framework in Australia. 1.Corporations Act 2001 (Cth). Since corporations have a significant impact on their stakeholders, the governments provide provisions which guide their actions to make sure that they did not adversely affect the interest of stakeholders. The Corporations Act imposes obligations in the directors of Samsung to make sure that they effectively comply with the guidelines relating to the regulatoryframeworkinAustralia.Asperthisact,obligationsareimposedonthe management to make sure that they sent the reports of the company to the regulators in Australia such as the Australian Securities and Investments Commission (ASIC) (Chia and Ramsay, 2016). There are provisions regarding mandatory meetings which directors have to conduct and information regarding these meetings is also given to regulators. Furthermore, there are various duties that are imposed on directors to make sure that they effectively discharge their duties. Directors of Samsung are obligated to make sure that they maintain care and diligence while discharging their duties as per section 180 of this Act. They are also obligated to prioritise the interest of the company above their personal interest to make sure that they act in good faith as per section 181. Since they operate in an apex position in the organisation, the directors or Samsung have to make sure that they did not use their position to cause harm to the company or gain an unfair advantage as per section 182 (Chia and Ramsay, 2016). They are also prohibited from using the confidential information which they have to take unfair advantage or harming the interest of the company under section 183. The penalties for directors for engaging in insolvency trading are also given under section 588G of the Act. Compliance with these guidelines is crucial for the management of Samsung. 2.Fair Work Act 2009 (Cth). The companies are obligated to make sure that they protect the interest of their employees byprovidingthemadequatefacilitiesandservicesinAustralia.Inthisregard,the provisions given under the Fair Work Act applies to the operations of Samsung. The company has to makesurethatsafetyandhealthpoliciesareimplementedinthe workplace to protect the interest of employees (Moorhouse, 2016). Samsung cannot hire any employees who receive a salary below the minimum wage which is fixed in the country. The changes in the wage rage also affect the salary packages of employees of Samsung. The company is also obligated to make sure that its employees are not forced to work on public holidays. 3.Competition and Consumer Act 2010 (Cth). While offering products and services to customers in Australia, this act plays a major role. It prohibits any practices that could potentially harm the competition in any given industry in Australia. This act also ensures that leading brands such as Samsung did not form any legal relationships with third parties that could limit the level of competition in Australia (Hiscock, 2018). The rights of customers are also protected through this act. It provides
5 provisions for the protection of the rights of customers in Australia. They have the right to make sure that they receive the product and service as promised by the organisation and they can sue the company under section 18 if it makes any false or misleading claims. Samsung is bound under these provisions as well. 4.Taxation Laws. Paying tax is an obligation of Samsung while operating in Australia. The company has to make sure that it timely fulfil this obligation or else legal penalties or fines can be imposed. The company has to assess different types of taxes which it pays to the government. For example, the corporate rate tax is currently 10 percent which is mandatory to be imposed on Samsung and the income which is generated by the corporation. The provisions regarding the Goods and Services Tax (GST) is also a part of taxation laws in Australia. As per these laws, the company has to pay 10 percent GST on the products and services which it offers to its customers (PwC, 2019).
6 Treaties, conventions, and agreements Forming treaties is common between countries, and they form them for different purposes. Mostcommonly,countriesformthemtobuildtradingrelations.Theserelationsare significant for ensuring that economic growth of different countries is supported. The provisions that are given under these treaties and agreements affect companies that rely on them to expand their operations. The products and services which are offered in international markets are affected by these provisions and Samsung is no exception. Therearevarioustreaties,conventions,andagreementsthatparticularlyaffectthe products and services of Samsung. 1.Australia – United States Free Trade Agreement (AUSFTA). Samsung focuses on offering its latest products in the United States since it is a major market for the enterprise after which its latest products are offered in other nations. International treaties and free trade agreements (FTAs) such as AUSFTA makes it easier for Samsung to offer its products to customers (Weatherall, 2015). These policies affect the products of Samsung since the company is able to offer its latest gadgets to customers in Australia by directly exporting them from the United States which saves its time. Various legal policies for the imposition of additional fees are removed under these treaties that affect the products of Samsung by making sure that they are not offered at a higher price in Australia than compared to other markets. 2.Convention between Australia and South Korea 1982. Being a South Korean company, Samsung is affected by treaties between Australia and its home countries. The convention in 1982 is a good example in which both countries implemented provisions to remove the double tax. International companies that generate income in foreign countries are also subject to tax in their home country. This affects their products and services since their prices are hiked while at the same time it puts the profitability of the company at risk (Stewart, 2017). These factors resulted in creating challenges for Samsung; however, they are resolved through this convention. Since the double tax is removed through this convention by the government of Australia and South Korea, Samsung no longer faces the challenge of double taxation. The corporation can sustain its profitability in the Australian market by offering its affordable products to customers while sustaining its profitability. 3.Korea-Australia Free Trade Agreement (KAFTA). Recently, the government of Australia and South Korea evaluated the trading potential between the two nations and a new FTA was formed. It came into force in 2014 through which new trading ties were formed between these nations. The legal complexities are replaced through this treaty by simple legal provisions making it easier for enterprises in both nations to expand their operations overseas. Provisions are also established under this treaty regarding the removal of tariffs and other fees which were a part of the legislative framework of these countries (Ivey and Davidson, 2015). The purpose of these provisions is to encourage companies to establish their operations in these nations. Samsung is benefited through this treaty. The company no longer faces challenges in relation to legal policies that make it difficult for the organisation to offer its latest products to customers in Australia. Another benefit which is received by Samsung is the removal of tariffs and other duties which make sure that its products are offered at reasonable prices in the Australian Market.
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7 4.United Nations Framework Convention on Climate Change (UNFCCC). Protection of the environment and its resources has become a prior agenda for countries at a global stage. Australia is no exception since the company became a member in UNFCCC through which it signed the Paris Agreement. Provisions are implemented under this convention for addressing the issue of climate change. The Australian government has formed policies and issues guidelines for companies operating in the nation to make sure that they also contribute to the achievement of this goal. Samsung is no exception since it is expected from the company that it will implement policies to reduce its carbon footprint in Australia (Ahmed and Ozturk, 2016). Samsung has implemented an environmental sustainability policy under which the company has adopted policies that are targeted towards reducing its carbon footprint. It increases the prices of its products, and it also changes the production and distribution operations of Samsung.
8 References Ahmed, K. and Ozturk, I. (2016) The emission abatement policy paradox in Australia: evidencefromenergy-emissionnexus.EnvironmentalScienceandPollution Research,23(17), pp.17850-17856. Bondarenko,P.(2019)Samsung.[Online]Availableat: https://www.britannica.com/topic/Samsung-Electronics [accessed on 5th May 2019]. Chia, H. and Ramsay, I. (2016) An analysis of shareholder resolutions involving Australian listed companies from 2004 to 2013.Company and Securities Law Journal,34(8), pp.618- 624. Hiscock, M. (2018) The Enforceability of Promises to Negotiate in Good Faith: Rethinking Traditional Common Law Attitudes. InTransnational Commercial and Consumer Law(pp. 175-186). New York City: Springer. IBISWorld.(2017)SamsungElectronicsAustraliaPtyLtd.[Online]Availableat: https://www.ibisworld.com.au/australian-company-research-reports/wholesale-trade/ samsung-electronics-australia-pty-ltd-company.html [accessed on 5th May 2019]. Ivey, S. and Davidson, C. (2015) Sorting the wheat from the ChAFTA-the operation of investor-State dispute settlement clauses and their limits in recent Australian free trade agreements.Brief,42(11), p.14. Moorhouse, P. (2016) Costs: Costs in fair work proceedings and the value of settlement offers.LSJ: Law Society of NSW Journal, (27), p.80. Notesmatic.(2018)SamsungNumberofEmployees.[Online]Availableat: https://notesmatic.com/2018/12/samsung-number-of-employees/[accessedon5thMay 2019]. PwC.(2019)Australia-Corporatetaxadministration.[Online]Availableat: http://taxsummaries.pwc.com/ID/Australia-Corporate-Tax-administration [accessed on 5th May 2019]. Stewart, M. (2017) Australia’s Hybrid International Tax System: Limited Focus on Tax and Development. InTaxation and Development-A Comparative Study(pp. 17-41). New York City: Springer. Weatherall, K. (2015) The Australia-US free trade agreement’s impact on Australia’s copyright trade policy.Australian Journal of International Affairs,69(5), pp.538-558.