ANZ Limited: Managing Legal Risks Under Corporations Act 2001

This report examines the application of the Corporations Act 2001 (Cth) to ANZ Limited, focusing on legal risks, managerial issues, and director's duties. It explores the background and rationale of the Act, highlighting its impact on corporate governance and ethical operations. The analysis covers potential legal, managerial, and relationship issues arising from the Act, including fiduciary responsibilities and shareholder rights. Furthermore, it discusses legal risk implications for the company, differentiating between short-term and long-term risks, and suggests management strategies for mitigating these risks. The report concludes with recommendations for effective risk management and ensures smooth functioning and enhanced reputation of the company. Desklib is a great platform to find such assignments and exam solutions.

Running Head: MANAGING THE LEGAL ENVIRONMENT
Managing the legal environment
Student’s Name
University Name
Author’s Note

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Table of Contents
Introduction......................................................................................................................................3
What is the Background and rationale of the corporations act 2001 (Cth).....................................4
What are the legal, managerial as well as relationship issues?........................................................6
How does the legislation to the company apply?............................................................................7
What are the legal risk implications for the company (director’s duties)?......................................9
What are the reason and implications of long term and short-term risk?......................................13
What are the management Strategies for legal risk and cost and benefit for the company...........14
Recommendations for risk management.......................................................................................15
Conclusion.....................................................................................................................................15
Reference List................................................................................................................................17

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Introduction
Introduction of the company law has been performed in this report in order to highlight the way
in which the ANZ limited company has been governed. In the current period of time, different
standards as well as frogs conducted in Australia by multiple organisations as well as their
directors has been detrimental to the stakeholders of those companies. The above discussed fraud
cases are primary related to the abuse of power in the hands of officers as well as directors of
organisations, bestowed by law. The securities and investment commission of Australia closely
observed the operations of officers as well as directors of the organisation and how they manage
the state of affairs. Over time, the ASIC have been able to develop policy for analysing the
organisation of stakeholders involved in criminal activities in regard to corporate laws laid down
by by Corporation Act of 2001 (Cth). The operations of the ANZ Limited are majorly depending
on the way in which the company is managed.
According to the ideas of Allen and Kraakman (2016), various operational risk can arise in
context to the ANZ Limited in case if the organisation do not implement proper laws of Property
Management. There are various contacts of Organisational Management, where governance by
law is applicable. Search contacts are incorporation, meetings, share, dividend, issue powers,
shareholder rights, disclosures, financial reporting, misleading and deceptive conduct, director
duties and so on. In case if these organisational aspects are not government property by law, it
can be the reason for serious detriment to the organisational stakeholders and subsequently to the
ANZ Limited itself. That is why it is very important that the managers understand the
implications of this legislation in context to the Organisational Management practices
implemented by them.

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The Corporation law of Australia is historical linked with the companies’ law of UK. There are
both civil as well as criminal implications of the breach of Corporations act of Australia. Since
any corporation is an artificial legal person, it cannot be held criminal responsible and that is
how the liability of the crime shift on to the shoulders of the directors come offices as well as
other stakeholders. In this case, the court will remove the corporate veil to identify that crime of
the directors and other stakeholders. The corporate veil will no longer be able to provide
protection to the organisational stakeholders. Understanding the legal implications of this law on
the company will not only help the directors and the other stakeholders of the company to avoid
the Civil or criminal implications but also ensure smooth functioning of the organisation and
enhancement of the reputation of the company in the corporate domain (Bird, Cahoy and
Prenkert, 2014).
The primary objective of this research paper is to analyse how this law applies to the ANZ
limited company and analyse areas which are prone to high legal risk, implications of the risk for
the company as well as develop strategies that can help in managing these risks around with cost
and benefit.
What is the Background and rationale of the corporations act 2001 (Cth)
This law or is a legalization of Commonwealth which provides regulations regarding the
business structure of the organisations pertaining to Australia and is governed under the federal
standards and also interstate level regulatory disciplines of the country. The implications of this
law extend towards investment scheme as well as partnerships. This act is the basic law, the
foundation of Corporation law in Australia. The statute has been simplified by act of 2004 which
minimised the legislation from about 3500 pages to only 200 pages. The factors in which the
legislation applies are development of organisational structure, the layout of their functions and

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the way in which they are to be carried out the duty officers as well as directors, formation of the
organisational structure, the functional approaches of the organisation, the officers duties,
provisions in context to fundraising and takeovers. The source of development of the corporation
law was a successful apple made in the Australian High Court in the court case of New South
Wales v the Commonwealth in 1990 169 CLR 482. The court decided in this context that the
parliament is powerless regarding matters of formations in the Corporation (Bowie, 2017).
Hence, all the states contributed towards referral of power and the provision of Corporations act
of 2001 was adopted.
The agreement done between the states as well as the Commonwealth Lays out that all changes
regarding the legalization will be initiated by the ministerial Council of corporations for being
sanctioned. The axioms of the Federal government to emphasize on Corporation powers made
this scheme come under pressure for developing rules of organisational agenda and industrial
reforms. As an outcome, some of the labour party led local governments withdrew their names
from the agreement.
The basic objective of this legalization is to confirm that the companies like the ANZ limited
operates effectively as well as ethically. There are many stakeholders associated with the
company like it’s shareholders, employees, financing community, clients, customers, , suppliers
as well as investors and so on. The corporation as an artificial legal entity keeps the directors as
well as officers protected under the corporate veil. That is why; stakeholders as well as the
directors of the company expected to ensure that the operations of the company conducted
ethically and managed legally. There are several dimensions of ethical management in a
corporation, as forwarded by the legislation. These aspects include disclosure, share and
dividend issue powers, shareholders rights, financial reporting, misleading as well as deceptive

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conduct and in the in the end, the duty of the directors (Bulchandani, 2017). The breach of the
Corporation Act might result in various civil as well as criminal implications. because the
corporation is considered as an artificial legal entity, it cannot be held liable for the criminal act
and that is why the liability of the criminal act is to be shared by the officers as well as the
directors and other stakeholders in this situation when the court will be lifting the corporate veil
between the stakeholders as well as the organisation that has been protecting them by means of
the corporate veil.
What are the legal, managerial as well as relationship issues?
Multiple legal relationship as well as managerial issues comes into the context of the company,
ANZ Limited which can be addressed by means of the provisions of this Law Act. This law
along with the principles for corporate governance have been provided by the Australian
securities exchange which Lays down the approaches which are ideal for Organisational
Management. However, these governance principles can be considered as guidelines only. Even
in those cases where the company do not need to follow them compulsory, they should
voluntarily implement them on an “if not why not” basis. This implies that if an organisation
recommends that the guidelines of the Australian securities exchange are not to be implied for
the management of that particular organisation, then the stakeholders of the organisation needs to
provide a substantial reason as to why these principles are not to be accepted for the management
of the organisation.
The legal Association between the state as well as the company is governed by this law. The
context of managerial relationship between company as well as its directors and the formal
relationship between the stakeholders of organisation and the organisation itself is also regulated
by this legislation. The legal contact formulated by this law in corporates whether the legislative

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principle allows the incorporation of these relationships in the organisation or not. The allowance
will rely on the fact whether the organisation has been formed for genuine purpose or not.
Another legal issue which is developed by the registration is whether the directors as well as the
other stakeholders like the offices in the company are complying with the requirements of their
duties in respect to the organisation and its stakeholders or not (Cheeseman, 2016).
The stakeholders of the company have fiduciary liability towards organisation which implies that
whatever action the stakeholders undertakes, should be objectified in alignment to the best
interests of the organisation. There should not be any obligation in their action towards the
personal interests of any third party who is pertinent to the organisation or is related to the
organisation in some way. As fiduciary to the company, it is the duty of the managerial
stakeholders to reveal any information that is of interest to the organisation and it's shareholders.
This is because, there is always the possibility that the directors or the officers can make personal
profit by utilising their internal position in the organisation for their authority to access the
resources of the organisation or information related to the organisation and the industry. In fact,
the issues can arise from the association between the organisation and the internal shareholders
also. It is evident that the allocation of shares between various shareholders of the organisation is
different. The opinion of a section of shareholders is that the share allocation should be in
proportion to the share that they have in the company (Clarkson, Miller and Cross, 2014). An
entity for an individual having lesser share in the organisation will be entitled to free judicial
treatment by another person who is a majority share holder for example the director of the
organisation. This legislation also lays out the rules which will help to protect the interest of such
shareholders in the organisation.
How does the legislation to the company apply?

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The legislations can be considered as the most important law which deals with the company, as
an incorporation into the country. As highlighted above, the law is applicable on all the states
and therefore the ANZ limited company which is a respective incorporation into the state also
falls within the jurisdiction of this law. This legislation applies since the time onwards well and
entity or and individual applies for the formation of a company in any state of Australia. the
provisions of the purposes that can lead to words the formation of a company in Australia are
provided in the section 112 of the law (Frank and Bix, 2017). The company which can be
opened, according to the law, include a public company with Limited shares or it may be a
company without liability or is a proprietary company that is limited by shares or guarantee. The
organisation, concerned here, is a limited company which has been registered with the ASIC.
After the registration, any organisation comes into existence as a unique legal entity in the
country. in order to start its operation, any limited company needs at least three directors. On the
contrary, it is a proprietary company its registration can take place with one director only. The
establishment of an organisation immediately bestows major responsibilities on the newly
appointed officers and directors, employed by the means of the section 9 of the act. The
responsibilities includes duties like due diligence and care, engaging in the best interests of the
organisation, refraining from misuse of the power of the position and the information that it is
gathered by the entity for the individual by the dint of the position in the company which may be
used for targeting personal interest fulfilment for the fulfilment of the interest of any third party
out of which company may account for losses. Legislation also provides that the interest of the
stakeholders in the organisation should be preserved. The officers as well as the directors of the
company have Supreme powers of managing the affairs of the organisation. Hence, as reflected
by Glover and Doss (2017), it is evident that they also have the authority of exploiting the

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shareholders, the community, and the creditors and so on in the organisation. That is why, is
legislation holds that the directors should refrain from indulging in operation of the business
affairs of the organisation in context to trading activities which do not have the potential to pay
back to the creditors.
Implications of the registration on the company also ensure that if the directors have engaged
into fraudulent violation of the provisions of this act, they will be individually accountable to
those who have suffered because of their activities. There are also indirect implications for
appropriate corporate governance by the stakeholders, considering the fact If the provisions of
the Law Act is not followed, it will be directly considered as a breach of the directors duties.
Stakeholders to the company like the community receive production of the act (Kraakman and
Hansmann, 2017). The act strictly prohibits activities which are unethical and can harm the
business environment of the organisation. The legislative regulations are also applicable to the
approaches that can be undertaken in the company for fundraising from public. The company,
ANZ Limited is needed to develop proper as well as timely disclosures, related to the Dispersion
of documents as provided by section 728 as well as 674. Any misconduct on the part of the
stakeholders will be punishable by law as provided in the section 1041H.
What are the legal risk implications for the company (director’s duties)?
Multiple legal risks exist in regards to the operation of organisations in Australia and because of
such risks; the operations of the companies can be subjected to application of this law. In regard
of the provisions of the law as well as the company, ANZ Limited it can be considered that one
of the primary areas of concern is public fundraising. An organisation registered with ASX
enjoys the right of public fund collection for increasing the capital. This company can also raise
funds from the public; however it has to do so in compliance with the standards of this law. The

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provisions of this law regarding fundraising are in context to the offer document that is provided
to the public against fund collection. The offer document or prospectus should be a specific
disclosure as proposed by the section 708 and 710 of this act (Law, 2016). These sections exhibit
that the prospectus should provide all data that is relevant to an individual who wants to invest
his money by buying shares of the organisation. All information in the prospectus should be
accurate and in case if there is any mis-statement, it will be considered as breach of the section
728 of the law which will not only hold the company responsible, but also hold the individual
employee or stakeholder responsible for the breach of this section of the law. On top of that, the
section 674 if a shareholder feel that any specific information will impact the share price of the
company, then that piece of information has to be disclosed and communicated with the
Australian securities exchange. In case if the concerned stakeholders failed to do so, it will be
considered as the legal breach of this section and the person who violated the legal principles
will be penalized. one proper example of such situation can be the case between Australian
securities and investment Commission v Sino Oil and Gas Limited. The stakeholder, who had
difficulty in interpreting English has been held responsible in this case along with the entire
organisation for the acts of preaching sections 674 as well as 728 of this Law Act (Macaulay,
2018). Another court case of the ASIC v Fortescue metals group Limited (2011) 190,exhibit and
instance where the directors have reached their ethics in context of disclosing the applications as
well as provisions in the prospectus, which clearly shows mis-statement of facts.
Legal risk also exists in context to the provisions of the legislation regarding the way in which
the organisation can arrange meeting. When the company is operating in Australia, it has the
liability of arranging periodic meetings for discussing the Future Plans and the performance of
the organisation. The necessity of comply by this legislation have been provided in the section

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349 of the act. Failure to undergo such meetings will be considered as a breach of the act and the
person whose decision has shaped this consequence will be held liable. Another major risk that
can affect the organisation is in context to its approach towards the minority of shareholders.
According to the provisions of this law, the high court of Australia can order the organisation
compensate the minority shareholders if it considers that their interests have been unfulfilled on
neglected. The legislation also incorporates the doctrine of capital maintenance which is
provided in the section 254 of this law. Company cannot enter into actions which will be
accountable for reduction of share capital into the detriment of the shareholders of the
organisation (McAdams et al. 2015). The company will be subjected to the risk in context to
breach of the law section 1041H when the actions in context to financial products like securities
are deceptive or the implications of the action are to mislead or deceive.
This section of the report also emphasizes on one particular section of the legislation which
provides for biggest risk in relation to the company. This is the section which provides for the
duties of the directors as well as other stakeholders in the organisation. One of the primary
managerial aspects of the stakeholders is organisational decision making. However, this function
ability can make them fall into trouble if the decisions have been undertaken in a way which is
not reasonable in favour of the organisation and the disposition of the position of the personality
in the organisation. The court case between Australian securities and investment Commission vs.
Cassimatis (No. 8) [(2016)] FCA 1023, can be highlighted. In this case, the directors also shared
the position of shareholders of the organisation. This company involved in providing financial
advice to public who could not afford to recover financial loss because of the poorly developed
business model developed by one of the organisational directors. The business model and the
customers experienced loss. The ASIC filed a lawsuit against directors who were found to be

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violating the provisions of the section 180 (1) and the reputation of the organisation by engaging
in an activity of deceptive conduct. This provision was also highlighted in the court case of ASIC
vs. Rich [2005] NSWSC, Asic v Adler and 4 Ors [2002] NSWSC 171, ASIC v Healey &Ors
[2011] FCA 717 as well as ASIC v. Hellicar [2012] HCA 17. In all these cases, the coach
directed that the duty is belonging to the company and the applicability of the law is also
bearable by the non executive directors in the company. This duty can also be breached by an
organisational member who has not been able to become a proper representative of another
organisational member in any General Meeting of the organisation (Means, 2014). When the
directors are not able to perform properly, they are accountable for the loss of monetary value as
well as reputation to the organisation. Search business decisions not only affect the stakeholders
but also the organisation as a whole which is involved in insolvent trading activities, in turn
resulting in breach of obligations for financial reporting in context to the organisation.
Another duty in contacts to the organisation is the duty of honesty, proper purpose as well as
good faith in favour of the organisation. The section 181 of the law provides this duty. Risk is
not mainly imposed by this section on the organisation as a whole, but individually to the
directors are the other stakeholders. The three unique elements of duty in context to this section
are good faith, best interest as well as proper purpose. Even if, the best interest of the
organisation is associated with the business decision of any stakeholder, compliance with the
provisions of this section will not be established if there is no proper purpose for the
implementation of the decision in context to the organisation. We can vide that best interest of
the organisation can also be variable as it has been evident in the case of Hutton v West Cork
Railway Co (1883) 23 Ch D 654. The best interest of the company will also be regarded as the
best interest for the shareholders in context to the circumstances where the company is solvent

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with the purpose provided by section 92A in the legislation. In case, if the company is not
solvent, the court will demand that best interest of the company are in alignment to the best
interest of the creditors.
What are the reason and implications of long term and short-term risk?
There are multiple implications of the highlighted risks, on the managers, officers as well as the
other stakeholders of the company including the overall organisation. The intention of making
money in unethical manner is what makes the organisational stakeholders involved in such risks.
Another reason because of which organisation or its stakeholders are involved in tourists is the
unawareness of the stakeholders regarding the activities by which they can be invoking a breach
of the various provisions of this act. For evidence, the section 180 (1) holds that directors should
implement informed decision making where they are supposed to be rational in depending upon
the advices of third parties (Melvin, 2014). However, even if the company has undergone some
negative consequences because of following third party advice by the director, who had the best
interests of the company in mind, it will still be considered as a breach of the act because he or
she did not act in a reasonable manner and verified the advice and its utility in context to the
business project.
The implications of Legislative breach are also various. There can be provisions for civil as well
as criminal penalty in case of breach of legislation. The provision of civil penalty can be
provided by the ASIC in context to the breach of any of the provisions highlighted in the report
by the company or the directors as highlighted in the section 1317E in the legislation. In this
context it can be mentioned that the Civil penalty in Corporates orders of the pecuniary penalties
for the company as well as the directors and other stakeholders along with the compensation
orders , where the directors of the company will be e asked for compensating them, who have

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been affected negatively, because of the decisions undertaken by them. On the other hand,
criminal penalties are imposed by the ASIC against the individual directors which are strict as
well as absolutely liable under the provisions of criminal code (Michalos, 2017). Civil penalties
are mainly imposed in the form of monetary payments for pecuniary penalties. The major
implication of this kind of finalisation is that it can affect the capital and ultimately affect the
trading as well as financial stability of the organisation.
What are the management Strategies for legal risk and cost and benefit for the company
Various strategies can be implemented for avoiding the legal risk that has been depicted in this
report. The strategies highlighted in this section have been developed in alignment with the
principles of corporate governance which is laid down by the ASX. The directors of the ANZ
limited company needs to keep in mind 7 principles if they want to comply with the provisions
of this law and thereby minimise the chances of the risks highlighted about, affecting the
organisation (Morgan, 2015). The current edition of the corporate governance principles
provided by the ASX holds that the board of control in a company should have a proper blend of
directors as well as executive directors. The basic objective is that the directors who do not share
a mutual relation in context to the company can independently carry out supervision in context to
the organisation and its operations in an effective way. Since the directors can lack time as well
as expertise, there are the executive directors who can implement the process of business
decision making. That hard and perhaps the most important provision provided by the ASX
needs the directors to be ethical and responsible in their actions. When the directors are
complying with ethics and responsibility in context to decision making in the organisation, they
are able to successfully evade the chances of occurrence of risks that might account out of
fraudulence and dishonestly. According to the fourth principal, integrity of corporate reporting

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has to be safeguarded by the directors. In case if the directors are responsible towards their
corporate reporting, they will be able to comply with the section 720 as well as 674 of this act
along with meeting other requirements like accurate development of financial statements
(Scarborough, 2015). The fifth principle requires them to make timely as well as balance sheet
disclosures which will help the company to avoid the above discussed threats. There are other
principles like respecting the legal rights of the stakeholders who hold security recognising as
well as those as well as providing fair remuneration (Tushnet, 2017). Alignments to these
regulations will also help the directors to avoid any risk in context to breach of this legislation.
Recommendations for risk management
The first suggestion in this report towards the ANZ limited company is to comply with the
principles of corporate governance as laid down by the ASX. In case if the company abide by
this principle they will be Rebel 2 to ensure that the director’s activities are in compliance with
the legislative provisions which will ensure the organisational compliance also.
Another recommendation is towards the managers so that they are always informed about the
current legal provisions and how the court has been interpreting the provisions. One suitable way
of accomplishing this is subscribing to the ASIC or the ACCC so that the stakeholders can get
regular updates.
Conclusion
Including this paper, it can be identified that there has been significant impact of the Corporation
Act on the way in which the organisations in Australia operates , not to speak in specific about
the ANZ limited company. The legal provisions in the Law Act do not only identify the legal
risks in context to the company but also the individual legal implications upon the managers as

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well as the directors and the other stakeholders in the personal capacity of the individual
personality. The basic reason of such risk is the unethical intention by which the actions are
implemented by the managers who actually have the duty of carrying out the functions on behalf
of the best interest of the organisation. At times, even if the decision is taken a best interest of the
company, factors like lack of legal knowledge in context to the existing provisions and lack of
interpretation skills also invites risks of legal breach. Such activities can be a serious threat to the
maintenance of financial stability in the company especially when the organisation is concerned
with the finance market. However, the directors as well as managers of the company always have
the capability of reducing the chances of these risks by keeping themselves informed about the
current law and by undertaking a Framework for corporate governance that is in alignment with
the regulations of the ASX.

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