Business Law Report: Corporate Culture and Legal Framework

This report delves into the concept of corporate culture, defining it as the attitude, behavior, and values that shape a company's internal environment. It emphasizes the integration of factors such as beliefs, values, and ideology, influenced by market dynamics, employee types, and management strategies. The report highlights the significance of ethical and legal conduct in corporate culture, linking it to corporate governance and the interests of stakeholders. It then focuses on the legal framework in Australia, including the Corporation Act 2001 and the Australian Securities and Investment Commission Act 2001, and the ethical guidelines provided by the Australian Securities Exchange (ASX). The report illustrates the practical application of these laws and ethical standards with case studies, such as the Sino Australia Oil and Gas Limited case and the Storm Financial Limited case, emphasizing the consequences of non-compliance and the importance of a sound corporate culture. The report concludes by underscoring the necessity of corporate culture and its implementation by governing authorities, further enhanced by ethical considerations to increase societal value. References are provided to support the analysis.

Running head: BUSINESS LAW
Business law
Name of the student:
Name of the university:
Author note

1BUSINESS LAW
Corporate culture refers to the attitude, behavior and values which is dedicated to the
creation of an outstanding psychological and social environment within the corporation. It is an
integration of different factors such as mutual beliefs, values as well as ideology of the members
of the corporation. It was developed with the emergence of market, background, types of
employees, strategies, product and services, different categories of management and the national
culture. In addition to these factors, there are others such as location, languages, viewpoint, rules,
values, beliefs and signs of a corporation1.
Moreover, corporate culture is also described as the introduction of a complex structure,
which is not possible to calculate as the results consist of only few elements. It was found out
that there are three probable elements in association with the contemporary corporate culture.
These elements include customers, work or job and employees or workforce. A corporate culture
can be termed as good when the management of the corporation carries out their activities in an
ethical manner. A good corporate culture involves proper maintenance of the legal activities by
the management and these are intended for the betterment o the employees of the organization2.
Corporate culture can be potentially associated with that of corporate governance, which
expects ethical and legal activities from the organization by considering the importance and the
interests of the stakeholders who are involved in the activities of the organization. To focus on
the implementation of a sound corporate culture, an organization is bound to abide by certain
laws and norms. These specific policies are involved with those members of the organization
1 Guiso, Luigi, Paola Sapienza, and Luigi Zingales. "The value of corporate culture." Journal of Financial
Economics 117.1 (2015): 60
2 Hickman, Craig R., and Michael A. Silva. Creating excellence: Managing corporate culture, strategy, and change
in the new age. Routledge, 2018.

2BUSINESS LAW
who are accountable for managing the organization. The legal policies in Australia include the
Corporation Act 2001 along with the Australia Securities and Investment Commission Act 2001.
This further includes the rules and regulations of the corporate governance ethics as offered by
the Australian Securities Exchange (ASX) 3.
As per the Corporation Act 2001, the managers are expected to follow numerous
guidelines, which they should follow while managing different activities of the organization.
These guidelines expect the organizations not to deceive their creditors and it is a part of the law
that the organization should provide them with appropriate information and data so that they do
not fall into the trap of misconception, deception or forgery. Similarly, the management of the
organizations must be extremely cautious while performing their activities. They need to take
best care of the works for the benefit if the organization and should not provide any false
information for the sake of own interest4.
According to the ASX principle, all the organizations must function in an ethical and
legal manner for managing particular risks that might emerge in the organization. However,
these guidelines are not implemented often and there are instances of falsification in the
Australian corporation. For instance, the cases of Sino Australia Oil and Gas Limited, a
subsidiary of a Chinese organization was involved in the swindle of providing misleading
information. The company was convicted because of using fake information to get hold of public
3 Audi, Robert, Tim Loughran, and Bill McDonald. "Trust, but Verify: MD&A Language and the Role of Trust in
Corporate Culture." Journal of business ethics 139.3 (2016): 551-561.
4 "Pages - Australian Prudential Regulation Authority." Apra.gov.au. N.p., 2018. Web. 20 May 2018.

3BUSINESS LAW
economy during their first public offering. Their illegal activity was not only limited to this
instance but also transferring of public money by the director, Mr. Shao. At this point, ASIC
interfered to secure 7.5 million of public money. This case made its way into the court where the
convicted director had to pay a heavy penalty for the welfare of the society. In addition to that,
he was also removed from the managerial position for two decades.
In another instance of forgery, Storm Financial Limited was prosecuted for cheating the
poor investors, who had to mortgage their personal properties in order to regain the investment.
There was negligence in terms of risk management at the dreamland amusement park where four
people had fallen prey to death. Moreover, the family members were not informed timely and it
led to a chaos and controversy. Thus, it can be concluded that a good corporate culture is
mandatory for an organization and need to be implemented by governing authorities and
provisions. It can be further boosted by ethical considerations to increase societal value5.
5 "Australia Begins Landmark Banking Inquiry." BBC News. N.p., 2018. Web. 20 May 2018.

4BUSINESS LAW
References
"Australia Begins Landmark Banking Inquiry." BBC News. N.p., 2018. Web. 20 May 2018.
"Pages - Australian Prudential Regulation Authority." Apra.gov.au. N.p., 2018. Web. 20 May
2018.
Audi, Robert, Tim Loughran, and Bill McDonald. "Trust, but Verify: MD&A Language and the
Role of Trust in Corporate Culture." Journal of business ethics 139.3 (2016): 551-561.
Guiso, Luigi, Paola Sapienza, and Luigi Zingales. "The value of corporate culture." Journal of
Financial Economics 117.1 (2015): 60-76.
Hickman, Craig R., and Michael A. Silva. Creating excellence: Managing corporate culture,
strategy, and change in the new age. Routledge, 2018.