Corporate Governance and Risk Management Analysis: Ardent Leisure Ltd.

This report analyzes the corporate governance failures of Ardent Leisure Ltd. following a fatal accident at Dreamworld, focusing on the company's risk management practices and adherence to ASX principles. The analysis examines the roles and responsibilities of the board of directors, highlighting breaches of duty of care and the legal consequences of these failures. The report delves into the specifics of corporate governance, including the importance of risk oversight, internal controls, and ethical standards, as well as the company's failure to recognize and manage risks. It explores the legal implications for the company, the directors, and the risk management committee, and the significance of the duty of care. The study also covers the financial implications of the accident and the penalties associated with breaches of corporate governance principles. This report underscores the importance of sound corporate governance in maintaining investor confidence and ensuring the safety and security of stakeholders.

Running head: CORPORATE LAW
Corporate Law
Name of the Student
Name of the University
Author Note

1CORPORATE LAW
Discussion
a) The Board of Ardent has alleged for the fatal accident and subsequent crisis. After the tragic
accident at Dreamworld a number of patrons are death on one of the rides which criticized
the operator and owner Ardent Leisure Ltd1. People have arises several question regarding
the safety management of the company. They have failed to recognize and manage the risks
which have been arising from the incident2.
The corporate governance processes the structures of the rules, relationships, systems and
processes by a particular authority for controlling and monitoring the corporations. It also
controls the mechanisms of the company which are held to control the governance. In the
corporate governance the good corporation always cooperates with the promotional investor
confidence which is one of the important parts to provide the ability on the ASX.
The principal 7 in Corporate Governance describes the reorganization and manages risk
where companies should establish such rules and monitoring system of risk oversight and
management and internal control. It has set several principals. It is the duty of the boards that
they must care about the establishment, implementation and annual review of the risk
management system for controlling and managing the risk factors. In the risk profile the Audit
Committee always analysis the various business risks in the risk management policies3.
1 Ali, Searat. "Corporate governance and stock liquidity in Australia: A pitch." Journal of Accounting and
Management Information Systems 15.3 (2016): 624-631.
2 Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and practices. Oxford
University Press, USA, 2015.
3 Beekes, Wendy, Philip Brown, and Qiyu Zhang. "Corporate governance and the informativeness of disclosures in
Australia: a re‐examination." Accounting & Finance 55.4 (2015): 931-963.

2CORPORATE LAW
When any risk or defects occur due to some internal control system then they board will be
responsible for the issues4. The company will operate the unit control and investment appraisal
for the financial controls and procedures of the capital expenditure for the annual budgets and
appraisal, due diligence which are the basic requirements of the companies5. There are several
kind of risks are available like credit risk, operational risk, liquidity risk, equity, cyber risk, fraud
risks and security risks which are affecting the risk management system of the boards. Therefore
the risk management committee control the risk management programs for the revaluate the
management systems6.
The quality and integrity of Personnel set an Ethical Standard Manuals for the operational
purposes of the bard rules for controlling the risk managements. When they operate the risk in
the business line management the board always compliance with the major business risks lines7.
Therefore according to the management system of the Ardent Leisure Ltd, the duty of the board
comes to a criticize issues where a major fatal accident occurs and a number of patrons are died
due to the major accident8. Therefore several question has arises about the responsibilities of the
company that how they manage the security system9. As per the principal 7 in Corporate
Governance the risk management is able to supremacy whole safety issues in the business but
the safety and securities of the employees also applicable under this principal10. It is the duty of
4 Ali, Searat. "Corporate governance and stock liquidity in Australia: A pitch." Journal of Accounting and
Management Information Systems 15.3 (2016): 624-631.
5 Ali, Searat. "Corporate governance and stock liquidity in Australia: A pitch." Journal of Accounting and
Management Information Systems 15.3 (2016): 624-631.
6 Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and practices. Oxford
University Press, USA, 2015.
7 Whiting, Rosalind H., and Georgia Y. Birch. "Corporate governance and intellectual capital disclosure." Corporate
Ownership and Control 13 (2016): 250-260.
8 Beekes, Wendy, Philip Brown, and Qiyu Zhang. "Corporate governance and the informativeness of disclosures in
Australia: a re‐examination." Accounting & Finance 55.4 (2015): 931-963.
9 Ali, Searat. "Corporate governance and stock liquidity in Australia: A pitch." Journal of Accounting and
Management Information Systems 15.3 (2016): 624-631.
10 Ali, Searat. "Corporate governance and stock liquidity in Australia: A pitch." Journal of Accounting and
Management Information Systems 15.3 (2016): 624-631.

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the board members of Ardent Leisure Ltd that they will control every safety issues in the risk
management and prevent the risks according to the ethics in the risk oversight and management
and internal control11.
b) According to the case study, the directors and the company are the part of the board therefore
if the Board failed to manage the risks the company and directors both are breaches the
Principles 7 of the ASX principles of Good Corporate Governance12.
The Australian Securities Exchange (ASX) is one of the parts in the Corporate Governance
where the Principal 7 describes the reorganization and manages risk where companies should
establish such rules and monitoring system of risk oversight and management and internal
control13. It addition is also possible to describe that the duties of the company are all depends on
the Board of the company. The company and the directors all are related with each other and if
any accident occurs due to the irresponsibility of the Board then it will state that the Board has
breach the Principal 7 of the Corporate Governance14. The all kind of legal responsibilities are
lie on the Board where they must conduct the business and every statutory responsibilities and
companies financial statements. According to the Corporate Governance, the breach of any
duties will make the penalties under the Corporate Act15. The Board must control and monitor
the duties where the rules and constitution of the corporation also included. The takeover Panel
11 Ali, Searat. "Corporate governance and stock liquidity in Australia: A pitch." Journal of Accounting and
Management Information Systems 15.3 (2016): 624-631.
12 Beekes, Wendy, Philip Brown, and Qiyu Zhang. "Corporate governance and the informativeness of disclosures in
Australia: a re‐examination." Accounting & Finance 55.4 (2015): 931-963.
13 Whiting, Rosalind H., and Georgia Y. Birch. "Corporate governance and intellectual capital disclosure." Corporate
Ownership and Control 13 (2016): 250-260.
14 Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and practices. Oxford
University Press, USA, 2015.
15 Mann, Catherine Renshaw, et al. "From the dean." (2016).

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Decision and Policies of the company are also related with the Principal 7 of the Corporate
Governance16.
Along with the duty of the Board of the Company the duty of the directors are also related in
this part. Directors of the company individually also maintain their duty to look after every
hazards and safety management of the company17. However, the board and the company along
with the directors who are the member of the board have the same duty to monitoring the risk
management as per the corporate governance18. The risks should be the material risks where the
companies are bound to maintain the legal obligation along with the business and risk policies in
the company19. If the company or Board or the Directors failed to manage the legal obligations
then they will breach their duties and face the legal consequences20. As per the case study, it has
been found that Ardent Leisure Ltd has failed to control and monitor the legal obligation along
with the safety and risk managements21. Here, the Board, Company and the directors all are
breaches their obligations which cause the damages. The risk management committee will have
the obligation to looks for the damages and has the responsibilities to maintain the obstacles as
per the Corporate Governance22.
When anyone breach the duties then as per the Corporate Governance then according to the
damages they are bound to pay the compensation to the parties who are affected for the breaches
16 Ali, Searat. "Corporate governance and stock liquidity in Australia: A pitch." Journal of Accounting and
Management Information Systems 15.3 (2016): 624-631.
17 Whiting, Rosalind H., and Georgia Y. Birch. "Corporate governance and intellectual capital disclosure." Corporate
Ownership and Control 13 (2016): 250-260.
18 Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and practices. Oxford
University Press, USA, 2015.
19 Beekes, Wendy, Philip Brown, and Qiyu Zhang. "Corporate governance and the informativeness of disclosures in
Australia: a re‐examination." Accounting & Finance 55.4 (2015): 931-963.
20 Mann, Catherine Renshaw, et al. "From the dean." (2016).
21 Ali, Searat. "Corporate governance and stock liquidity in Australia: A pitch." Journal of Accounting and
Management Information Systems 15.3 (2016): 624-631.
22 Beekes, Wendy, Philip Brown, and Qiyu Zhang. "Corporate governance and the informativeness of disclosures in
Australia: a re‐examination." Accounting & Finance 55.4 (2015): 931-963.

5CORPORATE LAW
and risk issues. The Board will accommodate the whole issues with the board members along
with the directors and the company23. They also review the entity of the risk management and
process the safety management with the insurable risk association of the company24.
c) The directors are the member of the board and shareholder of the company. They are bound
to perform several duties under the corporate governance. They are willing to function
according to their duties of care and diligence and must not breach the duties. Their
negligence towards director’s duty never makes any financial harm to the company.
It is the general law of duty of care where the directors have general duties to take the
reasonable care where they will look after every issues in the company which includes the
financial stability, employment hazards, safety and securities of the employees and along the
care of the company’s every issues25. The law of the duty of care never make any imposes w9ith
the general obligation of the director to make it sure that the company never make any
contravene with other acts or legislations. The directors also make it sure that the degree of skill
required every objective measurements which are related to the issues of the director’s duty26.
The statutory duty of care includes the degree of care ad diligence of a reasonable person
who will perform the duty of the directors of the company. According to the constitution of the
company the director never breaches the duties. If it breaches the duty toward the company then
the director may face the legal obligations according to the rules of the corporate governance27.
23 Whiting, Rosalind H., and Georgia Y. Birch. "Corporate governance and intellectual capital disclosure." Corporate
Ownership and Control 13 (2016): 250-260.
24 Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and practices. Oxford
University Press, USA, 2015.
25 Beekes, Wendy, Philip Brown, and Qiyu Zhang. "Corporate governance and the informativeness of disclosures in
Australia: a re‐examination." Accounting & Finance 55.4 (2015): 931-963.
26 Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and practices. Oxford
University Press, USA, 2015.
27 Ali, Searat. "Corporate governance and stock liquidity in Australia: A pitch." Journal of Accounting and
Management Information Systems 15.3 (2016): 624-631.

6CORPORATE LAW
The civil penalty also applied for the breach of the director’s duty. When the director breach the
duty of care there are some defenses are also available in the corporate governance rule28. The
business judgment rule, reliance defense and delegation defense are the most common defenses
can the directors may use when they are facing the allegation of breach the duty of care29.
Here in this case Ardent Leisure Ltd has the an important issue where their company has
faced a major tragedy of accident where several people has died which affect the reputation of
the company and for that reason it establishes that the board has breach the duties. Therefore as
being the member of the board and the shareholder of the company the director also owns the
duty toward the company and protects the safety issues with the company30.
If any company face any damages regarding the risk factors and if it has been proved that the
director has breached the duty towards the company then the penalty provisions also apply for
the directors also31. The breach of duty of care means the director’s activity represents negative
outcomes for the company and damage the reputation of the duty32. According to this case, if it
has been found that the directors are liable for the fatal accidents then the penalty provisions are
also applicable for the directors33. The financial harm is one of the major issues in the risk
management program. The directors are must not breach the duty of care and diligence towards
the company as they are board members and equal shareholders of the company34.
28 Whiting, Rosalind H., and Georgia Y. Birch. "Corporate governance and intellectual capital disclosure." Corporate
Ownership and Control 13 (2016): 250-260.
29 Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and practices. Oxford
University Press, USA, 2015.
30 Beekes, Wendy, Philip Brown, and Qiyu Zhang. "Corporate governance and the informativeness of disclosures in
Australia: a re‐examination." Accounting & Finance 55.4 (2015): 931-963.
31 Ali, Searat. "Corporate governance and stock liquidity in Australia: A pitch." Journal of Accounting and
Management Information Systems 15.3 (2016): 624-631.
32 Beekes, Wendy, Philip Brown, and Qiyu Zhang. "Corporate governance and the informativeness of disclosures in
Australia: a re‐examination." Accounting & Finance 55.4 (2015): 931-963.
33 Whiting, Rosalind H., and Georgia Y. Birch. "Corporate governance and intellectual capital disclosure." Corporate
Ownership and Control 13 (2016): 250-260.
34 Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and practices. Oxford
University Press, USA, 2015.

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d) The Board of Ardent has alleged for the fatal accident and subsequent crisis. After the tragic
accident at Dreamworld a number of patrons are death on one of the rides which criticized
the operator and owner Ardent Leisure Ltd. People have arises several question regarding
the safety management of the company. They have failed to recognize and manage the risks
which have been arising from the incident35.
Therefore there are several issues has been arises on the basis of the allegation toward the
board members of the Ardent Leisure Ltd. The allegation of the people is that they are failed to
manage the safety issues and monitoring the risk hazards36. In the corporate governance the good
corporation always cooperates with the promotional investor confidence which is one of the
important parts to provide the ability on the ASX. The principal 7 in Corporate Governance
describes the reorganization and manages risk where companies should establish such rules and
monitoring system of risk oversight and management and internal control37.
Therefore according to the risk managements it is their duty to check the issues and
overcome the risk through the risk management committee38. According to the case study, the
directors and the company are the part of the board therefore if the Board failed to manage the
risks the company and directors both are breaches the Principles 7 of the ASX principles of
35 Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and practices. Oxford
University Press, USA, 2015.
36 Beekes, Wendy, Philip Brown, and Qiyu Zhang. "Corporate governance and the informativeness of disclosures in
Australia: a re‐examination." Accounting & Finance 55.4 (2015): 931-963.
37 Beekes, Wendy, Philip Brown, and Qiyu Zhang. "Corporate governance and the informativeness of disclosures in
Australia: a re‐examination." Accounting & Finance 55.4 (2015): 931-963.
38 Whiting, Rosalind H., and Georgia Y. Birch. "Corporate governance and intellectual capital disclosure." Corporate
Ownership and Control 13 (2016): 250-260.

8CORPORATE LAW
Good Corporate Governance39. It is the duty of the board that they will maintain and control
every hazard in the corporation40.
The directors are the member of the board and shareholder of the company. They are bound
to perform several duties under the corporate governance. They are willing to function according
to their duties of care and diligence and must not breach the duties. Their negligence towards
director’s duty never makes any financial harm to the company41. When anyone breach the duties
then as per the Corporate Governance then according to the damages they are bound to pay the
compensation to the parties who are affected for the breaches and risk issues42. The Board will
accommodate the whole issues with the board members along with the directors and the
company43. They also review the entity of the risk management and process the safety
management with the insurable risk association of the company. The board or a committee of the
board should review the entity’s risk management framework at least annually to satisfy itself
that it continues to be sound and disclose, in relation to each reporting period, whether such a
review has taken place44.
39 Whiting, Rosalind H., and Georgia Y. Birch. "Corporate governance and intellectual capital disclosure." Corporate
Ownership and Control 13 (2016): 250-260.
40 Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and practices. Oxford
University Press, USA, 2015.
41 Beekes, Wendy, Philip Brown, and Qiyu Zhang. "Corporate governance and the informativeness of disclosures in
Australia: a re‐examination." Accounting & Finance 55.4 (2015): 931-963.
42 Whiting, Rosalind H., and Georgia Y. Birch. "Corporate governance and intellectual capital disclosure." Corporate
Ownership and Control 13 (2016): 250-260.
43 Ali, Searat. "Corporate governance and stock liquidity in Australia: A pitch." Journal of Accounting and
Management Information Systems 15.3 (2016): 624-631.
44 Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and practices. Oxford
University Press, USA, 2015.

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