Corporate Law: The Ardent Leisure Ltd Case and Corporate Governance

This report provides a comprehensive analysis of the Ardent Leisure Ltd case, focusing on the legal and ethical implications of a tragic accident at Dreamworld. It examines the company's failure to fulfill its duty of care and the subsequent criticisms regarding risk management and corporate governance. The report delves into the application of Principle 7 of the Corporate Governance, the role of the ASX, and the responsibilities of the board of directors. It also explores the concept of directors' duties, including the duty of care and diligence, and the defenses available under the Corporation Act. The analysis highlights the liabilities of the board, the importance of risk management committees, and the penalties associated with breaches of duty. The report references relevant literature and emphasizes the importance of maintaining legal obligations, safety, and risk management within the corporate framework.

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

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Discussion
a) The Board of Ardent has liable for the fatal accident and subsequent crisis which has been
occur due to a tragic accident in Dreamworld due to the accident the a number of patrons
has been died when one ride has been faced an accident. Therefore the operator and owner
of the Ardent Leisure Ltd has been faced several criticism due to the failure to the duty of
care1.
According to the Corporate Governance processes it helps to maintain the actual structure of
the corporation which sets the rules, constitution, and system to process. It basically has formed
for the maintenance and controlling the corporation2. The ASX has provided such rules under the
mechanism of the company which helps to make the corporation in the promotional investors
more confident while it applicable under the legislations3.
In the Principle 7 of the Corporate Governance provides the legislations wgich helpsx to
maintain and control every risks and hazards which has forms the rules for the oversight the
risks, management and other internal control. Under the Principle 7 the Corporate Governance
has helps and establishes the implementation and every annual review regarding the every issues
and other controlling management in the risk factors4. It is also comes under the Corporate
Governance that the Audit Committee is appointed while it is necessary to analysis the business
risks in the risk management policies5.
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 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.
3 ArAs, GülEr. A handbook of corporate governance and social responsibility. CRC Press, 2016.
4 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.
5 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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Here the risk has been identified through the internal control system of the board where the
control the whole units and investment appraisal regarding the financial controls a d other
procedures of the capital expenditure for the annual budgets and appraisal, due diligence which
are the basic requirements of the companies. There are several risks gas been control under the
Corporate Governance which includes credit risk, operational risk, liquidity risk, equity, cyber
risk, fraud risks and security risk where they are control by the risk management systems6.
The Ethical Standard Manuals has been set through the quality and integrity of Personnel
which interfere in the controlling the business management7. While operating the risk in the
management organizations the board rules and constitution is helps to operate, control and
mentoring the risk factors. Ardent Leisure Ltd has their own set of managing authority where
they work on the risk factors which are related with the corporation. However due to the sudden
issues their management authorities have been criticized where a major fatal accident occurs and
a number of patrons are died due to the major accident. Now the authority has failed to operate
the board of management. According to the Principle 7 in the Corporate Governance, the
management authorities have using the risk management where they are bound to control the
whole operating business in the risk issues. The risk management authority has been applicable
under the Principle 7 of the Corporate Governance. Now the Ardent Leisure Ltd has bound to
control such risk but they have been failed while operating the principles ethics in the risk
oversight and management and internal control8.
6 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.
7 ArAs, GülEr. A handbook of corporate governance and social responsibility. CRC Press, 2016.
8 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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b) The Board of directors of Ardent Leisure Ltd has been criticized due the failure to managing
the risk factors. The directors and other board members carry the responsibilities of the
company9. Therefore if it has been found that the board has failed to control the risk
management then the directors and other members of the boards are also held responsible
for the failure of the management system10.
The Australian Securities Exchange (ASX) which is the part of the Corporate
Governance has legislate the Principle 7 for the reorganization and managing risk where the
companies has been bound to control the whole constitution, rules and monitoring system of
risk oversight and management and internal control11.
Therefore the duty of the company is to maintain the duties where it is required to control
the risk Management system under the corporate governance. Therefore when the duties of the
company have been breached and cause the responsibilities for failure to manage the risk factors
where any accident or damage has been occur. When the damage has been found under the
corporate governance then the company will breach the principle 7. When the breach has been
for the failure management of the corporate governance then it will order to pay the penalties for
the damage and treated as compensation under the Corporation Act. Under the duty of the board
the constitution of that particular company will applicable under the corporate governance. The
takeover Panel Decision and Policies of the company are also parts of the Principal 7 of the
Corporate Governance12.
9 Graw, Stephen, et al. Understanding business law. 2016.
10 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.
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 ArAs, GülEr. A handbook of corporate governance and social responsibility. CRC Press, 2016.

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The directors are main authority of the boards where they are involved for controlling the
management authorities under the Corporate Governance. Now under the corporate governance
the directors are bound to control and operating the whole business with the authority of the
corporation. Here in Ardent Leisure Ltd has faced with a major accident. 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 company13. However the Board Members and directors are
bound control such operational risk management of the company risk policies. It has been found
that Ardent Leisure Ltd has failed to control and monitor the legal obligation along with the
safety and risk managements14. According to the scenario of the case the Board of directors has
breach the Sec-180 of the Corporation Act. Therefore the liabilities of the board has been
identifies for the board and along with the directors of the company. 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 Governance15.
When the damage has been occur due to failure of the terms of the Corporate Governance
then they should pay the compensation for breach the duty of care as directors where the risk and
controlling policies are need to maintain. The Board will accommodate the whole issues with the
board members along with the directors and the company. They also review the entity of the risk
management and process the safety management with the insurable risk association of the
company16.
13 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.
14 Graw, Stephen, et al. Understanding business law. 2016.
15 Ali, Searat. "Corporate governance and stock liquidity in Australia: A pitch." Journal of Accounting and
Management Information Systems 15.3 (2016): 624-631.
16 ArAs, GülEr. A handbook of corporate governance and social responsibility. CRC Press, 2016.

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c. according to the Corporation Act the Directors are the member of the Board ad has the
equal share of the holders of the company. Therefore the Corporate Governance has provides
such constitution for the directors to follow such rules and duties. Therefore the directors are
willing to perform the several duties and diligence where they must not breach their duties.
However due to the negligence by the directors if the duty cares not always make the financial
harms for the company17.
The directors owned the general duty of care which must be reasonable care for the company
by the directors. They must take every general duty which includes the financial stability,
employment hazards, safety and securities of the employees and along the care of the company is
every issue18. Where the duty of care has failed to make the improvement with the basic general
obligations of the directors which mot involves with any contravene other legislations or
constitution under the Corporate Governance. The degree of skill is also required where it relates
with the objective measurements and other issues regarding the director’s duty19.
Regarding the statutory duty of care is also the part of the duty of care which act with
diligence. Here a reasonable person must exercise the performance as a director of the company.
The constitution of the corporate governance has been set where the directors are must not
breach such statutory duty of care. However, it has been also important that if the breach has
been occur where the director will face various obstacles regarding the legal obligations.
Therefore the Civil Penalty has been applicable according to the breach of the duty of the
directors. Therefore the Corporate Governance has been also provided several defenses which
17 Bottomley, Stephen. "What is corporate law?." Routledge Handbook of Corporate Law (2016): Ciro, Tony, and
Christopher Symes. Corporations law: in principle. Thomson Reuters, 2013.49.
18 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.
19 ArAs, GülEr. A handbook of corporate governance and social responsibility. CRC Press, 2016.

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can be used by the directors when they has been subjected for breach of the duties under the
Corporation Act. 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 care20.
Now regarding the case study of Ardent Leisure Ltd has been faced with the major tragedy of
accident where several people have died21. Therefore tragic accident has affected the reputation
of the company where the breach of duty of care of the directors has been related. It is also
important to state that the board and the shareholder of the company the director also owns the
duty toward the company and protects the safety issues with the company22.
When the company faced the damages for the failures of the risk management then it is
important to prove the breach of duty of care of the directors. Here the Corporate Governance
has also applied the penalty provisions where the directors are bound pay the compensation. 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 company23. The section 1317E of the corporation Act provides the
penalty section for the breach of the duty of care24.
d. According to the case study, Ardent Leisure Ltd has been alleged by the Corporate governance
for the fatal accident and subsequent crisis. After the tragic accident at Dreamworld a number of
20 Ali, Searat. "Corporate governance and stock liquidity in Australia: A pitch." Journal of Accounting and
Management Information Systems 15.3 (2016): 624-631.
21 Bottomley, Stephen. "What is corporate law?." Routledge Handbook of Corporate Law (2016): Ciro, Tony, and
Christopher Symes. Corporations law: in principle. Thomson Reuters, 2013.49.
22 ArAs, GülEr. A handbook of corporate governance and social responsibility. CRC Press, 2016.
23 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.
24 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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patrons have been died25. As they has been criticized for failure to maintain the risk management
systems. The Corporate Governance has been alleged that the board of Ardent Leisure Ltd not
able to control the safety issues and controlling the risk hazards. It has been found in the ethics of
the Corporate Governance the good corporations always make the cooperation along with the
promotional investor confidence under the Australian Securities Exchange (ASX)26. It has
provides the ability to work with the good governance where any issues has been found.
However in this case scenario the Principle 7 of the Corporate Governance has provides such
reorganization which helps to manage the risk issues of the corporation where it is must to define
such rules and controlling system of risk oversight and management and internal control.
The risk managements has been corporate in the corporation where it helps to identifies
the risk hazards and take appropriate care resolve the issues trough the involvement of the
Corporate governance27. As the directors are the part of the corporate governance and if any
issues have been identified regarding the risk policies then it is the duty of the corporate
governance of the Principles 7 of the ASX principles of Good Corporate Governance.
Therefore the hazards and risk factors should identify according to the good corporate
governance28. When any breach has identified by the governance then it s also required solving
such issues. Therefore the entity of the risk management helps to process the safety and risk
management under the process of corporate governance where the safety management with the
insurable risks association with 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
25 ArAs, GülEr. A handbook of corporate governance and social responsibility. CRC Press, 2016.
26 Bottomley, Stephen. "What is corporate law?." Routledge Handbook of Corporate Law (2016): Ciro, Tony, and
Christopher Symes. Corporations law: in principle. Thomson Reuters, 2013.49.
27 ArAs, GülEr. A handbook of corporate governance and social responsibility. CRC Press, 2016.
28 Bottomley, Stephen. "What is corporate law?." Routledge Handbook of Corporate Law (2016): Ciro, Tony, and
Christopher Symes. Corporations law: in principle. Thomson Reuters, 2013.49.

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to be sound and disclose, in relation to each reporting period, whether such a review has taken
place. Therefore it is important for the boards were the Board of the Ardent Leisure must
preview all the risk issues and process according to the solving of the risk hazards29.
29 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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