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Corporate Law Essay

3426 words - 14 pages

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Corporation Law
BULAW 5915

1/22/2013
Suneel Younis Mughal
Ub 300 92 001

1.0 Corporate Governance

Corporate Governance practice aim to ensure that the board is accountable to stakeholders, especially shareholders, and that management is accountable to the board (Lipton, Herzberg & Welsh, 2010).It is helpful to an understanding of corporate governance to appreciate that it is concerned with how corporate entities are governed as distinct from the way the businesses within those entities are managed. Governance relates to where the company is going. Management is concerned with getting the company there. This distinction is central is determining the role and function ...view middle of the document...

4. Safeguard integrity in financial reporting- Meeting the information needs of a modern investment community is also paramount in terms of accountability and attracting capital.
5. Make timely and balanced disclosure-Companies should promote timely and balanced disclosure of all material matters concerning the company.
6. Respect the rights of shareholders - The rights of company owners, that are shareholders, need to be clearly recognised and upheld.
7. Recognise and manage risk- Every business decision has an element of uncertainty and carries a risk that can be managed through effective oversight and internal control.
8. Remunerate fairly and responsibly -Rewards are also needed to attract the skills required to achieve the performance expected by shareholders.

2.0 The Regulation of Corporate Governance
The regulation of corporate governance is a mix of legal regulation and self-regulation. The main regulatory elements are:
▪ Legal obligations largely imposed by the Corporation Act and fiduciary duties;
▪ Requirements which have legislative recognition and the force of law such as the ASX Listing Rules and accounting and auditing standards; and
▪ Codes of corporate governance such as the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendation which are voluntary, not mandatory.
ASIC has responsibility for legal regulation and enforcement while, for listed companies, the ASX plays a significant role in corporate governance regulation through the administration of its Listing Rules. The corporation Act deals with a wide variety of corporate governance issues. These included:
▪ Directors’ duties
▪ Shareholders’ meetings, rights and remedies
▪ The continuous and periodic disclosure obligation
▪ The requirements for, and regulation of, auditor
▪ The regulation of takeovers
The main focus of corporate governance is largely on the role and function of board and directors. A board’s functions fall into two distinct and separate categories: supervisory and strategic. The separation of the roles has led to several recommended corporate governance practices such as separation roles of chair and CEO, appointment of independent directors and use of board committees. Legal regulation prescribes minimum standards which if breached may result in civil and, in the worst cases, criminal liability. However, legal regulation alone is insufficient in promoting good corporate governance practice.

3.0 Why is Corporate Governance important to Australia?
Demonstrably good corporate governance practices are increasingly important in determining the cost of capital in a global capital market. Australian companies must be equipped to compete globally and to maintain and promote investor confidence both in Australia and overseas. In an examination of our corporate governance practices, Australia starts from a position of strength. However, it is important that we...

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