Introduction: Corporation Law Implementation In Corporate Sector ASIC Australia
The researcher discussed the Corporation law in Australia. As Baird & Rothwell (2011) stated that Corporation law is a broader concept of company’s law. As Etheridge (1990) argued that Corporation law is a creating relationship with the stakeholders. In Australia, the UK companies’ law mainly influences the corporate law. In Australia, the main corporate sector is ASIC (Australia Securities and Investment Corporation). The researcher mainly focused on the good corporate performance, its role, financial measures and independent directors. In corporate governance, the role of directors and stakeholders has discussed in the assignment. In Australia, the governance performance is measured in control the Corporation law. The researcher mainly focused on the implementation of Corporation law in every corporate sector in Australia.
Part A:
1.1 Good corporate governance:
Corporate governance is the broader version of various organization rules and regulation, in a simple way it is the mixture of the corporate world with companies’ legislation. According to Fisher (n.d.), the corporate governance is a concept of rules, regulations, process, and system of a corporate sector. Corporation law is affecting the company goals. Corporate governance is control over the corporate sector’s rules and regulations. In every corporate sector, the corporate law is affecting the external and internal environment. Good corporate governance means the effective law that is most useful in every country. Good corporate governance will change the whole environment and the company may meet the circumstance in its surrounded world. In Australia, the corporate governance develops the corporate sector worldwide. In corporate governance, the government made many rules and regulations, much legislation in favor of company’s stakeholders.
A good corporate governance structure has mainly effect by the eight aspects that our Board of directors, Performance management controls, Ethical standards and values, Legal and statutory requirements, corporate culture, Disclosure and transparency, Risk management and Corporate social responsibility Latimer (2009). The board of director is the main part of every company and they mainly help the company to take various rule and regulation. The performances of the corporate sector are controlled by the corporate governance. The ethical value is influenced the Corporation law, it is different in every country. In certain companies has its own statuary requirement that affects the corporate governance. The different culture in a different country makes different corporate governance. Corporate social responsibility is another and important aspect of corporate governance. Every company maintains the corporate social responsibility to create an effective relationship with its stakeholders Gunningham & Holley (2010). Companies corporate social responsibilities are to maintain a healthy environment, customer relationship management, Welfare activities, rewards etc. If a corporate sector maintains all the above points then the corporate governance becomes the good corporate governance.
Figure 1: Structure of Good Corporate Governance
1.2 The mechanisms play a role in corporate governance in Australia:
The main corporate governance in Australia is ASX corporate governance council. The ASX corporate governance council, have many sectors that are mainly control over the corporate law in Australia. That sectors are Association of superannuation funds of Australia Ltd, Australasian Investor Relations Association, Australian Council of Superannuation Investors, Australian Financial Markets Association, Australian Institute of Company Directors, Australian Institute of Superannuation Trustees, Australian Shareholders’ Association, ASX Group, Business Council of Australia Chartered Secretaries Australia, CPA Australia Ltd and Financial Services Institute of Australasia and so on (Latimer, 2009). In Australia the rules of corporate governance are-
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Enforcement: In enforcement, the company has to maintain the company’s law in according to Corporation Act. In this part, the company follow and make various administration rules for the benefits of the administration. In Corporation law the various rule has made for the administration benefit. In Australia, the board of director rights, members of a board member, decision-making process and the internal environment all this topic related rules has made Mann & Blunden (2010). The ASIC and ASX is mainly control over the implementation of the Corporation law in every corporate sector. All the administration rules have made from the corporation act, like the director’s rights, internal environment etc.
Public benefits: In public benefits, the corporate governance mainly focuses on the benefits of the public. As per the employee’s rights and the customer, satisfaction the corporate governance makes rules. In Australia, the customer satisfaction is an important aspect. All the rules of CRM based on the customer satisfaction. In every corporate sector, many rules have made based on employee rights (Cooney, Gahan, Marshall et al. 2009). The rules are employee rights about their job, working environment and working time, adult and young age, overtime etc. In favor of customer feedback, CRM, customer rights all this law has made.
Law reform: In law reform, the Australia governments make various laws about the Customer rights, directors’ rights, employee rights, environment safe laws etc law has made. In Australia, the ASX and ASCI are mainly establishing the corporate law.
1.3 Reason for good corporate governance’s relevance for key stakeholders:
Corporate governance is the making relationship with the stakeholders. Stakeholders mean the employees, managers, customers, suppliers, shareholders etc. In every company or a corporate sector is effect by the stakeholders. In every company, all the laws have mainly made for the stakeholder’s benefits purpose. In employee rights the employees, rights in a corporate sector that are described (Turner, 2010). In corporate law, the employee performance check, giving the financial and nonfinancial benefits, various allowances, and medical benefits all these policies has used in every corporate sector. The corporate made law about the customer rights, in that law the customer gets many benefits from the company, a customer gets the satisfaction with his company etc.
In every company stakeholders happy with its company that will help the laws to make good corporate governance. To implement the stakeholder-rights in an effective way the corporate governance made all the corporate law. Director’s rights law has made for the board director of the company6. In this law, the director’s rights, limitation, decision-making power all have discussed. In customer rights act customer feedback, exchange of damage product or replacement, delivering the product in time all the policies have made. Customers are more satisfied with those companies that are more concern about the customer rights (www.oecdobserver.org, 2014).
1.4 The financial measures determine the performance of a corporation’s governance:
Corporate governance’s performance is effective for the financial purpose. Many law in organisation results of its financial crisis. Under corporate governance, the entire corporation is bound to follow all the legislation. To maintain that legislation the company has spent lots of money that affect the finance part of that organisation (Environmental, n.d.). The small companies are more affected by all these laws. The small companies are usually are in the small-scale organisation. There the employee gets equal benefits. To maintain that laws the small-scale companies have faced financial crisis. In many law regarding the environment, the company faced financing crisis. The corporate law about pollution free environment, location effect, cultural differences all affects the company’s fund. Some organisation has made in a locality but create the dangers gas that will get harm the society. According to the corporate law, the company sifts and other location where the place is population free.
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In employees rights act, the company has to pay all the benefits to the employee that causes the financial crisis. If an employee was injured during his work time, the company has to bear all the money as per the law (Prest, 2011). Those extra expenses are added financial crisis in a company. The extra allowances create an extra expense in the company’s funds. The allowances are DA, medical, house rent etc. In customer perspective, the company has to bear for customer losses. If there any damage to the product, the company has to replace it and gave to the customer a new one as per the customer rights act. This extra expense gives an impact on the company’s fund.
1.5 Evaluation of the performance of Australian corporation’s board of directors in the light of these measures:
The Australian corporation’s board of directors or ABC board has established in 1983 (Fisher, n.d). In this board, there are seven directors and the managing director is choosing by the board. This board mainly focused on the benefits of the people of Australia. In this board, the laws have made to integrate the indecency of the organisation. The Governor appoints the entire director in organisation. ABC boards are responsible to collect the relevant data from the worldwide. This board mainly helps all the companies to maintain the corporate governance. The poset6ive impact of this board is all the stakeholders’ has benefited. The employees get extra benefits and the customers are gets their rights in the corporate world (www.unpan1.un.org, 2014).
The environment may pollution free and bed safe from the disaster. In corporate governance, the pollution free policies is a reason for reducing global warming in worldwide. This law also helps the organisation to control the pollution free environment. That will provide the healthy life to the people.
Corporate governance also has a negative side. Through all the laws, the company funds are affected and the company faced financial crisis. The company has to pay a higher amount in accordance with employee injure or the product defect, in every cast hew company spend lots of money for this purpose. The small-scale companies have more effect by all these laws. The small-scale company has not too able to provide all the benefits to the employees
(www.oecd.org, 2014).
The board of director takes all the decision about the company laws that create an effect on their stakeholders. The director does not give any information about the laws to the stakeholders as the result of this the stakeholders have made the mistakes. The various laws fail in implication in a practical field that is the waste of government money and time also. As an example the customer’s feedback, in the law the small-scale company are not able to take the customer feedback, as a result, the customer not satisfy and the company gets loose the customer. That is the failure of those laws.
1.6 Current Australian legal regulation of director’s duties is adequate to protect corporate directors:
The Australian legal regulation of director’s duties effect on the rights of stakeholders the duties of directors is to take care and maintain a good relationship with the stakeholders. The duty of directors is to provide the best interest and benefits to the employees (www.oecd.org, 2014).
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The director does not use the laws for his personal interest, they always think about the stakeholder’s benefits. The director’s analysis the policies before implementing them in the organisation.
The directors always concerned about its client satisfaction that increases the customer loyalty. The supplier’s rights also make an effect on company’s law. The supplier delivering time and the payment of supplier all this topic has discussed in suppliers rights policies. The company has to pay the suppliers in within fifteen days. In customers rights, the company has to replace the damaged product within thirty days (www.oecdobserver.org, 2014).
However, to protect the corporate governance the government of Australia takes many steps that are creating effective laws in benefits of stakeholders and companies also. The board is more concerned about the customer, because if the customer is satisfied then the organisation run effectively. The ethical and cultural environment an effective influences the corporate governance.
Part B:
2.1 What makes a director an ‘independent director” of an Australian corporation:
As Turner (2010) stated that. Independent director is an independent manager who is free from all the business or other relationship. The independent director has nominated and elected by the Board of directors. There are many criteria for an independent director that are the director must be a valuable shareholder in that company. The persons get maximum share of that company. The person has five-year experiences as a director. The persons may receive much remuneration from the National context. The person may free from any other legal aspect in context other company. The persons have mentally healthy and physically fit. The persons may refer the references all the board of directors. The persons may provide the affiliated certification to the company. The persons may relate to the company (Prest, 2011). The persons are may consult with a reputed person in that organisation. If above mention criteria are fulfilled by any persons is eligible for the post of Independent director.
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2.2 The primary role of directors:
The primary roles of the directors are to protect the interest of the business and the interest of the stakeholders. The main primary duties of the directors are to protect the business from getting insolvent while doing the trading activities. It is very much necessary for a company to run the trading activities in such a way that while doing the business the business house does not lose all the money and become defaulter (Gunningham & Holley, 2010). Therefore, the directors’ primary duty is to run the organization in accordance with its financial strengths.
The other role of the director is that to maintain the financial records of the company in accordance with the legal framework of the corporate rules and regulations of the country and if the company is working in an international market then maintaining the financial transparency as per the international standards (www.pc.gov.au, 2014).
The last but not the lease duty of the directors is that to maintain the interest of the stakeholders even in the most turbulent economic conditions and to maintain the good image of the company for the future development both in the national and in the international context.
2.3 Good corporate performance measurements:
According to Etheridge (1990), the corporate performance has generally been measured through the analysis of the long-term and the short-term measurement. In the short-term measurements, the company assesses the short-term profits and the return on per employee majorly. In long-term measurements, the majority of the companies are judging their performances, as per the corporate governance their sustainability capacity and to adopt the future challenges in the industry sector in both the national and in the international context (www.unpan1.un.org, 2014).
The ROI has very rigorously measured for making the performance appraisal both in the long and in the short term for a company. In recent days, the Australian companies are starting to measure the human asset strength as a measurable parameter for the performance measurement.
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Conclusion:
In the assignment, the researcher focused on the corporate governance in Australia. In Australia the two major board that are making the corporate rule. The researcher describes the various law that affects the corporate system that are employees benefits, customers rights, pollution free environment, suppliers rights etc. Among them, the customer rights are the burning topic in today’s world. The various duty of director has described by the researcher. The various rules for making the independent director and its criteria are a highlight of this assignment. The effectiveness of the good corporate governance in every country and the structure if the corporate governance in every corporate sector has mentioned by the researcher.