Describe about the Law of Business Organization for Principles and Guidance.
Historical background and reason for their inclusion in the Corporation Act.
The Corporation act is the act of the Commonwealth of Australia. This act can also be called as corporation act. This act deals with the laws that s to be followed by every business organizations of Australia. This act contents the laws which mainly focused in company starting from the registration to its winding up and some other provisions. The main reason of forming of the said act is the famous decision made in the case of New South Wales v Commonwealth, (Laws, 2016).
Sec.198A of the Corporation Act contents the powers of the directors. No director has any individual power and cannot execute the same (Federal Register of Legislation, 2016). The Board of directors has the authority to exercise all such powers and can do all such works as the company is authorized to do. The directors are the agents of the company. An individual director can only execute his power only if the Board delegates any authority to that director. The main power of the directors is that they have the complete authority to control the business affair of the company and are responsible for the same. The directors collectively called the Board of directors have the power to fill up the vacancy of the board by appointing a director. The other powers are that the board can issue shares and debentures and can fixed the rate of per share, they can also make loan for the business purpose and can do any act to the limit of their authority for the business purpose. The main reason to incorporate this act in the statute is that this will help the internal management to work smoothly which will increase the business of the company.
Duty of the directors has been mentioned in the section 191 of the Corporation Act (ASIC, 2016).
The duties of the directors which they are expected to follow are:
They have to attend the meetings of the board regularly.
They should not go beyond their authority to perform any action.
They should disclose any material fact in which he is having any personal interest and also is related to the company affairs to other directors, provided he acts as a guarantor to the company or is related to his remuneration. If he fails in doing so, he will be liable of breach of trust and of negligence.
This section has been included in the act in order to maintain the trust amongst the directors which will impliedly save the assets of the company from being ruined because of some kind of personal interest, (Australian Institute of Company Directors, 2016).
Section 250R (1) & (2)
This particular section of the act deals about the business of the AGM (Annual General Meeting). Annual general meeting is held to discuss about a specified matter (Mkysugar, 2016).
The notice of the AGM should be given to every members of the board which should specify the matter to be discussed. The AGM is to be held during the office hours. In the AGM, the annual report of the company by the auditors, financial report of the company for a particular year, director report, are to be discussed by the board. Any other relevant matter which is beneficiary for the company is also expected to be discussed. In the AGM of a listed company, there must be vote for the discussion over the remuneration report. This section helps to maintain transparency between the directors of the company with other officers which helps in smooth running of the business.
ASIC (2016) Insolvency for directors, [Online], Available: https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors/.
Australian Institute of Company Directors (2016) Good Governance Principles and Guidance for NFP Organisations, [Online], Available: https://www.companydirectors.com.au/Director-Resource-Centre/Not-for-profit/Good-Governance-Principles-and-Guidance-for-NFP-Organisations.
Federal Register of Legislation (2016) Corporations Act 2001, [Online], Available: https://www.legislation.gov.au/Details/C2014C00519.
LAWS (2016) CORPORATIONS ACT 2001, [Online], Available: https://corporate.laws.com/corporations-act-2001.
Mkysugar (2016) Corporation Act 2001, [Online], Available: https://mkysugar.com.au/.