Australian Corporate Acts Securities Law Case Study

Question: Describe about the Australian Corporate Acts for Securities Law Case Study. Answer: Case study Corporations and securities law case study NSX Limited vs. Pritchard FCA584 (22 May, 2009) NSX Ltd was requested by shareholders to call a general meeting to remove the existing directors and elect new directors. The shareholders commanded a 5% votes as required by the Corporations Act 2001. NSX informed the ASX of the directors intention. The directors must call a meeting within 21 days after a request. Members can only be allowed to conduct their meeting if this is not done as stipulated in section 249E. Surprisingly, on the 21st day, directors called a meeting and authorized a meeting to the ASX which in turn sent the notice of the meeting to the shareholders [1]. Instead the shareholders called their meeting and pursued their agenda of removing the directors. The federal court ruled in favor of the directors by specifying that the directors called a meeting before the elapsing of 21days time limit as stipulated in section 249E of the corporate law however there was no written notice. His honor out ruled the need of a receipt of notice though it is a necessity under sec tion 249D. This could be a significant consideration in evaluating whether the directors had complied with their duty to call a meeting on the deadline date after receiving shareholders request long enough. Could the directors have failed to call the meeting within the day limit of 21 days, shareholders would have won. (www.legisltion.vic.gov.au). Roles of Corporate Act Guides company formation process The Australian Corporate law serves as a legal entity created by legislation. The law therefore stipulates to private limited companies terms and conditions of their formation. For instance the law specifies ownership, profits, annual audits, and stake holders liabilities. Corporate governance Australian courts shape conducts and responsibilities of directors in private and public sector. Securities and Investment Commission keeps the executive team of the company under check through audit systems to enhance fairness and accountability on their administrative roles and assets management. Such a move helps companies to be consistence and survive within their jurisdiction through effective resource management plans and mobilization techniques (Australia O'Neill, 2013). Managers therefore are tasked with the responsibility to ensure their companies have functional financial and audit committees with independent directors to review internal accounting standards. Under this law, recommendations are made that the chief executive officer post should be distinguished from the chairs position for effective management. Further recommendations state that there should be more independent directors including the chairperson. Moreover, companies should have remuneration committee under an independent director[2]. The corporations Act 2001(section 184) demands directors to act in good faith and effectively use their position. Provisions of this act consider it an offense if the director is reckless or dishonest and fails to execute his duties in good faith in a proper manner. Directors, staff and other officers should therefore act fairly with no intensions of personal gain. Information should equally be truthful and used for the intended purpose (Clark, In Stuyck, In Terryn, 2015). Checks companies constitutions To enhance accountability and performance, Australia allows for removal of non-performing directors by majority rule. In public companies, CAP 2001(203D), demands that a two months notice be issued to the director and he or she should be given a hearing. Alternatively, the case is different on the private companies where removal follows a simpler procedure. For instance, in the case study, his honor was right since the 21days had not yet elapsed when the board called the meeting. Shareholders had a prior knowledge of the directors meeting but they choose to neglect it which was unconstitutionally contributing to their loss in the case presented (Elkington, Hall, Kell, Elkington, 2010). Safeguarding shareholders rights The Corporations Act safeguards shareholders rights by identifying their voting rights. Each stakeholder has one vote per share in the advent of a poll. The Australian Stock Exchange follows also recognizes shareholders position via their votes[3]. Directors must comply with shareholders demands of a meeting if members with 5% voting rights request a forum via writing specifying the resolutions they wish to pass. Ideally, members in a general meeting hold power to amend or alter the acting company constitution by a 75% vote. Members equally hold powers to contest against the directors pay. Basically, directors pay themselves and in some instances they could immerse companys resources for themselves until the Corporations Amendment law and the Corporate LAW Economic Reform Program Act of 2011 and 2004 was established by stakeholders to improve on accountability and remuneration (Law Society of Western Australia, 2012). Guides directors in performing their duties The Act foresees the loyalty and duty of care predispositions to ensure that directors act to the best interests of the organization. Australian directors as compared to other countries, create shareholder value as their primary obligations. The act ensures that the executive members avoid conflict of interests at all costs. Avoiding any potential harm to the organization is a key objective of the management. Therefore, directors who wish to take an opportunity in which the corporation may also have an interest must have a fully informed consent of the board lest the opportunity belongs to the company CA2001 (182-183). Further, any deal with huge transaction must be approved by members CA 2001(207-230). Proper oversight should be created by the directors to safeguard the position of the company therefore any default with regards to this provision is punishable. (www.australiansecurityandinvestmentcommisionvrich./vic.gov). Shareholder litigation Shareholders are allowed to litigate over a breach of duty owed to the company to ensure that the best interests of the company are acted upon adequately. The court is also mandated to give a leave if need arises[4]. Takeovers Under the Corporations Act 2001, chapter 6, transactions control and restrictions apply to ensure companies do not become unfair monopolies as far as business and foreign investment is concerned. This section allows for employee protection and industrial protection under the legislations of the state. Unfair dismissals are legitimated as well and proper compensation is equally achieved (Solomon Solomon, 2004). Other Laws that Guard Companies ASIC Act 2001 The Australian Security and Investments Commission and Consumer protection Act ensure that consumers and companies are protected against any financial loss. Basically this body provides security in investments to ensure financial services of companies are met proficiently. ASIC also establishes corporations and markets advisory to experts for a healthy business environment (Victoria, 2012). ASIC commission has been involved in a series of cases with regards to breach of duties. For example, in March 2006, the federal court filed a case against Fortescue Metal group Ltd. and the CEO; a substantial shareholder of the company for breaching a contract with the Chinese Corporation by giving misleading announcement. The terms however were uncertain and dismissed by Justice Gilmour on defense that they allegations were not worthy a legal enforcement. Claims included; Fortescue deceived its conduct by breaching requirements of section 674 of the Corporation Act 2001. The CEO also infringed s ection 180(1) of the Act by discharging his duty with less diligence. Insurance contract Act 1984 The Act handles reforms relating to contract of insurance to strike a balance between insurers, the insured and the public interests (Turner, 2009). This law is solely concerned with terms of agreement between parties to ensure fairness is achieved at all levels and conflicts are minimized. For instance, in July, 2013, Richard Swansson successfully sued his adviser Rusell Harrison for non-disclosure of Swanssons material facts concerning his health that left him uninsured. Section 29(3) of the Insurance Act allows an insurer to terminate contract of life insurance due to breach of duty in disclosure of information before the contact after a period not more than 3years has elapsed. (https://riskinfo.com.au/case-studies/2014/05/28/case-study-swansson-v-harrison/) Wrongs Act 1958 This law was enacted by Queens Excellent Majesty following the advice and the consent of the legislative council and the assembly of Victoria by the current parliament. The law addresses negligence caused while on call yet with prior knowledge of the risks involved. It holds the neglectors responsible for compensation. For instancecs, in May 2016, the high court held Dr. Kam responsible for medical negligence involving failure to warn Mr. Wallace against the risks involved in the operation. Ideally, Mr. Wallace would have rejected the medication procedure prescribed by Dr. Kam could he have been informed of the risks that caused him neurapraxia. (https://www.corrs.com.au/thinking/elsewhere/the-high-court-takes-a-defendant-friendly-approach-to-extending-the-scope-of-liability-for-a-failure-to-warn/ ). Competion and Consumer Act 2010 The Act relates to fair competition, trading, and consumer protection. Competition under this act is defined as a practice of businesses sharing similar markets. It therefore demands that companies should be honest in their pursuit of winning the market share by using right promotional campaign strategies. Consumers are protected against unfair measures of scale such as quality, quantity, price, and other standards defining user protection for example ingredients amongst others (Farrar, 2001). In August 2005-May 2008, Crafmatic Company was reported to have been using tricks to lure older persons into agreement with home presentation of their sales representative. The sales person would convince the consumer to buy the companies beds at $10,000 higher than the normal price. The federal court having the knowledge about this, ordered a seven years injunctions restraining the company. Those who had purchased the beds equally recorded their complaints for compensation. Customers were equa lly issued with details of their rights. Workplace injury rehabilitation and compensation Act 2013 The law stresses on the need of government commitment to reduce regulatory burden with regards to workers compensation. It facilitates easier understanding of workplace rights, responsibilities and obligations between employers and the employees (Guthrie, 1995). WIRC ensures compensation in terms of benefits and premiums is well calculated depending on the extent of the injury suffered while call[5]. In 2009 October, NSW injured workers were compensated a lump-sum payment to cater for their needs due to sustained injuries for their upkeep. (https://aworkcovervictimsdiary.com/tag/legal-cases-2/). Accident compensation Act 1985 Established by Accident Compensation Commission to constitute an accident tribunal to establish the Victorian accident Council to compensate, impose levy, remit payments, asses and collect levy with respect to accident compensation. The council offered provisions for amendment of the Workers Compensation Act 1958, the pay-roll system, Tax Act 1971, Motor Accidents Act 1973, Motor Car Act 1958, and other Acts related to accident. Magistrate S. Garnett in a court ruling in May 27th and 28th, 2015 applied this Act to dismiss claims that the medical panel refused termination of weekly payments yet 130weeks had passed since James sustained the back and neck injuries in 2009 in a motor accident. It was substantiated that James was no longer incapacitated due to injuries. It was equally established that the information from the doctor was inaccurate therefore case dismissed. ( https://www.magistratescourt.vic.gov.au/workcover-division-judgments-2015. Workers compensation Act 1958 This consolidates compensation of workers for sustained injuries during their work. Injuries may be manifested in various forms such as psychological torture, mental problem, and physical injuries amongst others. However, indicators are put in place to establish the cause of the injury whether it was due to workers carelessness, companys mistakes or unpredicted accidents such as earthquakes . Therefore companies and workers should take precautionary measures while on duty to avoid injuries at whatever costs. For example in an industrial company dealing with manufacturing, the helmet law applies to safeguard workers against head injuries (Clarke, Elliott, Mehmet, Law Vision, Australian Multimedia Training Productions, 2012). For instance, in F and Fleet master Services Pty Ltd, January 25th 2013, an injured worker who refused to go on a compulsory rehabilitation was suspended. The tribunal found no excuse for his failure. His claims on task suitability were rejected since workers are expected to diversify their skills. (https://aworkcovervictimsdiary.com/resource-centre/wkrs-comp-cases/). Occupational health and safety Act 2004 This Act safeguards employees health, safety, and welfare. Under this Act, the company is mandated with a task of ensuring its staff works in a conducive environment with less risk such as attacks, pollution effects, and others (Edwards, Halligan, Horrigan, 2012). Conducive environment is measured in terms of how much it contributes to workers motivation and job satisfaction visa vices the services offered[6]. As a way of creating a workable environmental plan, the management bases on staff-work relations to build corporation and limit conflicts at all costs (Belcher, 2014). Indicators of cases in manslaughter, occupational safety, and criminal liability were reinforced by the court to enhance a staff inclusive environment. (https://www98.griffith.edu.au/dspace/bitstream/10072/57309/1/90748). Equipment Act 1994 Public safety is paramount in any production setting. The Act therefore advocates for proper selection of machinery and equipment to avoid harm to individuals, plantation, animals and other species within the companys reach. For instance, manufacturing companies are required by law to ensure they safeguard the environment of its staff and surrounding communities by using machines that control noise, and smoke emissions, waste disposal amongst others (Holt, 2008). The supply chain material programs are used to enhance better equipment in Victoria to support efficient working environment. (https://www.safeworkaustralia.gov.au/sites/swa/australian-strategy/case-studies/pages/case-studies) Patents Act 1990 The Act is purely concerned with effective use of innovative technology for example use of internet should be regulated by the company to avoid much health related issues and stained relationships amongst staff members due to overdependence on innovation. Any innovation should meet the needs of customers and be within the business laws. Copyright Act 1968 The Act patently protects companies and other business entities against replicating products and services from their counterparts. Originality and creativity is highly advocated via entrepreneurial skills and innovative ideas are supported via extensive research and use of new technology for production purposes. For instance, the Russian Elcomsoft software company developed and sold via internet advanced eBook Processor which enables the user to disable publishers restrictions on electronic books. This could allow publication and distribution unflinching copyright Act. Arguments of fair use were claimed by Elcomsoft Company leaving US with no charges against the company since it was an innovative idea.(https://www.bakercyberlawcentre.org/genl2032/09_copyright_v2-no-highlight). Designs Act 2003 Designs Act aims at individual artistic works. Basically, some products are forbidden from emulating without the owners permission. Design in relation to products includes the overall appearance of the product and visual features. Using registered designs without the permission of the owner is infringement therefore punishable by law. Trustee Act 1958 Trustee Act bases on the discharge of mortgage by the companys management. Trustees are delegated with powers to sale, confer, or lease the property. The corporation Act 2011(53) specifies that public trustee of a state or a territory should identify beneficiaries under the trust, their rights, and any payments they are entitled to (Reynolds, 2001). For instance, in 18th November 2010, ANZ trustee wished to transfer the title of a building from one trustee to another. His honor used section 63 of the Trust Act 1958, with reference to Ballard v Attorney Generas Case that was ruled on the basis of qualification of trustees with regards to the voting power, the quorum, and procedures. A similar case had been witnessed between the Victorian Fund and the Queensland Fund as common trustees of Sir William's will. Trade marks Act 1995 Trade mark is used to distinguish goods or services provided by persons or companies. The Australian laws forbid some signs from being used as trademarks. The registered owner of a trademark is subject to ownership of the trademark and is free to sale it to other parties. The trademark board affirmed the appeal against registration of herbal access terming it as a way of increasing substance abuse such as marijuana. (https://www.ilnipinsider.com/category/case-studies/). Human tissue Act 1982 An in-depth definition of this Act is that it deals with human tissues which are most vulnerable for human living. The law does allow for donation in cases where one is stricken by sickness or accident leading to the default of the tissue or body organ. Human tissues can be used for schools in anatomy and practical lessons in the field of medicine however they are traders are not permitted to sale human tissues since it exposes human beings to risks of abduction. Equally, advertisement restrictions apply for instance in CAP1982 (40) which sates that a person shall not publish or disseminate tissues via any media, exhibit public view, or deposit tissues for sale. Schools are only allowed to use tissues in the event of death of a person. The law thereby defines death as irreversible cessation of circulation of blood in the body of a person and cessation of functioning of the brain. It is until then that tissues can be used for study[7]. https://www.show.scot.nhs.uk/scotorgrev/Documents /Review%20Group%20on% 20ROPM%20Report.pdf. Environment Protection Council Act Australian laws calls for companies to ensure that waste is controlled effectively. The Act demands that companies should identify disposal areas, transport waste effectively, and handle it in a way that it is consistent with environmental sound practices. The packaging material should reduce environmental degradation. Ideally, reuse and recycling of used packaging materials is highly advised. Australias international obligations protect human health and the environment (Australia Butterworths (Firm), 2001). The National waste policy offers four major directions which are responsibility, improving market, pursuing sustainability, and reducing hazard. Powercor Australia Ltd and Vemco Pty Ltd committed to spend $200,000 for rehabilitation of cleared vegetation following a court order presented in June 1st, 2015. (https://www.environment.gov.au/epbc/compliance-and-enforcement/case-judgments). Partnership Act 1963 This Act defines partnership as an agreement between parties to carry on a business. Majorly, the joint venture is meant to create a common goal of generating profit. Australian partnership is based on elements such as joint ownership, participating in gross returns, profit and loss sharing, and exercising partnership rights[8]. Wolfe end Golden Egg PTY Ltds disagreement on revenue were presented in a court to create a professional responsibility between the two partnerships. This depicts the need of limited audit and taxation for workable partnership. (https://essayturf.com/blog/australia-commercial-law/) References Australia, Butterworths (Firm). (2001). 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Corporate Governance Post-Companies Act 2006, Part 2. Corporate Governance, 73-103. doi:10.1016/b978-0-7506-8382-1.10004-3 Victoria. (2012). Inquiry into organ donation in Victoria: Report - March 2012. Melbourne: Victorian Government Printer. Retrieved from: https://www.parliament.vic.gov.au/vufind/Record/88231 www.legisltion.vic.gov.au www.australiansecurityandinvestmentcommisionvrich./vic.gov.au(2009)NSWSC1229