Maple Overview - Case Study Example

Assignment One Name Institution Assignment One Introduction Large business organizations like companies and corporations find it quite challenging in managing and setting targets for the entire organization. Sometimes, directors of the company find themselves in total disagreement over managerial issues that might be critical to an extent of affecting the normal operations of the company. Decisions made by the directors over the running of such big business organizations always have an impact to other stakeholders. For the absolute purpose of making the right decisions as well as handling issues that bring about disagreements, business law has been developed as a remedy to such problems and challenges. Business law can best be understood as the most appointed body of law that baselessly applies the relations, rights, and conduct of individuals and businesses engaged in merchandising, trade, commerce, and sales. Its harmless undertaking guarantees business law as the final authority in making the final decision for the most complicated issues in businesses (Gillies, 2004). An Overview of the Sample Incidence Maple is one of the Australian companies that majorly deals with the supply of the high end office furniture to the immediate Australian market, and boats a range of high profile businesses as clients. The ratings of the entire company reflect a possession of 1000 shares, which are partially assigned to the four company directors and the twenty family members. All shares are said to possess equal voting rights, but family shares are said to have been participating in terms of dividends at 10% of the rate of the management class. Furthermore, the company is said to have adopted the replaceable rules under the corporations Act 2001 and the chairperson of every meeting is elected. In this context, Belly, Daisy, Claude and Zac are family members as well as the shareholders of the Maple Company. Major issues are said to have rose due to the complications in the management of the company. The issues are as discussed below following the IRAC technique (Issues, Rule, Apply, and conclude) (CLW3100 Company Law). Discussion of the Major Issues by making use of the IRAC technique The first issue revolves around the directors’ desire to be in charge and leaning on one side in terms of receiving advices. In such cases, one director can be found chairing most of the meetings and becomes in charge over many transactions of the company. It must be noted that the replaceable rules under the corporation act 2001 248E states that for any director to chair the meetings or being in charge of the company must entirely depend on the elections that are normally handled in every meeting(ASIC, 2013). Directors are the ones who can only determine the period for which a particular director is to be the chair. However, this can only happen under the condition that the chairing director should be present in every meeting. Furthermore, the senior director is supposed to receive advice from all other directors irrespective of their intellectuality or professionalism. This implies that Bella has no right to continue being in charge of the company as well as chairing most of the meetings. She is supposed to understand that this can only be possible if other directors subsequently elect her to chair the meetings(International Law Association, 2002). Bella’s decision to favour Daisy in terms of the advisory services is totally illegal and it is an action that compromises the business laws. Even though she is in charge, she has to listen from the rest especially Zac and Claude, and not Daisy alone. In conclusion, the director in charge should handle meetings in free and fair ways. He or she should not be biased in any way. He or she should not force oneself in chairing the meeting but must be elected and his or her period of being the chairperson must absolutely be determined by other directors (Purcell & Knight, 2011). Secondly, personal interests of any director are always allowed and can be voted for in any of the meetings. Other directors have no right to prevent the director from expressing himself or herself. The secretary of the meeting is required to note down the interests and implemented later on if they win the majority number of the directors. Under the replaceable rules 194 clearly states that if any person among the directors of the company has a material that is of personal interest in a manner that it relates to the affairs of the company and, under section 191, the director discloses the extent and the nature of the interests in relation to the company’s affairs at the meeting, then the company cannot avoid the revealed transaction, despite the fact that the interest is in existence (ASIC, 2013). In this case, Claude and Zac can be allowed to discuss the business opportunity, especially the one related to the expansion of the Maple Company. They also have the right to present the idea in the meeting for the absolute purpose of carrying out a discussion that will either validate or not validate the interest. However, early notification about the personal interest should always be done prior to the meeting. Belly and Daisy will be taking an illegal action in denying the interest in case the interest wins the majority number of votes in a particular meeting. In addition, if the interest fails by carrying the minimum number of votes, then Zac and Claude are supposed to drop the interest and can be allowed to raise another one in the next meeting. This implies that the directors’ personal interests must also be put into consideration no matter how awkward they can be. What determines their efficiency on the operations of the company will entirely be determined by the number of votes. If the interest carries the majority, no hindrances should be posed for its implementation in the company. Such hindrances will always be considered to be illegal and this may lead to an accusation that will be forwarded for jurisdiction. However, raising complains over some of this interests can also be allowed during the meetings. Such complains can only be listened to, if reasons behind the complaint have reliable evidence that can essentially support the hindrance(Baker, Ponniah, and Smith, 1999). Thirdly, every share attached to the company, no matter the classification, has a voting right equivalent to other shares. Shareholders should not, at any point, assume some of the shares with an intension of passing a particular business interest. Realization of such ill intentions may only lead to an undertaking of a legal process. Directors who hold large shares have no right to manipulate their own decisions. Furthermore, business law allows one member one vote rule, in which shareholders are only allowed to vote once no matter the number of shares, of different classes, might be possessed by one shareholder. The replaceable rules under the constitution act 2001 250E states that subject to the rights or the restrictions attached to any class of shares, especially at a meeting of members of the company with a share capital, will always be put into consideration on a show of hands each member has one vote, as well as, on a poll each member has one guaranteed vote for each share they hold(ASIC, 2013). In this case, Claude and Z ac’s attempt of removing the voting rights of the family shares is considered to be an illegal undertaking that may only lead them to be sued in court by the other directors. This shows fraudulent means of passing the business interests that might have been discussed in the meeting, as well as ruining the chances of other directors in taking part in the whole process of decision making. It is evident that every share is attached to the voting right, and the attempt of Claude and Zac shows their ignorance in observing the requirements of the business law and what it constitutes. In conclusion, any hindrances to the voting rights attached to all categories of the shares are considered to be illegal unless proven by the court of law. Directors and other shareholders are expected to be open in terms of exposing their business interests that may or may not be voted for, rather than manoeuvring with an ill intention of forcing in the personal interest that may be implemented against the will of the majority members. Shares and members of the company should always be allowed to fully take part in poling and coming up with the most effective ideas, rather than relying on one person who can only end up misleading the whole company (American Bar Association, 2007). Any member can issue out his or her own proxy for the ultimate purpose of casting votes during the meeting. A member who is under critical health conditions can allow his or her proxy to be used in the meeting for the voting exercise. It must be noted that the proxy must be made use of according to the wish of the sickly member (Tomasic, Bottomley & Mcqueen, 2002). The replaceable rule under the constitution act 2001 states that unless the company or the business organization has received a notice of the matter before the commencement or resumption of the meeting at which a proxy votes, any vote cast by the proxy will always be considered to be valid even if the appointing member dies, the member is mentally incapacitated, the member revokes the proxy’s appointment, and finally, if the member transfers the shares with respect to which the proxy was granted(ASIC, 2013). In this context, Zac and Claude are fully allowed to make use of the Able’s proxy in voting in their business interests by supporting the majority. The law allows Able to make a choice on whom to support though bedridden. However, it must be noted that all shareholders must be notified on the person holding the patient’s proxy with an intention of knowing his or her personal interests in the voting though in absentia. Blackmailing and other fraudulent undertakings are not allowed in handling the proxy as well as suggesting the party to support, but should rather be open and fair in terms of choosing the side to support. Claude and Zac should have consulted Able’s interests before adding the proxy in support of their own business interests. Such an undertaking gives more chances for the opposing side to purport justice and fairness in the process of voting. In conclusion, even if one of the members dies among the shareholders, his or her proxy still has an impact in the election process. It will still hold the voting right that can support either side in passing a given business interest or idea. Despite the voting right, the proxy should not be biased in any way that may seem obvious to the rest of the group members. It should not be biased in terms of gender or the historical business interests of the shareholder in absentia (Varrenti, Cuevas & Hurlock, 2011). Finally, the chairperson of the meeting must have the majority in the house as a result of the votes casted in the election process. In addition, resolutions determine the removal of the director form the office as well as can be passed with or without a director’s meeting. The constitutional act 2001 248A puts forth that directors of the company can be allowed to pass a resolution without holding the directors’ meeting given that all directors are entitled to vote on a resolution sign document statement(ASIC, 2013). The resolution can only be passed only if the last director signs. In this context, electing Claude to be the chairperson of the meeting is allowed because the chair has to be elected in every meeting and must have the majority on his side. In addition, tabling the resolution to introduce the new business stream at the meeting was not compulsory because Zac and Claude could still have circulated the documented statement for all the directors to sign the resolution. However, it was legal for the chair to introduce the resolution that revolved around removal of the family shares voting rights, because the shares affected the whole process of decision making as well as relying on the majority in determining the business interests to be implemented in the company or not. It is evident that resolutions should not necessarily be raised during the meetings because this can also be achieved through the document statement. This is where director raises a resolution and circulates the document statement to be signed and verified by every director of the company(Bruno & Ruggiero, 2011). Conclusion Business law is a very essential body that has helped the business organizations settle mostof the disputes. The most sensitive part of any company revolves around the management of the company as well as the board of directors. The two parties play a major role in making decisions for the company and making sure that the targets and goals set by the company are fully met. An overview of the Maple Company reveals the problems that directors go through and the challenges they normally encounter as directors. The most profound problem among the directors draws a close attention on the way the shareholders make decisions and settle on some of the business interests. What is quite challenging is all about observing the rules and regulations especially during the voting process and chairing of the meetings. Claude, Zac, Belly, and Daisy found themselves possessing different interests for the company. This led to a cold war among them over the running of the Maple Company. It must be noted that having a common goal among the directors enables the company to stage up a good performance, while possessing different interests and goals may only lead to disagreements and therefore, business failure. References ASIC. (2013). Replaceable Rules Outline. Australian Securities and Investment Commission. Retrieved from. http://www.asic.gov.au/asic/asic.nsf/byheadline/Replaceable+rules+outlined?openDo cument Gillies, P. (2004). Business law. Sydney, Federation Press. Varrenti, A., Cuevas, F. D. L., & HURLOCK, M. (2011). Shareholders' rights: jurisdictional comparisons. London, The European Lawyer. Bruno, S., & Ruggiero, E. (2011). Public companies and the role of shareholders: national models towards global integration. Alphen aan den Rijn, The Netherlands, Kluwer Law International. CLW3100 Company Law. (N.N). Assignment: Semester 2 2013. American Bar Association. (2007). Corporate director's guidebook. Chicago, IL, American Bar Association, Section of Business Law. Baker, S., Ponniah, D., AND Smith, S. (1999). ”Survey of Risk Management in Major U.K. Companies.” J. Prof. Issues Eng. Educ. Pract., 125(3), 94–102. Purcell, G. & Knight, S. (2011). More women in senior roles: If only companies really wanted it. Improving the practice of management. Retrieved from: http://iveybusinessjournal.com/topics/the-workplace/more-women-in-senior-roles-if- only-companies-really-wanted-it#.Ui7s7n_0XIU International Law Association. (2002). The Canadian yearbook of international law 2001 Annuaire canadien de droit international 2001. Vancouver, B.C., University of British Columbia Press. Tomasic, R., Bottomley, S., & Mcqueen, R. (2002). Corporations law in Australia. Sydney, Federation Press. Read More