Relationship between Law and Corporate Governance in Australia - Assignment Example

Corporate Governance (Name) (University Affiliation) 1. What are the key laws that govern the field in Australia? Though complex and tortuous, the Corporation Act 2001 often referred to as “Corporations Act” (Cth) comprehensively addresses all the legal issues associated with the establishment and running of companies in Australia. The Corporation Act 2001 is the key legislation regulating companies in Australia. The Act sets out the laws and regulation supposed to deal with all business entities in Australia. Accordingly, the Australian Securities and Investments Commission (ASIC) is the main agency recognized by the Act to deal with corporate regulation. In effect, the body is charged with registering companies as well as processing and informing the public about company. Similarly, the agency is charged with investigating suspected contraventions and there after enforcing compliance with the Act. Within the Act, there are other key laws that govern the corporate governance. To start with, is the Fair Work Act 2009 (Cth). This Act governs the employment of mature age workers. It stipulates the terms and conditions of employment which business entities are required to follow. Next, is the Income Tax Assessment Act 1936(Cth). Similarly, this Act governs the different tax rates imposed on different ages of citizens in the employment industry and even after retirement. Another law is the Privacy Act. This law regulates how employers handle personal information regarding their employees. Accordingly, the Act addresses issues to do with collection, use, storage as well as the disclosure of personal information. Another essential law is the Superannuation Guarantee (Administration) Act 1992 (Cth). The primary objective of this law was to come up with a system within which retired Australians can get private income that would enhance their living standards. Thus, the law requires employers to set up policies that can foresee the same. Ultimately, is the Work Health and Safety Act 2011(Cth). As the title states, this law initiates the new concept in the harmonization of health and safety for all employees in Australia. As such, it gives business entities the guidelines as regards the health and safety of workers. 2. Discuss the relationship between law and corporate governance Law and corporate governance go hand in hand since they all deal with regulation and policy issues. More often than not, corporate governance has been associated with the relationship and structure that gives the company or corporate direction and performance. Accordingly, the structure and relationships ought to follow the legal framework set up by the relevant or rather the respective authorities. In effect, the board of directors is often charged with corporate governance. They typically make major decision as regards to the running of the company. Consequently, the board’s relationship with the other primary participants such as the management, the authorities, shareholders, and even employees is vital. The corporate governance framework must work within the law and furthermore within the regulatory, ethical, institutional and ethical environment of the community as well. For instance, when making major decisions like company mergers the board has to consider the legal requirements in place such as statutory guidelines stipulated in the Corporation Act 2011. However, corporate governance also revolves around non-legal principles and practices that control both the limited and unlimited corporations. Just like the Law, corporate governance controls the allocation of risks and returns from the company’s running. The law protects the stakeholders of the company and such, whenever the Board of Directors make an unfair decision the firm’s stakeholders have the right to the their grievances to a court of law. Tentatively, the Australian corporate governance doctrine describes the related responsibilities and control rights of three primary groups. First, are the company’s shareholders. This category provides capital to the firm and as such, the law gives them the right to approve major company’s transactions. Secondly, are the firm’s senior executives who foresee the daily running of the business. Ultimately, is the company’s board of directors. These individuals are elected by the shareholders to administer the management of the firm. 3. Analyse the corporate governance program they have in place and explain what tools and resources they use to try and enforce good corporate governance. Toll holding limited company has managed to succeed as far as corporate governance is concerned due to the strict policies that it has put in place. The firm’s directors and executive leadership qualities are guided by well-formulated corporate governance. In addition to the firm’s policies, the company directors and executive team adhere to the aforementioned corporate governance procedures and policies. Consequently, the firm maintains a consistent high quality leadership therefore attracting more clients, year after year. The company has been able to experience good corporate governance because of a nice structured framework that has been put in place. The framework comprises of several titled documents. The first document is the Board Charter. The firm’s Board aims at ensuring that it adds value by guiding, supporting and assist management to achieve the company’s goals. Therefore, the Board adopted a Board Charter that would outline the manner in which the company’s constitutional power as well as responsibilities would be exercised and discharged. This would be in regard to the principles of good corporate governance. Accordingly, the Charter addresses issues to with the Board composition and process, the power delegated by the Board to management and Board Committees and lastly, is the issue to do with relationship and interaction between the Board members. The charter was established on the basis of strong corporate governance. Second, is the term of Reference of Board Committees document. This document has been adopted to assist in the execution of the board’s responsibility. To achieve this, the board came up with various committees: Remuneration Committee, Nomination and Corporate Governance Committee, Audit and Financial Risk Committee, Occupational Health and Safety and Environment Committee. Moreover, the committees have their respective written charters, which are reviewed regularly. Third, is the document, which describes the process of selection and appoint of new directors. Adopted in 2012, the Board or rather the Nomination and Corporative Government Committee is supposed to review the composition board on a yearly basis. Next, is the Code of Conduct for Directors and Senior Executives document. This document is supposed to guide Directors and Senior Executives to act and behave in accordance with company’s values. Fifth, is the Auditor Independence Policy document. As the name suggests, the document forms part of the Audit and Financial Risk Committee charter. Sixth, is the Continuous Disclosure Policy, which ensures the company is compliance with the continuous disclosure Act. Another document is under the title Communication with Shareholders. Through this, Toll is in a position to keep its shareholders fully informed concerning the continuous developments and important information that affects the group. Subsequent is Risk Management Statement. This document is set to describe the firm’s approach towards risk oversight as well as management. The other important category is the one, which is charged with evaluating the performance of the Board and key executives. The respective document outlines the process, which is used to do the evaluation. Lastly, is the Stakeholder Codes of Conduct document, which is set to guide the way in which the stakeholders should behave as regards to the firm (Tollgroup.com, 2014). 4. Locate and summarize a media article about future corporate governance trends. (Ensure you have your article approved by your lecturer before the assignment is submitted). Though it is performing well, Toll Group needs to open about its tragedy regarding to the future corporate governance. Analysts on the other end are always eager to conduct an evaluation on the future trends of company’s cash flow. The analysts would want to foresee the critical challenges a company is likely to face in the coming years. As such, strategy is often seen as the primary source of such information. In effect, Toll Group strategy is somehow hidden maybe to deter their competitors from knowing their future plans. Realistically, though, a professional body called Strategic Management Institute that confirms that the disclosure of non-sensitive aspects of strategy often helps the company. The strategy results will offer the strategists an improved understanding of the firm’s prospect and as such, it will implicit a positive influence on it. Accordingly, Toll Holding Limited can benefit greatly from disclosure in this schema. Being a freight and transport company, the firm faces big challenges in the near future. On a wider perspective, the world of corporate governance can benefit from the adoption of “a new form of corporate information as well as control architecture.” Though the future corporate governance will be different, it must be noted that it will be more effective. For instance, the future corporate governance will depend on customer satisfaction in measuring the adaptability of the respective company (Heskett, 2014) References Austlii.edu.au, (2014). CORPORATIONS ACT 2001. [online] Available at: http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/ [Accessed 19 Aug. 2014]. Council, A. C. G. (2003). Principles of good corporate governance and best practice recommendations. Australian Stock Exchange Limited. Farrar, J. H. (2001). Corporate Governance in Australia and New Zealand. Oxford University Press, USA. Heskett, J. (2014). What’s the Future of Corporate Governance? — HBS Working Knowledge. [online] Hbswk.hbs.edu. Available at: http://hbswk.hbs.edu/item/2399.html [Accessed 19 Aug. 2014]. Tollgroup.com, (2014). Our Company | Toll Group - Providing Global Logistics. [online] Available at: http://www.tollgroup.com/our-company [Accessed 19 Aug. 2014]. Read More