Assessment Task 2</o:p> </o:p> Due Date: Sunday 5 August 2018</o:p> </o:p> Length: 2,000 words total (+/- 10%). Reference list and cover sheet details are not included in this...

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Assessment Task 2

Due Date: Sunday 5 August 2018

Length: 2,000 words total (+/- 10%). Reference list and cover sheet details are not included in this word-limit total.

Weighting: 25% of total unit marks

Assessment Criteria:

· Demonstration of knowledge of the issues and evidence of wide reading to support your analysis

· Demonstration of your ability to apply the knowledge to identify keys issues leading to your recommendations

· Evidence of sound reasoning and the exercise of professional judgement to support your recommendations

· Development and statement of concise recommendations for presentation to the AICD

· Overall structure and professional presentation of the report to the

AICD

· High quality written communication of concepts and terms in ordinary English as not all readers of the report can be assumed to be specialists competent in corporate governance

Case Study

‘As a separate legal person, a corporation has two basic objectives: To survive and to thrive. Shareholder value is not the objective of the corporation; it is an outcome of the corporation’s activities. While shareholders entrust their stakes in a corporation to the board of directors, shareholders are just one audience among others that the board may consider when making decisions on behalf of the corporation.

These audiences, typically called stakeholders, may also include other financial stakeholders, such as bondholders, and nonfinancial stakeholders, such as employees, customers, suppliers, and NGOs representing various concerns of civil society. In the face of limited resources, no matter how large the corporation, directors must make choices regarding the significance of the corporation’s many audiences.’

Source: Robert G Eccles and Tim Youmans (2015) ‘Why Boards Must Look Beyond Shareholders’, MIT Sloan Management Review

http://sloanreview.mit.edu/article/why-boards-must-look-beyond-shareholders/

5


Required

Assume you have been employed as a corporate governance consultant by the Australian Institute of Company Directors (AICD). The AICD is concerned that many company directors hold the opinion that the company’s board of directors has a responsibility to place the interests of shareholders above all other stakeholder interests.

Your assignment is to prepare a report to be submitted to the AICD evaluating the evidence that the responsibility of a company director is to place shareholder interests above those of other stakeholders. Specifically, the AICD has requested that your report contain evidence, examples and recommendations for company directors that will guide them when making board decisions so they are responsive to diverse stakeholder audiences. The AICD has advised you that they intend to make your report a public document and it will be uploaded to the website so it can be read by both corporate governance specialists and non-specialists.

Answered Same DayAug 01, 2020ACC03043Southern Cross University

Solution

Abr Writing answered on Aug 04 2020
56 Votes
Assessment Task 2
TABLE OF CONTENTS
INTRODUCTION    3
MAIN BODY    3
Responsibilities of a Company Director    3
Shareholders of the company    4
Stakeholders for the company    4
Responsibility of a director to place shareholder’s interest above other stakeholders    5
Recommendations for company directors    5
CONCLUSION    8
REFERENCES    9
INTRODUCTION
The law relating to business entities in Australia is governed by the Corporations Act 2001. This governs at both the federal as well as interstate level. Apart from dealing with companies, it also deals with other entities such as partnerships and managed investment schemes. This is an Act of the Commonwealth of Australia and is the primary basis of corporation law (Andriof et al. 2017). As per the Act, the key responsibility of a director is to comply with the legal obligations bestowed upon this position.
For the present report Australian Institute of Company Directors (AICD) employs corporate governance consultant that evaluates the responsibility of company director towards shareholder rather than those of other stakeholders. On the basis of which certain recommendations would be provided for the director that will guide them in making effective business decision.
MAIN BODY
Responsibilities of a Company Directo
As per the Corporations Act, the directors and other officers of a company have a certain set of duties and responsibilities to perform. These include:
1. A director should maintain due care and diligence while performing his role and should be well informed and aware of the financial position of the company at any point of time. It is his duty to prevent any type of tradings when the company is insolvent (Edelenbos and van Meerkerk, 2015).
2. Taking undue advantage of the position at any point of time is highly undesirable.
3. A director is essentially required to exercise his powers and duties in good faith and in the best interest of the company and for a proper purpose.
4. The duties of director also include maintaining secrecy regarding important data of the company and not disclose it for personal advantage (Mason and Simmons, 2014).
5. In any way, a director should not involve in any act which is detriment to the company.
6. Maintaining books and records also falls in his set of duties. Clear and complete disclosures should be made by a director which would enable shareholders in making properly informed judgements.
7. A director is expected to exercise his duties in the best interest of shareholders and to maximise wealth.
8. They are expected to exercise their duties in the best interests of shareholders and to maximise wealth.
Shareholders of the company
A shareholder can be any legal entity and may be a natural person or a corporation. Since they are part owners of the company, their consent is most important in the running of the company. Decisions on the key issues are made through voting by the shareholders. Hence they play a significant role in the functioning of a company. This is the reason that securing the rights and interests of the shareholders is a primary responsibility of the directors. From the viewpoint of Husted and de Sousa-Filho (2017), shareholder can be infe
ed as a part owner of the company and therefore enjoys a number of rights and powers. On the contrary, the stakeholders of a company include both financial stakeholders such as bondholders as well as non-financial stakeholders such as employees, customers etc. There is no constraint on the part of directors as per the existing legal framework from taking into account, the interests of such stakeholders.
In return for investing in a company, a shareholder is bestowed upon many preferential rights by the company which is obviously not extended to any of its stakeholders. Therefore, the directors are not bound to serve their interests.
Similarly when it comes to liabilities, the shareholders are liable only for the amount which is unpaid on the shares subscribed by them and for none of the obligations of the company as the company itself is a separate legal entity.
Stakeholders for the company
Individuals or groups having an interest whether financial or non-financial, in the success and progression of a company are its stakeholders. Stakeholders can be further classified as internal and external. Internal stakeholders include investors, partners etc. They are essentially those people who have a financial interest in the organization and hence have a vested interest in the success of the company. These are the ones who haven’t invested any personal or organizational...
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