Business Corporation Law Assignment Help |General Corporation Law
BUSINESS AND CORPORATIONS LAW
In this particular case study, a brief description of the Corporation act, 2001 and its components has been provided concerning the case of the North V marra Development private Ltd. It is further explained how this particular act was violated by few directors of an established firm. The reason behin the breaching of this eminent act has also been brushed further in this case study. The findings of this case consist of information about the duties and responsibilities of directors, focusing on how significant, the law is, in order to maintain a successful business along with pros and cons. The mentioned facts are further analysed in comparison with relevant cases and a group of effective strategies, as recommendation, for a stable legal system across the country.
One of the most significant and well-distinguished Act that is the Corporation act 2001, a key Act in the set of laws in Ministry of justice, was overstepped by a few Australian directors. The case of the North V marra Development private Ltd was expanded vigorously and came into attention when a primary Act like the Corporation Act was deliberately violated.
The Corporation Act is introduced and followed for the the security and prosperity of the financial as well as organizational growth of the reputed and established firms of Australia. The act typically depicts the criteria of allegiance and devotion of employers and employees business owners (Gorris, Hamermesh & Strine, 2011). This particular act was founded to be infringed by a group of directors as observed in the case of the North V marra Development private Ltd (1981), when it came to the payment of a particular amount of share, which was rigidly unacceptable in the eye of legislation and regulation.
Explanation of the duties that were breached and the reasons behind them
Dispute and illegal activities or violation of rules and regulations in business firms from small scale to establish is a likely happening across the nation. In the opinion of Strine Jr, (2015), while running a convenient business or even playing the role of a share or stakeholder consists of several criteria and conditions, as per the regulations of the particular nation. Some of the eminent laws and Acts strictly executed in such cases can include the state financial corporation act, the road transports corporation act and more. One of the most eminent Act followed by numerous firms and organization across the nation is the Corporations Act, 2001.
As per Mansell (2015), some of the significant constituents or sections of the Corporation Act has been violated by the directors are as follows,
- Section 180(1)
- Section 182
- Section 184 (1)
The breakage of such significant court order leads to a huge expansion of inconvenience on a large scale. Immense numbers of large firms to small companies, businesspersons and the people of the nation experienced a controversial situation for a particular period.
According the Corporation Act, in the ministry of justice, an owner or director of the firm is expected to obey and dedicatedly follow a set of rules and regulations in order to keep the business hassle free or away from any illegal disputes (Gevurtz, 2010).
According to Machado, Galhano & Trujillo (2014), the directors of Marra development private Ltd, overlooked the consequences that could lead to broader issues affecting the business, its reputation, market value of the business on a great scale. According to the findings, a part of the share that was about to be paid by the directors but as it seems they had pulled away from their responsibilities and duties towards the rules and regulations.
The possible Pros and Cons due to the violation of the Corporation Act, 2001
Since, a director holds huge set of responsibilities in a business or project than any other working body or department, the criteria declared in the Corporation Act was needed to be maintained, as a dedicated chief person. The corporation Act 2001, and its several sections is not only applicable for this particular scenario, but for each firm involved with finance and business.
As opined by Klettner, Clarke & Boersma (2014), there are a number of controversies about the reason behind the negligent violation of the act by the directors. It is also known that the two leaders of the firm were more or less at the stage of retirement and undergoing a comparably low-income phase.
Thus, it is relevant that the business run by the board of directors for a certain period of time or in the later part, involved artificial pricing as well. In Order to acquire stability, the appropriate rules and regulations of pricing and cost were not met or ignored.
The intention to increase or grow the final profit by adapting few illicit strategies, led the business to be at greater risks.
As set in the Corporation Act, 2001, the duties of a director have minor details that are to be carefully followed according to the ministry of justice. Under the Section 180(1), an officer of chief person or the chairperson is expected to act diligently and loyally and perform their appropriate duties along with maintaining good will. They are also affirmed to release themselves off their responsibilities while retirement, only after the position is handed over to a suitable individual (Munch, 2012).
In this scenario, the denial of the payment of the dividend led to a breakage of the particular section of law as stated by the ministry.
Even though the court has accepted certain explanation from the directors of Marra Development, to a certain extent, exceptionally, the final settlement brought the business an obstructive announcement.
As per the section 182, under Corporation act, 2001, the director is not eligible to take any higher advantage of his superior position, concerning the financial, reputational or any other aspects of the firm, which was violated in the particular scenario as well, O’Connell & Clark, (2017).
In order to gain profit, unfortunately the firm made unexpected losses in the final revenue facing several other issues and downfall in their growth.
A critical point of view expressed based on the specific case or scenario
While bringing up the breaching of the Corporation Act, 2001, and the case of the North V Marra Development private Ltd, there has been several practice of illicit manipulation of business terms and conditions in the market. They were only spotted when the incidents were reassessed in the ministry of law. Some of the Acts and their violated terms and conditions compared to the Corporation Act, 2001 shall be discussed in this particular case study.
Another blazing example for law violation has been observed in the case of Howard Smith Ltd v. Ampol Ltd. Similar to the Corporation act, 2001, the s. 171 Companies Act is though the circumstances vary in the scenario that the corporation Act, but in both the scenarios, the duty, diligence and loyalty of the directors were violated. As the directors, pulled away from their respective responsibilities, in case of the Marra development Pvt Ltd, the director of reputed firms that being the, Howard smith and Ampol pvt ltd acquired unlawful attempts in order to take over shares and letting down another member, Biotechnology Company: Vaccine Ltd (2017).
Unlike the conditions and justifications held to the Court were different but, in both the scenarios, the firm’s experienced severe consequences leading to loss, due to huge penalty declared by the Court. The Court is responsible for the security and well-being of such affairs.
According to the Court, the offenders of both the parties were penalized with a massive amount covering most of the percentage of their final revenue, which led to loss of on a large scale.
Moreover, the firm also faced reputation degradation and obstruction in growth.
Irrespective of the mentioned facts, it is quite justified that the court has taken up the right decision by penalizing the parties. As continuation of such violation would result in the expansion of breakage of laws affecting the stable and well-organized legal system a developed country like Australia.
According to Cohen et al. (2015), another likely example is the case of Turnbull’s asylum seekers illicit entry in the territories of Australia. The terms and conditions under the migration act of Australia; this act has been introduced long after it was breached. Sudden or random arrival of immigrants through aquatic or marine transports was strictly prohibited by the Court. Unlike any business or organizational rules involved in this Act, the immigrants or travelers breaking any rule or crossing the territory even by marine transport were charged with penalty of huge amounts and were asked to issue or acquire immediate Visa.
As stated by Hiller (2013), though the detailed criteria vary, these are all a part of the ministry of justice and are a demand from every legal citizen and visitors across the nation. Therefore, it is evident, that an individual needs to be well aware of the specific laws and acts related to any action or any business that they are going to start in the future, in order to avoid unnecessary or uninvited downfall.
In this scenario, the Court made justice by restricting entries to some extent, in order to secure the health, safety matters, and environment of the country from any unauthorized external influence. When a certain decision is taken by the court, it is made by the valuable opinion of chief personalities and legal experts, unlike an informal one man’s opinion. The decision of the court is fairly justified considering several facts, such as in order to avoid illegal activities via export and import business in the country, protecting the cultural and ethical values of the natives of Australia, security of the citizens of the country.
The case of the North V marra Development private Ltd, created a huge impact not only on the other running companies, but also on the entire legal system of Australia. As per Raviola & Norbäck (2013), a nation like Australia beholds a respectable, well-established legal system and is a strong competitor to every other nation in other aspects as well. Despite, the polished law system, rules and regulations, there are always drawbacks attached to it (Welch et al. 2016).
The impact of the Marra development private Ltd case became a word of mouth overnight and spread drastically among the mass. As opined by Allen & Kraakman (2016), though the directors of the firm tried their best to acquire justification, the strict regulations of the ministry were far from providing the same.
Some of the established organizations and their chief persons and experts opined on this particular matter and kept record of the experience. The Australian institute of Directors and the corporate governance also had opinions, how the court has perfectly taken the appropriate decision.
Other organizations like, the Australian Red Cross, Creative commons, Australian private hospitals association became aware of the happenings of such illicit affairs. The eminent personalities related to the particular industry also spoke about how the impact has lead to the goodwill of the legal system all over and awareness among small to large scale companies were spread (Czinkota et al. 2011).
Due to this particular decision, a number of organizations have become even stricter about double-checking of final data, stern actions against any unlawful acts performed by any employee in the firm, being aware of each section of the Corporation Act, 2001. According to Dragojlovic et al. (2015), the stern decision by the court not only affected such affairs but also helped any business body, proprietorship and partnership bodies, shareholders and stakeholders cautious about the significance of Law.
In Order to maintain a secured and better future for the business corporation sector, It is wise for all organizations to follow the rules strictly in order to avoid such losses like the North v Marr Development private Ltd case. They not only lost a huge amount in the penalty but also degraded rapidly in case of reputation in the industry and even more.
Additionally, along with following the existing rules of the Act, the firms can also adapt effective methods and strategies, like forming a hierarchy for filtering and checking unlawful acts by other employees in the company. Strategies like, charging an amount of fine based on the act of the convict, setting comparably more strict boundaries by the authority of each organization, eliminating work-area politics and tactfully tracking each data, can help to maintain a secured legal system.
However, a large number of research and studies has been performed about the violation of the Corporation Act, 2001. It is apparent that, every act consists of a certain legally written and declared set of terms and conditions. Any act against those rules creates an offender in the eye of the ministry and shall be penalized as occurred in the North V marra Development private Ltd case. It is mandatory for any employer or employer to typically be on track. An illicit or unfaithful carried out for a long time can provide the company with high revenue, but the decision was a revelation for such firms to provide an idea of how unbending and severe the consequences can be.
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Gevurtz, F. (2010). Gevurtz’s Corporation Law, 2d (Hornbook Series). West Academic.
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