Commercial and Corporation Law Concise Corporations

Question: Describe about the Commercial and Corporation Law for Concise Corporations. Answer: Corporation Law 2001 Corporation Law, 2001 includes various sections related to duties of directors, directors duties towards the organization, and duties of directors towards the shareholders (Cassidy, 2006). In this context, followings are some sections that are discussed in this report with the reasons of their inclusion in the corporation laws 2001 of Australia. Section 198A: Before the inclusion of section 198A in Corporation Law 2001, there were several business organizations, which have not developed their constitution and memorandum of business to run their business activities. The directors of some business organizations were also acting as shareholders therefore; they make every business related decision in their favor to ensure their benefits only rather than other shareholders (Cassidy, 2006). Because of this situation, the companies were not complying with the rules and regulations related to business. Due to this, the companies were misusing the rules related to the corporation. Due to this, the organizations were not able to comply with the rules and norms of the government. Hence, the main objective behind the inclusion of this section is to notify the directors about their obligations and duties towards the organization and shareholders (CCH Australia Limited, 2011). Therefore, it can be stated that this section of Corporation Law 2001 secure s the rights of shareholders within the corporation. Through the help of this, the directors make every decision as per the situation. This section of Corporation Law 2001 is also applicable in a company, which has not implemented any constitution for defining the obligations of directors and shareholders. Section 191: The history behind the inclusion of section 191 is corporation law 2001 to separate the interest of the directors and interest of the corporations. This is because there were several examples such as Enron, where the directors made the decision to fulfil their interest rather to the interest of the organizations. After the inclusion of this section in Corporation Law 2001, the organizations can be able to separate the interest of their shareholders from the interest of the corporation by defining the directors material personal interest (CCH Australia Limited, 2011). Before the inclusion of this section, the Corporation Law 2001 did not give the definition of directors material interest. After the inclusion of section 191, it is a necessity to the directors to put their material interest in front of shareholders in every meeting before making any contract. The benefits of this section are to separate the interest of directors before making any legal contract with other parties in the interest of the corporation (CCH Australia Limited, 2011). Because of this section, corporation law 2001 ensures that the directors will make every decision without bias. It will be used to ensure that the each decision made by the directors on the basis of facts and situations. Section 250R (2) (3): Before the corporation law in 2001, there were no rules related to the meeting of shareholders, voting of shareholders and rule related to passing a remuneration report. Each decision was taken by majority shareholders. Therefore, sometime the directors made a favorable decision to their organization and sometime directors made unfavorable decisions to the organization (Tomasic, Bottomley McQueen, 2002). So, the government of Australia added section 250 R (2) (3) in Corporation Law 2001 gives the rights to shareholders to vote on the remuneration related report. This section makes following changes: Section 250 R (2) is linked to the annual general meeting and voting of shareholders. This section in Corporation Law 2001 states that the director will accept any report of remuneration after voting system in which shareholders will be to vote on the report (CCH Australia Limited, 2011). This section of Corporation Law 2001 also forces the directors to register every meeting of shareholders. Section 250 R (3) is related to the decision making rights of the directors after the voting on reporting of remuneration. This section of corporation law 2001 gives the right to directors to accept or ignore the resolution passed by the shareholders in meeting through vote (Tomasic, Bottomley McQueen, 2002). This section does not bind the companys director because the passed resolution by shareholders describes the view of shareholders only. Reference Cassidy, J. (2006) Concise Corporations Law. NSW: Federation Press. CCH Australia Limited (2011) Australian Corporations Securities Legislation 2011: Corporations Act 2001, ASIC Act 2001, related regulations. Australia: CCH Australia Limited. Tomasic, R., Bottomley, S. McQueen, R. (2002) Corporations Law in Australia. NSW: Federation Press.