Corporation Rules and Regulations Essay

The group had been liable for 70% of Australian asbestos consumption. However, in February 2007, ASIC had started to impose civil proceedings against James Hardie, the handlers and the police police officers, as ASIC alleged that JHIL and twain administrator and non-executive had oversteped their statutory duty. This short research report had outlined the role of ASIC and various penalization that ASIC apprise impose below lot Act 2001. in any case that, we will also discuss the position that ASIC had held from 2004 until authorized image in relation to the theatre directors of Hardie group.At last, I had provided a summary of the ASICs media release that had been established on 13 May 2011, and indentified the element that ASIC is hoping the High Court to uphold. The Role of ASIC The Australian Security and Investment c atomic number 18 (ASIC) is a commonwealth statutory corporation that set up by Australian Securities and Investments Commission Act, and it is a regu lator which in charge of monitoring the Australias toilet, products, markets and financial services (Lipton, Herzberg and Welsh 2012, p. 736).On the opposite hand, ASIC is also a commonwealth authority that is responsible for governing the Corporation Act. ASIC Act provided that ASIC owned much(prenominal) motives and function that endowed by the corporation legislation to ASIC. Thus, what exactly is the corporation legislation means? on a lower floor branch 5(1), they had interpreted the term corporation legislation to mean the ASIC Act and the Corporation Act (Baxt, Finnane and Harris 2012). Besides that, ASIC also owned the power to initiate prosecution for criminal offences or apply for civil penalization dresss if they believed that theres a contravention of the law.ASIC is also able to ban a director from managing a go with for a certain period if they contravened their common duties. For instance, in the case of ASIC v Stephen William Vizard 2005, the court held th at as a director of Telstra, Mr. Vizard has contravened the Corporation Act Section 183, the duty of director to practice session the information in an improper purpose, and gain advantage for himself, thus, the court order pecuniary penalties and a disqualification order against Mr. Vizard (Price Waterhouse Coopers 2012).As a result of that, ASIC actually played a significant role in relation to initiate prosecution against companies directors for misconduct in order to ensure corporation and those related parties atomic number 18 complied with the corporation legislation. Now, let us look at the duties of a corporations directors under Corporation Act and what penalty can ASIC can imposed if the directors do not comply with the Corporation Act. The duties of a companys director The term director is a person who is appointed to manage control or govern the personal matters of a corporation.Under Section 9 definitions, the term directors extend to a person who is not formally ap pointed as a director, but they act as a director or whose pedagogics or whishes are followed customarily (Baxt, Finnane and Harris 2012). In chapter 2D. 1 of the Corporation Act, from Section 180 until Section 184, it devote that the principle duties of a director. They can be listed as followed Section 180 stated that a director or other officer of a corporation must exercise their power and discharge the duties in a manner with care and diligence (Mclnnes Wilson Lawyers 2011).Section 181 declared that, a director should exercise their power and discharge their duties in good faith where its in the best interest of the corporation and for a proper purpose (Mclnnes Wilson Lawyers 2011). Section 182 stated that, a director must not improperly use their position to obtain an advantage for themselves or other or cause lesion to the company. (Armstrong Lawyers 2007). Having understood the general duties of a companys director, we can now look at the penalties that ASIC could impose i f the directors had breach their duty or do not comply with the Corporation Act 2001. The penaltiesAs we mentioned before, the Australian Securities and Investment (ASIC) is a bailiwick body thats responsible to govern the corporation legislation and securities regulation in Australia. ASIC obtained the power to suss out potential contravention of the corporation law and significant penalties can be imposed on the directors who had failed to carry out their duties. The section of the Corporation Act attracting civil penalties under Section 1317J (1), ASIC can apply to the court for a Declaration of contravention Pecuniary penalties Compensation order (Baxt, Finnane and Harris 2012) 1)Pecuniary penalty orderThe court may order a pecuniary penalty of up to $200,000 to a director who breaches his duty under Corporation Act. in one case the declaration of a contravention by the person had been do (Section 1317E), and the contravention is a corporation penalty (Price Waterhouse Coop ers 2012). (2)Compensation order Under Section 1317H, the court may order a person to compensate the company where loss is suffered because the person had contravened a corporation civil penalty provision (Price Waterhouse Coopers 2012). (3)Disqualification from managing a companyThe Corporation Act Section 206C conferred ASIC the power to disqualify the directors from managing a company for a certain periods of time payable to the contravention of their general duties (Price Waterhouse Coopers 2012). This concept can be illustrated by the following case ASIC v Vines 2006, it had been engraft that Mr. Vines had breached his duty of care and diligence by misleading and an inadequate apocalypse of material information to the plug-in of directors and failure to ensure the statement was incorrect. The board was relying on Mr. Vines to make complete disclosure to all material matters.The court held that, as the director had breach their duties of care and diligence b providing fault statement, thus, he had breach civil penalty provisions. The court decided that, Mr. Vines will have to receive a 3 days disqualification, pay a pecuniary penalty of $100,000 and 22% of the ASIC cost (Price Waterhouse Coopers 2012). ASICs position that held from 2004-2012 The position of ASIC held from 2004-2012 in relation to the directors of James Hardie case had not altered. Why would I say that? Below is the details of ASICs position in relation to the directors of James HardieOn he 27th February 2004, the NSW government had authorized Mr. David capital of Mississippi to conduct a specific commission of Inquiry into James Hardie newly founded foundation-Medical Research and Compensation basis (Australian Council of Trade Union 2007). At first instance, it had been found out that, the foundation was in fact had a nearly 1. 5 billion of shortfall, and a media release saying that the MRCF is fully founded to meet all the current and future asbestos claims to the Australia Secur ities Exchange through the approval of the board directors during the directors meeting.Thus, ASIC had alleged that JHIL had made a misleading and jerry-built statement. As a result of that, it had raised a principle issue for the board of directors of JHIL, whether or not they had knowingly voted in favor of releasing the misleading announcement to ASX (Alcorn 2011). In addition, the sub issues that had been raised are under Section 180(1), was a general counsel can be treated as an officer? The Original Decision In April 2009, ASIC held that all of the executive, non-executive and company officer had breached their duty of care by thanksgiving the media statement to be made in ASX.In particularly, ASIC had alleged that, the company chief executive officer and company escritoire or general counsel, Mr. Macdonald and Mr. Shafron had breached the directors duty of care and diligence under Section 180(1) as they had failed to advice the board to disclose the DOCI information to ASX (Hargovan 2009). Thus the court had imposed penalties on both of them Mr. Macdonald was disqualified from managing a company for 15 years and a pecuniary penalty of $350,000.According to the Corporation Act 2001, Section 180(1), an officer obtain the power in decision making which affected the self-coloured or substantial part of a business, thus, Mr, Shafron had a positive obligation to advise the board of the disclosure of DOCI. In relation, he was given a disqualification order for 7 years and a pecuniary penalty of $75,000 (Baxt, Finnane and Harris 2012). Mr. Morley had been banned from the management for 5 years and paid a pecuniary penalty of $35,000. However, all of the cardinal former non-executives directors were disqualified from management for 5 years each and a pecuniary penalty of $30,000.The speak to In December 2010, the NSW court of woo overturned the finding in relation to liabilities and penalties of the non-executives directors, the CFO and secretary general counsel of James Hardie Industries Ltd as ASIC had failed to prove that the ASX media statement was approved by the board, and as the appellant court had established that some of the directors had acted honestly without any intention to gain benefit from themselves, which is under Section 1317 of the Corporation Act 2001 (Hargovan 2011).Thus, amendment had been made in relation to lessen the liabilities and penalty of the directors and officer can be found in later section (summary of media release). Nevertheless, its worth noting that Mr. Shafron, Mr. Morley and ASIC had filled application for special sacrifice to appeal the decision of the Court of Appeal. In May 2011, ASIC had issued media release that stated that they had granted a special leave to appeal the James Hardie decision.ASIC didnt change their position in relation to the directors of James Hardie and they are still seeking to uphold the finding that the directors of James Hardie had breached their duty by approving t he ASX announcement made by the company (ASIC 2011). Media Releases Summary This article talk about the ASIC had granted a special leave from the High Court to appeal the decision of the New South Wales Court of Appeal in the James Hardie matter in relation to the former non-executive directors and the former company secretary and general counsel of James Hardie Industries Limited.The ASIC has actually filled his application in the High Court on 14 January 2011. The purpose of ASIC to strive for a special leave is they are seeking clarification about the nature, nub and scope of ASICs obligation, while the Court of Appeal had concluded that ASIC had breached their duty of fairness, as they failed to call the escort Mr. Rob in the trial imagine of James Hardie case (ASIC 2011).The failure to call the witness, Mr.Rob had make a tremendous impact on the decision of the court, as they cannot attest the non-executive directors had voted in favor of the ASX announcements draft (Thomas 2011). As a result of that, ASIC is hoping the High Court to uphold the finding if the trial judge that the directors had acted in favor in regards of the ASX announcement made by the company (ASIC 2011). Decision As a result of that, in August 2009, the NSW Supreme Court had imposed pecuniary penalties on JHIL and all the non-executive officers and executive officers, plus a disqualification order on them for an extensive period.