QUESTION 5: AUSTRALIAN COMPANY LAW CONSTRAINING OR PROMOTING CORPORATE ACTIVITY
The companies functioning in Australia have always been able to get a back from corporate law that has been functioning in the country. It is due to the reason that it has always promoted improvements and adjustments in statutes and provisions as per the changing business environments. The report will make comprehensive discussion regarding various laws that act as a barrier in fostering growth in company and other aspects that are directly or indirectly related to its growth.
Australian company law discusses the provision that is frequently traced in form of legislations with respect to the organizations that are being established in territory. If any company plans to function in Australia or have a branch office in the territory, belonging to some other country, in this scenario, it must be registered as a foreign company under Corporation Act of Australia (Hanrahan, Ramsay and Stapledon, 2013). It acts as a public record and registration of company’s presence in the Australian territory. Since, all the legislations regarding business activities are discussed in this law, it can be stated that, it helps in appropriate promotion of the organization in such a manner that no misleading activity takes place in the nation. Hence, it helps to promote ethical compliance of the business.
The laws being established in relation to functioning of the organizations are quite stringent, however, it has only fostered growth of corporate activities in the territory in a well-defined manner. The authorities have also been able to achieve adequate amount of success in practicing this law in a manner that the legislations and statutes included in it are modernised and improvised as per the dynamic requirements of society and existing culture of conducting business activity. It has distinctive feature of arrangement of governance from that usual Anglo-American model due to which it is able to share various common features with the other countries as well. In order to ensure effective compliance of law, the most important determinants that are required to be considered by authorities are background business culture, ethical values and application of legal institutions against the corporate law operations (Muchlinski, 2012). Theorists have been able to prove that the provisions and statutes in Corporation law have been able to fulfil most of the elements that a contemporary theorist would have ever seen in desirable modern body of company law.
However, an overall increase in globalization and contraction of the role of state in economic market has adequately altered the nature of modernity in law that requires adequate changes to be applied in Corporation law as well. Due to this reason, it constantly generates the requirements of alterations, modifications and adjustments as per the changing legal as well as economical circumstances. Most recently, the authorities have involved in simplifying administration of Australian law and reduced using litigation as a means of enforcement in its body of law. Adequate emphasis has been put on specific areas of takeovers and voluntary administration of insolvent companies (Esposito, 2012).
Main aim of company law of Australia is to facilitate and improve the performance of financial system. It also helps in promoting confident and informed participation of investors and consumers in the system. Corporate law of Australia also plays an important role in administration of laws in an effective and efficient manner. It also plays an important role in collecting and storing relevant information about companies that are functioning in the territories whether it belongs to Australia or not. The authorities also involve in putting constant efforts to improve its mechanism in such a manner that all the defaults being present in the room of provisions can be assessed, based on which, corrective actions can be undertaken. Hence, it is now important for authorities to give an introduction to statutory derivative action procedures and impose liabilities on directors in the same manner for the debts of organization, in case of insolvent trading aspect. It is also important that the duties that have been mentioned regarding auditors must be enhanced that can help in reducing number of companies that may collapse due to their ineffective presentation of financial statements (Tricker and Tricker, 2015).
It has also become important for the corporation law to take actions against limited regulatory resources as well whose main role is to monitor corporate misconduct and bring them into legal actions who breaches the law. However, there is increasing range of financial and custodial punishments that are given to the corporations involved in breaching law. Introducing of new measures in the form of infringement notices with respect to civil penalty order procedure can help in solving out the issue. It can be stated that overall improvements and preparation of stringent laws in the corporate functions can help in reducing unethical practices in environment where business judgement can be taken by team in a well-defined manner (Lindorff, Jonson and McGuire, 2012). It can prove to be effective for both; the law makers and law seekers.
Adequate changes has been experienced in law in the years based on changing circumstances and conditions of corporate culture in country. It helps in reducing misconduct that is related to organizations functioning in Australia. It also helps in bringing minor breaches to regulatory attention. It can help in improving the overall civil and administrative functions of law (The challenge of corporate law enforcement: future directions for corporation’s law in Australia, 2016).
From the above report, it can be concluded that company law that is functioning in Australia have been prepared to foster growth in business activities. It helps in ensuring that all business functions are ethically conducted by all the corporations functioning within territory of Australia. The report also outlined that there are various aspects where changes are required to be made as it can act as a barrier to organizations to promote growth due to ineffective formulation of laws. Bringing changes in the same can be helpful in continuous fostering of growth in business activities of Australian corporations.
Books and Journals
- Esposito, R. T., 2012. The social enterprise revolution in corporate law: A primer on emerging corporate entities in Europe and the United States and the case for the benefit corporation. Wm. & Mary Bus. L. Rev.. 4. p.639.
- Hanrahan, P. F., Ramsay, I. and Stapledon, G. P., 2013. Commercial applications of company law.
- Lindorff, M., Jonson, E. P. and McGuire, L., 2012. Strategic corporate social responsibility in controversial industry sectors: The social value of harm minimisation. Journal of Business Ethics. 110(4). pp.457-467.
- Muchlinski, P., 2012. Implementing the new UN corporate human rights framework: Implications for corporate law, governance, and regulation. Business Ethics Quarterly. 22(1). pp.145-177.
- Tricker, R. B. and Tricker, R. I., 2015. Corporate governance: Principles, policies, and practices. Oxford University Press, USA.
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