Corporation And Corporate Social Responsibility

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Corporation And Corporate Social Responsibility

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Corporation And Corporate Social Responsibility

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Question:
Discuss about the Corporation and Corporate Social Responsibility.

Answer:
Introduction:

According to the case study the issue has been arises when the directors of the Chocolate Cleaning Products Pty Ltd (“CCP”) Alana and David has decided to fire Max who is the company solicitor and also owned 5% of shareholders of the Company. Now Max wants to enforce the clause in the constitution making or as a company solicitor. When Max has been engaged in the Chocolate Cleaning Products Pty Ltd (“CCP”) Company he has included a clause in the constitution of the company where he mentioned about himself as the company solicited and which is not replaceable accept for negligence act by him[1].
Now CCP has already a Sol who is an investor and mentor and experience in the cleaning products industry. Here they think it is enough of having Sol’s advice in regards to proposed expansion activities and there is no need of Max for other activities in the company where they also insert new clauses which mentioned the right to expropriate the shareholding of members owning less than 10% of the total shares issued[2].
The 136 of Corporation act provides the legislation where a company can form the constitution which has been effective for the relatable company and every members of it. Under the section 9 of the Corporation Act has provided the special resolution where the company members specially the shareholders provide their words and with at least 75% of votes by the shareholders has passed in favor of the resolution[3].
It is also important to mention that when Max has engaged with the company he has included a clause in the constitution appointing himself as a company solicitor and not replaced except for negligence [4]therefore the directors has the knowledge about the clause and as Max not engaged with any activities of negligence therefore they cannot replace him. However in the General Meeting the directors of the company has passed a special resolution which has been used as a altar for the company’s constitution and also inserted new clause where board has legislate their rights to Expo create the shareholdings of members who owns less than 10% of the total shares issued[5].
Therefore when Max has included the clauses about the replaceable of his position and the directors also have the knowledge about such clause. Now they have breach their duties as a director of the corporation[6]. The section 181 provided such clause where directors are bound to do work for the cooperation with care and diligence, good faith and must not misuse their position. Therefore the section 181,182, 183 and 184 has been breached by the directors of the company. Therefore Max can take legal action against them[7].
The special resolution is formed under the Corporation Act where the company can change their name, types, style or add any other extra clauses which has been related to the company. A special resolution must make specific criteria before it can be passed or voted by the members of the board of the company under the special resolution. It must make a notice where the members will meet and they will vote on the special resolution regarding the clause which has been changing or adding therefore the date time and proxy information must added. It is important at least 75% of votes must cast in favor of the special resolution clause where the company or the board members will give the votes and other shareholders and members are also join in the vote process. The section 9 of the Corporation Act has defined the special resolution for the corporation where 75% of vote mast cast by the shareholders and other members of the company[8]. For a special resolution there must be a special facts included whether amending or changing the constitution or adopting a new company name of changing the company type or selective share buyback of any changes regarding the share capital of the shareholders right. Now according to the case study David and Alana has already call for an Annual General Meeting where they pass the special resolution for the alteration of CCP’s Institutions and they have inserted and new clause giving the board the right to expropriate the shade Holdings of members who owned less than 10% of the total shares issued[9].

Now according to the case fact and the requirement of special resolution the directors of the company has changed in share capital or of the shareholders right regarding the shares of who owned 10% of shares of the company and they are expropriate from their rights[10]. The section 249L(c)[11] of Corporation Act provide such legislation where the special resolution must set out the intention to propose the special resolution and state the actual words of the resolution therefore when and a Annual General Meeting has been held for Casting the votes in favor of the special resolution it is important that it must fulfill the requirement of section 249L(c). The passing of a special resolution must be lodged by ASIC on form 205 notification of resolution or form 2205 notification of resolutions regarding shares. According to the case facts the directors has passed the special resolution in General Meeting where the shareholders also cast their votes which allow the directors to expropriate shares of Max even though The Other shareholders have passed a special resolution[12].
According to the case facts the issue has been arises when Banjo who is one of the non executive directors of Aussie Boats Ltd (“AB”) has disagreed with the resolution and issue of shares which he thinks it will be better to enter into discussion with MWB before the terms of the takeover also things that the directors have breach there equitable or statutory duties towards the Corporation[13].
Aussie boats Limited is working great marketing strategies from past 25 years but recently the other new luxury yachts companies has made more hi-tech fit-outs boats which make difficult competition for Aussie boats Limited in the international markets and they have due to lack of funds[14]. As they are failing to running their business the directors has been decided to buying up stocks from Millionaires on Water Ltd (“MWB”) where they owned 35% with the plan takeover bid imminent. therefore $500,000 of shares of La La Loopsy Pty Ltd return for the provision of a report on opportunities for AB to supply boats internationally and $1 million of shares to the public to be issued for the purpose of raising additional capital for expansion purposes[15].
In the meeting of the company they have immediately engages in previously planned expansionary activities so as to improve market share and it must be informed by high quality consultancy and market research[16]. When Millionaires on Water Ltd (“MWB”) has taken the shares it helps to reduce 18% of steaks in Aussie Boats Ltd (“AB”) but as Banjo one of the non executive directors of the company things that Clancy and jack are acting really out of concern for the position as Millionaires on Water Ltd (“MWB”) is known to terminate the position of Executive directors after completing or take over[17].
It is important for a company when they make any new resolution or changes regarding the company and the shareholders and other members of the board then the participation of every member are necessary. The Corporation Act Section 180 defines the care and diligence of the directors officers and employees where they must act with good faith which has been mentioned section 181 and section 182 has define the use of positions of the directors said they must follow some civil obligations for running the company and holding the position of directors of the company. The section 184 has provided the legislations where the directors’ must act with good faith must not misuse their position or any information of the company which cause any bad effect or criminal offences with the company[18].
Therefore it is important for the director that they must not reckless or intentionally dishonest towards the corporation or commit any offensive and they must not fail to exercise their powers and discharge their duties in good faith in the best interest of the corporation or any proper purposes[19]. For running a corporation at directors must not have any personal interest or benefit out of the Corporation[20].
It is must for the directors to follow all the obligations which directly or indirectly gaining an advantage or any detriment of the corporation and towards the other officers and employees of the company[21]. They must not breach their duties if they breach the duties and the section of 181, 182, 183 and 184 therefore the court will make the allegation of breach the duties which may affect them and provide penalties. The section 1317E of Corporation Act provide such penalties for the directors who breach their duties and failed to work as care and diligence good faith use of position use of information or intention to make any criminal offences[22].
According to the case facts one of the non executive directors disagreed with the new resolution of issue of shares by the directors of the company[23] if it has found that after the new company all the positions and then they terminate the executive directors then it will made disaster for the other executive directors and non executive directors also. If the directors of the company has failed to hold their positions before they make the resolution and take over the company to new company with new issue of shares then the other members Banjo the non executive director also take legal action against them for Bridge there equitable and statutory duties towards the company[24]. If Court has found that the directors has failed to maintain their position of directors in the company then they can we find with penalties and the section 1317E of the Corporation net will provide such penalties for breach the duties of the position of the directors[25].

Reference
Coffee Jr, John C., Hillary Sale, and M. Todd Henderson. “Securities regulation: Cases and materials.” (2015).
Corporation law 2nd edition, Jason Harris publication: LexisNexis butterworths Australia 2011
Donner, Irah H. “Fiduciary Duties of Directors When Managing Intellectual Property.” Nw. J. Tech. & Intell. Prop. 14 (2016): 203.
Hiller, Janine S. “The benefit corporation and corporate social responsibility.” Journal of Business Ethics 118.2 (2013): 287-301.
Knepper, William E., et al. Duty of Loyalty. Vol. 1. Liability of Corporate Officers and Directors, 2016.
Langford, Rosemary Teele, Ian Ramsay, and Michelle Anne Welsh. “The origins of company directors’ statutory duty of care.” (2015).
Lin, Chen, et al. “Directors’ and officers’ liability insurance and loan spreads.” Journal of Financial Economics 110.1 (2013): 37-60.
Loewenstein, Mark J. “Equity and Corporate Law.” SMUL Rev. 68 (2015): 783.
Lunn, Brad. “Strengthened director duties of care for cybersecurity oversight: Evolving expectations of existing legal doctrine.” Browser Download This Paper (2014).
Spamann, Holger. “Monetary Liability for Breach of the Duty of Care?.” Journal of Legal Analysis 8.2 (2016): 337-373.

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