Commercial and Corporation Law Law and Government Update

Question: Describe about the Commercial and Corporation Law for Law and Government Update. Answer: Section 198 A: The section is a big boost to the entrepreneurs in Australia. The section has offered significant power to the board to deal with any matter connecting to the operation of the company. This power is exclusive, and known as delegator power of the board. The board according to their role can issue shares and debentures and if required can seek financing from banks or any other financial institution unless the constitution of the company provide otherwise. As far as historical back ground of the Section 198A of Australian Corporation Act, 2001 is concerned, it was introduced in the Australian parliament as a supplementary version of Replaceable Rule through section 135 which also allocates directors to continue business without any interruption(Legislation, 2001). The back ground behind the section clearly indicates the lawmakers intention to provide significant power to the board to deal with matters related to the company. The interventions of the shareholders are being limited to the constitution power. Here constitution is referred as MOA and AOA of the company. The parliamentary affairs related to discussion on the section started back in 1998 and later on after much deliberation it was enacted on July 1, 1998. In reference of section 135, the board was given the power based on concept of Replaceable Rule ratified by the constitution of the company. The target is to ensure that company operates smoothly and manages the day to day operation of the company (Austlii, 2016). Section 191: The disclosure of the directors interest is mandatory under this section of Corporations Act, 2001. The section was mainly influenced by the UK Companies Act. The relevance of the section was better understood at the later stage after enactment of Sarbanes Oxley Act, 2002 widely known as SOX Act. The material interest of the directors in the company or in the business deals is to be disclosed. If interested directors are allowed to participate in the discussion regarding a business where one or more interested director is present and voting it may jeopardize the interest of the company. Therefore the disclosure of the interest would help other directors to study the business deal more properly where the interested director is not allowed to vote(Dawson, 2009). The materials interest of the directors is to be notified to the board where any decision regarding would be taken. After several amendments this current section has been able to rightly ask for the disclosures of the directors. This section has however given an exception to one director companies. The back ground of the section is to ensure that any particular undisclosed interest can jeopardize company financial and also the image. Therefore disclosure of the fact has been made relevant. The material interest of the should be informed to the existing board and the notification is to be placed before the meeting of directors wile delegating on the subject regarding which disclosure is being made (SEC, 2016). Section 250R (2) and (3): The target of most of the acts is to ensure that all of the information comes to public domain. The remuneration of the directors is generally fixed at the remuneration committees of the company. The role of the remuneration committee is already clarified in stock exchange listing rules. Despite that the section holds its ground on the fact that every shareholder should be aware of the remuneration of key managerial personnel. If the shareholders are not satisfied they can put a negative vote against the resolution or opt to leave the company as shareholders(ASX, 2016). The target of the section is to create awareness among the shareholders. The AGM notification will ensure that most made of the members would become aware of such remuneration being offered to the directors or to KMPs. This will allow shareholders to assess the financials of the company in a proper manner. The intimation to the shareholders should be a continuous process for the directors which will let them to be informed. The target of the section is to ensure transparency in the affairs of the company and also it does not bind the directors to follow the voting in case of negative vote. The AGM notice shall mandatorily include notice regarding remuneration of the directors according to section 250R (2) (3) of Corporations Act, 2001. This has been the idea of lawmakers behind this section (Austlii, 2016). References: ASX, 2016. Annual General Meeting. [Online] Available at: https://www.asx.com.au/asxpdf/20160418/pdf/436kwng9dkn2sf.pdf [Accessed 13 September 2016]. Austlii, 2016. CORPORATIONS ACT 2001 - SECT 198A. [Online] www.austlii.edu.au Available at: https://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s198a.html [Accessed 10 September 2016]. Austlii, 2016. CORPORATIONS ACT 2001 - SECT 250R. [Online] www.austlii.edu.au Available at: https://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s250r.html [Accessed 10 September 2016]. Dawson, B., 2009. Company Law and Governance Update. [Online] Available at: https://www.ashurst.com/doc.aspx?id_Content=7608 [Accessed 13 September 2016]. Legislation, 2001. Corporations Act 2001. [Online] Available at: https://www.legislation.gov.au/Details/C2013C00003 [Accessed 09 September 2016]. SEC, 2016. Sarbanes-Oxley Act of 2002. [Online] www.sec.gov Available at: https://www.sec.gov/about/laws/soa2002.pdf [Accessed 10 September 2016].