CORPORATE ACCOUNTABILITY

Corporate Accountability: Meetings and Disclosure

Corporate Accountability: Meetings and Disclosure

Part I

The statutory business judgment rule was included in the Corporations Act in 1999 and since then has been a controversial law. It acts as a defence for the businesses that operate in good faith. They ensure that this law is for a proper purpose and that the director has no personal interest. The business should be operated in a manner that helps in achieving the goals and that the directors of the company are performing to the best of their potential and that proves to be beneficial for the company, as well. It is important that the section 180(2) is understood. This section of the Corporations Act is related to the directors of the organization. They are required to take decisions that are in the best interest of the company without bringing their personal interest in between.

They should have the appropriate knowledge and information related to the decision that they have to take so that they are in a position to take the best decision possible (Tomasic, Et.al, 2002, pp. 24). Furthermore, under this act, the directors are required to make sure rationally that the judgment (decision) that they are taking is in the best interest of the corporation. The rights of the directors are ensured provided they work in a manner that is outlined by the law and that is in the best interest of the company.

Section 180 of the Corporations Act is known as Duty of care and diligence and the business judgment; therefore, it is very important for the directors to ensure that they take decisions keeping in mind their duties. The subsection 2 of this law includes an element of 'business judgment' as well. This can be explained as the decision to take or not take action in respect of a matter relevant to the business operations of a corporation rule. This law has been designed to make sure that the directors of the companies are working in a manner that is unbiased and that will help the company in achieving its objectives in the best possible manner.

Case Law

This law has been used in various cases. An example of a case is Australian Securities and Investments Commission v Rich in 2009. In this case, the directors of the company One Tel telecommunications were accused of breaching their duty of care and diligence by the Australian Securities and Investments Commission. This breach had led to the closure of the company in 2001. This was one of the longest cases in the Australian legal history. The case took nine years to decide. In 2009, the NSW Supreme Court dismissed the case of is Australian Securities and Investments Commission against Rich and said that they had failed to provide sufficient proof against any of the director of One Tel telecommunications (Hicks, 2008, pp. 42).

The directors of One Tel telecommunications did not sue Australian Securities and Investments Commission for damages. The court decided that the regulatory authority failed in ...