Liability of Corporate Officers and Directors †MyAssignmenthelp

Question: Discuss about the Liability of Corporate Officers and Directors. Answer: Introduction: In the case study, the facts been found that Galli grandchildren are getting angry on the board of directors because they have decided not to provide dividend amount of A class shareholders in this year and instead of the dividend amount they will provide with the fund of the development of the organic vineyards at Robinvale (Tricker Tricker 2015). The Corporation Act 2011, the section 254W stated the provisions where share holders have the right to have their dividend amount (Grinblatt Titman 2016). The dividend amount describe various related fact about the company shares in A class of share holders where they will also eligible to have the dividend right with the other share holders of the company (Knepper et al. 2016). According to the case study the board of GML do not able to make any decisions about the payment of dividend amount to the A Class share holders in this year where the Gilli grandchildren wants their dividend payment (Legislation.gov.au, 2017). According to the Corporation Act 2011 of Australia, it establishes in the legislation of the shares and share holders right for having their dividend payment. Any person can be the part of share holders of the company where the amounts which company earn as the out of expenses (Grinblatt Titman 2016). They pay the dividend amount to the share holders along with board members of the company where the shoulders have the right to get their dividend amount (Knepper et al. 2016). As for the corporation act it is the duty of the director that they should take the initiative for paying the dividend amount equally to the every share holders of the company along with the dividend amount (Tricker Tricker 2015). The corporation act defines the legislation where the partly paid shares or permanent shares are also distributed from the companys earning (Legislation.gov.au, 2017). The share holders own various rights in the company. The corporation act provides them the right to attend meeting of the company where the director proposed and published various reports of the company (Grinblatt Titman 2016). The annual general meeting also another part of publishing the reports where share holders also provide their suggestions and change the rules according to the importance of the proposed report. Therefore the amount which the company has earn out of the profit as an extra rewards the share holders has rights to claim the dividend amount (Knepper et al. 2016). It also provides various rights for the share holders where they can participate in the decisions of the meetings where the board members make the decisions about the statues and constitution of the company (Tricker Tricker 2015). Share holders can propose their suggestions where the company gets more benefits from the outside shares. The corporation act also provides the legislation for the share holders to check the minute book and security register of the company as per the best interest of the company (Legislation.gov.au, 2017). The section 254W of the Corporation Act establishes the legislation of the dividend rights for the A Class of shares of the public company who has the equal dividend right along with the other share holders of the company. For providing the dividend rights the legislation has introduced several special resolutions where the A Class of shares holders claimed share dividend amount from the company (Legislation.gov.au, 2017). Here in the case study the Galli grandchildren want to take legal action against the board members of the company in respect of nonpayment of the dividend capital. Therefore director of the company has the duty that they must pay the dividend amount to shareholder. However they have breach the rules (Tricker Tricker 2015). Now according to the section 181, 182, 183 and 184 of the Corporation Act 2001 the director has breach their duties. They are not paying the dividend amount to the Galli grandchildren and instead of that they want to retain earnings to fund the development of the organic pioneered at vineyard at Robinvale (Knepper et al. 2016). As per the case study at FWPL, Mario and Nick Galli concerned about the level of dissatisfaction among the A class shareholders. Now they want to buy a share buyback under the corporation act (Tricker Tricker 2015). The share buyback defines a process where company brought their own stock of shares for the benefits of the company (Grinblatt Titman 2016). In this process the company introduces an offer where they can able to buy their own shares from the companys share holders. This process helps the company to gain more benefits for some the shareholders (Legislation.gov.au, 2017). First the company makes the offer to the shade holders for buying the share and when the shares are sold back again to the company then they can cancel the share with share holder. For the private company they have the equal access to buy from the other shareholders. In this process they can select a particular of shares which only make offered for the selected shared holder (Knepper et al. 2016). In the share buybacks process the dividend component and capitals component are mainly used for processing (Tricker Tricker 2015). More the company lowering the share numbers, the shared buybacks helps the company to earn more profit and increased share price where the company can get back the cash to the share holders and any other investors of the company (Grinblatt Titman 2016). Share buybacks is strategic process of the corporation act where it helps the company to make a profitable capital amount of the stocks and the gain amount help the company to pay the surplus cash to the invest or and make them believe that they are able to pay any share amount to the investors (Legislation.gov.au, 2017). As per the case study, the FWPL wants to get rid of the A class shares the way of a reduction of the capital amount. The section 256B of the corporation at defining the provisions of the terms where the reduction without the authorization is not possible by the company (Tricker Tricker 2015). It only applicable when the company will be able to reduce the share capital amounts with a fare and reasonable reason to all shareholders. When there was no existence of prejudice system then it is the ability of the company to provide the reduction amount to all the creditors (Knepper et al. 2016). The corporation act defines the provisions where the share holders must reduce of the share capital according to the section of 256C of Corporation Act. The company can cancel the share without any consideration and in this matter the reduction of share capital should complete or satisfy the terms of the corporation act otherwise the applications of the reduction may not apply. Therefore when the c ompany cancelled the uncalled capitals, this process helped company to reduction of the share capital (Knepper et al. 2016). However, the reduction of the share only possible to process when the company reduce the equal with shareholders and not the selected production and it will apply for each and every holder of ordinary shares in the company (Tricker Tricker 2015). Therefore the ordinary share holders share amount can also reduce for the benefit of the company because the terms and process of the reduction amount equal for every ordinary share holders of the companies. However if any problem arise from the company, then it is not able to reduce the share amount. In the selective reduction of share capital should not allowed all the conditions because the selective share holders are only eligible to for the selective reduction only (Legislation.gov.au, 2017). FWPL company directors are wanted to reduce the share capital from the shareholders. They must propose a form 2560 notification where they provide the notice of the meeting to pass the resolution for the reduction of the share capitals and submitting every document which are related to the reduction and the notice of the meeting should be sent to the shareholders. In a General Meeting the reduction of share capital resolution should be passed according to the companies on constitution regarding the special resolution as per the circumstances (Knepper et al. 2016). Reference Alstadster, A., Jacob, M. Michaely, R., 2017. Do dividend taxes affect corporate investment?. Journal of Public Economics, 151, pp.74-83. Dent Jr, G.W., 2014. Corporate Governance Without Shareholders: A Cautionary Lesson from Non-Profit Organizations. Del. J. Corp. L., 39, p.93. Graetz, M.J. Warren, A.C., 2016. Integration of corporate and shareholder taxes. Grinblatt, M. Titman, S., 2016. Financial markets corporate strategy. Knepper, W.E., Bailey, D.A., Bowman, K.B., Eblin, R.L. Lane, R.S., 2016. Duty of Loyalty (Vol. 1). Liability of Corporate Officers and Directors. Legislation.gov.au. (2017). Corporations Act 2001. [online] Available at: https://www.legislation.gov.au/Details/C2013C00605 [Accessed 22 Aug. 2017]. Tricker, R.B. Tricker, R.I., 2015. Corporate governance: Principles, policies, and practices. Oxford University Press, USA.