Directors Must Unequivocally Act in the Best Interests of the Company (an Australian Perspective)

Topics: Stock, Corporation, Fiduciary Pages: 3 (1037 words) Published: May 24, 2013
Directors are wills and minds of a company. Furthermore, Directors are defined as a person who is responsible and in charge for managing the company’s trade activities and affairs (Hanrahan, Ramsay and Stapledon 2010). Directors are appointed by members (Shareholders) after chosen the right person by another director of the company. In company’s view directors are the responsible bodies that are generate more profits to the company. Harris, Hargovan and Adams (2011) defined the term of best interest as “The meaning of the term ‘in the best interests’ of the company involves a consideration of ‘who’ the company is for the purposes of the law” Therefore, should directors must act in the best interest of the company. In my view, I think directors must not unequivocally act in the best in the best interest of the company .

The main task of director’s duty is loyalty to their company (Hanrahan, Ramsay and Stapledon 2010). Furthermore, Ciro and Symes (2009, p.209) stated that “Directors duties exist to protect shareholders from the risk of directors causing harm to the company, including any of its property or assets as well its reputation”. This statement clearly expressed directors are owed a duty to shareholders . Shareholders are the major way of generating capital to the company and they are seeking some profit by this contribution. However, it is stated in Commonwealth Corporation ACT 2001, s. 254U “The directors may determine that a dividend is payable and fix: the amount; and the time for payment; and the method of payment”. Thus, this is a replaceable rule it can be different in various companies but directors have full right to determine whether give or not shareholders a profit as dividends .

However, there are few cases regarding directors owed a duty to individual shareholder. According to Harris, Hargovan and Adams (2011) directors are owed a duty to company as a whole generally means that at the same time as duties are owed to the combined body of...
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