TY - BOOK AU - Du Plessis,J.J. AU - Hargovan,Anil AU - Bagaric,Mirko AU - Bath,Vivienne AU - Jubb,Christine AU - Nottage,Luke TI - Principles of contemporary corporate governance SN - 9780511813481 AV - K1327 .D8 2011 U1 - 346/.0664 22 PY - 2012/// CY - Cambridge [England], New York PB - Cambridge University Press KW - Corporate governance KW - Law and legislation KW - Comparative law KW - Electronic books N1 - Includes bibliographical references and index; Contents Table of cases Table of statutes Preface 1 The concept 'corporate governance' and essential corporate governance principles The meaning of corporate governance Generally Origins of the corporate governance debate and the stakeholder debate Comparative Study of Corporate Governance Codes Relevant to the European Union and its Members (January 2002) King Report (South Africa), Executive Summary of the King Report - King Report on Corporate Governance (March 2002) Australian Stock Exchange (ASX): Corporate Governance Council Principles of Good Corporate Governance and Best Practice Recommendations (March 2003) Report of the HIH Royal Commission (Owen Report) (April 2004) OECD Principles of Corporate Governance (April 2004) Definition of 'corporate governance' Essential corporate governance principles Generally The King Report (2002) Characteristic 1: Discipline Characteristic 2: Transparency Characteristic 3: Independence Characteristic 4: Accountability Characteristic 5: Responsibility Characteristic 6: Fairness Characteristic 7: Social responsibility The Australian Stock Exchange (ASX): Corporate Governance Council Best Principles of Good Corporate Governance and Best Practice Recommendations Principle 1: Lay solid foundations for management oversight Principle 2: Structure the board to add value Principle 3: Promote ethical and responsible decision-making Principle 4: Safeguard integrity in financial reporting Principle 5: Make timely and balanced disclosure Principle 6: Respect the rights of shareholders Principle 7: Recognise and manage risk Principle 8: Encourage enhanced performance Principle 9: Remunerate fairly and responsibly Principle 10: Recognise the legitimate interests of shareholders Is 'good corporate governance' important and does it add value? Concluding remarks 2 Stakeholders in corporate governance 1 Introduction 2 Stakeholders in the corporation: an overview (a) What is a stakeholder? (b) Discussion of different stakeholders Shareholders Employees Creditors Customers The community The environment Government 3 Stakeholders' interests and the corporation: the rule of law (a) The Australian position (b) Analysis - the appropriate boundaries of corporate governance regulation (c) Overseas position: a snapshot OECD European Union United States South Africa United Kingdom 4 Stakeholder interests, good governance and the interests of the corporation: a mutual relationship (a) General analysis (b) Case study on James Hardie's asbestos compensation settlement 5 Concluding remarks: a case for shareholder primacy 3 Board functions and board structures The organs of governance Board functions Board structures The 'unitary' and 'two-tier' structures compared Board structures in the broader context of a good corporate governance model Overview Effective support mechanisms to assist the board in fulfilling its functions properly Effective statutory provisions Effective regulators Charters, policies and codes of best practice and conduct 4 Types of company directors and officers Definition of 'director' De jure and de factor directors covered Shadow director Definition of officer Statutory definition Senior employees and senior executives as 'officers' Middle-management as 'officers'? Types of company officers Executive and non-executive directors Independent non-executive directors Lead independent directors or senior independent directors The manager director or chief executive officer (CEO) Chairperson Alternate director Secretary Training and induction of directors Training Induction of new directors Ethical behaviour by directors 5 Corporate Governance in Australia - background and business initiatives Background to the corporate governance debate in Australia The Bosch Report Background Bosch Report (1991) Later refinement and expansions The Bosch Report (1993) The Bosch Report (1995) Divergence from UK practice: 1995 till early 2003 The Hilmer Report Background The Hilmer Report (1993) The Hilmer Report (1998) The virtues of good corporate governance in Australia between 1991 and 1998 The IFSA Blue Book Concluding remarks 6 Regulation of corporate governance Overview of chapter Regulation generally 3 Objectives in regulating corporate governance 4 Sources of regulation in Australia (a) 'Hard law (i) Statutory regulation - corporate law (ii) Statutory regulation - other than corporate law (iii) 'Corporate govenance and the judges': the place of judge-made law (b) 'Hybrids' (i) ASX listing rules (ii) Accounting standards (c) 'Soft law' The role of market forces 5 Towards an effective corporate governance framework in Australia - analysis and reform proposal (a) OECD's guidelines for achieving an effective governance framework (b) Proposed MOU on corporate governance between ASX and ASIC 6 Conclusion 7 The role of the regulators: ASX and ASIC The Australian Stock Exchange Ltd (ASX) Slow to get out of the blocks Rapid change in attitude since the end of 2002 ASX Corporate Governance Council's Principles of Good Corporate Governance and Best Practice Recommendations Parts and layout Recommendations A few concluding remarks The Australian Securities and Investments Commission (ASIC) History Constitution and some statutory powers Initial steps by ASIC after the HIH collapse Actions instituted by ASIC against directors after the HIH collapse Actions by ASIC Court orders Some considerations regarding the period of disqualification Criminal prosecutions Aim with high profile prosecutions ASIC enforcement patterns The role of ASIC in corporate governance Limits of ASIC's powers and responsibilities? Concluding remarks 8 CLERP 9 reforms to the Corporations Act 1 Overview 2 The Corporate Law Economic Reform Program 3 Impetus for CLERP 9: responding to corporate collapses 4 Explanation of key CLERP 9 reforms (a) Audit reform (b) Corporate disclosure (i) Remuneration of directors and executives (ii) Financial reporting (iii) Continuous disclosure (iv) Shareholder participation (v) Whistleblowers (vi) Disclosure rules (c) Miscellaneous Managing conflict by financial services licensees Register of relevant interests Officers, senior managers and employees Enforcement Proportionate liability 5 Corporate law reform post-CLERP 9 6 Concluding remarks 9 Implementation of the ASX Best Practice Recommendations: charters, policies and codes 1 Implementing the ASX Principles of Good Corporate Governance and Best Practice Recommendations 2 Best Practice Recommendations requiring charters and policies 3 Practice examples of implementing ASX Best Practice Recommendations (a) Charters (b) Company policies and codes Code of conduct Trading policy Disclosure policy Shareholder communication policy Risk management policy Remuneration policy 4 Concluding remarks 10 Auditors and audits 10.1 Introduction: the audit role and where it fits into corporate governance 10.1.1 Overview of the audit role 10.1.2 The link between the audit role and corporate governance 10.2 Wholesale recent changes to audit role 10.3 Auditor independence 10.3.1 Overview of rationale behind independence requirement 10.3.2 General requirement for auditor independence 10.3.3 Meaning of 'conflict of interest situation' 10.3.4 Disclosing and resolving conflicts 10.3.5 Specific independence requirements - minimising conflict of interest through employment and financial restrictions 10.3.6 Auditor rotation 10.3.7 Disclosure of non-audit services 10.4 Auditors and the AGM 10.5 Auditors' duties 10.6 Reducing the legal exposure of auditors 10.6.1 Overview of auditors' liability 10.6.2 Registration of audit companies 10.6.3 Proportionate liability 10.7 Qualification of auditors 10.8 Uniform auditing standards 10.9 Audit oversight 10.10 Concluding remarks 11 Directors' duties and liability Introduction Part 9.4b - civil penalty provisions or pecuniary penalty provisions Overview The civil penalty provisions in particular s 180: duty of care and diligence - civil obligation s 181: duty of good faith - civil obligation s 182 and 183: duty not to use position or information to gain personally or cause detriment to the corporation Part 2E: duty relating to related party transactions Part 2H: duty relating to share capital transactions Part 2M.2 and 2M.3: duty relating to requirements for financial reports Part 5.7B: duty to prevent insolvent trading Part 5C: duties relating to managed investment schemes Chapter 6A: duty relating to continuous disclosure Part 710: duty not to be involved in market misconduct and other prohibited conduct relating to financial products and financial services Market manipulation False trading and marker rigging Dissemination of information about illegal transactions Insider trading Subclause 29(6) of Schedule 4: duty relating to disclosure for proposed demutualisation Case study regarding civil penalty provisions or pecuniary penalty provisions: ASIC v Adler Overview Summary of the facts Contravention of civil penalty provisions Related party transactions (Chapter 2E) Financial assistance (Part 2J.3) Duty of care and diligence (s 180) Duty of good faith (s 181) Use of position to gain advantage for oneself or another or to cause detriment to the corporation (s 182) Improper use of information (s 183) Court orders Enforcement of directors' duties Overview The statutory derivative action: Part 2F.1A The case to introduce a statuory derivative action Eligible applicant Cause of action Leave of court required to institute the statutory derivative action Oppressive conduct of affairs: Part 2F.1 Type of conduct covered by Part 2F.1 Who may apply for relief under Part 2F.1? Introduction Members Nature of relief available under Part 2F.1 Section 1324 injunctions Introduction Section 1324(1) Court's discretion Remedies in particular Injunctions Damages Criminal liability of directors The importance of criminal sanction in the corporations law Selected criminal offences directors and other officers can commit under the Corporations Act General Specific offences for breaches of duties Primary duties of directors Some other primary offences that directors can commit Conclusion 12 Corporate governance in selected jurisdictions and the OECD principles of corporate governance United States Background to the corporate governance debate in the US The American Law Institute's (ALI) involvement in the corporatate governance debate Basic aims of the project Impact and importance of the project Some of key aspects addressed Topics The objectives and conduct of the corporation Structure of the corporation General s 3.01: management of the corporation's business s 3.02: functions and powers of the board of directors The Sarbanes Oxley Act of 2002 - the US response to collapses like Enron and WorldCom Backdrop Aims and objectives NYSE: sections 303 and 303A - corporate governance rules Background Summary of the most important NYSE corporate governance rules United Kingdom Background to the corporate governance debate in the UK The Cadbury Report of the unfolding of the concept of 'corporate governance' in the UK Context of Cadbury Report Code of best practice Further developments The Greenbury Report (1995), the Hampel Report (1998), the Smith Report (2003) and the Higgs Report (2003) The UK combined code Germany Background to the corporate governance debate in Germany The German corporate governance code Background to its adoption Parts, layout and explanatory nature of the German code Employee participation at supervisory board level or codetermination The German board structure OECD principles of corporate governance Background to OECD principles of corporate governance Broad aims and application Parts and layout Ensuring the basis for an effective corporate governance framework Disclosure and transparency 13 The case for enhanced shareholder participation in corporate decision-making 13.1 Introduction 13.1.1 Overview of recommendations in this chapter 13.1.2 Outline of independence thesis 13.1.3 Outline of multiple shakeholder theseis 13.1.4 What is an independent director? 13.2 The primacy of shareholder interests: arguments in favour of greater shareholder participation in management 13.2.1 Shareholders own the company 13.2.2 Shareholder interests are most closely aligned with those of the company 13.3 The independence thesis 13.3.1 Diverse ownership naturally leads to the exclusio of owners in decision-making 13.3.2 Does independence lead to better decision-making and higher profitability? 13.4 Multiple stakeholder thesis 13.4.1 The managerial quality argument 13.4.2 Independent directors care more about fringe players 13.5 Law reform in a climate where relevant empirical evidence is lacking 13.6 Where to now? 13.6.1 Non-independent directors 13.6.2 Shareholder committees Composition Functions Powers General 13.7 Concluding remarks 14 The ethical obligations of corporations 1 Introduction 2 The threshold issue: is there a role for ethical considerations in business? 2.1 A short look at the short history of business ethics 2.2 The disunity between business and ethics arguments 2.3 Morality applies to business because moral judgements are universalisable 2.4 Exception to universalistion - activities with internal settled rules? 2.5 Are moral norms too vague to apply to business? 2.6 Promise to shareholders to maximise profits as basis for rejecting application of moral principles to business? 2.7 Summary of the general link between business and ethics 3 Application of moral principle to business setting 3.1 Types of duties imposed on corporation - proscriptions against causing harm, lying and environmental damage already legally enforced 3.2 Additional duties imposed on corporations - a duty of benevolence? 3.2.1 Acts and omissions doctrine serves to minimise obligations on corporations 3.2.2 Principal duty is for corporations to comply with law - business is morally neutral 3.2.3 A more elaborate duty - extreme wealth and maxim of positive duty 3.2.4 Requirement to pay social dividend 3.3 Extreme wealth and duty not to frustrate access to justice 4 Summary 15 Reflections on contemporary corporate governance and its future direction 1 Introduction 2 Regulatory pyramid and the cycles of regulation: a perspective on contemporary corporate governance regulation 3 Interaction of cycles of regulation and 'law and norms' discourse (a) The significance of norms (b) Norms, corporate governance and the utility of behavioural analysis 4 Concluding remarks: corporate governance regulation going forward Index UR - https://www.cambridge.org/core/books/principles-of-contemporary-corporate-governance/73681FC8D4569775FF90843982CD5200 ER -