Assessment Task 2 Due Date: Sunday 5 August 2018 Length: 2,000 words total (+/- 10%). Reference list and cover sheet details are not included in this word-limit total. Weighting: 25% of total unit...

Assessment Task 2
TABLE OF CONTENTS
INTRODUCTION    3
MAIN BODY    3
Responsibilities of a Company Director    3
Shareholders of the company    4
Stakeholders for the company    4
Responsibility of a director to place shareholder’s interest above other stakeholders    5
Recommendations for company directors    5
CONCLUSION    8
REFERENCES    9
INTRODUCTION
The law relating to business entities in Australia is governed by the Corporations Act 2001. This governs at both the federal as well as interstate level. Apart from dealing with companies, it also deals with other entities such as partnerships and managed investment schemes. This is an Act of the Commonwealth of Australia and is the primary basis of corporation law (Andriof et al. 2017). As per the Act, the key responsibility of a director is to comply with the legal obligations bestowed upon this position.
For the present report Australian Institute of Company Directors (AICD) employs corporate governance consultant that evaluates the responsibility of company director towards shareholder rather than those of other stakeholders. On the basis of which certain recommendations would be provided for the director that will guide them in making effective business decision.
MAIN BODY
Responsibilities of a Company Director
As per the Corporations Act, the directors and other officers of a company have a certain set of duties and responsibilities to perform. These include:
1. A director should maintain due care and diligence while performing his role and should be well informed and aware of the financial position of the company at any point of time. It is his duty to prevent any type of tradings when the company is insolvent (Edelenbos and van Meerkerk, 2015).
2. Taking undue advantage of the position at any point of time is highly undesirable.
3. A director is essentially required to exercise his powers and duties in good faith and in the best interest of the company and for a proper purpose.
4. The duties of director also include maintaining secrecy regarding important data of the company and not disclose it for personal advantage (Mason and Simmons, 2014).
5. In any way, a director should not involve in any act which is detriment to the company.
6. Maintaining books and records also falls in his set of duties. Clear and complete disclosures should be made by a director which would enable shareholders in making properly informed judgements.
7. A director is expected to exercise his duties in the best interest of shareholders and to maximise wealth.
8. They are expected to exercise their duties in the best interests of shareholders and to maximise wealth.
Shareholders of the company
A shareholder can be any legal entity and may be a natural person or a corporation. Since they are part owners of the company, their consent is most important in the running of the company. Decisions on the key issues are made through voting by the shareholders. Hence they play a significant role in the functioning of a company. This is the reason that securing the rights and interests of the shareholders is a primary responsibility of the directors. From the viewpoint of Husted and de Sousa-Filho (2017), shareholder can be inferred as a part owner of the company and therefore enjoys a number of rights and powers. On the contrary, the stakeholders of a company include both financial stakeholders such as bondholders as well as non-financial stakeholders such as employees, customers etc. There is no constraint on the part of directors as per the existing legal framework from taking into account, the interests of such stakeholders.
In return for investing in a company, a shareholder is bestowed upon many preferential rights by the company which is obviously not extended to any of its stakeholders. Therefore, the directors are not bound to serve their interests.
Similarly when it comes to liabilities, the shareholders are liable only for the amount which is unpaid on the shares subscribed by them and for none of the obligations of the company as the company itself is a separate legal entity.
Stakeholders for the company
Individuals or groups having an interest whether financial or non-financial, in the success and progression of a company are its stakeholders. Stakeholders can be further classified as internal and external. Internal stakeholders include investors, partners etc. They are essentially those people who have a financial interest in the organization and hence have a vested interest in the success of the company. These are the ones who haven’t invested any personal or organizational...