BUSL251 Abdill Career PwC accused of conflict over dual role at Thomas Cook Media Reflection Paper

Question Description

The topic of Media you choose must relate to those lecture notes I attached.

You can choose any topic from them and find a related newspaper or article.

Please read All instructions and marking rubric very carefully

New times roman 12

Single space

All the work must be original

Turnitin report is required

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Assessment Task (20 marks – 20%) – Media Reflection Assignment – Rubric and Feedback Criteria 5 marks each category Fail 0 Fail Pass Credit Distinction High Distinction Appropriate selection of article Text and choice of article demonstrates awareness of written task requirements, and the content is relevant and informed by those requirements [interpreting focus of question – written communication] Not attempted/ entirely or significantly plagiarized from other sources. Inappropriate article choice. Does not pertain to or is largely irrelevant to unit content Fails to answer the question or misinterprets the scope or focus of the assessment. Substantially appropriate article choice. Largely pertains to relevant unit content Fair attempt to answer the question and response suggests moderate recognition of the scope and focus of the assessment. Appropriate article choice that pertains to relevant unit content. Good attempt to answer the question and response suggests recognition of the scope and focus of the assessment. Good article choice that pertains to and highlights relevant unit content. Very good attempt to answer the question and response suggests a strong and clear recognition of the scope and focus of the assessment. Excellent article choice that pertains to, highlights and analyses relevant unit content. Excellent attempt to answer the question and response suggests a strong, clear and informed recognition of the scope focus and application of the assessment. Analyzing article and interpreting relevant factual legal issues [written communication] Not attempted/ entirely or significantly plagiarized from other sources Analysis presented in a confusing way with little awareness of need for clarity. Little or no interpretation of relevant facts of article or legal issues raised. Analysis presented in a substantially clear manner with predominantly sufficient interpretation of relevant facts of article and legal issues raised. Analysis presented in a clear manner with sufficient interpretation of relevant facts of article and legal issues raised. Analysis presented in a very clear manner with good interpretation of relevant facts of article and legal issues raised. Analysis presented in an exceedingly clear manner with very high level interpretation of relevant facts of article and legal issues raised. Criteria 5 marks each category Legal Analysis, Interpretation and Evaluation Evidence of the technical (legal) language relevant to the Unit [critical thinking/ written communication] Fail 0 Not attempted/ entirely or significantly plagiarized from other sources Fail Pass Little or no evidence of interpretation of article content and/or subsequent critical evaluation of legal issues in context of relevant areas of Unit. Some evidence of interpretation of article content and subsequent marginal critical evaluation of legal issues in context of relevant areas of Unit. Little or no application of source material such as: text, cases, legislation or scholarly journal commentary. Some application of source material such as: text, cases, legislation or scholarly journal commentary. Credit Evidence of substantial interpretation of article content and subsequent sufficient critical evaluation of legal issues in context of relevant areas of Unit. Application of source material such as: text, cases, legislation or scholarly journal commentary. Distinction High Distinction Strong and clear evidence of thorough interpretation of article content and subsequent meaningful critical evaluation of legal issues in context of relevant areas of Unit. Strong and clear evidence of thorough, high level and insightful interpretation of article content and subsequent informed, high level critical and innovative evaluation of legal issues in context of relevant areas of Unit. Good application of source material such as: text, cases, legislation or scholarly journal commentary. Excellent application of quality source material such as: text, cases, legislation or scholarly journal commentary. . Clear, ordered, precise and appropriately referenced [technical aspects of written communication] Not attempted/ entirely or significantly plagiarized from other sources Does not follow, or only marginally follows assessment style guidelines (typed, single spaced, cover sheet). Little or no appropriate use of legal terminology or appropriate referencing. Language is frequently too informal for academic purposes. Errors in grammar make overall meaning unclear. Errors in spelling and presentation distract reader. Largely follows assessment style guidelines. Predominantly appropriate use of legal terminology and referencing. Language is occasionally informal. Errors in grammar make meaning unclear in places. Minor errors in spelling and presentation may distract reader. Follows assessment style guidelines. Follows assessment style guidelines. Follows assessment style guidelines. Appropriate use of legal terminology and referencing. Accurate and effective use of legal terminology and referencing. Accurate, effective and insightful use of legal terminology and referencing. Writing style and presentation are of a high academic standard. Writing style is exemplary and compelling, and is of a publishable academic standard. Language is generally appropriate for an academic assignment, with only occasional minor errors in grammar, spelling or presentation. Company Constitution Relationship to Outsiders Financing Dividends 1 Trustee Companies • Trusts, like companies, are artificial legal creations. • A trust arrangement involves a trustee/ trust fund/ beneficiary. • A business may be carried on by a company acting as a trustee (trading trust). • Directors of trustee companies may incur liability if no indemnity from the trusts assets is permitted (s197). 2 Constitution and Replaceable Rules • Companies are artificial entities. • They must have rules / limits to govern their relationship with members; and between members • Prior to 1998 companies had: ➢Memorandum of Association (external relationships) ➢Articles of Association (internal relationships) 3 Constitution and Replaceable Rules • Post 1 July 1998 companies no longer required a Memorandum – the information previously contained can be found in the company’s application for registration • For a company formed after 1 July 1998 its internal governance rules consist of: ➢ The replaceable rules set out in the Corporations Act; or ➢ a constitution; or ➢ a combination of both Note that companies formed before July 1998 were able to retain their existing constitutional documents 4 Constitution and Replaceable Rules • The replaceable rules adopted on registration. The replaceable rules function as the basic rules of internal management or corporate governance. • Section 141 of the Corporation Act contains an index to the replaceable rules • Pursuant to s 140 the constitution and replaceable rules bind the company, they form a contract enforceable by the members and directors. 5 Constitution and Replaceable Rules • S135 (2) sets out that a company constitution can displace or modify a replaceable rule • S136 sets out the capacity of a company to : ➢ adopt a new constitution: ✓on registration – the members agree in writing ✓ after registration – need a special resolution ➢ modify or repeal an existing constitution ✓ need a special resolution 6 Constitution and Replaceable Rules • Amending the constitution: ➢General test for amendment (for the benefit of the company as a whole) Allen v Gold Reefs ➢Expropriation of minority share rights Gambotto v WCP 7 Constitution and Replaceable Rules • The principle arising from Gambotto v WCP Ltd: ➢ amendment must be for a proper purpose ➢ amendment must be fair ➢Amendment must not oppress minority shareholder 8 Company Liability in Contract • Indoor Management Rule: Royal British Bank v Turquand • Managing directors: ➢ the board of directors manage the company and have power to contract (s198A) ➢ The board may elect a managing director (s201J and s198C) 9 Company Liability in Contract ➢ Actual authority, can be either ✓ Express actual authority (in the internal rules or by the board of directors delegating its power) ✓ Implied actual authority (appointing someone to a certain position or “acquiescence”) Freeman and Lockyer v Buckhurst Park ➢ Apparent or Ostensible authority Crabtree- Vickers v Australian Direct Mail Pacific Carriers Ltd v BNP Paribas 10 Enforcing Contracts with the Company 1. Contracting through agents ➢ Actual authority ➢ Apparent or Ostensible authority 2. How companies execute documents: s127 ➢ Without a common seal (s127(1)) ➢ With a common seal (s127(2)) 11 Enforcing Contracts with the Company • The corporations Act creates assumptions in favour of outsiders dealing with the company (s129) • The assumptions in s129: 1) 2) 3) 4) 5) 6) 7) the indoor management rule ASIC records holding out officer or agent will properly perform their duties S127 (1) S127 (2) an officer or agent has authority to warrant authenticity of documents 12 Enforcing Contracts with the Company • Pursuant to s128, an outsider is entitled to make the assumptions in s129 in relations to dealings with a company. • The assumptions in s129 may be made even if the officer or agent of the company acts fraudulently or forges a document (s128(3) • However, the assumptions in s129 will not apply if outsider: ➢ knew assumptions incorrect, or ➢ suspected assumptions incorrect (s128 (4)) Soyfer v Earlmaze Sunburst Property v Agwater 13 Company Liability in Tort and Crime • Companies can be liable in tort or crime: ➢Vicarious Liability ✓ The company is liable through its employees ✓ ABC Development Learning Centre v Wallace ➢Direct or Organic Theory ✓ Requires identifying the directing mind and will ✓ Tesco Supermarket v Nattrass ➢The Criminal Code Act 14 Company Financing • Companies finance their operations through a mix of: ➢ Equity ✓ Retained profits ✓ Reserves ✓ Shares (ordinary shares or preference shares) ➢ Debt / Borrowings ✓ Loans (bank loans, overdraft, mortgage, factoring) ✓ Debentures • The ratio between debt and equity is called the gearing ratio or leverage ratio (this ratio is an indicator of risk for investors) 15 Comparison of Equity (Shares) and Debt SHARES DEBT • Public companies raise capital by offering shares to investors (shareholders) • Companies borrow funds from the lenders (creditors) and issue debentures. • Shareholders are members of the company with all attendant rights under the Corporations Act. • Debentures holders are merely creditors of the company. Their rights depend largely on the terms of the contract. • Shareholders are participants in the company enterprise • Creditors are not participants in the company. Creditors are outsiders. • Creditors’ return is interest. • Shareholders’ return is dividends. However the distribution of profits (dividends) is tied to company performance 16 Comparison of Shares and Debt Share • Shares are transferable (s1070A). However, directors of proprietary (Pty) companies can refuse to register a transfer of shares for any reason. (s1072G) Debt • Debts are generally not transferable. • Pursuant to s563A creditors have a right to be paid before members – payment of a claim owed by a company to a member, whether by way of dividends, profits or otherwise, or any other claim that arises from the buying or holding of shares in the company is to be postponed until all other debts or claims have been satisfied Note: Sons of Gwalia Limited v Margaretic 17 Share Capital • Shares are a form of “securities” under the Corporations Act. • The term “securities” is defined in Ch 6D in s761A and includes: ➢ Ordinary shares Which provide voting and dividend rights ➢ Preference shares Which provide priority of dividends ➢ Options This is a right to take up shares in the future 18 Shares – Disclosure • Disclosure of a share offer (s706) must be provided to investors unless that an exception applies (s708 and s708AA) • There are 4 types of disclosure documents (s709) ➢ ➢ ➢ ➢ Prospectus (s710 & s711) Short form prospectus (s712) Profile statement (s714) Offer information statement (s715) 19 Shares – Disclosure • A prospectus must contain all information investors and professional advisors would reasonably require s710. • Advertising of the offer is restricted (s734) • There are penalties for misleading or deceptive statements in disclosure documents (s728) 20 CSF • Part 6D.3A of the Corporations Act provides a regulatory framework for equity-based crowd-sourced funding. • Unlisted public companies limited by shares and proprietary companies with less than $25 million in consolidated assets and annual revenue can make offers of ordinary shares to retail investors through a licensed CSF intermediary’s platform, using a CSF offer document. • Eligible companies can raise up to $5 million in any 12month period • Section 113 provides that CSF shareholders are not to be counted in the shareholder limit on proprietary companies calculation for the purposes of the section. 21 Maintenance of Share Capital • In the common law, the rule in Trevor v Whitworth set out that companies must maintain their issued share capital for the benefit of creditors. • However, this strict application of the capital maintenance rule has been modified in the Corporations Act. Chapter 2J permits a company to engage in the following transactions: ➢ Reduction of share capital ➢ Share buy-backs 22 Reduction of Share Capital • s256B(1), a company may reduce its share capital in a way that is not otherwise authorised by law if the reduction: ➢ is fair and reasonable to the company’s shareholder ➢ does not prejudice the company’s ability to pay creditors, and ➢ is approved by the shareholders by resolution. 23 Reduction of Share Capital • s257B – Share capital may be legitimately reduced by way of a buy-back. • Most requirements for share buy-back are similar to the requirements for share capital reductions. • Buy-backs are optional. Shareholders choose whether to participate (sell their shares) in the buyback. 24 Dividends • A dividend is a distribution of the company’s profits and can only be paid in accordance with s254T • A company’s solvency is relevant to the payment of a dividend • s254U gives the overall authority to the directors to determine the amount, time and method of payment of a dividend. s254U is a replaceable rule. • s254V – The debt arises only when dividends have been declared and the time fixed for payment has fallen due. Until that time, a company does not incur a debt and also the dividend can be revoked. 25 Debentures and Loan Capital • Debentures are documents that either create or acknowledge an obligation by a company to repay a debt. • s283BH describes 3 forms of debenture: ➢ Mortgage Debenture A company gives security over real property ➢ Debentures Any other type of security arrangement ➢ Unsecured note No security given • Where debentures are issued to the public a trustee is appointed (s283AA). 26 Secured Finance • The Personal Property Securities Act (PPS Act) affects the traditional law regarding securities. The PPS Act covers individuals and companies and relates to security over personal property. • A ‘security interest’ includes traditionally recognised forms of security such as charges as well as nontraditional forms such as retention of title arrangements • To be enforceable a ‘security interest’ must attach to property (‘collateral’) – giving the secured party legal rights 27 Secured Finance Under the PPS Act a security interest may exist in relation to 2 important types of assets: Non-circulating – here the security interest attaches to a specific, presently identifiable asset (previously this category was called a fixed charge) Circulating – here the security interest attaches to a circulating asset, something which may be disposed of in the normal course of the company’s business, such as trading stock (previously this category was called a floating charge). The security agreement will govern default 28 Secured Finance • Priority between competing ‘security interests’ is a relevant issue • The right to priority is based on the extent to which the ‘security interest’ is ‘perfected’ • One way to ‘perfect’ a ‘security interest’ is by registration of a financing statement on the PPS Register. • A financing statement includes information about the secured party and details of the secured property (collateral) 29 Secured Finance • A ‘security interest’ will not be enforceable in certain situations: ➢If not registered on the PPS Register within the applicable time period and the company goes into liquidation, voluntary administration or executes a deed of company arrangement ➢Where directors seek to enforce within 6 months of the creation of the interest 30 DIRECTORS AND CORPORATE MANGEMENT DIRECTORS FIDUCIARY DUTIES 1 Who is a director? ‘Director’ is defined in s.9 Corporations Act as follows: a) A person who: 1) Is appointed to the position of a director; or 2) Is appointed to the position of an alternate director and is acting in that capacity b) Unless the contrary intention appears, a person who is not validly appointed is a director if 1) They act in the position of a director (‘de facto director’) or 2) The directors of the company or body are accustomed to act in accordance with the person’s instructions or wishes. (‘shadow director’) 2 Who is a director? • De facto directors (s9 (b) (1)) • Need not be officially appointed: The test is whether they were acting in the position of a director • May have resigned: The test is whether the tasks they performed were those normally undertaken by director 3 Who is a director? • Alternate directors (s.9 (a) (ii)) ➢ is a person appointed to act as a “fill-in” for a director who for some reason at the time is unable to act as a director. ➢ The alternate director is a director only at the time they are called upon to act in the place of the absent director. 4 Types of directors • Managing Director appointed pursuant to s201J and may take all the board’s powers under s198C • Chair of Directors exercise procedural control at meetings (s248E) and signs the minutes (s249U) 5 Types of directors • Nominee Directors ➢ are often appointed to represent the interests of a particular class or classes of shareholders. ➢ example: employees may be entitled, pursuant to the company constitution, to elect a director. ➢ a subsidiary’s directors may be nominees of the holding company. 6 Types of directors • Executive Directors full-time employee of the company and as such owe contractual, common law and statutory obligations to the company. • Non-executive Directors ➢ not involved in full-time management of the company and not an employee. ➢ Often these are experts who can provide specific expertise in relation to certain areas of the company’s business 7 Appointment of directors • s201A requires: ➢ Public company must have at least 3 directors ➢ Proprietary company to have at least 1 director • Restrictions on appointments: ➢ must be an individual and not a company (s201B(1)) ➢ must be at least 18 years old (s201B(1)) ➢ the person must consent to appointment as a director (s201D) ➢ must not be disqualified from being a director (s201B(2)) 8 Appointment of directors • When companies are formed, …

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