Fundamental of law: The 2001 Corporations Act, Australia

| May 28, 2014

Accountability and transparency have become major issues in the corporate world. The lack of proportionality between the rewards received by executives and the performance of companies has become a major topic in debates. In most cases, the company executives’ salaries and other remunerations do not reflect their work performance. Poor corporate governance codes have contributed towards the failure of many global companies such as Enron and others that were victim to the Maxwell affair. Poor corporate governance is also considered as one of the causes for the financial recession. The main aim of corporate governance codes is to ensure that a company operates in line with shareholder expectations. The Australian government has ensured that investors and other stakeholders are adequately protected by setting up corporate governance rules. These are rules that govern corporate affairs and are included in the constitution and are set to ensure that executives keep stakeholders need ahead. The 2001 Corporations Act governs the Australian corporate world. The Act applies to business entities at both federal and state level. The law controls all corporate activities in line with constitutions of respective companies and ensures that stakeholder needs are taken into consideration.

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