Australian Business Media Reported That The Board Of Federation Centre

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I. Introduction In the August 2015, most of the Australian business media reported that the board of Federation Centre (“FDC”) sacked Steven Sewell as a Chief Executive Officer (CEO) and then replaced him with Angus McNaughton as a new CEO. This removal subsequently surprised investors and markets because it occurred just two months after the completion of the merger between FDC and Novion Property Group (“Novion”). Moreover, there is no further explanation from the board of FDC about the reason of removal Steven Sewell. Consequently, the shares of the FDC declined 6% since the replacement. The removal of a director by the board in the FDC case creates legal and ethical issues, which ultimately led to the onset of commercial issues. Despite the legal, ethical and commercial issues, this case is strongly indicated that there are some problems in the mechanism of removal directors stipulated in the Corporations Act 2001 (Cth) (“Corporations Act”) S 203D and S 203E. This indication is underpinned by some cases in the Australian court in which directors are removed also by the board. Therefore, this paper will analyse the legal, ethical and commercial issues regarding with the removal of FDC’s director, discuss the problem in the procedure of removal directors stipulated in the legislation, and compare other regulations in the common law and civil law countries. Finally, drafts of new mechanism of dismissal directors will be provided in this research to reform Section 203D
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