Ownership And Control Of A Country 's Corporate Governance System

1003 WordsApr 11, 20175 Pages
Ownership has become increasingly complex, with corporate governance frameworks meant to minimise agency issues, arising through the separation of ownership and control. In lieu of high profile collapses and the global financial crisis, governments have seen fit to introduce mechanisms aiming at governing the modern corporation, in an effort to quell any further issues. Legislative reform in Australia resulted in the implementation of Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth) (‘the CLERP Act’), as well as soft law created by the Australian Securities Exchange (ASX). Additionally, amendments to the Corporations Act 2001 (Cth) (‘The Act’) were made. Developments per these changes suggest…show more content…
The listing rules, as well as the CGC guidelines – Principles of Good Corporate Governance, and Best Practice Recommendations’, – identify effective governance mechanisms that reduce agency issues. Therefore, with regards to director and managerial accountability, current corporate governance and corporate law should be considered as sufficient. Williams argues that ‘a key feature of Australian corporate governance is the extensive regulation and personal liability of directors.’ Personal liability is imposed on directors under not only trade practice laws, but also in taxation laws and remuneration reporting requirements under the Act. The ‘ad hoc’ approach of reform in Australia has resulted in the current over-regulated system. Such over-regulation has been found to influence directors to concentrate on compliance with laws, rather than actual business issues and opportunities at hand, this could be detrimental. Indeed, corporate collapses have led to an increase in the development of regulation, in turn creating greater director duties and reporting requirements, again creating more collapses continuing the pattern. Therefore, better corporate governance involves aligning the interest of managers and shareholders closer to the interests of the shareholders, without creating additional obligations for executives. With the division of ownership and control, possession of shares is widely dispersed – ‘denying shareholders the capacity to properly scrutinise
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