Business Law Essay Example | Topics and Well Written Essays - 3250 words - 2

Business Law - Essay Example This paper shall consider different authorities on the subject matter in order to arrive at a scholarly appraisal of the subject matter. According to section 181 of the Corporations Act, â€Å"a director or other officer of a corporation must exercise their power and discharge their duties in good faith in the best interest of the corporation and for a proper use†. Violations of this provision make a director civilly and criminally liable. For directors who act dishonestly and recklessly, criminal liability may be forthcoming (Organisation for Economic Co-operation and Development, 1997). The directors’ duty is to avoid conflicts of duty and interest and therefore, he must not allow conflicts of interest to compromise his position in the company. Sections 191-195 of the Corporations Act set forth obligations for directors to not allow conflicts of interest to arise from his actions. Based on these provisions, directors are therefore called on to notify the board of directors when there are instances of personal interest which have a bearing on the company activities and affairs (Panoramic Resources, 200 8). Section 195 of the Corporations Law specifies that a director of a public company cannot be present during a voting or board meeting where the members are deliberating an issue where he is an essential person of interest. He may however be present if the other directors pass a resolution allowing him to be present and to vote; and if the ASIC orders a specific order on the issue (Corporations Law, 2001). The responsibilities in the section cover board meetings, and meetings of committees of the board. This is to be applied even if the committee would not have any bearing on the affairs of the company. Committees under advisory capacities are therefore part of the prohibition (Tomasic, et.al., 2002). In evaluating the terms under which