CPA107

DESCRIPTION Question M1:1-6, M2:7-15, M3:16-24, M4:25-34, M5:35-44, M6:45-54,RELATED M7:54-60 PAGE# Corp Act/TPA
Types of companies: Corps formed and registered under corp Act 2001 Types of companies 1.03
Companies limited by guarantee: limitation on agreed to pay the guarantee Types of companies 1.04
Limited Liability Companies: limited by share are most common type of company Types of companies 1.04
Limited to the amt to the co when the shares were is limited to the amount o/s shares issued
Types of companies 1.04 Exam
Unlimited liability companies: no limitation upon winding up, 'veil of incorp' does not apply
Types of companies 1.04
No-liability companies (NL appear in company's name) Types of companies 1.05
Proprietary and public companies: cannot openly solicit investment from the public Types of companies 1.05 s113&s9 'C'
Proprietary large(1 criteria) & small (revenue >$10m; assets > $5m, staff >50 two criteria)Proprietary & public companies 1.05 s113,s9&s45A..
Organisations: Purpose; Objective; Ownership & Governance Table 1.1 Sole trader/Private/Public/unincorp asso.1.06
Corp governance: broadest comprehends the framework of rules, relationships, sys & HIH Insurance Justice Owen view of
processes within & by which authority is exercised & controlled in corporations Corp governance 1.07
Corp governance: checks & incentive to ensure managers maximise shareholders value Australian Treasury's Corp Law & Econ1.07 R
Corp governance: Corp is fundamentally governed by a board of directors overseeing Wheeland & Hunger view of corp
top mgt with concurrence of shareholder governance 1.07
Corp governance: set of relationships between a co's mgt, board, shareholders & stakeholders
OECD: Corp governance 1.07 Exam
Corp governance: Asia economies rapid growth & co collapses need transparent Corp governance requirement for
accountability effective 1.08
Corp governance: factors driving increasing expectations- 1 Globalisation of mkt; 2
Advances of IT; 3 corp increased competition; 4 investors become sophisticated need Corp governance: factors increasing
accessible info expectations 1.08
Cadbury committee-sponsoring org-internal control & leadership Treadway COSO: internal control/leadership1.09
Corp governance: fraudulent financial rept/inadequate accountability and audit Corp governance recent debate 1.09
IFAC: emphasis responsibilities of mgt for info & financial mgt & internal controls to produce
Sarbanes-Oxley Act 2002 USA 1.09
IFAC: produced research report on Rebuilding Public confidence in Financial Rept Co should set out their ethical policies code
1.09 Exam
Ramsay's rept: Independence of au co auditors, 10 corp gov't principles & best practices Combined Code UK; Higgs rept & Smith 1.09
rept
Corp governance issues: 1 directors function; 2 board structure & composition; 3 board
chairman; 4 board committees; 5 appointment & retirement board membership; 6
remuneration; 7 financial rept & auditing; risks mgt & internal controls; 8 code of
conduct Bosch Committee-AU 1.10
OECD Int'l-White Paper Asia
OECD 5 principles: 1 shareholders' rights protection; 2 shareholders equitable economies. Evaluate/improve corp
treatment; 3 stakeholders role; 4 disclosure & transparency; 5 board responsibilities governance 1.10
Corp governance contribution to business prosperity & accountability. Balance s/b correctedHampel committee 'Supercode" 1.11
Cadbury Committee UK audit
Corp governance: 1 no individual has unfettered powers "check balance"; 2 independent committee exclusively of non-
non-executives; 3 audit committee in board; 4. Corp governance procedures executive member 1.11
Directors remuneration disclosure transparency report Greenbury Committee UK: 1.11
Corp governance: adopted a comprehensive action plan to address abusive executive CalPERS: USA publishes list of best
compensation plans in US corp & worst performing corp 1.12
Combined code: Hampel together Cadbury rept formulate 1/3 s/b non-executive, 3 minimum Turnbull rept broadened internal control1.12
FRC recommendations: 1. Chairman should not involved chairman's remuneration; 2 Higgs & Smith's with FRC 'UK
half of board s/b independent non-executive directors; 3 AGM of non-executive standard setting board' recognised in
directors chaired by senior independent director without presence of the chairman 'comply or explain' principle 1.12
Corp Governance principles: 1 duty of board oversee the CEO & senior mgt; 2 Mgt
should not conflict interest with company; 3 audit committee engagement an
independent audit; 4 auditor ensure independence; 4 equitably del with employees BRT USA no "one size fits all' board 1.13
Corp governance: 1 timely & accurate disclosure of financial * non-financial records; 2
equitable treatment of shareholders; 3 clear rights & responsibilities of shareholders, APEC: basic principles & outcome key
directors & managers; 4 effective & enforceable accountability standards statements for government 1.13-1.14
World Bank to aid countries in economic dev & commitment continuous dev corp governance IMF: balance of pay't & ex rate 1.14
Corp governance principles recommended by Std AU follow OECD & categorised into
role, powers & responsibilities on the board, disclosure & transparency obligation,
rights & equitable Australian Standard AS8000 1.15 AS8000-8004
IASB structure: IASC foundation Trustees appoint IASB exercise oversight & raise IASB assumed accounting standard-
funds needed , whereas IASB sole responsibility for setting accounting standards setting 1.15
ASIC essential function to administer corp & commercial laws & to monitor compliance.AASB Role to dev, draft & issue a/c std1.16 s1(2)
ASX role: conduct mkt in which investors & enterprises come together with confidence
to creat prosperity through sharing of risks & rewards. Listing rule need corp ASX: trading equities, debt securities
governance practices & index derivatives 1.17
ASX: Australian Stock Exchange (ASX): Rule Australian stock exchange 1.18
ATO has a role to play in awareness & adoption of improved governance & disclosure issues ATO implementation major tax reform 1.18
CGC: ASX high-level committee Recommendations Corporate governance council 1.18
ASX committee for identify & support best practice principle, improved ASX Listing Corp Governance Council: audit
Rule committee 1.18
ACCC to administer TPA ACCC advancing economic policy 1.19
Gov't makes laws by ASIC ACCC & ATO; recommendations: IASC ASX & AASB F1.1 Corp governance: role of governance 1.19-20
Lobbying group: Gov't pass laws affect operations by frequently influence by submit
written or face-to-face discussions; groups: consumer; clubs; trade unions;
environmental & churches Groups: lobbying 1.20-21
Lobbying: AU Mining Industry Asso; AU Retailers Association; Business Council of
AU; National Farmers Federation; Victorian Chamber of Commerce; AU Chamber of
Manufacturers Industry & trade associations: lobbying 1.20-21
Free Mkt : Wealth will be maximised by allowing Mkt s free of restrictions & co free to runFriedman, Milton: co should not pay tax1.21
Groups were important to countermand the power to companies Galbraith, John Kenneth USA economist1.21
Free-Mkt : lobby groups against laws & regulations being proposed, unregulated free-Mkt Regulation vs deregulation: free mkt 1.21-22
Board of director responsibility: formulate strategy; dev policy; appoint remunerate & Board's responsibility: accountable to
senior executive mgt & ensure accountability shareholder 2.04
Shareholder: individual & institutional; Keasey: Int in wellbeing of the co is in long-termKeasey
success& Wright 2.05
Stakeholder: Corp & stakeholder relationship Table 2.1 Investors/Customers/suppliers.. Corporation & stakeholder relationship 2.06-07
Corp governance: Principles of "Effective"-evaluate & improve the legal, institutional
& regulatory for corp governance to provide guidance & suggestions for stk ex, OECD dev principle for corp
investors, corp & other parties have a role in process of dev good corp governance governance 2.06-07
Shareholder right: 1 deal with shareholders rights 2 equitable treatment of shareholders OECD: with code of shareholder's right 2.08 R2.01
ASX Principles 6 for rights of shareholders Hampel: Shareholder right & responsibilities
2.09-10

p1of86
 CPA107
OECD & ASX code with regard to shareholders rights ASX & OECD shareholders rights 2.10 SA2.2
Stakeholders right: employees, creditors, customer, suppliers, non-equity investors, regulators
Hampel & gov't
Report: Stakeholder & ASX 2.10-11
Stakeholder right: Board's primary duty is to the shareholders & should consider stakeholders
BRT stakeholders right similarity to OECD
2.12
BRT: Board's duty is to shareholders & should consider stakeholders to enhances their value OECD: employee is importance stakeholder2.12
Board of directors is pivotal in relationship between shareholders & mgt. Principle A1-A7, OECDB && C ASX difference 2.13 SA2.3
Principles of good Corp governance & Best practice recommendations OECD & ASX diff ASX Principles 1-9 2.14-15 SA2.4
OECD: 'corp governance framework ensure strategic guidance of co, effective monitoringHampel of mgt Report: Board of directors 2.15 R2.3
Board of directors: function focus on conformance with regulations & the fiduciary CACG guidelines responsibilities to
duties of directors aimed to achieving improved corp performance for shareholders. ensure corp governance 2.15 R2.4
Principles of good Corp governance: OECD ASX & Combined code ASX; OECD & Combined code 2.15 SA2.5
Board: ensure integrity of corp accounting & financial rept with independent audit &
controls & compliance; monitor effectiveness of governance process; oversee disclosure
& communication Conformance role of board 2.16
Board: strategy in monitoring implementation of strategy & overseeing major capital
expenditure; selecting compensating, monitoring key executives & overseeing planning;
reviewing key executive & board remuneration, formal transparent board nomination
process Performance role of board 2.16
Board's role in strategy difference ASX; OECD & Combined code 2.16-17 SA2.6
Board: Formulation board committees strengthen independence & accountability to community Accountability & transparency 2.17
CEO & CFO certify matters: cancers high earnings derived by senior Mgt Sarbanes-Oxley Act & US legislation 2.14 (old)
ASX require disclosure audit committee or reason why exist committee Audit committee: independent audit 2.18
Board structure: Role of committees. subset overall board formulated to deal with specificCommittees
nature role & board structure 2.18 T2.3
Nomination committee: recommend potential board appointment of board members Nomination committee: consider board processes
2.20
Remuneration/Compensation committee: review and recommendation of remuneration Remuneration/Compensation committee2.20
Committee structure: utilisation board experts; recognition geographic & time
limitations; freeing up full board agenda strategic issues. Subset of board formed to
exploit expertise of directors Benefit of committee structure 2.21
Agency theory: defined "Maximise their own benefit & information asymmetry" Agency theory: separate ownership & mgt 2.21
Bonding costs, Monitoring costs, Residual loss Agency costs 2.22
Bonding costs: including internal audit team, voluntary interim finical rept. Incurred contracts
Agency costs 2.22
Empire Building: Acts by mgt to increase size 'empires' to justify increased salary, perks/power
Agency costs: e.g. pur subsidiary 2.23
Monitoring costs: costs of external audit & mgt compensation plans Agency costs 2.22
Residual loss: residual loss of value of the firm. Loss arising fm decision represent residual
Agency
loss costs 2.22-23
Opportunistic: Over-consumption, Empire building, Risk avoidance; differing time horizons Agency cost: Opportunistic 2.23
Over-consumption of 'Perks'-incidental benefits gained in addition to income e.g. low int Agency
loan costs: e.g. prestigious office 2.23
Differing time horizons: maximise short-term gains & exp in long-term approaching retirementAgency cost: Opportunistic 2.23
Information asymmetry: A/c no. indicators performance & share price & shareholders wealth Agency theory: role for accounting 2.23
Risk avoidance: avoid loss or engage risky depending how managers compensated Agency costs 2.23
Maximising 'share price'/'profitability': advantages & disadvantage Agency cost: Performance-based remuneration
2.25
Mgt compensation: Performance-based remuneration, bonus plans, stock option Compensation: performance rept 2.25
Performance-based compensation with cognitive moral development (CMD) allow Rutiedge & Karim: not accept self-int
ethical moral consideration constrain self-interest affect firm value basis 2.24
Performance-based remuneration: mitigate agency costs act in the shareholders' interest Agency cost: Performance-based remuneration 2.25
Bonus plans: not achieve target-take a bath; achieve-maximised profit; over target-reduceHealy:
profit mgt manipulation reported 2.26
Take a bath: enhance future years rept lowest result in current year Bonus Plans: profit may 'real' or 'cosmetic'
2.26 (old)
Stock option: Corp Act required to disclosure in aggregate amount. AASB ED106 & IASB Agency costs: stock option & a/c treatment
2.27
Executive compensation guideline: motivating & retain employee; attract quality mgt &
share co reward and 4 basic principles: remuneration comparable with mkt; reward
linked to benchmark; individual elements identified & disclosed; transparency, Agency costs: executive compensation
accountability & fairness scheme 2.29
Performance-based compensation: extrinsic reward lead to active manipulation reported measures
Kohn: Alternative view performance-based2.29
Performance-based compensation: lead active manipulation reported measures Kohn & Healy Healy: Alternative view performance-based
2.29
Threat of takeovers: unfettered abuse of opportunistic behaviour down profits to takeoverAgency
target costs: non-agency incentive 2.30
Conflict minimsation factors: 1Takeovers Threat 2Shareholder/stakeholder activism 3ASA Agency
4AGM theory 2.30-31
Crikey.com.au: point out theft, corruption, deception & collusion. Top paid executive , AGM & ASA, Corp governance rating
poor corp performer & takeover defence & Media: Conflict minimsation 2.31
Conflict minimsation factors: Corp governance rating agencies; Role of media Agency theory 2.32
CSR Ltd: set co's strategic direction & delegates responsibility for mgt ASX: listed co corp governance statement2.33
Southcorp Ltd: responsibility for guiding and monitoring business with policies Corp governance statement 2.33
Commonwealth Bank: responsibility for corp governance oversees the business Corp governance statement 2.34
Corp governance in not-for profit organisations Public sector & SME Not-for-profit organisations 2.34
Corp governance in Social services: Brotherhood of St. Laurence Social services: Brotherhood of St. Laurence
2.35
Corp governance in Arts & Entertainment sector Australian Ballet 2.35
Corp governance in Sports & Leisure Sector Essendon Football Club 2.35
Key governance issues: maintain solvency on containing cots to efficient & effective outcomes
Not-for -profit corp governance 2.36
Participants in the corp governance process Broad & Owner: Same director's liability in Not-for-profit organisations: Board
a for-profit co. Director usual act in unpaid or rec'd minimal director fee. Nominations role-Similar; Owners-focus
less formal. Role of board similar to for-profit co stakeholder 2.36
Corp governance in public sector: Public sector accountable to relevant minister for
financial outcomes with bdg & effective delivery of ser with gov't policy Public sector corp governance 2.37
Need for good corp governance in the public sector: failure ensure obj &
accountabilities in pass Public sector corp governance 2.37
Department of Defence qualified by auditor-general for internal records error value of eqip Energex: inappropriate pay't to CEO 2.37-38
Uhrig Report on corp governance: dev a template of governance principles Public sector corp governance 2.38
Gov't improvement: lack of effective governance for several authorities in unclear
delegation, no clarity relationship with Ministers & portfolio dept, lack of accountability
for exercise of power. Complicated by board impractical for gov't provide full
governing powers required be effective Uhrig Rept 2.39
Uhrig Rept principles benefit: improving 1.transparency & accountability;2.efficiency
of statutory authorities 3.effectiveness of statutory authorities Uhrig Rept 2.40
2.40-41
Uhrig Rept summary of recommendations and better practice guidance for board Government statutory authorities board Q2.13
Corp governance for SME SME corp governance 2.41

p2of86
 CPA107
Victoria University, Growing Employment by Identifying & Supporting Growth Firms Project
SME definition 2.42
Governance issues: long-term perspective; Risks of family firms; growth complexity;
Cadbury-fairness of rewards SME corp governance 2.42-43
Shareholder agreement: stakeholder issues assume greater importance for family-based
firms; particularly on employees SME corp governance 2.43
ASX concern SME need to conform with recommended audit committee SME classified as reporting entities 2.43
Corp governance process determine policies: director obligation & duties; sturcture;
auditor; disclosure; transparency; procedures for appointment & succession Directors role: obligation 3.03

Best practice co set own corp statement. 1 enforceable obligations: statute & common Corp governance: 3 level corp
law ASX, TPA or code; 2 Company's own corp governance statement; 3 Ethical governance principles. Only
standards accepted or promoted within community enforceable obligation against directors 3.04
HL Bolton v TJ Graham: like human
Director role in proprietary & listed co: primary duty carry the corp governance policies being 3.05
Director duty: complexity of co & challenges this imposes on directors to carry out legal
duties Daniels v Anderson 3.06
Director negligence including executive and non-executive director not auditor AWA Ltd v Daniels t/as Deloitte 3.06
Public co at least 3 directors (2 Australian) s201a2, proprietary co no less than 1 directorsDirector
s201a1 and officer s.9 3.07-08 s9 'C'; s201a
De facto director: those hold position as director in s9bi. Same obligation with de jure director
Director: De facto directors s9 (b) (i) 3.08 s9bi 'C'
De jure directors: 1 acting as solicitor 2 appointed by AGM 3 appointment subject to AGM Director: appointed by law 3.08
De facto directors: director not re-elected in constitution at next AGM still as de facto director
R v Drysdale: director continued act in role
3.08 A3.03-04 s9bi 'C'
Shadow directors s. 9 (b) (ii): Parent co liable shadow director Standard Chartered Bk AU v Antico 3.09 s9bii 'C'
De facto directors: Yasseen is a de facto directors a liable Mistomorn Pty Ltd (in liq.) v Yasseen 3.09 A3.06-08 s9bi & s598 'C'
De facto directors: Austin resign but continued 'help out friends' act as a de facto directorDCT v Austin resigned but continued duty 3.09 A3.08 s9bi 'C'
Alternate director not legal status when director for whom they are an alternative is present Strathmore Group v Fraser 3.10
Remuneration Committee of co should be comprised entirely of non-executive directors Greenbury committee-Remuneration committee 3.10
Alternate directors: cannot act under a power of attorney as a director Mancini v Mancini 3.10
Alternate directors: director disqualified on conflict on interest, alternate director is not affected
Anaray Pty Ltd v Sydney Futures Ex Ltd3.10
Hampel recommended audit committee should non-executive directors with same obligations Executive & non-executive directors 3.10
Alternate directors/Stand-in Director: not liable as director under insolvent trading legislation
Playcorp Pty Ltd v Shaw: call upon to act3.10 A3.06 s201k 'C'
Audit committee Half non-executive director Hampel Rept 3.11
Executive and non-executive directors: two basis Executive and non-executive directors 3.11
Int'l developments: UK: less black letter law; USA moved to black letter (Sarbanes-Oxley) Corp Governance: UK less law, USA to3.11 law
Nominee Directors duty: Subsidiary precedence over the Society Ltd if no constitution Scottish Co-oper Wholes Soc v Meyer 3.12 s187 'C'
Nominee directors: appointed to represent the interest of particular class of
shareholders. UK & AU request to act in the best interest of co as a whole Nominee directors 3.12
Act in good faith by nominee director in best interest of subsidiary precedence holding coNominee Director act in good faith 3.13 s187 'C'
Deed-of-settlement co-directors duties developed fm early predecessors of adm created co Directors duties-Deed-of-settlement 3.13
Fiduciary duties-relationship between trustee and investor Trustees-deed-of-settlement companies 3.13
bona fide - director honestly believes in the best interest of co. Act in good faith in the
best int of the corp for directors and officers Directors and Officers statutory duties 3.14 s181 'C'
Bubble Companies Act-Foundation of the current Corporation Act 2001 in England Corp Act 2001-Bubble Co Act 3.14
Common Law and equitable duties-like a trustee and co is treated like a beneficiary Equitable duties and common law 3.14
Company low origin: Trust Law & contract law Directors duty: Trust law & contract law3.14
Duty to act bona fide-act in good faith, honestly, without fraud or collusion. Subjective test Duty to act bona fide in best int of co 3.14
Duty to act bona fide: refusal to register was bona fide & attacked shown to be in bad faith Smith & Fawcett Ltd 3.15
General body: 'Corporations' as a general body & can’t discriminate between majority & Greenhalgh
minority v Arderne C 3.15 A3.02
Gratuitous pay't-inhibit altruism gratuitous pay't to worker & no duty owed to employeesParke v Daily News Ltd 3.15 A3.03
Legitimate interest to shareholder: short-term interest less importance than co commercialDarvallconcern v North Sydney Brick & Tile Co3.16
Ltd
Nominee directors-should not put interest of group ahead of interest of co as whole Walker v Wimborne 3.16
Special circumstances-can rise to a duty of fiduciary nature to individual shareholders notColeman
just co v Meyers 3.16
Fiduciary duty: director owe duty also to shareholders if nature of transaction rise fiduciary Brunninghausen
duty v Glavanics 3.16 A3.09 SA3.02
Civil penalty applies for breach; criminal penalty applies to breach s.184 Penalty 3.17 s181(1)&184 'C'
Directors no duty owed to employee Parke v Daily News Ltd 3.17
Duty to exerciser powers for proper purposes. Objective test Statutory duty of good faith 3.17 s181(1) 'C'
But for test: directors are not required to ignore own interest but must not be 'substantial' Mills v Mills 3.18
Civil penalty s181(1) b and a criminal penalty for s184 Statutory duty for a proper purpose 3.18 s181(1) 'C'
Statutory duty for a proper purpose Penalty 3.18 s181(1)&184 'C'
But for test: Impermissible purpose to issue share to dilute shareholder Whitehouse v Carlton Hotel Pty Ltd 3.18 A3.05
Director duty: 1 director had authority to exercise the power; 2 court looks at
motivation; 3 decide whether an action may be attributable to a number of Duty to act proper
purposes******************** purposes*********** 3.18********
Creating/destroying majority voting power-breach of s 181 improper purpose manipulateDuty control
to retain discretion 3.19 s181 'C'
Takeover: Directors reim re-election cost in breach of fiduciary duty although act in goodAdvancefaith Bank Australia Ltd v FAI Ins Ltd 3.19 A3.04
Duty to act bona fide but improper purpose invalid*********************************** Howard Smith v Ampol Petroleum Ltd**** 3.19 ******** subjective test
Duty for act in best int but not contradicted (no order against directors) still invalid**********
Hogg v Cramphorn****************** 3.19********
Delegation in minutes s.198D(3) exercise of power by delegate is as effective as directorDiscretion-s198D & s198D(3) 3.20 s198d,198d3 'C'
Duty to retain discretion: director to liable to the co for loss as a result of unauthorised pay't
Gould v Mt Oxide Mines Ltd 3.20 objective test
Director delegation in legislation or constitution permitting the board to do so. Often
breach found when co get financial diff Duty to retain discretion 3.20 s190 'C'
Directors to confer a managing director powers with revoke or vary the delegation Discretion-s 198C 3.20 s198c 'C'
Duty to retain discretion: Director allow manager sign chq for co. Director liable to co for Gould
loss v Mt Oxide Mines Ltd 3.20 objective test
Nominee director vote according to appointor's (parent co) instructions relieved fm breaching Thorby duty
v Goldberg 3.20 s187 'C'
Director unstilted to rely reliance was made in good faith & after making independent assessment
Reliance-protection from adverse effects3.21 s189 'C'
Duty to avoid conflict of interest by examination: contract/personal profits/competing with Directors
co behavior examination by court3.21 objective test
Trustee dealt or attempted to deal with estate of those is obtained fm any other person is permitted
Aberdeen Ry v Blaikie: no enquiry permitted
3.21-22
An interest in a matter may give a standing notice to other directors s 192 & s193 ss 192-193 3.22 s192-193 'C'
Director of a co who has a material personal interest must give notice of the interest Subsection & s191c 3.22 s191c 'C'
Does not apply to proprietary co with one director s191 No distinction public and proprietary 3.22 s191c 'C'
Indirect interest still caused a breach of duty by director as benefit fm co securing the loan Victors Ltd v Linguard 3.22
Material personal interest requires "Real sensible possibility of conflict" Aberdeen Ry v Blaikie 3.22 s191c 'C'
Bribes: not matter the co suffered loss or not, the issue of receiving personal gain in mgt role
Secret profit-payment of a secret comm 3.23

p3of86
 CPA107
Misused of co funds: Money lent to directors to pur property, director held the property inPaul co trust
A. Davies (Aust) Pty Ltd v Davies 3.23
Personal or secret profits example-bribes; misuse fund; opportunities; confidential info; improper
Directors personal or secret profit 3.23
Undisclosed benefits: set up subsidiary need repay profit, disclosed not only CEO also shareholders
Furs Ltd v Tomkies 3.23
Director act in good faith but not full disclosure profit give back Regal (Hastings) Ltd v Gulliver 3.23 SA3.5 s181,183 'C'
Taking up corp opportunity: Director effectively full disclosure to board and members Queensland Mines Ltd v Hudson: 3.24 s181,183 'C'
Taking up corp opportunity: Director need full disclosure to full board Furs Ltd v Tomkies 3.24 s181,183 'C'
Taking up corp opportunity: Erring directors could not retain benefit to take back the contract
Cooke v Deeks: corp opportunity/position 3.24 s236 'C'
Use of confidential information: either director made improper use of info was in financial McNamara
diff v Flavel 3.24-25 s183 'C'
Competing with the company: non-executive director can join board of rival co Bell v Lever Bros 3.25
Competing with the company: tender a job by own co breached fiduciary duty Green v Bestobell Industries Pty Ltd 3.25
Improper use of position in the co: obligation of director to co reflected in statutory position
Furs Ltd v Tomkies 3.25 s182 'C'
Improper use of position in the company: break director obligation reflected in statutory position
Cooke v Deeks 3.25 s182 'C'
Improper use of position in the company: break director obligation reflected in statutory position
Furs Ltd v Tomkies 3.25 s182 'C'
Use of confidential information: improper use of position by endeavouring to keep assetsJeffree
away v NCSC: creditor entitle to assets3.25 s183 'C'
Remuneration disclosure in ASX Principle of good corp governance and Best practice Disclosure of remuneration 3.26 s202a&b 'C'
Remuneration: CLERP 9 listed public co insert a 'remuneration report' to annual director'sDirector's
report remuneration disclosure 3.26
Replaceable rule: 1 authorised by law, 2 AGM approve 3 Service contract authorising pay't****Directors pay't-Replaceable rule******** 3.26******** s202a&b 'C'
Director s228-families of directors;ss217-227 entity w/o member; s 207 financial benefit'sRelated-party
229 transactions 3.26-27 s217-29,07 'C'
Duty of care, skill & diligence: 3 basic no greater skill, no need to attend all meeting; justified
City Equitable
trust Fire Insurance Ltd 3.27 objective test
Duty of care, skill & diligence: today's standard higher ASC v Gallagher 3.27 objective test
Duty of care, skill & diligence: today's standard higher AWA Ltd v Daniels t/as Deloitte 3.27 objective test
Duty of care, skill & diligence: today's standard higher Overend & Gurney Co v Gibb 3.27 objective test
Director obligation keep themselves informed as to financial affairs of co Statewide Tobacco Services Ltd v Morley 3.28
Not a fiduciary duty, on a common law obligation. Director make profit take risks.
Section imposes objective 'reasonable person' test Duty of care, skill & diligence 3.28 s180 'C'
Director obligation to prevent co insolvent at time a debt is incurred or personal liability
debt. Corp Act imposes director duty constantly on guard against not to incur further
debt when financial instability could lead new debt not being able to be met. directors
required to keep themselves informed as to financial position of
co*********************************** Duty to prevent insolvent trading******* 3.28-29****** s588G 'C'
Reasonable grounds for suspecting; Suspecting and incurs a debt Incurring a debt s 588G(1A) 3.29 s588g(1a) 'C'
Duty to prevent insolvent trading defences available to
director************************* Duty to prevent insolvent trading******* 3.29******** s588h 'C'
Accountability is one of the cornstones of good corp governance Corporate governance 3.30
Duty to prevent insolvent: director failed to disclose co's worsening financial position to creditor
Tourprint Int'l Pty Ltd v Bott 3.30 s588h4 'C'
Accountability-Shareholder, Lenders, Employees, Creditors, Regulators Disclosure: IT& Int'l increase disclosure3.31
Information technology increase disclosure-improving disclosure Disclosure-new technology 3.31
Voluntary disclosure-financial information and non-financial issues as corp govern principlesNon-financial disclosure 3.31
Int'l standard-improving disclosure by new technology offers opportunities, fax Disclosure-Int'l standard 3.32
Removal of director-breach of duty by a director Director breach duty-removal of director3.32
Remedies available to the co when director breach of duty***************************** Common law remedies *************** 3.32-33******
Redress 'delinquent' directors or others where there are grounds for an action, co
chooses not to sue. A member take action in the name of
co.*************************************** Statutory derivative action************ 3.33-34****** s236-7,41,03 'C'
Criminal penalty provision- s.184 dishonest or reckless Criminal penalty provision 3.34 s184 'C'
Removal of a director-s 203C/D, 203E prevents removal of public co director Removal of a director 3.34 s203c,d,e 'C'
Civil penalty provisions- s 180, 181, 182 and 183; Criminal penalty provision s184************
Remedies: s 180, 181, 182 and 183; 184****
3.34******** s180-184 'C'
Relief from breach of duty- Members in a general meeting may ratify a decision AGM member may ratify decision 3.35
Relief from breach of duty- Prov of co's constitution (its internal rules) may permit ratification
Relief from breach of duty 3.35 s199A 'C'
Relief from breach of duty- The court may relieve a person from liability Excused act honestly & fairly 3.35 s1318(1) 'C'
Safe harbour: Statutory business judgment rule reluctant to intervene 'a safe harbour' defence
Defences: Statutory business judgment 3.35-36 s180.2 'C'
Business judgment-means any decision in respect of a matter relevant to business of the corp Business judgment 3.36
Duty to act bona fide in the best interests of the company: Fiduciary duty Directors' duties 3.36
Duty to act with care, skill and diligence: statute law obligation Not a fiduciary duty Directors' duties 3.36
Duty to avoid conflicts of interests: Fiduciary duty Common law Directors' duties 3.36
Duty to exercise powers for their proper purpose: Fiduciary duty Common Law Directors' duties 3.36
Duty to retain their discretionary powers: Fiduciary duty Common Law Directors' duties 3.36
Board: Aligning director & shareholder interest Director & shareholder interest 4.04
Board-Role of the board carry out strategic aim of co to oversee mgt by CEO, other executive Director owe fiduciary duty individually4.04
Board policies affect: trading; form of co; mgt style; legal; co financed; competition; infoMgtavailability
objective enhance shareholders value
4.05
CEO-Role of the CEO day-to-day operations, take charge mgt, strategy & identify law issue Role of the CEO and example 4.05 SA4.1
Lie in maximisation co profit; made shareholder happy, bldg investor confidence, complyDirectors'
ASX ruleinterest 4.06
AICD on CLERP legislation-1 minimisation of cost 2 cost-benefit on law amendments Bosch & AICD comment code of
3 consultation with legislation users 4 less black letter law 5 wealth creation 5 private conduct & corp practices in corp
co recognise governance 4.07 & 1.10
Investor's interests-investment opportunity empowering for individual investors 'mum & Mum dad' & Dad investors confident invest 4.08
O'Brien. Mary-increase in gingival investors will continue to have far-reaching effect Individual shareholder-transparent co 4.08
ASA-57% AU holder shares, age over 55. Transparent, communicative, answer &
accountable. Blacklist of 'poor performers' Individual investors - ASA 4.09 R4.03
Shareholder: AGM requisition, resolution thresholder notice of AGM, proxy
arrangement, disclosure of proxy directory electuary. No recommendation for further
regulatory provision CASAC report-Shareholder praticipation4.09 R4.04
Institution investors-ins co, p fund, investment trusts & professional investment fund manager
Hampel Report-dialogue between investors 4.10
Institutional investor more concerned to move in & out of positions mkt for best rtn. "free-riding'
Cadbury Rept: Institutional investors 4.10
Institutional investors-right to exercise its responsibilities as a corp owner & encourage CalPERS:Institutional investors-
other shareholders to do aimed at benchmarking corp governance individually 4.11
Int'l investors: BRT published Statement on Corp Governance stress 'soft' factors like
quality of director & personalities of directors. (Other changes also required) BRT involved debate 4.11-12
OECD principles-provide legislative protection of shareholders right by auditor to disclosureCorp governance-achieving goals 4.12
Corp governance: People, teamwork, leadership, enterprise& skills produce prosperity.
Accountability require appropriate rule & regulations Hampel rept: good corp governance 4.13
ASX-Corp governance statements and policies 'annual report' Corp governance statement-ASX 4.13-15

p4of86
 CPA107
ASX Listing Rules state listed co must include annual report ' a statement disclosing
best practice recommendations set by ASX Corp governance
Council********************** ASX Corp Governance Council*********
4.14********
ASX Corp governance principles; 1 foundations for mgt & oversight; 2 Board to add
value; 3 Promote ethical & responsible decision making; 4 safeguard integrity in
financial rept; 5 timely & balanced disclosure; 6 respect the rights of shareholders; 7
recognise & manage risk; 8 enhanced performance with board & mgt effectiveness; 9
fair remuneration & responsibility; 10 recognise legitimate int of Corp governance principles: support in
stakeholders*************************************** guidelines********************** 4.14*15*****
Corp governance-10 principles good
Good corp governance: not expected to applied rigidly will be a bench mark for good corp
corp *******************************
governance*********************************************************** * 4.14-15******

Large proprietary co, unlisted public co other co are required prepare annual rept, do not
need to contain corp governance statements. Unlisted public co stringent rept obligation
but Corp Act still doesn't require corp governance statements*************** Corp Act: annual report ******** 4.15*******
ASX Listing Rule - periodic disclosure and address issuers R4.05 part A****************** Listed rule-ASX listing rule******* 4.16 R4.05A**
ASX Guidance Note 9 - Disclosure of Corp Governance Practices R4.05 part B*************** Listed rule-ASX guidance note 9*** 4.16 R4.05B**
Triple bottom line widely taken up not only accounting profession also environment Elkington, John: CSR 4.17
Corp social responsibility-Triple bottom line 'environmental, social & financial reporting'Triple bottom line reporting 4.17
Environmental accounting-conscience of all stakeholders Environmental reporting 4.17-18
Ok Tedi-BHP incurred loss in public relation failure of ethical & moral standard no 'blackEnvironmental
letter' cost-BHP 4.18-19
System of Environmental Economic a/c (SEEA)-Integrated environmental & Economic A/C Government expenditure on environment 4.19
Corp social reporting and the sunshine standard manifest four steps CSR-social reporting 4.20
CSR: focus human rights, community involvement & environmental impact & sustainability Corp social reporting CSR 4.20
Social accounting: OECD encourage protection of human rights & ensure 'effective
redress for violation of these right OECD: Social accounting 4.20
CSR: Business Council advocate adopting policies reflect a responsible co make up
CSR Business Council of Australia 4.20
CSR: Why doesn't Dow Jones do a socially responsible investing index?' Prestbo, John: CSR 4.21
World Business Council Sustainable
CSR: publish discussion paper, policies or code of conduct on CSR Dev 4.21
Body Shop-'new bottom line' social rept recycling, waste mgt, animal right & complianceSocial Reporting 4.21
Risk mgt is a process identify, analyse, value, treat, monitor & communicate the info
gathered for the benefit of co. Standards AU dev a Risk Mgt standard AS/NZS 4360 to
minimise risk Risk Mgt 4.22
ASX require disclose approach of risk & arrangement in place Risk Mgt process 4 reasons 4.23
IT-services centralised databases, data t/f,bar coding, video conferencing, email, fax, internet…
IT 4.23-24
IT-benefit on continuously and easily assess financial health of co. IT benefit 4.24
IT-integrity & security of IT sys are absolutely vital IT possible causes 4.24
IT-obligations board to understand new technology. Co may losing important memory &IT history
obligations 4.24
Electronic data collection by regulator to provide confidentially by ASIC, ASX, ACCC &ITATO regulator 4.25
Remuneration Committee: Cadbury & Greenbury effectively superseded by Hampel Greenbury specifically look at remuneration
4.25
Remuneration, nomination and performance: Greenbury Committee key recommendationGreenbury committee-Remuneration 4.25-26
ASX listing rules do not require a co have a nomination or remuneration committee Nomination or remuneration committee4.26
Remuneration packages in research shown stk option tend greater link with profit & performance
Keasey & Wright: Remuneration comm4.27
Remuneration committees: independent director paid wholly in share; CEO
substantially. Ultimate result of CEO's stewardship of co share price rose by 50% later Sunbeam Corp case: CEO take short-
fell term view 4.27
Nominations committees should have nomination candidates & assessing CEO Hampel & Greenbury recom. all
performance, individual directors & board as a whole independent director 4.27
Nominations committees: clear terms of reference for committees responsibilities &
procedures should understanding independent directors should be free to act Greenbury & Hampel recom. all
independently independent director 4.27
Remuneration & nomination committees set up with majority of non-executive directors Bosch Rept 4.27
Remuneration committees-executive remuneration should linked to increased in co profitExecutive remuneration 4.27
Evaluation board performance-assessing success profitability and return on invested fundAICD & Bosch Rept 4.28
Bosch rept & AICD support training by the board or professional training respectively*******Training: Co not require by law to training
4.28********
Ethics build in public & global gov't regimes for major reforms. Importance of ethics &
corp governance as one of the key issues directors & officers have to face in order to
regain credibility in the Mkt
****************************************************** Corp scandals with corp collapse******* 5.02-.03*****
Ethics is judgment, not rules - importance of ethics in the culture of corp Ethical conduct and co directors 5.02-5.03
Ethics not sufficient to simply have corp governance legislation Cohen, Ethics is judgment, not rules 5.03
Good Reputation Index: Mgt of employees, environmental performance, social impact, ethic, Ethical
fin…conduct and co directors 5.03
Importance in the culture Accompanied by good leadership; instill corp value; law Ethics in the culture 5.03
Ethics as moral principle or a set or moral value is considered correct or goods Brokensha, Peter: Ethics 5.04
Ethical principles - Utilitarianism; Egoism and The Kantian ethic Ethical conduct and co directors 5.04-5.05
Egoism-Actions are moral when consequences are in the best long-term int of the individual Ethical conduct and co directors 5.05
Kantian Ethic-moral laws capable of being universally applied by everyone Triple bottom line: reflected Kantian ethic
5.05
Social responsibility of business is only to use resource to increase profit Friedman, Milton: not correct nowadays5.05
Utilitarianism-based on outcome, promoting greatest happiness among all stakeholders Ethical conduct and co directors 5.05

Ethical principles-practical reasons 1 good corp reputation & quality employees

retaining; 2 failure of corp adopt ethical practices may cases prompt gov't intervention;
3 failure ensure compliance disregard for law & morality in corp conduct Ethical conduct and co directors 5.06
Ethics and black-letter law Ethics and black-letter law 5.06
Ethical standards - "proactive" for forester high standards of behavious and "Law - reactive"
Code of conduct: Law and Ethical 5.07
Financial Services Reform Act 2001 & CLERP 9: ASIC sue Adler breach director duty ASIC v Adler (HIH) 5.07
Laws applicable unethical-misleading conduct, co takeover, insider trading, manipulation….Law approach of ethical conduct 5.07
Misleading or deceptive conduct in relation to Corp securities TPA s 52 & s 1041H**********
Misleading or deceptive conduct*******
5.08-09***** s1041H P6d.3 'C'
Misleading or deceptive conduct: not a misleading statement for election directorship NRMAYates v Whitlam 5.09 s995, Part 6d.3 'C'

p5of86
 CPA107
Misleading or deceptive conduct is not a criminal offence only civilly liable. Repay the Insider trading & market manipulation,
damage or disqualified but no in misleading or deceptive
jail**************************************************** conduct******* 5.09******** s1041H 'C'
Prospectuses misleading or deceptive statement, s 710-715, s728(1) & (3)******************
Part 6D.3 fundraising documents******* 5.09-10***** s728.710-5 'C'
Legislation not distinction between small and other investors Not small and other investors 5.10 s728.3 'C'
Liable if not accuracy and completeness; s 729 misleading statement in prospectuses s 731 and s 729 5.10 s731,729 'C'

Personal liability of directors for losses experienced by investor acquiring shares in

reliance on the prospectus. Directors not liable if reasonable inquiries prior to the issue Prospectus; accuracy & completeness
of prospectus**** ******************************* 5.10******** s729,731 'C'
Prospectuses contravene s728(1) is civilly liable to parties who suffer loss by that conduct****
Misleading or deceptive statement****** 5.10******** s728 'C'
Prospectuses-underlying philosophy s 710 Prospectuses 5.10-11 s710 'C'
Prospectus issued 'frees shares' mislead members Fraser v NRMA Holdings Ltd 5.11 s710, s731 'C'
Takeovers-Ethical aspects Ethical aspects of takeovers legislation 5.11
Ethical aspects of takeovers: 1 Director have self-int; 2 shareholders need possession of
relevant information to sell share to offerer; 3 open & transparent
fashion********************** Takeover law key points s606********** 5.11-12***** s606(1) 'C'
Policy aspect of law: 1 acquisition of control in efficient, competitive & info mkt; 2
legislation not apply to proprietary co less than 50 members; 3 orderly & open fashion;
4 shareholders identity of offerer proposes to take over; 5 reasonable opportunity to
consider takeover; 6 equal opportunity in
benefits************************************************** Takeover legislation policy**********5.12******* s606(1) 'C'
Acquisition creep-<20% threshold may acquire & add'l 3% every 6 months w/o breach s611 Other forms of lawful takeover 5.13 s611, s606(1) 'C'
Lawful takeover - reasons for selling their share to the bided and not to sell; acquisition creep**
Takeover: acquisition creep**********5.13******* s636,606 'C'
Relevant interest: 1 holder share; 2 power to exercise or control exercise of right to
vote; 3 power to dispose or control exercise of a power to dispose of the shares Takeover Law - relevant interest 5.14 s608 'C'
Insider-trading: Corp Act prohibits would have a material effect on the price or value of securities
Insider-trading legislation policy******* 5.14-15****** p2d.1, s183 'C'
Insider trading: 1. Fairness mkt price; 2 fiduciary duties to co & shareholders; 3
preventing damaging mkt integrity; 4 prevent injury to
securities***************************** Inside trading prevent reasons********5.15-16****** s1042a/1043a 'C'
Insider information-prohibits insiders 'tipping' others with price-sensitive information Insider-trading legislation policy 5.17 s1043a 'C'
Insider-trading legislation -apply to officers may benefit fm information & material effectInsider-trading
price legislation policy 5.17 s1042a/s1043a 'C'
Information not generally available which as a material effect on the price Generally available information 5.18 s1042c(1) 'C'
Information: matter of supposition and matters relating to the intention Information 5.18 s1042a 'C'
Material: co's dealings with customers in question, the coup is influence investors in dealingR v shares
Evans and Doyle 5.19 s1042d 'C'
Trading by corporations where an officer is aware of the information s1043A trading by corp aware of info 5.19-20 s1043a 'C'
Manipulation mkt prohibited by protect community & integrity of mkt apply artificially price***
Market manipulation s 1041A "Effect"** 5.20******** s1041 'C'
Manipulation of the Mkt by conduct and statements "General section-liable with other section" Market manipulation s 1041A 5.20-21 s1041a 'C'
Manipulation of the Mkt by conduct and statements s997 "intention" Market manipulation s 1041a "Effect"** 5.20-21 s1041a & s997
Manipulation mkt by conduct & statement: create false/misleading appearance active trade Endresz
sharesv Whitehouse 5.21 s1041a/b,998 'C'
Churning prohibited is 'likely' to achieve prohibited result "Effect - objective tests"
Australian Securities Comm v Nomura 5.22 s1041b 'C'
False trading & Mkt rigging transactions s1041b: artificial transaction result in the price Market rigging and false trading trans 5.22 s1041b,c 'C'/s52 T
Churning: prohibited by s1041B "Effect - objective test" North v Marra Developments Ltd 5.23 s1041b 'C'
Appearance of sale brought about by ordinary Mkt methods misleading appearance real share Fenwick price
v Jeffries Industries Ltd 5.24 s998 'C'
s1041E 3 elements: materially false or misleading; 2 likely effect; 3 dissemination information
False or misleading statements in relation 5.24
to securities s1041e 'C'
False or misleading statement in relation to securities s1041E "refer to statement" False or misleading statements 5.25 s1041e 'C'
Fraudulently inducing persons to deal in securities-wrongdoers issue statement s1041F False or misleading statement 5.25 s1041f 'C'
Misleading & likely to induce pur of securities Australian Securities Comm v McLeod 5.25 s999 'C'
Secret comm: Director can't gain advantage & cause detriment to the corp. Civil obligation Fiduciary relationship agent duty 5.27 s182, s1317e 'C'
Secret comm: Director has to account co profit breached fiduciary duty, directors acted honestly
Regal (Hastings) Ltd v Gulliver 5.27 s182, s1317s 'C'
Ansell's personal int conflicted with duty: account to Boston for both comm & the bonuses Boston Deep Sea fishing & Ice Co v Ansell 5.28
Bribes-payment of a secret comm making the pay't fails to disclose to other person.
Intention to induce the agent to act favourably to the payer & unfavourabley to the Industries & General Mortgage v
principal Lewis 5.28
Breached agent duty to the principal not depend co suffered any detriment Furs Ltd v Tomkies 5.29
Bribe: HK Public servant accept bribes: Civil penalty 'pur properties in NZ, only on trust Attorney-General
for co' for Hong Kong v Reid5.29
Civil consequences of taking a bribe-general principles. Co & person paying bribe are victim Bribes-civil consequences 5.29
Civil consequences: Account amount of bribe Petrotrade Inc v Smith 5.29
Criminal consequences of taking bribes: punishable or 10 years imprisonment or both Bribes-payment of a secret comm 5.29 s176 'C'
Secret comm was a consequence a custodial sentence was warranted R v Kendrick 5.29-30
Bribes: offering bribes prohibits by s176(2) Crimes Act re Addstone Pty Ltd 5.30 s176 'C'
Secret Comm: serious act from both a legal & ethical perspective & sentence offenders R v Jamieson 5.30
Custom no defence-ethical point 'finder's fees' to agents is common practice Secret comm is customary no defence 5.31
Directors must not misuse corp funds by mixing money with their own in intention************ Misappropriation of corp funds******** 5.31******** s181 'C'
Corp veil-persons control the co are separated in law from the co itself Salomon v Salomon-Phoenix co 5.32
Criminal law-misappropriation of corp funds theft for directors prosecuted under criminalMisappropriation
law of corp fund-R v Reid5.32
Mareva injunctions-misappropriated co fund freezing director assets until identification assetCourt assistance-misappropriated co fund 5.32
Misappropriated co funds: director caused money to benefit his own co breached duty Totex-Adon Pty Ltd v Marco 5.32
Phoenix co-director shift responsibility to a co "pull the plug" Phoenix co 5.33
Phoenix co-unable to pay debts; acts intentionally to deny creditor; commence in 12 month Phoenix co 5.33
Phoenix co-problem with current legislation Phoenix co 5.34
Phoenix co & phoenix trading: litigated or reported few reported Deputy commissioner taxation v Woodings 5.34 SA5.24
Disqualification director carrying out the policy the corp in charge & not making decisionCullento it direction
v CAC 5.35
Managing a corp: includes directors powers broader to controls a co irrespective of position Brick & Pipe Industries v Occidental Life 5.35
Managing a corp-3 categories 1 automatic; disqualification by court; 3 disqualification byDisqualification
ASIC of directors 5.35 s206 'C'
Managing corporation-disqualification of directors s206A Managing corporation 5.35 s206a 'C' P2d.6
Automatic disqualification Chew v NCSC 5.36
Automatic disqualification-disqualification starts on the day lasts for…. Disqualification of directors 5.36
Anomalies -Refugee status in Australia & absence convicted of treason is automatically disqualified
Automatic disqualification 5.37
Automatic disqualified by court grant leave on application of ASIC Automatic disqualification 5.37
Automatically disqualified because advisors incorrectly interpreted Chew v NCSC 5.37 SA5.26
ASIC: disqualified a person by court under three headings & example of disqualified director Disqualified director: s206C civil penalty 5.38 s206c 'C'
Disqualify with notions of honesty and competence Punishing to poor judgment 5.39 s206d 'C'

p6of86
 CPA107
Disqualify-ASIC power important difference the power of court and ASIC is liquidation ASIC powers to disqualify 5.39 s206d 'C'
ASIC and ethical consideration Nicholas v commissioner for Corp Affairs Disqualify-ASIC ethical considerations 5.40 s206f 'C'
Disqualify power issues of commercial morality & standards of competence directors to reach Friend v Corp Affairs comm 5.40 s206 'C'
Director in question clearly did not have an understanding the way co should operate Delonga v Australian Securities Comm 5.41
Disqualified from managing a corp by ASIC ASIC v Keech 5.41
Code of conduct applicable to directors-self regulation as a form of regulation & Research Self-regulation as form of regulation 5.42
Push came to shove, the voluntary scheme lacked teeth Fels: self-regulation 5.43
Australian Institute of company Directors' Code of Conduct (AICD) Code of Conduct 5.43
Self-regulation and ethics Self-regulation as form of regulation 5.43
AICD code of conduct-Expansion on legal obligations Code of Conduct 5.44
AAMI Customer Charter aspects Corp code by AAMI 5.45
Codes of conduct for individual co: advantage of flexibility & commitment by mkt participants
Code of Conduct 5.45
Working group comprising AICD, CPA AU, Business Council of AU, Law council of AAMI Customer Charter-internal corp
AU & ICAA & securities institute of AU code 5.45
Way, Nicholas 'business review weekly'-ethical behaviour important and community Ethical behaviour 5.46
Compliance program 2 aspect, substantial c compliance program 2 actually implementedACCC successful
v Australian Safeway Stores Pty 6.03
Ltd
Compliance program effective importance in Federal court ACCC v. Nissan Motor Co (AU Ltd 6.03
Compliance program: designed to reduce organisation's risk of breaking the law Compliance program-integrated business6.04
Legal compliance: sound legal compliance program reduce corp risk Legal compliance 6.04
Compliance program effective: assist a business reduce risks procedures must audited & Compliance
review program 6.05
Trade practices compliance program: Corp to maximise profits to ensure satisfactory return TPA 6.05-06
Compliance program: evidence of a corp culture seriously comply with requirement of the TPC
Actv CSR Ltd 6.06
Competition in the Mkt place: business respond to changing of lower price and
improved choice for consumers & greater efficiency, higher economic growth &
increased employment Hilmer report point to competition 6.07
Competition policy: protection & preservation of competition & policy objectives Competition Policy in Australia 6.07-08
Workable competition: not perfect competition but feasible in real-world Mkt conditionsWorkable competition 6.08-09
Competition law goals: based on workable or effective competition achieving microeconomic Competition law goals 6.09-10
ACCC is not a policy advisor, combines a consumer protection role with protecting
competition in general sense Anti-competitive behaviour regulation 6.10
Anti-competitive behaviour regulate: Part IV-restrictive trade proactive & V consumer protection
TPA Part IV & V 6.10
Anti-competitive absolute prohibitions: collusive price fixing, boycotts, third-line forc,resale..
TPA Anti-competitive 6.11
Anti-competitive substantial lessening of competition prohibitions TPA Anti-competitive 6.11
Authorisation: dispensation ACCC grant in respect of some restrictive agreements/practices ACCC issue Authorisation 6.11-12 s88 'T'
Penalties:ACCC to court action for breaches Part IV by Federal Court impose monetary penaltyACCC & TPA non-punitive orders 6.12-13 s76,80-82,87 'T'

Nature & extent; amount of loss; circumstances; degree of power; deliberateness of

contravention and the period; mgt conduct; corp culture & disposition to cooperate with
authorities responsible ************************************************* TPC v CSR Ltd****************** 6.13*******
Collusion controls in the Mkt place: Contract, arrangement or understanding TPA s.45 6.14 s45 'T'
Collusion Mkt place: Collusion by a meeting to raise prices TPC v David Jones Pty Ltd 6.15 s45 'T' Guilty
Collusion Mkt place: parallel behaviour not illegal. TPC v Nicholas Enterprises 6.15 s45(2)aii&bii 'T' Guilty
Price Fixing agreement: prohibits a firm making or giving effect to provision in contract Collusion, include price fixing s45 6.16 s45 'T'
Manufacturer of video recorders price suggest:pre-eminent expression competition-competition
Collusive price fixing agreements45 6.16 CSA6.1 s45 'T'
Fixing, controlling/maintaining price, price fixing arrangement: Guilt and agreed to penalties
ACCC v Pioneer Concrete 6.17 s45 'T' Guilty
Price fixing exception: joint ventures agreements & joint buying & selling agreements Price fixing exception 6.17 s45a2&4 'T'
Price fixing by collective buying groups: buyer groups collectively acquired to agreementPrice fixing-collective buying groups 6.18 s45a4 'T'
Wines & spirits retailers established 'The Cut Price Liquor Shop': an illegal collective boycott
Collective boycotts 6.18 CSA6.2 s45 'T'
Collective boycotts: 3 steps involved 1 contract, arrangement or understanding; 2
between competitors; 3 have a boycott purpose Collusion, including price fixing s45 6.18-19 s45 'T'
Fruit producers not supply fruit to
supermarkets that stocked imported
Supply of goods or services to particular persons or classes of persons fruit 6.18 s45 'T'
Mattress manufacturers agreeing to
supply a particular retailer only if it
ceases importing its own brand or
Supply of goods or services to particular persons or classes of persons unless particular agreeing to resell at recommended
circumstances exist or certain conditions are met or agreed to retail prices 6.18 s45 'T'
Not acquire good because it supplies
Acquisition of goods or services from particular persons or classes of persons goods to discount house 6.18 s45 'T'
Buy goods if agrees to supply retailer
Acquisition of goods or services from particular person or classes of persons unless exclusively or discontinue supplies to
particular circumstances exist or certain conditions are met or agreed to discount 6.18 s45 'T'
Anti-competitive agreement: Agreement 'lessening competition' Lessening competition 6.19 s45e 'T'
Lessening of competition: resulted in a substantial lessening of competition Ah Toy J Pty Ltd v Thiess Toyota Pty Ltd6.19 s45(2) 'T' Guilty
Strategic alliance, partnering, joint ventures & trade associations Strategic alliances 6.20-21 s45 'T'
ACCC Trade Association Retail Tobacco Sellers Asso of Victoria6.21 s45 'T'
Controls over pricing in the Mkt place Resale price maintenance 6.21-22 s48;96.3,7;98.1 'T'
Resale price maintenance: scheme allowance retailers adhere to displayed recommended Frankfurter
price Pty Ltd v TPA 6.22 CSA6.3 s48 'T'
TPA s48 3 steps deterring: 1 supplier specified a price; 2 price specified or used by
supplier a minimum price; 3 supplier taken action to ensure stipulated resale price is
maintained********* Resale price maintenance************* 6.22******** s96, 98 'T'
1. Recommended price, 2 price set out to recommended price only no obligation to co Recommended price 6.23 s97 'T'
Inducement: induce a retailer not to sell below to be resale price maintenance. is an inducement
TPC v Medad Pty Ltd 6.23 s48 'T' Guilty
Taken action types of resales price maintenance not mutually exclusive: 1 making it
known goods will not supplier; 2 inducing or attempting to induce; 3 agreeing or
offering to agree; 4 using statements of price; 5 withholding supply
*********************************** Resale price maintenance************* 6.23*********
Withholding supplies: refuse to supply goods unless specific resale price is charged ACCC v Australian Safeway Stores Pty 6.24-25
Ltd & George Weston
s48&s45Foods
'T' Guilty
Ltd
TPA: if 1 refuses to supply; supplies on disadvantageous terms; treat buyer less
favourable. Withholding supply by TPA 6.25 s48 'T'
Withholding supplies: did not want a price war on hands breach of s48 and fined TPC v Bata Shoe Co of AU Pty Ltd 6.25-26 s48,s45 'T' Guiltily
Withholding supplies in legitimate commercial reasons Peter Williamson Pty Ltd v Capitol Motors
6.26 s48 'T' No Guilty

p7of86
 CPA107
Withholding supply: discounts to selling 'below cost' is allowed to withhold supplies.
Except for genuine clearance
sales***************************************************** Withholding supply not illegal********6.26******** s98 'T'
Withholding supplies: Ampol agreed to reinforce trade practices training & compliance program
ACCC v Ampol Petroleum (Victoria) Pty 6.26-27
Ltd s48 'T' 'Guilty'
Withholding supplies remedies: supplies liable for damages at injured. Restraining the supplier
Withholder supplies 6.27
Franchisee impact of tying condition would be no substantially lessen competition,
third-line forcing is illegal outright Exclusive dealing s47 6.28 & CS6.4 s47 'T'
Controls over distribution in the Mkt place: coercive behaviour in setting trading conditions
Exclusive dealing s47 6.27-28 s47 'T'
Exclusive dealing s47: no evidence exclusive dealing. Not producing anti-competitive effectOutboard Marine AU v Hecar Investments 6.28 s47 'T' 'No Guilty'
Sundae Ice Cream Co. exclusive dealing: 5 general categories of vertical restraint Exclusive dealing s47 6.28 CSA6.4 s47 'T'
Exclusive dealing-anti-competitive: sufficient push price competitors s47 O'Brien Glass Ind. Pty Ltd v Cool & Sons 6.29
Pty Ltd s47 'T'
Third-line forcing: exclusive dealing prohibited outright-w/o prove a substantial competition
Exclusive dealing-Third-line forcing 6.29 s47 'T'
Authorisation & notification: exclusive dealing conduct can authorise on public benefit grounds
Notification applies to all exclusive dealing
6.30 s47 'T'
Franchising-regulated by a voluntary code of practice not mandatory code TPA s47,s45,s48 6.30 s47,45,48 'T'
Third-line forcing Exclusive dealing: bldg society has insurance s47(6) Re Ku-ring-gai Co-operative Bldg Society 6.30Ltd s47(6) 'T' 'Guilty'
Third-line forcing required: three parties; two product; requirement a 2nd product to be
taken fm a nominated third party as a condition of supply of the first product Third-line forcing 6.30

Substantial degree mkt power: 1 substantially damaging competitor; 2 preventing entry

of person into the Mkt ; 3 deterring person from engaging in competitive conduct Misuse of market power 6.31 s46 'T'
Misuse of Mkt power break: 1 substantial degree of power in relevant Mkt ; 2 taken
advantage of Mkt power; 3 1 of 3 unlawful purposes Décor Pty Ltd supply 6.31 CSA6.5 s46 'T'
Relevant Mkt s46: definition of 'Mkt ' mkt was wider not only Maldives Singapore Airlines v Taprobane Tours: 6.32 s46 'T' 'No Guilty'
Substantial Mkt power: large or weighty or considerable, solid or big compared other firms TPA s46 substantial market power 6.33 s46 'T'
Substantial Mkt power: mkt power :ability of a firm to raise price above cost s46 Queensland Wire Industries v BHP 6.33 s46 'T'
Substantial Mkt power: withholding boots deter/prevent competitive conduct Mark Lyons Pty Ltd v Bursill Sportswear 6.33-34 s46&47 'T' 'Guilty'
Eliminating/substantially damaging competitor: Predatory pricing/squeezing source of supply Market power: Prevent person entering mkt 6.34 s46 'T'
Take advantage of Mkt power/prohibit: using mkt power do something powerless competitor Queensland Wire Industries v BHP 6.34 s46 'T' 'Guilty'
Deterring a person from engaging in competitive conduct Preventing person from entering any market 6.35
Relevant purpose for the corp in TPA s4F Substantial purpose 6.35 s4F 'T'
Substantial purpose to relevant purpose preventing person entering mkt or engaging in competitive
Predatory pricing
conductcut price to rival driven
6.35
out s46 'T'
Predatory pricing s46: exclusive distribution sys maximised sales Melway Publishing Pty Ltd v Robert Hicks 6.35-36
Pty Ltd s46.7 S4f 'T' 'Guilty'
Substantial Mkt power s46: Abused mkt position took advantage of power ACCC v Boral Ltd 6.36-37 s46 'T' Guilty'
Anti-competitive agreement: Collective Boycotts; Price-fixing; Secondary boycotts; CollectiveCollective
agreement
Boycotts; Price fixing 6.37 s45 'T'
Fair or Mkt Failure: s46 substantial degree of mkt power & s50 prohibition of mergers Joint Select Committee 6.37 s46,50 'T'
Mergers: concentrate on preventing accumulations of power by acquisition Dominance-affecting: mergers 6.37 s50 'T'
Mergers: direct/indirect acquisition shares/assets;effect of substantially lessening competition
Takeovers & mergers prevent 6.37 s50,45,46 'T'
Misuse of market power: concentrate on controlling the activities of powerful firms Monopolisation 6.37 s46 'T'
Authorisation of merger is available by ACCC for public benefits Merger or takeover 6.38 s50 'T'
Statements of business principle-maintaining high std of behaviour throughout Bosch-Codes of conduct 6.39
TPA PartV:D1unfair comm practices,D1Asetting std,D2 consume contract,D2Amanu consume Consumers gds protection 6.39 Part V D1,1a,2,2a 'T'
Misleading & deceptive business conduct (s52):advertise, auditors role & intellectual property
Mkt & advertising 6.40-41 s52 'T'
Advertising truth: does it convey a truthful impression Hornsby Bldg Info Centre v Sydney Bldg 6.41
Ingo Centre s52 'T'
Misleading & deceptive-cigarette: supported 'independent scientific analysis' must literally Tobacco
true Institute v AFCO 6.41 CSA6.6 s52 'T'
Misleading & deceptive: a corp acted honestly label injunction Parkdale Custom Built Furniture v Puxu6.42 Pty Ltd s52 'T'
Misleading & deceptive-shoes flaw: unqualified statement adv good 'top quality' Macfarlane v John Martin & co. Ltd 6.42 s53a 'T' 'Guilty'
Misleading & deceptive-adv co mistake: falsely representing goods accessories they did not Evahave
v Mazda Motors 6.42 CSA6.7 s52 'T' "Guilty'
Misleading & deceptive: confused by misleading conduct Taco Co. of Australia v Taco Bell Pty Ltd 6.42 CSA6.8 s52 'T'
Misleading & deceptive: "reasonable man" at common law no role connection TPA Annand & Thompson Pty v TPC 6.43 s52 'T' "Guilty'
Misleading & deceptive: cricket: not to be judged according to knowledgeable cricket followers
World Series Cricket v Parish 6.43 s52 'T'
Misleading & deceptive: countervailing gullible or 'credulous' consumers misled Ciba-Geigy Canada Ltd v Apotex Inc 6.43 CSA6.8 s52 'T'
Misleading & deceptive: sold 'Big Mac' & wine different to lead not be misled McWilliam's Wines v McDonald's 6.44 s52 'T'
Puffery & advertising: coffee- adv compared price only puffery of products, not prohibit
imaginative adv but not misleading or deceptive Stuart Alexander & Co. v Blenders Pty Ltd 6.44
Advertises: Hotel 'only a stones throw from the beach' but 300m from the beach Puffery & advertising: hotel 6.44 CSA6.9
Misleading & deceptive: car rental- misleading Dewhirst & Kay Rent-A-Car v Budget Rent-A 6.45 Car Sys s52,53a.b.c,55 'T'
Comparative advertising: power drill-'torture test' but make clear the adv Makita v Black & Decker 6.46 s52 'T'
Comparative advertising: suits- compare of suit is permitted if it is not false, misleading/deceptive
Country Road Clothing v Najee Nominees 6.46Pty Ltd s52 'T' 'no contravention'
Comparative advertising: toothpaste- compare toothpaste, interim injunction granted forced Colgate-Palmolive
to abandon v Rexona 6.46 CSA6.10 s52 'T'
Small print in adv: 'upto' & conditions apply' might be literally but create a misleading overall
Advertising
impression
small print: 'upto' 6.47
Comparative advertising: batteries- mislead average consumer in overall impression 'up to' Nationwide News Pty Ltd v ACCC 6.47 CSA6.11 s52 'T'
Bait advertising:2 offences 1 deliberate intention not to supply goods in reasonable
quantities; 2 not intention to not supply advertised goods in reasonable quantities but Raincheck enable to pick adv good up
can fall back on at specified price 6.48
Bait advertising: batteries: not obtained 'reasonable quantities' of prom coffee 'whilst stk last'/'ltd'
Collis v Coles Myer Ltd 6.48 CSA6.12 s56 'T'
Auditors don't owe 3 party duty of care unless intended induce plaintiff to act upon audit Esanda
report Finance Corp v Peat Marwick 6.49 s52 'T'
Pro-competitive nature of intellectual property law a partial exemption Intellectual property: patent; copyright; 6.49
registered design;
s51trademark
'T'
Brand name, logos, packaging & labeling: label mislead prospective customers Apand v The Kettle Chip co. Pty Ltd 6.50 CSA6.13 s52 'T'
Brand name, logos, packaging & labeling: lookalike shoes Dr Martens Australia pty ltd v Windsor 6.51 Smith Pty Ltd s52 'T'
Protection of business reputation: protection exists whether registered or not Australian Society of A/cants v Federation 6.51of Australians52
Accountants
'T' Inc.
adv discounted shop-floor stk which is
falsely represent that goods are of particular standard quality, value, grade, composition, rtn fm three-month loan to someone
style or model or have a particular history or particular previous use use 6.52 s53a 'T'

falsely represent that services are of particular standard, quality, value or grade adv tennis tournament but not the case 6.52 s53aa 'T'
falsely represent that goods are new adv goods are new but is not 6.52 s53b 'T'
adv particular persons agreed to
falsely represent that a particular person has agreed to acquire goods or services acquire 6.52 s53bb 'T'
adv comply with SAA but only
represent that goods or services have sponsorship, approval, performance electrical compatibility & microwave
characteristics, accessories, uses or benefits they do not have oven not 6.52 & CS6.15 s53c 'T'
similar s53c focus on corp rather
represent that the corporation has a sponsorship, approval or affiliation it does not have product 6.52 s53d 'T'

p8of86
 CPA107

make a false or misleading representation with respect to the price of goods or services adv 600 now 450, but never 600 6.52 s53e 'T'
make a false or misleading representation concerning the availability of facilities for the
repair of goods or of spare parts for goods facilities for repair of goods but not 6.52 s53ea 'T
Whisky not made in Scotland but
picture of Scotsman will misleading &
make a false or misleading representation concerning the place of origin of goods deceptive 6.52 & 6.56 s53eb 'T'

make a false or misleading representation concerning the need for any goods or services need for goods is not 6.52 s53f 'T'
make a false or misleading representation concerning the existence, exclusion or effect warranty 12 month but inside only 90
of any condition, warranty, guarantee, right or remedy days 6.52 s53g 'T'
False & misleading representation: s53a,aa,b,bb,c,d,e,ea,eb,f,g Misleading & False representation 6.52 s53 'T'
False & misleading representation: monetary penalty imposed by ACCC Goods of particular std, quality, value 6.52-53 s53,55 'T'
Services of particular std, quality & value: misrepresenting standard of services-tennis tournament
Kiley v Lysfar Pty Ltd 6.53 s53aa 'T'
Goods of particular std, quality, value: winding back odometer of a car misrepresent previousEva vuse
Southern Motors Box Hill 6.53 CSA6.14 s53a 'T'
Sponsorship and approval sponsorship, approval or affiliation it does not have Corporation claims 6.54 s53d 'T'
Sponsorship, approval, performance s 53c Michael Edgely Int'l v Ashtons Nominees 6.54 s53c 'T'
Sponsorship, approval, performance: adv a 16-days tour but only 15-days Dawson v World Travel Headquarters Pty 6.54 s53c ;'T'
Sponsorship, approval, performance: adv fire extinguishers failed efficiency by fire commissioner
Given v Snuffa Pty Ltd 6.54 s53c 'T'
Sponsorship, approval, performance: particular model of motor car servo-assisted brakes Eva v Mazada Motor 6.54 s53c 'T'
Standards Asso of AU (SAA): falsely representing gds approved by the std asso of AU SAA Hartnell v Sharp Corp 6.54 CSA6.15 s53c 'T'
Pricing of goods: 'savings' on 'recommended retail price' as 'puffery' adv Sest v Copperart Pty Ltd 6.54 CSA6.16 s53e 'T'
Pricing of goods: dual-priced swing tag & higher price not available TPC v Cue Design Pty Ltd 6.55 s53e 'T' 'Guilty'
Country of origin: 'Made in Scotland' misleading and deceptive Trade Mark Wee McGlen 6.55 CSA6.17 s53eb 'T'
False representation as to price examples Adv false representations as to price 6.55 T6.2 s53e 'T'
Made in…' claims: 50% prod in that country s65ab, Built in… or Assembled in ..' ss52&53eb Product of… s65ac 6.56 s65,s52,s53 'T'
Rights of consumers: exchanged goods within 7 days Miller v Fiona's Clothes Horse of Counterpoint
6.56 CSA6.18
Pty Ltd s53g 'T'
Rights of consumers: 12-month warranty stub inside only 90 days Ballard v Sperry Rand Australia Ltd 6.57 s53g 'T'
Consumer may not carefully examine Chocolate box containing 250g but shaped 500g containers Slack filing 6.57 CSA6.19 s55 'T'
Unconscionable conduct: refused to enforce agreement for real estate agent & illiterate farmer
Downsett v Reid 6.57-58
Special disability: "special disability' of age & language difficulties Commercial Bank of Australia v Amadio 6.58
TPA Part IVA: unconscionability Unconscionable contracts 6.58
Unconscionable conduct: corp in trade/commerce; relation to business contracts/consumers Unconscionable standard from contract 6.59 s51 'T'
Part VC is a criminal offence of strict corp liability: s79,80,82 present civil & criminal regime
Division 1&1A, partV civil, partVC criminal
6.60 Part V D1,1a,2,2a 'T'
TPA amendments incorporating changes to the Commonwealth Criminal Code TPA D1,1A of Part V & Part VC 6.60 s79,s80,s82 'T'
Outsider system: equity finance has more important as means of dev companies "Nestor & Insider
Thom" systems dependent loans fm bank7.02 & 7.05
Internationalization of Corp governance: 1 society toward openness; 2 scale & activity
of corp in determining the prosperity & well-being of economies; increase individual
wealth in institutions investment (PF & ins co); effective monitoring & improved
standards Public interest explanations 7.03
Int'l Capital Mkt: Business Sector Advisory Group on Corp Governance to OECD OECD 7.03
Mkt-based outsider model: 1 widespread equity ownership; 2 co law faces shareholder
int; 3 emphasis on minority shareholder protection; 4 disclosure require Corporate governance outsider model 7.04
Mkt-based sys of corp governance in outsider systems with disclosure base 1
widespread equity ownership 2 shareholder int as primary focus of co law 3 emphasis
on minority shareholder protection 4 stringent requirement for disclosure US & UK including AU and NZ 7.04
Outsider systems-corp govern of US&UK 'heart of agency theory, corp govern principle Market-based
& co law' outsider model corp govern
7.04
Institutional investment: US & UK high equity shares, Germany & France considerable Financial assets of institutional
growth, Japanese declined proportion of institutional investment investors 7.05 T7.1&7.2
Market-based sys: economies adopted this model of corp governance, equity is widely
distributed among individual & institutional investors Nestor & Thompson: market-based sys 7.04
Market-based sys: 1 disclosure based 2 bank less central in outsider model, bank
finance is short term,3 shareholder have right to voting power 4 investors' capacity to
discipline mgt is greater in ability to buy or sell the shares US & UK including AU and NZ 7.06
Portfolio composition of institutional investors: important equity shares of US & UK institutional
Equity mkts of Germany & France 7.06 T7.3
US co proposal: 1 board maximum 10 directors 2 outside director nominated as lead
director 3 board meet major shareholder 4 Independent directors describe remedial in Lipton & Lorsh proposal adopted in
annual rept for co 3 out of 5 years US 7.07
US-outside directors have limited time, knowledge & expertise in co that they are
responsible for Lorsch & Maclver 7.07
US mkt-based system: traditionally worked on a collegial basis under dominance of senior One-tier
mgt. board ratify strategic mgt decision
7.07
US:PF of CALPERS, New Yarok City, State of Connecticut, State of Minnesota & TIAA-CREF Pension funds particularly influential 7.08
UK: 1 Cadbury-std of audit 2 Monks & Minow-lack of accountability, disclosure &
transparency 3 Lorsch & Maciver-adequacy of board structure & process 4 quality of Cadbury code of corp governance:1
directorial competencies 5 lack of CSR 6 Pound-growth of merger & acquisition Greenbury rept 2 Hampel rept 3
activities 7 Gregg-short-term basis corp performance 8 spate of business fraud 9 combined code 4 turnbull rept.
weakness of corp self-regulation Modern co Law 7.09
UK mkt-based system: Dependent equity mkt than large industrial economies "Cadbury Anglo-Saxon model of corp
code" governance 7.09-10
UK reform followed Cadbury code: Greenbury Rept, Hampel Rept, Combine code, Cadbury Code reforms corp
Turnbull Rept governance 7.10
UK: examined directors & auditor duties, investigated shareholder rights, explore new
corp rept, particular issued of rept & accountability by smaller co Modern Co Law Review 7.10
Australia & New Zealand: AU dev outsider model NZ capital short term, arm's length & Widely-held: no one shareholder who
diffuse. Corp governance follows Anglo-Saxon model owned 10% or more of the equity 7.11-12
AU: financial mkt 1 progressive deregulation of financial mkt 2 globalisation of
financial mkt 3 financial product innovation 4 increasing prominence of institutional Joseph Healy: compare growth of AU
investors mkt 7.12
NZ equity market is smallest mkt relative to GDP. 1 Small size firms, Dividend treats
equity , stk mkt not enjoy a strong reputation compliance & governance std not match
advanced ind mkt Healey for NZ public equity mkt 7.12
Shareholder value orientation: US, UK, AU, NZ adopted this model, influence European Anglo-Saxon
& Asian shareholder value-based 7.13

p9of86
 CPA107
US with dedicated capital investment sys of Germany & Japan. US sys focused purely
on financial goals & measure & short-term performance, German & Japanese sys
characterized by long-term investment in industrial strategies to boost productivity &
capability Porter, Michael rept for US Council 7.13
Corp failure US reform & the regulation of corp governance: encouragement of corp self-regulation
US sys achieve highest level of efficiency
7.14
US sys encouragement of self-regulating by corp entities, supported by law around basic Millstein:
principle US sys 7.14
Managerial capitalism: US corp successful grow managers become dominant players newMillstein:
forms US sys 7.15
German & Japanese industry seem destined for ascendancy as relentlessly pursue export Japanese
success & Germany industry 7.16
New economy 1 grow without threat of recession 2 continues to expand without
increasing inflation 3 restructure efficiency & productivity 4 new IT & capital 5
function 6 balanced budget 7 globalised & export driven Weinstein: new economy 7.16
Economic on new knowledge & info-based networked economy with potential to
capitalise on Metcalfe's Law-scale of a network expand linearly, use expands
geometrically. Metcalfe's Law: new economy 7.17

Irrational exuberance: scramble to make serious money overnight in dot.com revolution Shiller: dot.com 7.17
Enron: CEO & CFO cert rept complies with rept requirement; misconduct co, CEO & Sarbanes-Oxley Act: Enron created-
CFO reim the co for bonus or equity or incentive-based compensation paid and prof fm off-balance sheet entities to hide 7.17-18
sales of securities realised in 12-month period after first publication of a/c liabilities& boost rept earnings MC7.04
Australian Financial Review: Enron collapse disclosed US dysfunctional. Co a/c WorldCom: wrongly listed over $3b
misleading, auditor conniving, lawyers conspiring, rating agencies asleep, regulator exp as capital exp not reflected in co's
inadequate. Faith in US corp hasn't been so strained since 1900s' earning result. Adelphia Comm/Tyco 7.17
Sarbanes-Oxley Act new laws, regulations & listing rules after Enron Gordon: Enron 'shareholder capitalism' 7.18-19
UK Corp governance reform: Dept of Trade & Industry boards foster inclusive relationships UK legal compel PF (NAPF)&combine 7.19-20code
UK: 1 new definition or role of board 2 open & rigorous on appointment of director 3
evaluation of performance of board 4 at least half independent non-executive 5
separation of chairman & CEO 6 chief executive no become chairman 7 closer
relationship between chairman & independent director 8 strengthened role for audit
committee Combined code 7.20
One-Tel losses ignored until
CLERP9 & ASX corp governance principles: 1 ensure independence of auditor 2 bankruptcy& HIH collapse: director
continuous disclosure 3 improve shareholders meeting conduct 4 annual rept include abandonment ethical responsibilities to
disclosure of director 3 whistleblowing co 7.21
European cooperative relationships: insider model relies int on board of direct.
Protection stockmarket and threat of takeover, bank play active role, shareholders are Anglo-Saxon emphasizes competition
widespread & mkt processes 7.22-23
European countries: 1 ownership & control held by cohesive group of insider have long-
term stable relationships 2 insider group connection with drawn fm family int, allied
industrial concerns, bank & holding co 3 insider groups monitor mgt act under their
control Insider model 7.22
Insider sys: redistribute control 1 pyramid corp structures 2 shareholder agreements 3
discriminatory voting rights 4 reduce the participation or influence of other minority Bank & business network: deeper
investors insiders 7.23-24
Europeans emphasis cooperative relationship & reaching consensus, Anglo-Saxon
tradition emphasis competition & mkt processes. Insider model relies on representation
of int on the board of directors Relationship-based sys 7.22 MC7.22
European Union toward int'l: important distinction: 1Co law 2 employee representation
3 stakeholder issues 4 shareholder rights & participation mechanics 5 board structure 6
roles & responsibilities 7 supervisory body independence & leadership 7 board
committees 8 disclosure Weil, Gotshal & Manages: corp gov in EU 7.24
EU corp governance policy: 1 Co law 2 employee representation 3 stakeholder issues 4
shareholder rights & participation mechanics 5 board structure, role & responsibilities 6
independence & leadership 7 board committees 8 disclosure Well, Gotshal & Manges 7.24
European union dev corp governance: 1 privatisation of state-owned co; 2 growth &
diffusion of sharehold in countries; 3 increased merger & takeover activity Germany-small & medium-sized unicorn7.24-25
German: dual board structure. Two-tier board sturcture. Overlaps in membership
between two boards not allow with same firm & symmetric cross-overlaps between two
firms are also prohibited OECD: German business 7.25
Germany business: 1 strong concentration of ownership of individual enterprises 2
importance of small & medium-sized unincorp co 3 close correspondence between Germany: Central characteristic of
owners & managers 4 limited role play by stk mkt corp governance 7.25
France & Italy: France majority of shares owned by non-financial enterprise 2 cross-
participation is important element of corp governance 3 cross-praticipation shield
managers fm short-term pressure of mkt by making change in corp control more 7.26 &
difficult Italy & France MC7.06
Europe reform of Corp governance institution: continuous improvement of corp governance A Modern Regulatory Framework for Co 7.26-27
Law Europe
European corp governance-FEE rept int in 1 internal control 2 financial rept 3 audit
committee 4 rept by external auditors to shareholders & mgt 5 internal audit 6 FEE report: European accounting
shareholders meeting profession 7.27-28
European a/c: appropriate bal of power at board; audit committee examining financial
rept; policy on non-audit services, extended (long form) rept to board by external FEE & Winter report: emphasis wider
auditors in combination with oral presentation & in-depth ex of views; review the aspect of internal control & related
auditors role & independence processes of risk mgt 7.28 MC7.07
Asia-Pacific relationship-based sys with rules-based sys & family control with close relationship
Relationship-based with rules-based sys7.28-29
East Asia main principle & objectives process: 1 ensuring clear & effective financial
control sturcture 2 dev external monitoring & control with improvement in legal 3
advancing training & dev program Corporate governance in East Asia 7.30
East asks important element: decision-making structure & role ensure effective
governance & financial control 2 clear definition of duties & responsibilities 3 more Corp governance codes important
rigorous monitoring & rept requirement element 7.30
East Asia: Financial crises & the beginning of reform:TH managed float, reform process Japan:
for Asia keiretsu sys, trust-based form 7.30-34
Japanese bank: 1 ex ante-investment & loan 2 interim-cashflows at co's a/c 3 ex post-corrective
Aoki & Okuno: corp governance structure 7.33
East Asia corp governance dev 1 more accountable & transparent operation 2 ensuring
effective control & regulation by external agencies 3 training to dev understanding
sound corp governance practices Corp governance dev in east Asia 7.31
Financial institution s remained weak & unreformed. Corp law in Japan modeled on
German sys Japan: keiretsu sys, trust-based form 7.31

p10of86
 CPA107
Equity market: Japan lies in middle of US/UK heavily equity-based mkt, EU smaller equity OECD:
mkt equity market 7.32
Bank positioned in 3 forms: 1 ex ante: investment decision of co. loan application 2
interim: performance of ongoing business, cashflow 3 Ex post: financial performance, Aoki & Okuno: Japanese corp
intervening take corrective measure governance 7.33
Trust-based form: governance relational contract generate sense obligation to trading partnersLearmont: trust-based form d
China: 5 types 1 state-owned enterprises; town & village enterprises; 3 joint ventures; 4
foreign-owned enterprises; 5 listed public co. Listed co in A, B, H shares Relationship-based to a rule-based sys 7.35-37
World bank in china recommended: dominate state ownership on mkt discipline &
regulatory capacity 2 bldg institutional investor base 3 strengthen banks role, enhancing Tenev, Zhang & Brefort: survey corp
creditor's rights gov 7.36
Asia-Family-controlled co & business network: two-thirds of listed co family run & private Relationship-based
co with rules-based sys7.37-8 T7.5
Asian countries revamped corp laws & regulations. Asian roundtable work towards full
convergence with int'l std. Full convergence is not possible, divergences will be OECD White paper on corp
disclosed by co governance 7.38
Market-based sys functional convergence by forces: 1 influence stock ex, toward IAS, global Convergence
co & diversity 7.39
Menu of choice approach to corp governance standard for appropriate to specific risk profile OECD: Int'l corp governance code 7.39-40
Corp governance: evolving & dynamic complexity of corp life, convergence &
divergence simultaneously Diversity & complexity of corp governance 7.40
Enron case analysis Enron case analysis 7.40-42
HIH Insurance analysis HIH 7.43-44
Case scenario - Act bona fide & proper purpose but conflict of int & not prevent insolvent Shedworks CS3.05 3.36
Misleading or deceptive conduct: e.g. investor failure to disclose was one factor to Silence: : failure to disclose
mislead s42 information MC5.03 p.5.05 s1041H
ASIC role in Corp govern: Corp are directed & controlled; monitored & supervised & accountableASIC role in corp governance R1.04
ASIC enforcement action in HIH; Harris Scarfe; One-Tel; NRMA ASIC major enforcement R1.05
OECD principles of corp govern: Rights, Equitable treatment; role, disclosure; responsibilities
Corp govern: OECD principle R2.01 Slide 47-48
Hampel Rept: summary of conclusion & recommendations of committee on corp governance Committee on Corp Governance R3.01
Board agenda and timetable Board agenda and timetable R4.01
OECD Principle focus traded co best
AICD comments on OECD: Corp governance is important but behaviour of practice. Concern Shareholder &
shareowners & economic settings are more important stakeholders' rights R4.02
ASA-Poor performers 2004 list 19 co highlighted for special attention on Shareholder rate Poor
of rtn
performers 2004 - ASA R4.03
Shareholder participation in the modern listed public co: Final report CASAC report-Shareholder praticipationR4.04
ASX listing rule on corp governance: listed co notify the mkt immediately information
likely to have a material effect on share price - continuous & periodic disclosure
requirements******** Corp governance: ASX listing rules***** R4.05*******
Santos Ltd-Corp governance statement Corp governance statement R4.06
Coles Myer-Corp governance statement Corp governance statement R4.07
Three pillars sustainable dev-bal economic dev, environmental protection & social progress Bourne, Greg-three pillar of development R4.08
Responsible business engagement with society-business is & should be integral part of society Holme, Lord-Corp social responsibility R4.09
Body Shop environmental policy Environmental policy R4.10
Managing affairs information Managing affairs information R4.12
Greenbury Report Recommendations- Santos Ltd and Coles Myer Ltd Santos Ltd & Coles Myer Ltd R4.13
Recommendations of the Greenbury Report Greenbury Rept R4.13
Auditors-Problems with applying misleading or deceptive conduct to auditors in past claim Opinion reasonably held: none liability R6.01 s52 'T'
Compliance programs-The benefits for companies & their stakeholders Compliance program-avoidance of harmR6.01
Another $1 million in penalties & costs for Queensland fire protection cartel ACCC pursue corp collusive conduct R6.02 s45 'T'
Corp governance-three surveys: who: surveyed co by region, relative premium, diff opinion Surveys for Corp governance R7.01
Enron means for the mgt & control of the modern business corp: some initial reflections Shareholder capitalism-American style R7.02
Non-executive directors benefits arise Non-executive directors SA3.01 3.11
Director of subsidiary obtain benefit example-act in the best int avoid personal profit Subsidiary director obtain benefit SA3.02 3.13 s187 'C'
Director satisfy the ground claim defense when co insolvent at the time incurred a debt Insolvent SA3.06 3.30 s588h 'C'
Directors duties trust law is reason the duties 'fiduciary' relationship trustee & beneficiaryFiduciary duty-trustee & beneficiary SA3.06 3.30
Statutory derivative action-minority member or officer the right to bring action Ultra vires-minority member SA3.07 3.34
AICD commented on OECD principle made specific recommendation for minor changesOECD principles and AICD SA4.02 4.7
ASA encourage shareholder participation AGM and produce 'poor performers list' Australian Shareholders Association SA4.03 4.9
CASAC no recommendation for further provion because of adequate access already available CASAC no recommend in access info SA4.04 4.9
Institutional investors express views should take active int in investing co - Hampel reporHampel Report-institutional investors SA4.05 4.11
Corp governance statements (CGS) of Santos Ltd and Coles Myer Ltd in OECD PrincipleOECD Principles in CGS SA4.07 4.17
ASX deal with independence of directors, appointment, remuneration, audit, ethical
standards, auditors & board composition; Corp governance statements (CGS) details
obligations of continuous disclosure of financial matters & appointment of directors,
shareholders rights Corp Act & ASX Listing Rules SA4.08 4.17
Environmental a/c-keeping track depletion of co assets, assessing value of treatment & disposal
Environmental reporting SA4.09 4.18
Elkington, John-Cannibals with Forks: Triple Bottom Line 'financial, environmental & social Triplea/c'
bottom line accounting SA4.11 4.19
Corp social reporting (CSR) should examine policies & practices of co in relation to gov'tCSR rule SA4.12 4.22
Risk Mgt can be more effectively tracked, greater disclosure with reduced cost. IT-Risk Mgt SA4.13 4.25
Director may owe a special duty to the specific shareholders rely on him Ethical conduct and co directors SA5.01 5.4
Director of a public co owes duties to corp as a whole not only the major shareholders Ethical conduct and co directors SA5.01 5.4
Triple bottom line examples-economic/financial for sales, social skill dev, environmentalTriple… bottom line SA5.02 5.5
Ethical conduct result in Director & co. Criminal law & civil liability Ethical conduct and co directors SA5.03 5.6
Law may less effective than voluntary code of conduct examples Ethical and Law SA5.04 5.7
Not imposed criminal liability for easy to contravene and strict liability TPA SA5.05 5.9 s1041h 'C' & s52 T
s728(3) will apply where bad news concerning the co has been omitted fm disclosure document Ramsay, An Introduction to the CLERPSA5.06 5.10 s728 'C'
Prospectuses close before the contract renewed defence s731. Should lodge supplementary Prospectus
s719 SA5.07 5.10 s719,731 'C'
Directors automatically liable for losses suffered by third parties s 588G Directors liable liability SA5.08 5.11 S588g 'C'
Formal takeover bid shares to be acquired more than 3% in 6 months permitted Takeover Law SA5.09 5.13 s611 'C'
Takeover law for formal takeover bid for share control below 20% to <20%. Takeover Law SA5.09 5.13 s611 'C'
Corporations Act prov structure minority shareholder locked into shareholding Minority shareholder SA5.10 5.13 s636,606 'C'
Takeover law - Resolution of co more than 50% vote invalids. Gambotto v WCP Ltd SA5.11 5.14 s611 'C'
Ethical perspective takeover law take into a/c a person's relevant interest in shares t/r to co
Relevant interest - takeover law SA5.12 5.14 s611 'C'
Insider-trading legislation only officers of co would overall too limiting for two reasons Insider-trading legislation policy SA5.13 5.17 s1042a/1043a 'C'
Chinese walls portable screens meant to act as a visual barrier, generally will not excludeLeakage
noise of information within organisation SA5.15 5.20

p11of86
 CPA107
Buyback permitted when employees resigned but can't transfer share, co may buyback Manipulation of the market by conduct SA5.16 5.22 s1041a 'C'
Concerned effect, s 998 dealt with conduct intended 'likely' Conduct intended 'likely' SA5.17 5.22 s1041a/b,998 'C'
Likely effects and strikes at negligent conduct (careless of the truth) False or misleading statement in securities
SA5.20 5.25 s1041e 'C'
Reckless can connote dishonest where statements with careless disregards for the truth Fraudulently inducing persons to deal SA5.21 5.26 s1041f 'C'
Competitive products not sell by my dealers: depends likely anti-competitive Anti-competitive SA6.03a 6.31 s46 'T'
Duration of dealer is illegal considered anti-competitive Anti-competitive SA6.03b 6.31 s46 'T'
Exclusive Australian agency appointed by overseas distributor is legal Appointed exclusive Australian agent SA6.03c 6.31 s46 'T'
Dealer network limited territory selling particular customers is legal unless anti-competitive
Confining dealer network SA6.03d 6.31 s46 'T'
Exclusive dealing can be authorised , even 'third-line forcing' can be authorised Third-line forcing can be authorised SA6.03e 6.31 s46 'T'
Mkt share held by competitors, availability of imports, barriers to entry, financial strength
Substantial degree of mkt power-when SA6.04a 6.37 s46 'T'
Mkt power misused committed an offence Substantial degree of mkt power-offenceSA6.04b 6.37 s46 'T'
Mkt power misused when engaged irrelevant conduct in a competitive Mkt Substantial degree of mkt power-misused SA6.04c 6.37 s46 'T'
Seeking to compete when in a substantial mkt power, supply should not be refused Substantial degree of mkt power-refusingSA6.04d 6.37 s46 'T'
Quoting an exorbitant price to customer as effectively refusing supply Substantial degree of mkt power-price SA6.05e 6.37 s46 'T'
Full disclosure-foundation upon the integrity of equity mkt is built Disclosure & transparency SA7.01 7.07
US corp governance: continual intervention & second-guessing powerful institutional investorUS corp governance SA7.02 7.09
US corp governance regulation correlation between mkt failure & collapses & bursts of legislative
Corp governance regulation & legislationSA7.03 7.16
Over-regulation emerging: careful monitoring & tighter regulation for superannuation fund. Over-regulation SA7.04 7.19
Outsider strength 1 dispersed ownership & strong institutional investors 2 primacy of
shareholder int in co law 3 emphasis on protection of minority shareholder int 4
disclosure require 4 fluid capital investment in dynamic economy 4 competitive
performance Outsider system of corp governance SA7.05 7.22
Outsider sys weakness: 1 over-dominant & over-paid CEO 2 weak boards of directors 3
failure in rept & transparency 4 short-term investment 5 instability of governance &
investment 6 cyclical volatility in dynamic economy Outsider system of corp governance SA7.05 7.22
European relationship-based insider sys advantage: 1 diverse int on board of direct 2
insider group monitor mgt & less agency problems 3 wide group of stakeholders
actively recognised 4 close relationship with bank provide stable finance 5 inter-corp
shareholding provide stability of ownership 6 established governance procedures 7
longer-term business strategies Relationship-based sys SA7.06 7.28
European relationship-based disadvantage: 1 discipline of mgt in securities mkt is weak
2 mkt for corp control is weak, eliminating threat of takeover 3 lack of dev of
institutional investors 4 less emphasis on public disclosure of info 5 shareholder
agreement & voting restriction allow minority group to exercise control 6 elaborate
governance procedure can be time-consuming 7 inter-locking business network
complacency rather than competitiveness Relationship-based sys SA7.06 7.28
Family-based insider sys benefits: 1 flexibility & dynamism contributed to rapid
economic growth 2 unity of ownership & control eliminate principal/agent problem 3
investors support successful mgt teams & companies 5 sense of purpose & cohesion
with understanding of customary practices 6 strength & stability of tradition Insider sys SA7.07 7.39

Family-based insider sys cost: 1 persistent problems of neglect of minority shareholders

2 pyramidal structures acquire control of operation cashflow disproportionate to equity
stake in co 3 independence & diligence of board called into question 4 std of disclosure
& transparency are minimum 5 regulators are unable to act on poor information &
access 6 enforcement of contract is problematic because of weak courts Insider sys SA7.07 7.39
Enron case failure corp governance: failure to 1 disclose 2 transparency 3 board 4
conflict of int 5 conflict of int external auditor 6 failure in morality & ethical basis Enron case analysis SA7.08 7.42
HIH case failure corp governance: failure to 1 realise responsibilities 2 domination by
CEO to acted as publicly owned 3 inadequate financial control 4 not due diligence 5
irresponsible operation & strategy 6 inadequate financial & accounting control 7 failure
of act diligently 8 fail to disclosure & transparency 9 indulgence while neglecting
responsibilities HIH SA7.09 7.44
Outsider sys as disclosure-based: 1 investor reliable info to make decision 2 regulation
intended to ensure complete info to investors 3 bank finance in short term 4 equity
shares significant than bonds & loans Anglo-American MC7.02
Outsider sys 1 independence of audit & accountancy professions 2 lack of
accountability, disclosure & transparency of boards 4 adequacy of board structure &
process 4 quality of director competencies Outsider system of corp governance MC7.03
East Asia: 1 Information asymmetries are more severe 2 contracting costs are higher
because stk practices not dev enforcement of contracts 3 adm agencies are less able to
handle issue benefit fm detailed rule making & non-legal adm enforcement such as a/c
std, disclosure East Asia MC7.08
East Asia: board often no clearly defined role for non-executive director & lack of
knowledge of obligation & function of co officers; decision-making bodies not effective
in formal role, unable to exercise right, & boards are co-opted by dominant
shareholders; disclosure & transparency tend to kept a bare minimum. East Asia Corp governance MC7.09

p12of86
 CPA107

s113,s9&s45A..
60

10 6 1
15 9 2

15 9 3

16 9.6 4

16 9.6 5
16 9.6 6
12 7.2 7

p13of86
CPA107

p14of86
 CPA107

s181(1)&184 'C'

s181(1)&184 'C'

s198d,198d3 'C'

p15of86
 CPA107

s236-7,41,03 'C'

p16of86
 CPA107

s1041H P6d.3 'C'

s995, Part 6d.3 'C'

p17of86
 CPA107

s611, s606(1) 'C'

s1042a/1043a 'C'

s1042a/s1043a 'C'

s1041a/b,998 'C'

s1041b,c 'C'/s52 T

s182, s1317e 'C'

s182, s1317s 'C'

p18of86
 CPA107

s76,80-82,87 'T'

s45(2)aii&bii 'T' Guilty

s45(2) 'T' Guilty

s48;96.3,7;98.1 'T'

s48&s45 'T' Guilty

s48,s45 'T' Guiltily

s48 'T' No Guilty

p19of86
 CPA107

s47 'T' 'No Guilty'

s47(6) 'T' 'Guilty'

s46 'T' 'No Guilty'

s46&47 'T' 'Guilty'

s46.7 S4f 'T' 'Guilty'

Part V D1,1a,2,2a 'T'

s52,53a.b.c,55 'T'

s52 'T' 'no contravention'

p20of86
 CPA107

Part V D1,1a,2,2a 'T'

p21of86
CPA107

p22of86
 CPA107

s1041h 'C' & s52 T

s1042a/1043a 'C'

p23of86
 CPA107

s1041a/b,998 'C'

p24of86
 CPA107_Description
DESCRIPTION Question M1:1-6, M2:7-15, M3:16-24, M4:25-34, M5:35-44, M6:45-54,RELATED M7:54-60 PAGE# Corp Act/TPA
1. Recommended price, 2 price set out to recommended price only no obligation to co Recommended price 6.23 s97 'T'
AAMI Customer Charter aspects Corp code by AAMI 5.45
ACCC is not a policy advisor, combines a consumer protection role with protecting
competition in general sense Anti-competitive behaviour regulation 6.10
ACCC to administer TPA ACCC advancing economic policy 1.19
ACCC Trade Association Retail Tobacco Sellers Asso of Victoria6.21 s45 'T'
Accountability is one of the cornstones of good corp governance Corporate governance 3.30
Accountability-Shareholder, Lenders, Employees, Creditors, Regulators Disclosure: IT& Int'l increase disclosure3.31
Acquisition creep-<20% threshold may acquire & add'l 3% every 6 months w/o breach s611 Other forms of lawful takeover 5.13 s611, s606(1) 'C'
Buy goods if agrees to supply retailer
Acquisition of goods or services from particular person or classes of persons unless exclusively or discontinue supplies to
particular circumstances exist or certain conditions are met or agreed to discount 6.18 s45 'T'
Not acquire good because it supplies
Acquisition of goods or services from particular persons or classes of persons goods to discount house 6.18 s45 'T'
Act in good faith by nominee director in best interest of subsidiary precedence holding coNominee Director act in good faith 3.13 s187 'C'
Advertises: Hotel 'only a stones throw from the beach' but 300m from the beach Puffery & advertising: hotel 6.44 CSA6.9
Advertising truth: does it convey a truthful impression Hornsby Bldg Info Centre v Sydney Bldg 6.41
Ingo Centre s52 'T'
Agency theory: defined "Maximise their own benefit & information asymmetry" Agency theory: separate ownership & mgt 2.21
AICD code of conduct-Expansion on legal obligations Code of Conduct 5.44
AICD commented on OECD principle made specific recommendation for minor changesOECD principles and AICD SA4.02 4.7
OECD Principle focus traded co best
AICD comments on OECD: Corp governance is important but behaviour of practice. Concern Shareholder &
shareowners & economic settings are more important stakeholders' rights R4.02
AICD on CLERP legislation-1 minimisation of cost 2 cost-benefit on law amendments Bosch & AICD comment code of
3 consultation with legislation users 4 less black letter law 5 wealth creation 5 private conduct & corp practices in corp
co recognise governance 4.07 & 1.10
Alternate director not legal status when director for whom they are an alternative is present Strathmore Group v Fraser 3.10
Alternate directors/Stand-in Director: not liable as director under insolvent trading legislation
Playcorp Pty Ltd v Shaw: call upon to act 3.10 A3.06 s201k 'C'
Alternate directors: cannot act under a power of attorney as a director Mancini v Mancini 3.10
Alternate directors: director disqualified on conflict on interest, alternate director is not affected
Anaray Pty Ltd v Sydney Futures Ex Ltd3.10
An interest in a matter may give a standing notice to other directors s 192 & s193 ss 192-193 3.22 s192-193 'C'
Anomalies -Refugee status in Australia & absence convicted of treason is automatically disqualified
Automatic disqualification 5.37
Another $1 million in penalties & costs for Queensland fire protection cartel ACCC pursue corp collusive conduct R6.02 s45 'T'
Ansell's personal int conflicted with duty: account to Boston for both comm & the bonuses Boston Deep Sea fishing & Ice Co v Ansell 5.28
Anti-competitive absolute prohibitions: collusive price fixing, boycotts, third-line forc,resale..
TPA Anti-competitive 6.11
Anti-competitive agreement: Agreement 'lessening competition' Lessening competition 6.19 s45e 'T'
Anti-competitive agreement: Collective Boycotts; Price-fixing; Secondary boycotts; Collective Collective
agreement
Boycotts; Price fixing 6.37 s45 'T'
Anti-competitive behaviour regulate: Part IV-restrictive trade proactive & V consumer protection
TPA Part IV & V 6.10
Anti-competitive substantial lessening of competition prohibitions TPA Anti-competitive 6.11
Appearance of sale brought about by ordinary Mkt methods misleading appearance real share Fenwickprice
v Jeffries Industries Ltd 5.24 s998 'C'
ASA encourage shareholder participation AGM and produce 'poor performers list' Australian Shareholders Association SA4.03 4.9
ASA-57% AU holder shares, age over 55. Transparent, communicative, answer &
accountable. Blacklist of 'poor performers' Individual investors - ASA 4.09 R4.03
ASA-Poor performers 2004 list 19 co highlighted for special attention on Shareholder rate Poor
of rtn
performers 2004 - ASA R4.03
Asia-Family-controlled co & business network: two-thirds of listed co family run & private Relationship-based
co with rules-based sys7.37-8 T7.5
Asian countries revamped corp laws & regulations. Asian roundtable work towards full
convergence with int'l std. Full convergence is not possible, divergences will be OECD White paper on corp
disclosed by co governance 7.38
Asia-Pacific relationship-based sys with rules-based sys & family control with close relationship
Relationship-based with rules-based sys7.28-29
ASIC and ethical consideration Nicholas v commissioner for Corp Affairs Disqualify-ASIC ethical considerations 5.40 s206f 'C'
ASIC enforcement action in HIH; Harris Scarfe; One-Tel; NRMA ASIC major enforcement R1.05
ASIC essential function to administer corp & commercial laws & to monitor compliance.AASB Role to dev, draft & issue a/c std1.16 s1(2)
ASIC role in Corp govern: Corp are directed & controlled; monitored & supervised & accountable ASIC role in corp governance R1.04
ASIC: disqualified a person by court under three headings & example of disqualified director Disqualified director: s206C civil penalty 5.38 s206c 'C'
ASX committee for identify & support best practice principle, improved ASX Listing Corp Governance Council: audit
Rule committee 1.18
ASX concern SME need to conform with recommended audit committee SME classified as reporting entities 2.43
ASX Corp governance principles; 1 foundations for mgt & oversight; 2 Board to add
value; 3 Promote ethical & responsible decision making; 4 safeguard integrity in
financial rept; 5 timely & balanced disclosure; 6 respect the rights of shareholders; 7
recognise & manage risk; 8 enhanced performance with board & mgt effectiveness; 9
fair remuneration & responsibility; 10 recognise legitimate int of Corp governance principles: support in
stakeholders*************************************** guidelines********************** 4.14*15*****
ASX deal with independence of directors, appointment, remuneration, audit, ethical
standards, auditors & board composition; Corp governance statements (CGS) details
obligations of continuous disclosure of financial matters & appointment of directors,
shareholders rights Corp Act & ASX Listing Rules SA4.08 4.17
ASX Guidance Note 9 - Disclosure of Corp Governance Practices R4.05 part B*************** Listed rule-ASX guidance note 9*** 4.16 R4.05B**
ASX Listing Rule - periodic disclosure and address issuers R4.05 part A****************** Listed rule-ASX listing rule******* 4.16 R4.05A**
ASX listing rule on corp governance: listed co notify the mkt immediately information
likely to have a material effect on share price - continuous & periodic disclosure
requirements******** Corp governance: ASX listing rules***** R4.05*******
ASX listing rules do not require a co have a nomination or remuneration committee Nomination or remuneration committee4.26
ASX Listing Rules state listed co must include annual report ' a statement disclosing
best practice recommendations set by ASX Corp governance
Council********************** ASX Corp Governance Council********* 4.14********
ASX Principles 6 for rights of shareholders Hampel: Shareholder right & responsibilities
2.09-10
ASX require disclose approach of risk & arrangement in place Risk Mgt process 4 reasons 4.23
ASX require disclosure audit committee or reason why exist committee Audit committee: independent audit 2.18
ASX role: conduct mkt in which investors & enterprises come together with confidence
to creat prosperity through sharing of risks & rewards. Listing rule need corp ASX: trading equities, debt securities
governance practices & index derivatives 1.17
ASX: Australian Stock Exchange (ASX): Rule Australian stock exchange 1.18

p.25of86
 CPA107_Description
ASX-Corp governance statements and policies 'annual report' Corp governance statement-ASX 4.13-15
ATO has a role to play in awareness & adoption of improved governance & disclosure issues ATO implementation major tax reform 1.18
AU: financial mkt 1 progressive deregulation of financial mkt 2 globalisation of
financial mkt 3 financial product innovation 4 increasing prominence of institutional Joseph Healy: compare growth of AU
investors mkt 7.12
Audit committee Half non-executive director Hampel Rept 3.11
Auditors don't owe 3 party duty of care unless intended induce plaintiff to act upon audit Esanda
report Finance Corp v Peat Marwick 6.49 s52 'T'
Auditors-Problems with applying misleading or deceptive conduct to auditors in past claim Opinion reasonably held: none liability R6.01 s52 'T'
Australia & New Zealand: AU dev outsider model NZ capital short term, arm's length & Widely-held: no one shareholder who
diffuse. Corp governance follows Anglo-Saxon model owned 10% or more of the equity 7.11-12
Australian Financial Review: Enron collapse disclosed US dysfunctional. Co a/c WorldCom: wrongly listed over $3b
misleading, auditor conniving, lawyers conspiring, rating agencies asleep, regulator exp as capital exp not reflected in co's
inadequate. Faith in US corp hasn't been so strained since 1900s' earning result. Adelphia Comm/Tyco 7.17
Australian Institute of company Directors' Code of Conduct (AICD) Code of Conduct 5.43
Authorisation & notification: exclusive dealing conduct can authorise on public benefit grounds
Notification applies to all exclusive dealing
6.30 s47 'T'
Authorisation of merger is available by ACCC for public benefits Merger or takeover 6.38 s50 'T'
Authorisation: dispensation ACCC grant in respect of some restrictive agreements/practices ACCC issue Authorisation 6.11-12 s88 'T'
Automatic disqualification Chew v NCSC 5.36
Automatic disqualification-disqualification starts on the day lasts for…. Disqualification of directors 5.36
Automatic disqualified by court grant leave on application of ASIC Automatic disqualification 5.37
Automatically disqualified because advisors incorrectly interpreted Chew v NCSC 5.37 SA5.26
Bait advertising: batteries: not obtained 'reasonable quantities' of prom coffee 'whilst stk last'/'ltd'
Collis v Coles Myer Ltd 6.48 CSA6.12 s56 'T'
Bait advertising:2 offences 1 deliberate intention not to supply goods in reasonable
quantities; 2 not intention to not supply advertised goods in reasonable quantities but Raincheck enable to pick adv good up
can fall back on at specified price 6.48
Bank positioned in 3 forms: 1 ex ante: investment decision of co. loan application 2
interim: performance of ongoing business, cashflow 3 Ex post: financial performance, Aoki & Okuno: Japanese corp
intervening take corrective measure governance 7.33

Best practice co set own corp statement. 1 enforceable obligations: statute & common Corp governance: 3 level corp
law ASX, TPA or code; 2 Company's own corp governance statement; 3 Ethical governance principles. Only
standards accepted or promoted within community enforceable obligation against directors 3.04
Board agenda and timetable Board agenda and timetable R4.01
Board of director responsibility: formulate strategy; dev policy; appoint remunerate & Board's responsibility: accountable to
senior executive mgt & ensure accountability shareholder 2.04
Board of directors is pivotal in relationship between shareholders & mgt. Principle A1-A7, OECDB && C ASX difference 2.13 SA2.3
Board of directors: function focus on conformance with regulations & the fiduciary CACG guidelines responsibilities to
duties of directors aimed to achieving improved corp performance for shareholders. ensure corp governance 2.15 R2.4
Board policies affect: trading; form of co; mgt style; legal; co financed; competition; infoMgt
availability
objective enhance shareholders value
4.05
Board structure: Role of committees. subset overall board formulated to deal with specificCommittees
nature role & board structure 2.18 T2.3
Board: Aligning director & shareholder interest Director & shareholder interest 4.04
Board: ensure integrity of corp accounting & financial rept with independent audit &
controls & compliance; monitor effectiveness of governance process; oversee disclosure
& communication Conformance role of board 2.16
Board: Formulation board committees strengthen independence & accountability to community Accountability & transparency 2.17
Board: strategy in monitoring implementation of strategy & overseeing major capital
expenditure; selecting compensating, monitoring key executives & overseeing planning;
reviewing key executive & board remuneration, formal transparent board nomination
process Performance role of board 2.16
Board-Role of the board carry out strategic aim of co to oversee mgt by CEO, other executiveDirector owe fiduciary duty individually4.04
Board's role in strategy difference ASX; OECD & Combined code 2.16-17 SA2.6
Body Shop environmental policy Environmental policy R4.10
Body Shop-'new bottom line' social rept recycling, waste mgt, animal right & complianceSocial Reporting 4.21
bona fide - director honestly believes in the best interest of co. Act in good faith in the
best int of the corp for directors and officers Directors and Officers statutory duties 3.14 s181 'C'
Bonding costs, Monitoring costs, Residual loss Agency costs 2.22
Bonding costs: including internal audit team, voluntary interim finical rept. Incurred contracts
Agency costs 2.22
Bonus plans: not achieve target-take a bath; achieve-maximised profit; over target-reduceHealy:
profit mgt manipulation reported 2.26
Bosch rept & AICD support training by the board or professional training respectively*******Training: Co not require by law to training
4.28********
Brand name, logos, packaging & labeling: label mislead prospective customers Apand v The Kettle Chip co. Pty Ltd 6.50 CSA6.13 s52 'T'
Brand name, logos, packaging & labeling: lookalike shoes Dr Martens Australia pty ltd v Windsor 6.51
Smith Pty Ltd s52 'T'
Breached agent duty to the principal not depend co suffered any detriment Furs Ltd v Tomkies 5.29
Bribe: HK Public servant accept bribes: Civil penalty 'pur properties in NZ, only on trust Attorney-General
for co' for Hong Kong v Reid5.29
Bribes: not matter the co suffered loss or not, the issue of receiving personal gain in mgt role
Secret profit-payment of a secret comm 3.23
Bribes: offering bribes prohibits by s176(2) Crimes Act re Addstone Pty Ltd 5.30 s176 'C'
Bribes-payment of a secret comm making the pay't fails to disclose to other person.
Intention to induce the agent to act favourably to the payer & unfavourabley to the Industries & General Mortgage v
principal Lewis 5.28
BRT: Board's duty is to shareholders & should consider stakeholders to enhances their value OECD: employee is importance stakeholder 2.12
Bubble Companies Act-Foundation of the current Corporation Act 2001 in England Corp Act 2001-Bubble Co Act 3.14

Business judgment-means any decision in respect of a matter relevant to business of the corp Business judgment 3.36
But for test: directors are not required to ignore own interest but must not be 'substantial' Mills v Mills 3.18
But for test: Impermissible purpose to issue share to dilute shareholder Whitehouse v Carlton Hotel Pty Ltd 3.18 A3.05
Buyback permitted when employees resigned but can't transfer share, co may buyback Manipulation of the market by conduct SA5.16 5.22 s1041a 'C'
Cadbury committee-sponsoring org-internal control & leadership Treadway COSO: internal control/leadership
1.09
CASAC no recommendation for further provion because of adequate access already available CASAC no recommend in access info SA4.04 4.9
Case scenario - Act bona fide & proper purpose but conflict of int & not prevent insolvent Shedworks CS3.05 3.36
CEO & CFO certify matters: cancers high earnings derived by senior Mgt Sarbanes-Oxley Act & US legislation 2.14 (old)
CEO-Role of the CEO day-to-day operations, take charge mgt, strategy & identify law issue Role of the CEO and example 4.05 SA4.1
CGC: ASX high-level committee Recommendations Corporate governance council 1.18
China: 5 types 1 state-owned enterprises; town & village enterprises; 3 joint ventures; 4
foreign-owned enterprises; 5 listed public co. Listed co in A, B, H shares Relationship-based to a rule-based sys 7.35-37
Chinese walls portable screens meant to act as a visual barrier, generally will not excludeLeakage
noise of information within organisation
SA5.15 5.20

p.26of86
 CPA107_Description
Churning prohibited is 'likely' to achieve prohibited result "Effect - objective tests"
Australian Securities Comm v Nomura 5.22 s1041b 'C'
Churning: prohibited by s1041B "Effect - objective test" North v Marra Developments Ltd 5.23 s1041b 'C'
Civil consequences of taking a bribe-general principles. Co & person paying bribe are victim Bribes-civil consequences 5.29
Civil consequences: Account amount of bribe Petrotrade Inc v Smith 5.29
Civil penalty applies for breach; criminal penalty applies to breach s.184 Penalty 3.17 s181(1)&184 'C'
Civil penalty provisions- s 180, 181, 182 and 183; Criminal penalty provision s184************
Remedies: s 180, 181, 182 and 183; 184****
3.34******** s180-184 'C'
Civil penalty s181(1) b and a criminal penalty for s184 Statutory duty for a proper purpose 3.18 s181(1) 'C'
One-Tel losses ignored until
CLERP9 & ASX corp governance principles: 1 ensure independence of auditor 2 bankruptcy& HIH collapse: director
continuous disclosure 3 improve shareholders meeting conduct 4 annual rept include abandonment ethical responsibilities to
disclosure of director 3 whistleblowing co 7.21
Code of conduct applicable to directors-self regulation as a form of regulation & Research Self-regulation as form of regulation 5.42
Codes of conduct for individual co: advantage of flexibility & commitment by mkt participantsCode of Conduct 5.45
Coles Myer-Corp governance statement Corp governance statement R4.07
Collective boycotts: 3 steps involved 1 contract, arrangement or understanding; 2
between competitors; 3 have a boycott purpose Collusion, including price fixing s45 6.18-19 s45 'T'
Collusion controls in the Mkt place: Contract, arrangement or understanding TPA s.45 6.14 s45 'T'
Collusion Mkt place: Collusion by a meeting to raise prices TPC v David Jones Pty Ltd 6.15 s45 'T' Guilty
Collusion Mkt place: parallel behaviour not illegal. TPC v Nicholas Enterprises 6.15 s45(2)aii&bii 'T' Guilty
Combined code: Hampel together Cadbury rept formulate 1/3 s/b non-executive, 3 minimum Turnbull rept broadened internal control1.12
Committee structure: utilisation board experts; recognition geographic & time
limitations; freeing up full board agenda strategic issues. Subset of board formed to
exploit expertise of directors Benefit of committee structure 2.21
Common Law and equitable duties-like a trustee and co is treated like a beneficiary Equitable duties and common law 3.14
Commonwealth Bank: responsibility for corp governance oversees the business Corp governance statement 2.34
Companies limited by guarantee: limitation on agreed to pay the guarantee Types of companies 1.04
Company low origin: Trust Law & contract law Directors duty: Trust law & contract law3.14
Comparative advertising: batteries- mislead average consumer in overall impression 'up to' Nationwide News Pty Ltd v ACCC 6.47 CSA6.11 s52 'T'
Comparative advertising: power drill-'torture test' but make clear the adv Makita v Black & Decker 6.46 s52 'T'
Comparative advertising: suits- compare of suit is permitted if it is not false, misleading/deceptive
Country Road Clothing v Najee Nominees 6.46Pty Ltd s52 'T' 'no contravention'
Comparative advertising: toothpaste- compare toothpaste, interim injunction granted forced Colgate-Palmolive
to abandon v Rexona 6.46 CSA6.10 s52 'T'
Competing with the company: non-executive director can join board of rival co Bell v Lever Bros 3.25
Competing with the company: tender a job by own co breached fiduciary duty Green v Bestobell Industries Pty Ltd 3.25
Competition in the Mkt place: business respond to changing of lower price and
improved choice for consumers & greater efficiency, higher economic growth &
increased employment Hilmer report point to competition 6.07
Competition law goals: based on workable or effective competition achieving microeconomic Competition law goals 6.09-10
Competition policy: protection & preservation of competition & policy objectives Competition Policy in Australia 6.07-08
Competitive products not sell by my dealers: depends likely anti-competitive Anti-competitive SA6.03a 6.31 s46 'T'
Compliance program 2 aspect, substantial c compliance program 2 actually implementedACCC successful
v Australian Safeway Stores Pty 6.03
Ltd
Compliance program effective importance in Federal court ACCC v. Nissan Motor Co (AU Ltd 6.03
Compliance program effective: assist a business reduce risks procedures must audited & Compliance
review program 6.05
Compliance program: designed to reduce organisation's risk of breaking the law Compliance program-integrated business6.04
Compliance program: evidence of a corp culture seriously comply with requirement of the TPC
Actv CSR Ltd 6.06
Compliance programs-The benefits for companies & their stakeholders Compliance program-avoidance of harmR6.01
Concerned effect, s 998 dealt with conduct intended 'likely' Conduct intended 'likely' SA5.17 5.22 s1041a/b,998 'C'
Conflict minimsation factors: 1Takeovers Threat 2Shareholder/stakeholder activism 3ASA Agency
4AGM theory 2.30-31
Conflict minimsation factors: Corp governance rating agencies; Role of media Agency theory 2.32
Consumer may not carefully examine Chocolate box containing 250g but shaped 500g containers Slack filing 6.57 CSA6.19 s55 'T'
Controls over distribution in the Mkt place: coercive behaviour in setting trading conditionsExclusive dealing s47 6.27-28 s47 'T'
Controls over pricing in the Mkt place Resale price maintenance 6.21-22 s48;96.3,7;98.1 'T'
Corp failure US reform & the regulation of corp governance: encouragement of corp self-regulation
US sys achieve highest level of efficiency
7.14
Corp governance contribution to business prosperity & accountability. Balance s/b corrected Hampel committee 'Supercode" 1.11
Corp governance for SME SME corp governance 2.41
Corp governance in Arts & Entertainment sector Australian Ballet 2.35
Corp governance in not-for profit organisations Public sector & SME Not-for-profit organisations 2.34
Corp governance in public sector: Public sector accountable to relevant minister for
financial outcomes with bdg & effective delivery of ser with gov't policy Public sector corp governance 2.37
Corp governance in Social services: Brotherhood of St. Laurence Social services: Brotherhood of St. Laurence
2.35
Corp governance in Sports & Leisure Sector Essendon Football Club 2.35
Corp governance issues: 1 directors function; 2 board structure & composition; 3 board
chairman; 4 board committees; 5 appointment & retirement board membership; 6
remuneration; 7 financial rept & auditing; risks mgt & internal controls; 8 code of
conduct Bosch Committee-AU 1.10
Corp governance principles recommended by Std AU follow OECD & categorised into
role, powers & responsibilities on the board, disclosure & transparency obligation,
rights & equitable Australian Standard AS8000 1.15 AS8000-8004
Corp Governance principles: 1 duty of board oversee the CEO & senior mgt; 2 Mgt
should not conflict interest with company; 3 audit committee engagement an
independent audit; 4 auditor ensure independence; 4 equitably del with employees BRT USA no "one size fits all' board 1.13
Corp governance process determine policies: director obligation & duties; sturcture;
auditor; disclosure; transparency; procedures for appointment & succession Directors role: obligation 3.03
Corp governance statements (CGS) of Santos Ltd and Coles Myer Ltd in OECD PrincipleOECD Principles in CGS SA4.07 4.17
Cadbury Committee UK audit
Corp governance: 1 no individual has unfettered powers "check balance"; 2 independent committee exclusively of non-
non-executives; 3 audit committee in board; 4. Corp governance procedures executive member 1.11
Corp governance: 1 timely & accurate disclosure of financial * non-financial records; 2
equitable treatment of shareholders; 3 clear rights & responsibilities of shareholders, APEC: basic principles & outcome key
directors & managers; 4 effective & enforceable accountability standards statements for government 1.13-1.14
Corp governance: adopted a comprehensive action plan to address abusive executive CalPERS: USA publishes list of best
compensation plans in US corp & worst performing corp 1.12
Corp governance: Asia economies rapid growth & co collapses need transparent Corp governance requirement for
accountability effective 1.08

p.27of86
 CPA107_Description
Corp governance: broadest comprehends the framework of rules, relationships, sys & HIH Insurance Justice Owen view of
processes within & by which authority is exercised & controlled in corporations Corp governance 1.07
Corp governance: checks & incentive to ensure managers maximise shareholders value Australian Treasury's Corp Law & Econ1.07 R
Corp governance: Corp is fundamentally governed by a board of directors overseeing Wheeland & Hunger view of corp
top mgt with concurrence of shareholder governance 1.07
Corp governance: evolving & dynamic complexity of corp life, convergence &
divergence simultaneously Diversity & complexity of corp governance 7.40
Corp governance: factors driving increasing expectations- 1 Globalisation of mkt; 2
Advances of IT; 3 corp increased competition; 4 investors become sophisticated need Corp governance: factors increasing
accessible info expectations 1.08
Corp governance: fraudulent financial rept/inadequate accountability and audit Corp governance recent debate 1.09
Corp governance: People, teamwork, leadership, enterprise& skills produce prosperity.
Accountability require appropriate rule & regulations Hampel rept: good corp governance 4.13
Corp governance: Principles of "Effective"-evaluate & improve the legal, institutional
& regulatory for corp governance to provide guidance & suggestions for stk ex, OECD dev principle for corp
investors, corp & other parties have a role in process of dev good corp governance governance 2.06-07
Corp governance: set of relationships between a co's mgt, board, shareholders & stakeholders OECD: Corp governance 1.07 Exam
Corp governance-three surveys: who: surveyed co by region, relative premium, diff opinion Surveys for Corp governance R7.01
Corp social reporting (CSR) should examine policies & practices of co in relation to gov'tCSR rule SA4.12 4.22
Corp social reporting and the sunshine standard manifest four steps CSR-social reporting 4.20
Corp social responsibility-Triple bottom line 'environmental, social & financial reporting'Triple bottom line reporting 4.17
Corp veil-persons control the co are separated in law from the co itself Salomon v Salomon-Phoenix co 5.32
Corporations Act prov structure minority shareholder locked into shareholding Minority shareholder SA5.10 5.13 s636,606 'C'
Country of origin: 'Made in Scotland' misleading and deceptive Trade Mark Wee McGlen 6.55 CSA6.17 s53eb 'T'
Creating/destroying majority voting power-breach of s 181 improper purpose manipulateDuty control
to retain discretion 3.19 s181 'C'
Crikey.com.au: point out theft, corruption, deception & collusion. Top paid executive , AGM & ASA, Corp governance rating
poor corp performer & takeover defence & Media: Conflict minimsation 2.31
Criminal consequences of taking bribes: punishable or 10 years imprisonment or both Bribes-payment of a secret comm 5.29 s176 'C'
Criminal law-misappropriation of corp funds theft for directors prosecuted under criminalMisappropriation
law of corp fund-R v Reid5.32
Criminal penalty provision- s.184 dishonest or reckless Criminal penalty provision 3.34 s184 'C'
CSR Ltd: set co's strategic direction & delegates responsibility for mgt ASX: listed co corp governance statement 2.33
CSR: Business Council advocate adopting policies reflect a responsible co make up
CSR Business Council of Australia 4.20
CSR: focus human rights, community involvement & environmental impact & sustainability Corp social reporting CSR 4.20
World Business Council Sustainable
CSR: publish discussion paper, policies or code of conduct on CSR Dev 4.21
CSR: Why doesn't Dow Jones do a socially responsible investing index?' Prestbo, John: CSR 4.21
Custom no defence-ethical point 'finder's fees' to agents is common practice Secret comm is customary no defence 5.31
De facto director: those hold position as director in s9bi. Same obligation with de jure director
Director: De facto directors s9 (b) (i) 3.08 s9bi 'C'
De facto directors: Austin resign but continued 'help out friends' act as a de facto directorDCT v Austin resigned but continued duty 3.09 A3.08 s9bi 'C'
De facto directors: director not re-elected in constitution at next AGM still as de facto director
R v Drysdale: director continued act in role
3.08 A3.03-04 s9bi 'C'
De facto directors: Yasseen is a de facto directors a liable Mistomorn Pty Ltd (in liq.) v Yasseen 3.09 A3.06-08 s9bi & s598 'C'
De jure directors: 1 acting as solicitor 2 appointed by AGM 3 appointment subject to AGM Director: appointed by law 3.08
Dealer network limited territory selling particular customers is legal unless anti-competitiveConfining dealer network SA6.03d 6.31 s46 'T'
Deed-of-settlement co-directors duties developed fm early predecessors of adm created co Directors duties-Deed-of-settlement 3.13
Delegation in minutes s.198D(3) exercise of power by delegate is as effective as directorDiscretion-s198D & s198D(3) 3.20 s198d,198d3 'C'
Department of Defence qualified by auditor-general for internal records error value of eqip Energex: inappropriate pay't to CEO 2.37-38
Deterring a person from engaging in competitive conduct Preventing person from entering any market6.35
Differing time horizons: maximise short-term gains & exp in long-term approaching retirement Agency cost: Opportunistic 2.23
Director act in good faith but not full disclosure profit give back Regal (Hastings) Ltd v Gulliver 3.23 SA3.5 s181,183 'C'
Director delegation in legislation or constitution permitting the board to do so. Often
breach found when co get financial diff Duty to retain discretion 3.20 s190 'C'
Director duty: 1 director had authority to exercise the power; 2 court looks at
motivation; 3 decide whether an action may be attributable to a number of Duty to act proper
purposes******************** purposes*********** 3.18********
Director duty: complexity of co & challenges this imposes on directors to carry out legal
duties Daniels v Anderson 3.06
Director in question clearly did not have an understanding the way co should operate Delonga v Australian Securities Comm 5.41
Director may owe a special duty to the specific shareholders rely on him Ethical conduct and co directors SA5.01 5.4
Director negligence including executive and non-executive director not auditor AWA Ltd v Daniels t/as Deloitte 3.06
Director obligation keep themselves informed as to financial affairs of co Statewide Tobacco Services Ltd v Morley 3.28
Director obligation to prevent co insolvent at time a debt is incurred or personal liability
debt. Corp Act imposes director duty constantly on guard against not to incur further
debt when financial instability could lead new debt not being able to be met. directors
required to keep themselves informed as to financial position of
co*********************************** Duty to prevent insolvent trading******* 3.28-29****** s588G 'C'
Director of a co who has a material personal interest must give notice of the interest Subsection & s191c 3.22 s191c 'C'
Director of a public co owes duties to corp as a whole not only the major shareholders Ethical conduct and co directors SA5.01 5.4
Director of subsidiary obtain benefit example-act in the best int avoid personal profit Subsidiary director obtain benefit SA3.02 3.13 s187 'C'
HL Bolton v TJ Graham: like human
Director role in proprietary & listed co: primary duty carry the corp governance policies being 3.05
Director s228-families of directors;ss217-227 entity w/o member; s 207 financial benefit'sRelated-party
229 transactions 3.26-27 s217-29,07 'C'
Director satisfy the ground claim defense when co insolvent at the time incurred a debt Insolvent SA3.06 3.30 s588h 'C'
Director unstilted to rely reliance was made in good faith & after making independent assessment
Reliance-protection from adverse effects3.21 s189 'C'
Directors automatically liable for losses suffered by third parties s 588G Directors liable liability SA5.08 5.11 S588g 'C'
Directors duties trust law is reason the duties 'fiduciary' relationship trustee & beneficiaryFiduciary duty-trustee & beneficiary SA3.06 3.30
Directors must not misuse corp funds by mixing money with their own in intention************ Misappropriation of corp funds******** 5.31******** s181 'C'
Directors no duty owed to employee Parke v Daily News Ltd 3.17
Directors remuneration disclosure transparency report Greenbury Committee UK: 1.11
Directors to confer a managing director powers with revoke or vary the delegation Discretion-s 198C 3.20 s198c 'C'
Disqualification director carrying out the policy the corp in charge & not making decisionCullento it direction
v CAC 5.35
Disqualified from managing a corp by ASIC ASIC v Keech 5.41
Disqualify power issues of commercial morality & standards of competence directors to reach Friend v Corp Affairs comm 5.40 s206 'C'

p.28of86
 CPA107_Description
Disqualify with notions of honesty and competence Punishing to poor judgment 5.39 s206d 'C'
Disqualify-ASIC power important difference the power of court and ASIC is liquidation ASIC powers to disqualify 5.39 s206d 'C'
Does not apply to proprietary co with one director s191 No distinction public and proprietary 3.22 s191c 'C'
Duration of dealer is illegal considered anti-competitive Anti-competitive SA6.03b 6.31 s46 'T'
Duty for act in best int but not contradicted (no order against directors) still invalid**********
Hogg v Cramphorn****************** 3.19********
Duty of care, skill & diligence: 3 basic no greater skill, no need to attend all meeting; justified
City Equitable
trust Fire Insurance Ltd 3.27 objective test
Duty of care, skill & diligence: today's standard higher ASC v Gallagher 3.27 objective test
Duty of care, skill & diligence: today's standard higher AWA Ltd v Daniels t/as Deloitte 3.27 objective test
Duty of care, skill & diligence: today's standard higher Overend & Gurney Co v Gibb 3.27 objective test
Duty to act bona fide but improper purpose invalid*********************************** Howard Smith v Ampol Petroleum Ltd**** 3.19 ******** subjective test
Duty to act bona fide in the best interests of the company: Fiduciary duty Directors' duties 3.36
Duty to act bona fide: refusal to register was bona fide & attacked shown to be in bad faith Smith & Fawcett Ltd 3.15
Duty to act bona fide-act in good faith, honestly, without fraud or collusion. Subjective test Duty to act bona fide in best int of co 3.14
Duty to act with care, skill and diligence: statute law obligation Not a fiduciary duty Directors' duties 3.36
Duty to avoid conflict of interest by examination: contract/personal profits/competing with Directors
co behavior examination by court3.21 objective test
Duty to avoid conflicts of interests: Fiduciary duty Common law Directors' duties 3.36
Duty to exercise powers for their proper purpose: Fiduciary duty Common Law Directors' duties 3.36
Duty to exerciser powers for proper purposes. Objective test Statutory duty of good faith 3.17 s181(1) 'C'
Duty to prevent insolvent trading defences available to
director************************* Duty to prevent insolvent trading******* 3.29******** s588h 'C'
Duty to prevent insolvent: director failed to disclose co's worsening financial position to creditor
Tourprint Int'l Pty Ltd v Bott 3.30 s588h4 'C'
Duty to retain discretion: Director allow manager sign chq for co. Director liable to co for Gould
loss v Mt Oxide Mines Ltd 3.20 objective test
Duty to retain discretion: director to liable to the co for loss as a result of unauthorised pay't
Gould v Mt Oxide Mines Ltd 3.20 objective test
Duty to retain their discretionary powers: Fiduciary duty Common Law Directors' duties 3.36
East Asia corp governance dev 1 more accountable & transparent operation 2 ensuring
effective control & regulation by external agencies 3 training to dev understanding
sound corp governance practices Corp governance dev in east Asia 7.31
East Asia main principle & objectives process: 1 ensuring clear & effective financial
control sturcture 2 dev external monitoring & control with improvement in legal 3
advancing training & dev program Corporate governance in East Asia 7.30
East Asia: 1 Information asymmetries are more severe 2 contracting costs are higher
because stk practices not dev enforcement of contracts 3 adm agencies are less able to
handle issue benefit fm detailed rule making & non-legal adm enforcement such as a/c
std, disclosure East Asia MC7.08
East Asia: board often no clearly defined role for non-executive director & lack of
knowledge of obligation & function of co officers; decision-making bodies not effective
in formal role, unable to exercise right, & boards are co-opted by dominant
shareholders; disclosure & transparency tend to kept a bare minimum. East Asia Corp governance MC7.09
East Asia: Financial crises & the beginning of reform:TH managed float, reform process Japan: for Asia keiretsu sys, trust-based form 7.30-34
East asks important element: decision-making structure & role ensure effective
governance & financial control 2 clear definition of duties & responsibilities 3 more Corp governance codes important
rigorous monitoring & rept requirement element 7.30
Economic on new knowledge & info-based networked economy with potential to
capitalise on Metcalfe's Law-scale of a network expand linearly, use expands
geometrically. Metcalfe's Law: new economy 7.17
Egoism-Actions are moral when consequences are in the best long-term int of the individual Ethical conduct and co directors 5.05
Electronic data collection by regulator to provide confidentially by ASIC, ASX, ACCC &ITATO regulator 4.25
Eliminating/substantially damaging competitor: Predatory pricing/squeezing source of supply Market power: Prevent person entering mkt6.34 s46 'T'
Elkington, John-Cannibals with Forks: Triple Bottom Line 'financial, environmental & social Triplea/c'
bottom line accounting SA4.11 4.19
Empire Building: Acts by mgt to increase size 'empires' to justify increased salary, perks/power
Agency costs: e.g. pur subsidiary 2.23
Enron case analysis Enron case analysis 7.40-42
Enron case failure corp governance: failure to 1 disclose 2 transparency 3 board 4
conflict of int 5 conflict of int external auditor 6 failure in morality & ethical basis Enron case analysis SA7.08 7.42
Enron means for the mgt & control of the modern business corp: some initial reflections Shareholder capitalism-American style R7.02
Enron: CEO & CFO cert rept complies with rept requirement; misconduct co, CEO & Sarbanes-Oxley Act: Enron created-
CFO reim the co for bonus or equity or incentive-based compensation paid and prof fm off-balance sheet entities to hide 7.17-18
sales of securities realised in 12-month period after first publication of a/c liabilities& boost rept earnings MC7.04
Environmental a/c-keeping track depletion of co assets, assessing value of treatment & disposalEnvironmental reporting SA4.09 4.18
Environmental accounting-conscience of all stakeholders Environmental reporting 4.17-18
Equity market: Japan lies in middle of US/UK heavily equity-based mkt, EU smaller equity OECD:mkt equity market 7.32
Ethical aspects of takeovers: 1 Director have self-int; 2 shareholders need possession of
relevant information to sell share to offerer; 3 open & transparent
fashion********************** Takeover law key points s606********** 5.11-12***** s606(1) 'C'
Ethical conduct result in Director & co. Criminal law & civil liability Ethical conduct and co directors SA5.03 5.6
Ethical perspective takeover law take into a/c a person's relevant interest in shares t/r to coRelevant interest - takeover law SA5.12 5.14 s611 'C'
Ethical principles - Utilitarianism; Egoism and The Kantian ethic Ethical conduct and co directors 5.04-5.05

Ethical principles-practical reasons 1 good corp reputation & quality employees

retaining; 2 failure of corp adopt ethical practices may cases prompt gov't intervention;
3 failure ensure compliance disregard for law & morality in corp conduct Ethical conduct and co directors 5.06
Ethical standards - "proactive" for forester high standards of behavious and "Law - reactive"
Code of conduct: Law and Ethical 5.07
Ethics and black-letter law Ethics and black-letter law 5.06
Ethics as moral principle or a set or moral value is considered correct or goods Brokensha, Peter: Ethics 5.04
Ethics build in public & global gov't regimes for major reforms. Importance of ethics &
corp governance as one of the key issues directors & officers have to face in order to
regain credibility in the Mkt
****************************************************** Corp scandals with corp collapse*******
5.02-.03*****
Ethics is judgment, not rules - importance of ethics in the culture of corp Ethical conduct and co directors 5.02-5.03
Ethics not sufficient to simply have corp governance legislation Cohen, Ethics is judgment, not rules 5.03
EU corp governance policy: 1 Co law 2 employee representation 3 stakeholder issues 4
shareholder rights & participation mechanics 5 board structure, role & responsibilities 6
independence & leadership 7 board committees 8 disclosure Well, Gotshal & Manges 7.24
Europe reform of Corp governance institution: continuous improvement of corp governance A Modern Regulatory Framework for Co 7.26-27
Law Europe

p.29of86
 CPA107_Description
European a/c: appropriate bal of power at board; audit committee examining financial
rept; policy on non-audit services, extended (long form) rept to board by external FEE & Winter report: emphasis wider
auditors in combination with oral presentation & in-depth ex of views; review the aspect of internal control & related
auditors role & independence processes of risk mgt 7.28 MC7.07
European cooperative relationships: insider model relies int on board of direct.
Protection stockmarket and threat of takeover, bank play active role, shareholders are Anglo-Saxon emphasizes competition
widespread & mkt processes 7.22-23
European corp governance-FEE rept int in 1 internal control 2 financial rept 3 audit
committee 4 rept by external auditors to shareholders & mgt 5 internal audit 6 FEE report: European accounting
shareholders meeting profession 7.27-28
European countries: 1 ownership & control held by cohesive group of insider have long-
term stable relationships 2 insider group connection with drawn fm family int, allied
industrial concerns, bank & holding co 3 insider groups monitor mgt act under their
control Insider model 7.22
European relationship-based disadvantage: 1 discipline of mgt in securities mkt is weak
2 mkt for corp control is weak, eliminating threat of takeover 3 lack of dev of
institutional investors 4 less emphasis on public disclosure of info 5 shareholder
agreement & voting restriction allow minority group to exercise control 6 elaborate
governance procedure can be time-consuming 7 inter-locking business network
complacency rather than competitiveness Relationship-based sys SA7.06 7.28
European relationship-based insider sys advantage: 1 diverse int on board of direct 2
insider group monitor mgt & less agency problems 3 wide group of stakeholders
actively recognised 4 close relationship with bank provide stable finance 5 inter-corp
shareholding provide stability of ownership 6 established governance procedures 7
longer-term business strategies Relationship-based sys SA7.06 7.28
European union dev corp governance: 1 privatisation of state-owned co; 2 growth &
diffusion of sharehold in countries; 3 increased merger & takeover activity Germany-small & medium-sized unicorn7.24-25
European Union toward int'l: important distinction: 1Co law 2 employee representation
3 stakeholder issues 4 shareholder rights & participation mechanics 5 board structure 6
roles & responsibilities 7 supervisory body independence & leadership 7 board
committees 8 disclosure Weil, Gotshal & Manages: corp gov in EU 7.24
Europeans emphasis cooperative relationship & reaching consensus, Anglo-Saxon
tradition emphasis competition & mkt processes. Insider model relies on representation
of int on the board of directors Relationship-based sys 7.22 MC7.22
Evaluation board performance-assessing success profitability and return on invested fundAICD & Bosch Rept 4.28
Exclusive Australian agency appointed by overseas distributor is legal Appointed exclusive Australian agent SA6.03c 6.31 s46 'T'
Exclusive dealing can be authorised , even 'third-line forcing' can be authorised Third-line forcing can be authorised SA6.03e 6.31 s46 'T'
Exclusive dealing s47: no evidence exclusive dealing. Not producing anti-competitive effect Outboard Marine AU v Hecar Investments 6.28 s47 'T' 'No Guilty'
Exclusive dealing-anti-competitive: sufficient push price competitors s47 O'Brien Glass Ind. Pty Ltd v Cool & Sons6.29
Pty Ltd s47 'T'
Executive and non-executive directors: two basis Executive and non-executive directors 3.11
Executive compensation guideline: motivating & retain employee; attract quality mgt &
share co reward and 4 basic principles: remuneration comparable with mkt; reward
linked to benchmark; individual elements identified & disclosed; transparency, Agency costs: executive compensation
accountability & fairness scheme 2.29
Fair or Mkt Failure: s46 substantial degree of mkt power & s50 prohibition of mergers Joint Select Committee 6.37 s46,50 'T'
False & misleading representation: monetary penalty imposed by ACCC Goods of particular std, quality, value 6.52-53 s53,55 'T'
False & misleading representation: s53a,aa,b,bb,c,d,e,ea,eb,f,g Misleading & False representation 6.52 s53 'T'
False or misleading statement in relation to securities s1041E "refer to statement" False or misleading statements 5.25 s1041e 'C'
False representation as to price examples Adv false representations as to price 6.55 T6.2 s53e 'T'
False trading & Mkt rigging transactions s1041b: artificial transaction result in the price Market rigging and false trading trans 5.22 s1041b,c 'C'/s52 T
adv particular persons agreed to
falsely represent that a particular person has agreed to acquire goods or services acquire 6.52 s53bb 'T'
falsely represent that goods are new adv goods are new but is not 6.52 s53b 'T'
adv discounted shop-floor stk which is
falsely represent that goods are of particular standard quality, value, grade, composition, rtn fm three-month loan to someone
style or model or have a particular history or particular previous use use 6.52 s53a 'T'

falsely represent that services are of particular standard, quality, value or grade adv tennis tournament but not the case 6.52 s53aa 'T'
Family-based insider sys benefits: 1 flexibility & dynamism contributed to rapid
economic growth 2 unity of ownership & control eliminate principal/agent problem 3
investors support successful mgt teams & companies 5 sense of purpose & cohesion
with understanding of customary practices 6 strength & stability of tradition Insider sys SA7.07 7.39

Family-based insider sys cost: 1 persistent problems of neglect of minority shareholders

2 pyramidal structures acquire control of operation cashflow disproportionate to equity
stake in co 3 independence & diligence of board called into question 4 std of disclosure
& transparency are minimum 5 regulators are unable to act on poor information &
access 6 enforcement of contract is problematic because of weak courts Insider sys SA7.07 7.39
Fiduciary duties-relationship between trustee and investor Trustees-deed-of-settlement companies 3.13
Fiduciary duty: director owe duty also to shareholders if nature of transaction rise fiduciary
Brunninghausen
duty v Glavanics 3.16 A3.09 SA3.02
Financial institution s remained weak & unreformed. Corp law in Japan modeled on
German sys Japan: keiretsu sys, trust-based form 7.31
Financial Services Reform Act 2001 & CLERP 9: ASIC sue Adler breach director duty ASIC v Adler (HIH) 5.07
Fixing, controlling/maintaining price, price fixing arrangement: Guilt and agreed to penalties
ACCC v Pioneer Concrete 6.17 s45 'T' Guilty
Formal takeover bid shares to be acquired more than 3% in 6 months permitted Takeover Law SA5.09 5.13 s611 'C'
France & Italy: France majority of shares owned by non-financial enterprise 2 cross-
participation is important element of corp governance 3 cross-praticipation shield
managers fm short-term pressure of mkt by making change in corp control more 7.26 &
difficult Italy & France MC7.06
Franchisee impact of tying condition would be no substantially lessen competition,
third-line forcing is illegal outright Exclusive dealing s47 6.28 & CS6.4 s47 'T'
Franchising-regulated by a voluntary code of practice not mandatory code TPA s47,s45,s48 6.30 s47,45,48 'T'
Fraudulently inducing persons to deal in securities-wrongdoers issue statement s1041F False or misleading statement 5.25 s1041f 'C'
FRC recommendations: 1. Chairman should not involved chairman's remuneration; 2 Higgs & Smith's with FRC 'UK
half of board s/b independent non-executive directors; 3 AGM of non-executive standard setting board' recognised in
directors chaired by senior independent director without presence of the chairman 'comply or explain' principle 1.12

p.30of86
 CPA107_Description
Free Mkt : Wealth will be maximised by allowing Mkt s free of restrictions & co free to run Friedman, Milton: co should not pay tax1.21
Free-Mkt : lobby groups against laws & regulations being proposed, unregulated free-Mkt Regulation vs deregulation: free mkt 1.21-22
Full disclosure-foundation upon the integrity of equity mkt is built Disclosure & transparency SA7.01 7.07
General body: 'Corporations' as a general body & can’t discriminate between majority & Greenhalgh
minority v Arderne C 3.15 A3.02
German & Japanese industry seem destined for ascendancy as relentlessly pursue export Japanese
success & Germany industry 7.16
German: dual board structure. Two-tier board sturcture. Overlaps in membership
between two boards not allow with same firm & symmetric cross-overlaps between two
firms are also prohibited OECD: German business 7.25
Germany business: 1 strong concentration of ownership of individual enterprises 2
importance of small & medium-sized unincorp co 3 close correspondence between Germany: Central characteristic of
owners & managers 4 limited role play by stk mkt corp governance 7.25
Corp governance-10 principles good
Good corp governance: not expected to applied rigidly will be a bench mark for good corp
corp *******************************
governance*********************************************************** * 4.14-15******
Good Reputation Index: Mgt of employees, environmental performance, social impact, ethic, Ethical
fin…
conduct and co directors 5.03
Goods of particular std, quality, value: winding back odometer of a car misrepresent previousEva vuseSouthern Motors Box Hill 6.53 CSA6.14 s53a 'T'
Governance issues: long-term perspective; Risks of family firms; growth complexity;
Cadbury-fairness of rewards SME corp governance 2.42-43
Gov't improvement: lack of effective governance for several authorities in unclear
delegation, no clarity relationship with Ministers & portfolio dept, lack of accountability
for exercise of power. Complicated by board impractical for gov't provide full
governing powers required be effective Uhrig Rept 2.39
Gov't makes laws by ASIC ACCC & ATO; recommendations: IASC ASX & AASB F1.1 Corp governance: role of governance 1.19-20
Gratuitous pay't-inhibit altruism gratuitous pay't to worker & no duty owed to employeesParke v Daily News Ltd 3.15 A3.03
Greenbury Report Recommendations- Santos Ltd and Coles Myer Ltd Santos Ltd & Coles Myer Ltd R4.13
Groups were important to countermand the power to companies Galbraith, John Kenneth USA economist1.21
Hampel recommended audit committee should non-executive directors with same obligations Executive & non-executive directors 3.10
Hampel Rept: summary of conclusion & recommendations of committee on corp governance Committee on Corp Governance R3.01
HIH case failure corp governance: failure to 1 realise responsibilities 2 domination by
CEO to acted as publicly owned 3 inadequate financial control 4 not due diligence 5
irresponsible operation & strategy 6 inadequate financial & accounting control 7 failure
of act diligently 8 fail to disclosure & transparency 9 indulgence while neglecting
responsibilities HIH SA7.09 7.44
HIH Insurance analysis HIH 7.43-44
IASB structure: IASC foundation Trustees appoint IASB exercise oversight & raise IASB assumed accounting standard-
funds needed , whereas IASB sole responsibility for setting accounting standards setting 1.15
IFAC: emphasis responsibilities of mgt for info & financial mgt & internal controls to produce
Sarbanes-Oxley Act 2002 USA 1.09
IFAC: produced research report on Rebuilding Public confidence in Financial Rept Co should set out their ethical policies code
1.09 Exam
Importance in the culture Accompanied by good leadership; instill corp value; law Ethics in the culture 5.03
Improper use of position in the co: obligation of director to co reflected in statutory position
Furs Ltd v Tomkies 3.25 s182 'C'
Improper use of position in the company: break director obligation reflected in statutory position
Cooke v Deeks 3.25 s182 'C'
Improper use of position in the company: break director obligation reflected in statutory position
Furs Ltd v Tomkies 3.25 s182 'C'
Indirect interest still caused a breach of duty by director as benefit fm co securing the loan
Victors Ltd v Linguard 3.22
Inducement: induce a retailer not to sell below to be resale price maintenance. is an inducement
TPC v Medad Pty Ltd 6.23 s48 'T' Guilty
Information asymmetry: A/c no. indicators performance & share price & shareholders wealth Agency theory: role for accounting 2.23
Information not generally available which as a material effect on the price Generally available information 5.18 s1042c(1) 'C'
Information technology increase disclosure-improving disclosure Disclosure-new technology 3.31
Information: matter of supposition and matters relating to the intention Information 5.18 s1042a 'C'
Insider information-prohibits insiders 'tipping' others with price-sensitive information Insider-trading legislation policy 5.17 s1043a 'C'
Insider sys: redistribute control 1 pyramid corp structures 2 shareholder agreements 3
discriminatory voting rights 4 reduce the participation or influence of other minority Bank & business network: deeper
investors insiders 7.23-24
Insider trading: 1. Fairness mkt price; 2 fiduciary duties to co & shareholders; 3
preventing damaging mkt integrity; 4 prevent injury to
securities***************************** Inside trading prevent reasons********5.15-16****** s1042a/1043a 'C'
Insider-trading legislation -apply to officers may benefit fm information & material effectInsider-trading
price legislation policy 5.17 s1042a/s1043a 'C'
Insider-trading legislation only officers of co would overall too limiting for two reasons Insider-trading legislation policy SA5.13 5.17 s1042a/1043a 'C'
Insider-trading: Corp Act prohibits would have a material effect on the price or value of securities
Insider-trading legislation policy******* 5.14-15****** p2d.1, s183 'C'
Institution investors-ins co, p fund, investment trusts & professional investment fund manager
Hampel Report-dialogue between investors 4.10
Institutional investment: US & UK high equity shares, Germany & France considerable Financial assets of institutional
growth, Japanese declined proportion of institutional investment investors 7.05 T7.1&7.2
Institutional investor more concerned to move in & out of positions mkt for best rtn. "free-riding'
Cadbury Rept: Institutional investors 4.10
Institutional investors express views should take active int in investing co - Hampel reporHampel Report-institutional investors SA4.05 4.11
Institutional investors-right to exercise its responsibilities as a corp owner & encourage CalPERS:Institutional investors-
other shareholders to do aimed at benchmarking corp governance individually 4.11
Internationalization of Corp governance: 1 society toward openness; 2 scale & activity
of corp in determining the prosperity & well-being of economies; increase individual
wealth in institutions investment (PF & ins co); effective monitoring & improved
standards Public interest explanations 7.03
Int'l Capital Mkt: Business Sector Advisory Group on Corp Governance to OECD OECD 7.03
Int'l developments: UK: less black letter law; USA moved to black letter (Sarbanes-Oxley) Corp Governance: UK less law, USA to3.11 law
Int'l investors: BRT published Statement on Corp Governance stress 'soft' factors like
quality of director & personalities of directors. (Other changes also required) BRT involved debate 4.11-12
Int'l standard-improving disclosure by new technology offers opportunities, fax Disclosure-Int'l standard 3.32
Investor's interests-investment opportunity empowering for individual investors 'mum & Mum dad' & Dad investors confident invest 4.08

Irrational exuberance: scramble to make serious money overnight in dot.com revolution Shiller: dot.com 7.17
IT-benefit on continuously and easily assess financial health of co. IT benefit 4.24
IT-integrity & security of IT sys are absolutely vital IT possible causes 4.24
IT-obligations board to understand new technology. Co may losing important memory &IT history
obligations 4.24
IT-services centralised databases, data t/f,bar coding, video conferencing, email, fax, internet…
IT 4.23-24
Japanese bank: 1 ex ante-investment & loan 2 interim-cashflows at co's a/c 3 ex post-corrective
Aoki & Okuno: corp governance structure 7.33
Kantian Ethic-moral laws capable of being universally applied by everyone Triple bottom line: reflected Kantian ethic
5.05

p.31of86
 CPA107_Description
Key governance issues: maintain solvency on containing cots to efficient & effective outcomes
Not-for -profit corp governance 2.36

Large proprietary co, unlisted public co other co are required prepare annual rept, do not
need to contain corp governance statements. Unlisted public co stringent rept obligation
but Corp Act still doesn't require corp governance statements*************** Corp Act: annual report ******** 4.15*******
Law may less effective than voluntary code of conduct examples Ethical and Law SA5.04 5.7
Lawful takeover - reasons for selling their share to the bided and not to sell; acquisition creep**
Takeover: acquisition creep**********5.13******* s636,606 'C'
Laws applicable unethical-misleading conduct, co takeover, insider trading, manipulation…. Law approach of ethical conduct 5.07
Legal compliance: sound legal compliance program reduce corp risk Legal compliance 6.04
Legislation not distinction between small and other investors Not small and other investors 5.10 s728.3 'C'
Legitimate interest to shareholder: short-term interest less importance than co commercialDarvall
concern v North Sydney Brick & Tile Co3.16
Ltd
Lessening of competition: resulted in a substantial lessening of competition Ah Toy J Pty Ltd v Thiess Toyota Pty Ltd6.19 s45(2) 'T' Guilty
Liable if not accuracy and completeness; s 729 misleading statement in prospectuses s 731 and s 729 5.10 s731,729 'C'
Lie in maximisation co profit; made shareholder happy, bldg investor confidence, complyDirectors'
ASX ruleinterest 4.06
Likely effects and strikes at negligent conduct (careless of the truth) False or misleading statement in securities
SA5.20 5.25 s1041e 'C'
Limited Liability Companies: limited by share are most common type of company Types of companies 1.04
Limited to the amt to the co when the shares were is limited to the amount o/s shares issued Types of companies 1.04 Exam
Lobbying group: Gov't pass laws affect operations by frequently influence by submit
written or face-to-face discussions; groups: consumer; clubs; trade unions;
environmental & churches Groups: lobbying 1.20-21
Lobbying: AU Mining Industry Asso; AU Retailers Association; Business Council of
AU; National Farmers Federation; Victorian Chamber of Commerce; AU Chamber of
Manufacturers Industry & trade associations: lobbying 1.20-21
Made in…' claims: 50% prod in that country s65ab, Built in… or Assembled in ..' ss52&53eb Product of… s65ac 6.56 s65,s52,s53 'T'
make a false or misleading representation concerning the availability of facilities for the
repair of goods or of spare parts for goods facilities for repair of goods but not 6.52 s53ea 'T
make a false or misleading representation concerning the existence, exclusion or effect warranty 12 month but inside only 90
of any condition, warranty, guarantee, right or remedy days 6.52 s53g 'T'

make a false or misleading representation concerning the need for any goods or services need for goods is not 6.52 s53f 'T'
Whisky not made in Scotland but
picture of Scotsman will misleading &
make a false or misleading representation concerning the place of origin of goods deceptive 6.52 & 6.56 s53eb 'T'

make a false or misleading representation with respect to the price of goods or services adv 600 now 450, but never 600 6.52 s53e 'T'
Managerial capitalism: US corp successful grow managers become dominant players newMillstein:forms US sys 7.15
Managing a corp: includes directors powers broader to controls a co irrespective of position
Brick & Pipe Industries v Occidental Life
5.35
Managing a corp-3 categories 1 automatic; disqualification by court; 3 disqualification byDisqualification
ASIC of directors 5.35 s206 'C'
Managing affairs information Managing affairs information R4.12
Managing corporation-disqualification of directors s206A Managing corporation 5.35 s206a 'C' P2d.6
Manipulation mkt by conduct & statement: create false/misleading appearance active trade Endresz
sharesv Whitehouse 5.21 s1041a/b,998 'C'
Manipulation mkt prohibited by protect community & integrity of mkt apply artificially price***
Market manipulation s 1041A "Effect"** 5.20******** s1041 'C'
Manipulation of the Mkt by conduct and statements "General section-liable with other section"
Market manipulation s 1041A 5.20-21 s1041a 'C'
Manipulation of the Mkt by conduct and statements s997 "intention" Market manipulation s 1041a "Effect"** 5.20-21 s1041a & s997
Manufacturer of video recorders price suggest:pre-eminent expression competition-competition
Collusive price fixing agreements45 6.16 CSA6.1 s45 'T'
Mareva injunctions-misappropriated co fund freezing director assets until identification asset
Court assistance-misappropriated co fund5.32
Market-based sys functional convergence by forces: 1 influence stock ex, toward IAS, globalConvergence
co & diversity 7.39
Market-based sys: 1 disclosure based 2 bank less central in outsider model, bank
finance is short term,3 shareholder have right to voting power 4 investors' capacity to
discipline mgt is greater in ability to buy or sell the shares US & UK including AU and NZ 7.06
Market-based sys: economies adopted this model of corp governance, equity is widely
distributed among individual & institutional investors Nestor & Thompson: market-based sys 7.04
Material personal interest requires "Real sensible possibility of conflict" Aberdeen Ry v Blaikie 3.22 s191c 'C'
Material: co's dealings with customers in question, the coup is influence investors in dealing
R v shares
Evans and Doyle 5.19 s1042d 'C'
Maximising 'share price'/'profitability': advantages & disadvantage Agency cost: Performance-based remuneration
2.25
Menu of choice approach to corp governance standard for appropriate to specific risk profile
OECD: Int'l corp governance code 7.39-40
Mergers: concentrate on preventing accumulations of power by acquisition Dominance-affecting: mergers 6.37 s50 'T'
Mergers: direct/indirect acquisition shares/assets;effect of substantially lessening competition
Takeovers & mergers prevent 6.37 s50,45,46 'T'
Mgt compensation: Performance-based remuneration, bonus plans, stock option Compensation: performance rept 2.25
Misappropriated co funds: director caused money to benefit his own co breached duty Totex-Adon Pty Ltd v Marco 5.32
Misleading & deceptive business conduct (s52):advertise, auditors role & intellectual property
Mkt & advertising 6.40-41 s52 'T'
Misleading & deceptive: "reasonable man" at common law no role connection TPA Annand & Thompson Pty v TPC 6.43 s52 'T' "Guilty'
Misleading & deceptive: a corp acted honestly label injunction Parkdale Custom Built Furniture v Puxu6.42
Pty Ltd s52 'T'
Misleading & deceptive: car rental- misleading Dewhirst & Kay Rent-A-Car v Budget Rent-A
6.45 Car Sys s52,53a.b.c,55 'T'
Misleading & deceptive: confused by misleading conduct Taco Co. of Australia v Taco Bell Pty Ltd
6.42 CSA6.8 s52 'T'
Misleading & deceptive: countervailing gullible or 'credulous' consumers misled Ciba-Geigy Canada Ltd v Apotex Inc 6.43 CSA6.8 s52 'T'
Misleading & deceptive: cricket: not to be judged according to knowledgeable cricket followers
World Series Cricket v Parish 6.43 s52 'T'
Misleading & deceptive: sold 'Big Mac' & wine different to lead not be misled McWilliam's Wines v McDonald's 6.44 s52 'T'
Misleading & deceptive-adv co mistake: falsely representing goods accessories they did not Evahave
v Mazda Motors 6.42 CSA6.7 s52 'T' "Guilty'
Misleading & deceptive-cigarette: supported 'independent scientific analysis' must literally
Tobacco
true Institute v AFCO 6.41 CSA6.6 s52 'T'
Misleading & deceptive-shoes flaw: unqualified statement adv good 'top quality' Macfarlane v John Martin & co. Ltd 6.42 s53a 'T' 'Guilty'
Misleading & likely to induce pur of securities Australian Securities Comm v McLeod 5.25 s999 'C'
Misleading or deceptive conduct in relation to Corp securities TPA s 52 & s 1041H**********Misleading or deceptive conduct******* 5.08-09***** s1041H P6d.3 'C'
Misleading or deceptive conduct is not a criminal offence only civilly liable. Repay the Insider trading & market manipulation,
damage or disqualified but no in misleading or deceptive
jail**************************************************** conduct******* 5.09******** s1041H 'C'
Misleading or deceptive conduct: e.g. investor failure to disclose was one factor to Silence: : failure to disclose
mislead s42 information MC5.03 p.5.05 s1041H
Misleading or deceptive conduct: not a misleading statement for election directorship NRMA Yates v Whitlam 5.09 s995, Part 6d.3 'C'
Misuse of market power: concentrate on controlling the activities of powerful firms Monopolisation 6.37 s46 'T'
Misuse of Mkt power break: 1 substantial degree of power in relevant Mkt ; 2 taken
advantage of Mkt power; 3 1 of 3 unlawful purposes Décor Pty Ltd supply 6.31 CSA6.5 s46 'T'
Misused of co funds: Money lent to directors to pur property, director held the property inPaul
co trust
A. Davies (Aust) Pty Ltd v Davies 3.23

p.32of86
 CPA107_Description
Mkt power misused committed an offence Substantial degree of mkt power-offenceSA6.04b 6.37 s46 'T'
Mkt power misused when engaged irrelevant conduct in a competitive Mkt Substantial degree of mkt power-misusedSA6.04c 6.37 s46 'T'
Mkt share held by competitors, availability of imports, barriers to entry, financial strength
Substantial degree of mkt power-when SA6.04a 6.37 s46 'T'
Mkt-based outsider model: 1 widespread equity ownership; 2 co law faces shareholder
int; 3 emphasis on minority shareholder protection; 4 disclosure require Corporate governance outsider model 7.04
Mkt-based sys of corp governance in outsider systems with disclosure base 1
widespread equity ownership 2 shareholder int as primary focus of co law 3 emphasis
on minority shareholder protection 4 stringent requirement for disclosure US & UK including AU and NZ 7.04
Monitoring costs: costs of external audit & mgt compensation plans Agency costs 2.22

Nature & extent; amount of loss; circumstances; degree of power; deliberateness of

contravention and the period; mgt conduct; corp culture & disposition to cooperate with
authorities responsible ************************************************* TPC v CSR Ltd****************** 6.13*******
Need for good corp governance in the public sector: failure ensure obj &
accountabilities in pass Public sector corp governance 2.37
New economy 1 grow without threat of recession 2 continues to expand without
increasing inflation 3 restructure efficiency & productivity 4 new IT & capital 5
function 6 balanced budget 7 globalised & export driven Weinstein: new economy 7.16
No-liability companies (NL appear in company's name) Types of companies 1.05
Nomination committee: recommend potential board appointment of board members Nomination committee: consider board processes
2.20
Nominations committees should have nomination candidates & assessing CEO Hampel & Greenbury recom. all
performance, individual directors & board as a whole independent director 4.27
Nominations committees: clear terms of reference for committees responsibilities &
procedures should understanding independent directors should be free to act Greenbury & Hampel recom. all
independently independent director 4.27
Nominee director vote according to appointor's (parent co) instructions relieved fm breachingThorbydutyv Goldberg 3.20 s187 'C'
Nominee Directors duty: Subsidiary precedence over the Society Ltd if no constitution Scottish Co-oper Wholes Soc v Meyer 3.12 s187 'C'
Nominee directors: appointed to represent the interest of particular class of
shareholders. UK & AU request to act in the best interest of co as a whole Nominee directors 3.12
Nominee directors-should not put interest of group ahead of interest of co as whole Walker v Wimborne 3.16
Non-executive directors benefits arise Non-executive directors SA3.01 3.11
Not a fiduciary duty, on a common law obligation. Director make profit take risks.
Section imposes objective 'reasonable person' test Duty of care, skill & diligence 3.28 s180 'C'
Not imposed criminal liability for easy to contravene and strict liability TPA SA5.05 5.9 s1041h 'C' & s52 T
NZ equity market is smallest mkt relative to GDP. 1 Small size firms, Dividend treats
equity , stk mkt not enjoy a strong reputation compliance & governance std not match
advanced ind mkt Healey for NZ public equity mkt 7.12
O'Brien. Mary-increase in gingival investors will continue to have far-reaching effect Individual shareholder-transparent co 4.08
OECD & ASX code with regard to shareholders rights ASX & OECD shareholders rights 2.10 SA2.2
OECD Int'l-White Paper Asia
OECD 5 principles: 1 shareholders' rights protection; 2 shareholders equitable economies. Evaluate/improve corp
treatment; 3 stakeholders role; 4 disclosure & transparency; 5 board responsibilities governance 1.10
OECD principles of corp govern: Rights, Equitable treatment; role, disclosure; responsibilities
Corp govern: OECD principle R2.01 Slide 47-48
OECD principles-provide legislative protection of shareholders right by auditor to disclosureCorp governance-achieving goals 4.12
OECD: 'corp governance framework ensure strategic guidance of co, effective monitoringHampel of mgt Report: Board of directors 2.15 R2.3
Ok Tedi-BHP incurred loss in public relation failure of ethical & moral standard no 'blackEnvironmental
letter' cost-BHP 4.18-19
Opportunistic: Over-consumption, Empire building, Risk avoidance; differing time horizons Agency cost: Opportunistic 2.23
Organisations: Purpose; Objective; Ownership & Governance Table 1.1 Sole trader/Private/Public/unincorp asso.1.06
Outsider strength 1 dispersed ownership & strong institutional investors 2 primacy of
shareholder int in co law 3 emphasis on protection of minority shareholder int 4
disclosure require 4 fluid capital investment in dynamic economy 4 competitive
performance Outsider system of corp governance SA7.05 7.22
Outsider sys 1 independence of audit & accountancy professions 2 lack of
accountability, disclosure & transparency of boards 4 adequacy of board structure &
process 4 quality of director competencies Outsider system of corp governance MC7.03
Outsider sys as disclosure-based: 1 investor reliable info to make decision 2 regulation
intended to ensure complete info to investors 3 bank finance in short term 4 equity
shares significant than bonds & loans Anglo-American MC7.02
Outsider sys weakness: 1 over-dominant & over-paid CEO 2 weak boards of directors 3
failure in rept & transparency 4 short-term investment 5 instability of governance &
investment 6 cyclical volatility in dynamic economy Outsider system of corp governance SA7.05 7.22
Outsider system: equity finance has more important as means of dev companies "Nestor & Insider
Thom" systems dependent loans fm bank7.02 & 7.05
Outsider systems-corp govern of US&UK 'heart of agency theory, corp govern principle Market-based
& co law' outsider model corp govern
7.04
Over-consumption of 'Perks'-incidental benefits gained in addition to income e.g. low int Agency
loan costs: e.g. prestigious office 2.23
Over-regulation emerging: careful monitoring & tighter regulation for superannuation fund. Over-regulation SA7.04 7.19
Part VC is a criminal offence of strict corp liability: s79,80,82 present civil & criminal regime
Division 1&1A, partV civil, partVC criminal
6.60 Part V D1,1a,2,2a 'T'
Participants in the corp governance process Broad & Owner: Same director's liability in Not-for-profit organisations: Board
a for-profit co. Director usual act in unpaid or rec'd minimal director fee. Nominations role-Similar; Owners-focus
less formal. Role of board similar to for-profit co stakeholder 2.36
Penalties:ACCC to court action for breaches Part IV by Federal Court impose monetary penalty ACCC & TPA non-punitive orders 6.12-13 s76,80-82,87 'T'
Performance-based compensation with cognitive moral development (CMD) allow Rutiedge & Karim: not accept self-int
ethical moral consideration constrain self-interest affect firm value basis 2.24
Performance-based compensation: extrinsic reward lead to active manipulation reported measures
Kohn: Alternative view performance-based 2.29
Performance-based compensation: lead active manipulation reported measures Kohn & Healy Healy: Alternative view performance-based2.29
Performance-based remuneration: mitigate agency costs act in the shareholders' interest Agency cost: Performance-based remuneration 2.25

Personal liability of directors for losses experienced by investor acquiring shares in

reliance on the prospectus. Directors not liable if reasonable inquiries prior to the issue Prospectus; accuracy & completeness
of prospectus**** ******************************* 5.10******** s729,731 'C'
Personal or secret profits example-bribes; misuse fund; opportunities; confidential info; improper
Directors personal or secret profit 3.23
Phoenix co & phoenix trading: litigated or reported few reported Deputy commissioner taxation v Woodings
5.34 SA5.24
Phoenix co-director shift responsibility to a co "pull the plug" Phoenix co 5.33
Phoenix co-problem with current legislation Phoenix co 5.34
Phoenix co-unable to pay debts; acts intentionally to deny creditor; commence in 12 month Phoenix co 5.33

p.33of86
 CPA107_Description
Policy aspect of law: 1 acquisition of control in efficient, competitive & info mkt; 2
legislation not apply to proprietary co less than 50 members; 3 orderly & open fashion;
4 shareholders identity of offerer proposes to take over; 5 reasonable opportunity to
consider takeover; 6 equal opportunity in
benefits************************************************** Takeover legislation policy**********5.12******* s606(1) 'C'
Portfolio composition of institutional investors: important equity shares of US & UK institutional
Equity mkts of Germany & France 7.06 T7.3
Predatory pricing s46: exclusive distribution sys maximised sales Melway Publishing Pty Ltd v Robert Hicks 6.35-36
Pty Ltd s46.7 S4f 'T' 'Guilty'
Price Fixing agreement: prohibits a firm making or giving effect to provision in contract Collusion, include price fixing s45 6.16 s45 'T'
Price fixing by collective buying groups: buyer groups collectively acquired to agreementPrice fixing-collective buying groups 6.18 s45a4 'T'
Price fixing exception: joint ventures agreements & joint buying & selling agreements Price fixing exception 6.17 s45a2&4 'T'
Pricing of goods: dual-priced swing tag & higher price not available TPC v Cue Design Pty Ltd 6.55 s53e 'T' 'Guilty'
Pricing of goods: 'savings' on 'recommended retail price' as 'puffery' adv Sest v Copperart Pty Ltd 6.54 CSA6.16 s53e 'T'
Principles of good Corp governance & Best practice recommendations OECD & ASX diff ASX Principles 1-9 2.14-15 SA2.4
Principles of good Corp governance: OECD ASX & Combined code ASX; OECD & Combined code 2.15 SA2.5
Pro-competitive nature of intellectual property law a partial exemption Intellectual property: patent; copyright; 6.49
registered design;
s51trademark
'T'
Proprietary and public companies: cannot openly solicit investment from the public Types of companies 1.05 s113&s9 'C'
Proprietary large(1 criteria) & small (revenue >$10m; assets > $5m, staff >50 two criteria) Proprietary & public companies 1.05 s113,s9&s45A..
Prospectus issued 'frees shares' mislead members Fraser v NRMA Holdings Ltd 5.11 s710, s731 'C'
Prospectuses close before the contract renewed defence s731. Should lodge supplementary Prospectus
s719 SA5.07 5.10 s719,731 'C'
Prospectuses contravene s728(1) is civilly liable to parties who suffer loss by that conduct****
Misleading or deceptive statement****** 5.10******** s728 'C'
Prospectuses misleading or deceptive statement, s 710-715, s728(1) & (3)****************** Part 6D.3 fundraising documents******* 5.09-10***** s728.710-5 'C'
Prospectuses-underlying philosophy s 710 Prospectuses 5.10-11 s710 'C'
Protection of business reputation: protection exists whether registered or not Australian Society of A/cants v Federation6.51of Australians52
Accountants
'T' Inc.
Public co at least 3 directors (2 Australian) s201a2, proprietary co no less than 1 directorsDirector
s201a1 and officer s.9 3.07-08 s9 'C'; s201a
Puffery & advertising: coffee- adv compared price only puffery of products, not prohibit
imaginative adv but not misleading or deceptive Stuart Alexander & Co. v Blenders Pty Ltd 6.44
Push came to shove, the voluntary scheme lacked teeth Fels: self-regulation 5.43
Quoting an exorbitant price to customer as effectively refusing supply Substantial degree of mkt power-price SA6.05e 6.37 s46 'T'
Ramsay's rept: Independence of au co auditors, 10 corp gov't principles & best practices Combined Code UK; Higgs rept & Smith 1.09
rept
Reasonable grounds for suspecting; Suspecting and incurs a debt Incurring a debt s 588G(1A) 3.29 s588g(1a) 'C'
Reckless can connote dishonest where statements with careless disregards for the truth Fraudulently inducing persons to deal SA5.21 5.26 s1041f 'C'
Recommendations of the Greenbury Report Greenbury Rept R4.13
Redress 'delinquent' directors or others where there are grounds for an action, co
chooses not to sue. A member take action in the name of
co.*************************************** Statutory derivative action************ 3.33-34****** s236-7,41,03 'C'
Relevant interest: 1 holder share; 2 power to exercise or control exercise of right to
vote; 3 power to dispose or control exercise of a power to dispose of the shares Takeover Law - relevant interest 5.14 s608 'C'
Relevant Mkt s46: definition of 'Mkt ' mkt was wider not only Maldives Singapore Airlines v Taprobane Tours: 6.32 s46 'T' 'No Guilty'
Relevant purpose for the corp in TPA s4F Substantial purpose 6.35 s4F 'T'
Relief from breach of duty- Members in a general meeting may ratify a decision AGM member may ratify decision 3.35
Relief from breach of duty- Prov of co's constitution (its internal rules) may permit ratification
Relief from breach of duty 3.35 s199A 'C'
Relief from breach of duty- The court may relieve a person from liability Excused act honestly & fairly 3.35 s1318(1) 'C'
Remedies available to the co when director breach of duty***************************** Common law remedies *************** 3.32-33******
Removal of a director-s 203C/D, 203E prevents removal of public co director Removal of a director 3.34 s203c,d,e 'C'
Removal of director-breach of duty by a director Director breach duty-removal of director3.32
Remuneration & nomination committees set up with majority of non-executive directors Bosch Rept 4.27
Remuneration Committee of co should be comprised entirely of non-executive directors Greenbury committee-Remuneration committee 3.10
Remuneration Committee: Cadbury & Greenbury effectively superseded by Hampel Greenbury specifically look at remuneration
4.25
Remuneration committees: independent director paid wholly in share; CEO
substantially. Ultimate result of CEO's stewardship of co share price rose by 50% later Sunbeam Corp case: CEO take short-
fell term view 4.27
Remuneration committees-executive remuneration should linked to increased in co profitExecutive remuneration 4.27
Remuneration disclosure in ASX Principle of good corp governance and Best practice Disclosure of remuneration 3.26 s202a&b 'C'
Remuneration packages in research shown stk option tend greater link with profit & performance
Keasey & Wright: Remuneration comm4.27
Remuneration, nomination and performance: Greenbury Committee key recommendationGreenbury committee-Remuneration 4.25-26
Remuneration/Compensation committee: review and recommendation of remuneration Remuneration/Compensation committee2.20
Remuneration: CLERP 9 listed public co insert a 'remuneration report' to annual director'sDirector's
report remuneration disclosure 3.26
Replaceable rule: 1 authorised by law, 2 AGM approve 3 Service contract authorising pay't****Directors pay't-Replaceable rule******** 3.26******** s202a&b 'C'
adv comply with SAA but only
represent that goods or services have sponsorship, approval, performance electrical compatibility & microwave
characteristics, accessories, uses or benefits they do not have oven not 6.52 & CS6.15 s53c 'T'
similar s53c focus on corp rather
represent that the corporation has a sponsorship, approval or affiliation it does not have product 6.52 s53d 'T'
Resale price maintenance: scheme allowance retailers adhere to displayed recommended Frankfurter
price Pty Ltd v TPA 6.22 CSA6.3 s48 'T'
Residual loss: residual loss of value of the firm. Loss arising fm decision represent residual
Agency
loss costs 2.22-23
Responsible business engagement with society-business is & should be integral part of societyHolme, Lord-Corp social responsibility R4.09
Rights of consumers: 12-month warranty stub inside only 90 days Ballard v Sperry Rand Australia Ltd 6.57 s53g 'T'
Rights of consumers: exchanged goods within 7 days Miller v Fiona's Clothes Horse of Counterpoint
6.56 CSA6.18
Pty Ltd s53g 'T'
Risk avoidance: avoid loss or engage risky depending how managers compensated Agency costs 2.23
Risk Mgt can be more effectively tracked, greater disclosure with reduced cost. IT-Risk Mgt SA4.13 4.25
Risk mgt is a process identify, analyse, value, treat, monitor & communicate the info
gathered for the benefit of co. Standards AU dev a Risk Mgt standard AS/NZS 4360 to
minimise risk Risk Mgt 4.22
s1041E 3 elements: materially false or misleading; 2 likely effect; 3 dissemination information
False or misleading statements in relation5.24
to securities s1041e 'C'
s728(3) will apply where bad news concerning the co has been omitted fm disclosure document Ramsay, An Introduction to the CLERPSA5.06 5.10 s728 'C'
Safe harbour: Statutory business judgment rule reluctant to intervene 'a safe harbour' defence
Defences: Statutory business judgment 3.35-36 s180.2 'C'
Santos Ltd-Corp governance statement Corp governance statement R4.06
Sarbanes-Oxley Act new laws, regulations & listing rules after Enron Gordon: Enron 'shareholder capitalism' 7.18-19
Secret comm was a consequence a custodial sentence was warranted R v Kendrick 5.29-30
Secret comm: Director can't gain advantage & cause detriment to the corp. Civil obligation Fiduciary relationship agent duty 5.27 s182, s1317e 'C'
Secret comm: Director has to account co profit breached fiduciary duty, directors acted honestly
Regal (Hastings) Ltd v Gulliver 5.27 s182, s1317s 'C'
Secret Comm: serious act from both a legal & ethical perspective & sentence offenders R v Jamieson 5.30
Seeking to compete when in a substantial mkt power, supply should not be refused Substantial degree of mkt power-refusing SA6.04d 6.37 s46 'T'

p.34of86
 CPA107_Description
Self-regulation and ethics Self-regulation as form of regulation 5.43
Services of particular std, quality & value: misrepresenting standard of services-tennis tournament
Kiley v Lysfar Pty Ltd 6.53 s53aa 'T'
Shadow directors s. 9 (b) (ii): Parent co liable shadow director Standard Chartered Bk AU v Antico 3.09 s9bii 'C'
Shareholder agreement: stakeholder issues assume greater importance for family-based
firms; particularly on employees SME corp governance 2.43
Shareholder participation in the modern listed public co: Final report CASAC report-Shareholder praticipationR4.04
Shareholder right: 1 deal with shareholders rights 2 equitable treatment of shareholders OECD: with code of shareholder's right 2.08 R2.01
Shareholder value orientation: US, UK, AU, NZ adopted this model, influence European Anglo-Saxon
& Asian shareholder value-based 7.13
Shareholder: AGM requisition, resolution thresholder notice of AGM, proxy
arrangement, disclosure of proxy directory electuary. No recommendation for further
regulatory provision CASAC report-Shareholder praticipation4.09 R4.04
Shareholder: individual & institutional; Keasey: Int in wellbeing of the co is in long-termKeasey
success& Wright 2.05
Small print in adv: 'upto' & conditions apply' might be literally but create a misleading overall
Advertising
impression
small print: 'upto' 6.47
Social accounting: OECD encourage protection of human rights & ensure 'effective
redress for violation of these right OECD: Social accounting 4.20
Social responsibility of business is only to use resource to increase profit Friedman, Milton: not correct nowadays5.05
Southcorp Ltd: responsibility for guiding and monitoring business with policies Corp governance statement 2.33
Special circumstances-can rise to a duty of fiduciary nature to individual shareholders notColeman
just co v Meyers 3.16
Special disability: "special disability' of age & language difficulties Commercial Bank of Australia v Amadio 6.58
Sponsorship and approval sponsorship, approval or affiliation it does not have Corporation claims 6.54 s53d 'T'
Sponsorship, approval, performance s 53c Michael Edgely Int'l v Ashtons Nominees6.54 s53c 'T'
Sponsorship, approval, performance: adv a 16-days tour but only 15-days Dawson v World Travel Headquarters Pty 6.54 s53c ;'T'
Sponsorship, approval, performance: adv fire extinguishers failed efficiency by fire commissioner
Given v Snuffa Pty Ltd 6.54 s53c 'T'
Sponsorship, approval, performance: particular model of motor car servo-assisted brakes Eva v Mazada Motor 6.54 s53c 'T'
Stakeholder right: Board's primary duty is to the shareholders & should consider stakeholders
BRT stakeholders right similarity to OECD
2.12
Stakeholder: Corp & stakeholder relationship Table 2.1 Investors/Customers/suppliers.. Corporation & stakeholder relationship 2.06-07
Stakeholders right: employees, creditors, customer, suppliers, non-equity investors, regulators
Hampel & gov't
Report: Stakeholder & ASX 2.10-11
Standards Asso of AU (SAA): falsely representing gds approved by the std asso of AU SAA Hartnell v Sharp Corp 6.54 CSA6.15 s53c 'T'
Statements of business principle-maintaining high std of behaviour throughout Bosch-Codes of conduct 6.39
Statutory derivative action-minority member or officer the right to bring action Ultra vires-minority member SA3.07 3.34
Statutory duty for a proper purpose Penalty 3.18 s181(1)&184 'C'
Stock option: Corp Act required to disclosure in aggregate amount. AASB ED106 & IASB Agency costs: stock option & a/c treatment
2.27
Strategic alliance, partnering, joint ventures & trade associations Strategic alliances 6.20-21 s45 'T'

Substantial degree mkt power: 1 substantially damaging competitor; 2 preventing entry

of person into the Mkt ; 3 deterring person from engaging in competitive conduct Misuse of market power 6.31 s46 'T'
Substantial Mkt power s46: Abused mkt position took advantage of power ACCC v Boral Ltd 6.36-37 s46 'T' Guilty'
Substantial Mkt power: large or weighty or considerable, solid or big compared other firmsTPA s46 substantial market power 6.33 s46 'T'
Substantial Mkt power: mkt power :ability of a firm to raise price above cost s46 Queensland Wire Industries v BHP 6.33 s46 'T'
Substantial Mkt power: withholding boots deter/prevent competitive conduct Mark Lyons Pty Ltd v Bursill Sportswear 6.33-34 s46&47 'T' 'Guilty'
Substantial purpose to relevant purpose preventing person entering mkt or engaging in competitive
Predatory pricing
conductcut price to rival driven
6.35
out s46 'T'
Sundae Ice Cream Co. exclusive dealing: 5 general categories of vertical restraint Exclusive dealing s47 6.28 CSA6.4 s47 'T'
Fruit producers not supply fruit to
supermarkets that stocked imported
Supply of goods or services to particular persons or classes of persons fruit 6.18 s45 'T'
Mattress manufacturers agreeing to
supply a particular retailer only if it
ceases importing its own brand or
Supply of goods or services to particular persons or classes of persons unless particular agreeing to resell at recommended
circumstances exist or certain conditions are met or agreed to retail prices 6.18 s45 'T'
System of Environmental Economic a/c (SEEA)-Integrated environmental & Economic A/C Government expenditure on environment 4.19
Take a bath: enhance future years rept lowest result in current year Bonus Plans: profit may 'real' or 'cosmetic'
2.26 (old)
Take advantage of Mkt power/prohibit: using mkt power do something powerless competitor Queensland Wire Industries v BHP 6.34 s46 'T' 'Guilty'
Taken action types of resales price maintenance not mutually exclusive: 1 making it
known goods will not supplier; 2 inducing or attempting to induce; 3 agreeing or
offering to agree; 4 using statements of price; 5 withholding supply
*********************************** Resale price maintenance************* 6.23*********
Takeover law - Resolution of co more than 50% vote invalids. Gambotto v WCP Ltd SA5.11 5.14 s611 'C'
Takeover law for formal takeover bid for share control below 20% to <20%. Takeover Law SA5.09 5.13 s611 'C'
Takeover: Directors reim re-election cost in breach of fiduciary duty although act in goodAdvance
faith Bank Australia Ltd v FAI Ins Ltd 3.19 A3.04
Takeovers-Ethical aspects Ethical aspects of takeovers legislation 5.11
Taking up corp opportunity: Director effectively full disclosure to board and members Queensland Mines Ltd v Hudson: 3.24 s181,183 'C'
Taking up corp opportunity: Director need full disclosure to full board Furs Ltd v Tomkies 3.24 s181,183 'C'
Taking up corp opportunity: Erring directors could not retain benefit to take back the contract
Cooke v Deeks: corp opportunity/position 3.24 s236 'C'
Third-line forcing Exclusive dealing: bldg society has insurance s47(6) Re Ku-ring-gai Co-operative Bldg Society 6.30Ltd s47(6) 'T' 'Guilty'
Third-line forcing required: three parties; two product; requirement a 2nd product to be
taken fm a nominated third party as a condition of supply of the first product Third-line forcing 6.30
Third-line forcing: exclusive dealing prohibited outright-w/o prove a substantial competition
Exclusive dealing-Third-line forcing 6.29 s47 'T'
Threat of takeovers: unfettered abuse of opportunistic behaviour down profits to takeoverAgency
target costs: non-agency incentive 2.30
Three pillars sustainable dev-bal economic dev, environmental protection & social progressBourne, Greg-three pillar of development R4.08
TPA amendments incorporating changes to the Commonwealth Criminal Code TPA D1,1A of Part V & Part VC 6.60 s79,s80,s82 'T'
TPA Part IVA: unconscionability Unconscionable contracts 6.58
TPA PartV:D1unfair comm practices,D1Asetting std,D2 consume contract,D2Amanu consume Consumers
gds protection 6.39 Part V D1,1a,2,2a 'T'
TPA s48 3 steps deterring: 1 supplier specified a price; 2 price specified or used by
supplier a minimum price; 3 supplier taken action to ensure stipulated resale price is
maintained********* Resale price maintenance************* 6.22******** s96, 98 'T'
TPA: if 1 refuses to supply; supplies on disadvantageous terms; treat buyer less
favourable. Withholding supply by TPA 6.25 s48 'T'
Trade practices compliance program: Corp to maximise profits to ensure satisfactory returnTPA 6.05-06
Trading by corporations where an officer is aware of the information s1043A trading by corp aware of info 5.19-20 s1043a 'C'
Triple bottom line examples-economic/financial for sales, social skill dev, environmentalTriple
… bottom line SA5.02 5.5
Triple bottom line widely taken up not only accounting profession also environment Elkington, John: CSR 4.17
Trust-based form: governance relational contract generate sense obligation to trading partners
Learmont: trust-based form d

p.35of86
 CPA107_Description
Trustee dealt or attempted to deal with estate of those is obtained fm any other person is permitted
Aberdeen Ry v Blaikie: no enquiry permitted
3.21-22
Types of companies: Corps formed and registered under corp Act 2001 Types of companies 1.03
Uhrig Report on corp governance: dev a template of governance principles Public sector corp governance 2.38
Uhrig Rept principles benefit: improving 1.transparency & accountability;2.efficiency
of statutory authorities 3.effectiveness of statutory authorities Uhrig Rept 2.40
2.40-41
Uhrig Rept summary of recommendations and better practice guidance for board Government statutory authorities board Q2.13
UK Corp governance reform: Dept of Trade & Industry boards foster inclusive relationships UK legal compel PF (NAPF)&combine 7.19-20
code
UK mkt-based system: Dependent equity mkt than large industrial economies "Cadbury Anglo-Saxon model of corp
code" governance 7.09-10
UK reform followed Cadbury code: Greenbury Rept, Hampel Rept, Combine code, Cadbury Code reforms corp
Turnbull Rept governance 7.10
UK: 1 Cadbury-std of audit 2 Monks & Minow-lack of accountability, disclosure &
transparency 3 Lorsch & Maciver-adequacy of board structure & process 4 quality of Cadbury code of corp governance:1
directorial competencies 5 lack of CSR 6 Pound-growth of merger & acquisition Greenbury rept 2 Hampel rept 3
activities 7 Gregg-short-term basis corp performance 8 spate of business fraud 9 combined code 4 turnbull rept.
weakness of corp self-regulation Modern co Law 7.09
UK: 1 new definition or role of board 2 open & rigorous on appointment of director 3
evaluation of performance of board 4 at least half independent non-executive 5
separation of chairman & CEO 6 chief executive no become chairman 7 closer
relationship between chairman & independent director 8 strengthened role for audit
committee Combined code 7.20
UK: examined directors & auditor duties, investigated shareholder rights, explore new
corp rept, particular issued of rept & accountability by smaller co Modern Co Law Review 7.10
Unconscionable conduct: corp in trade/commerce; relation to business contracts/consumers Unconscionable standard from contract 6.59 s51 'T'
Unconscionable conduct: refused to enforce agreement for real estate agent & illiterate farmer
Downsett v Reid 6.57-58
Undisclosed benefits: set up subsidiary need repay profit, disclosed not only CEO also shareholders
Furs Ltd v Tomkies 3.23
Unlimited liability companies: no limitation upon winding up, 'veil of incorp' does not apply
Types of companies 1.04
US co proposal: 1 board maximum 10 directors 2 outside director nominated as lead
director 3 board meet major shareholder 4 Independent directors describe remedial in Lipton & Lorsh proposal adopted in
annual rept for co 3 out of 5 years US 7.07
US corp governance regulation correlation between mkt failure & collapses & bursts of legislative
Corp governance regulation & legislationSA7.03 7.16
US corp governance: continual intervention & second-guessing powerful institutional investor
US corp governance SA7.02 7.09
US mkt-based system: traditionally worked on a collegial basis under dominance of senior One-tier
mgt. board ratify strategic mgt decision
7.07
US sys encouragement of self-regulating by corp entities, supported by law around basic Millstein:
principle US sys 7.14
US with dedicated capital investment sys of Germany & Japan. US sys focused purely
on financial goals & measure & short-term performance, German & Japanese sys
characterized by long-term investment in industrial strategies to boost productivity &
capability Porter, Michael rept for US Council 7.13
US:PF of CALPERS, New Yarok City, State of Connecticut, State of Minnesota & TIAA-CREF Pension funds particularly influential 7.08
Use of confidential information: either director made improper use of info was in financialMcNamara
diff v Flavel 3.24-25 s183 'C'
Use of confidential information: improper use of position by endeavouring to keep assetsJeffree
away v NCSC: creditor entitle to assets3.25 s183 'C'
US-outside directors have limited time, knowledge & expertise in co that they are
responsible for Lorsch & Maclver 7.07
Utilitarianism-based on outcome, promoting greatest happiness among all stakeholders Ethical conduct and co directors 5.05
Victoria University, Growing Employment by Identifying & Supporting Growth Firms Project SME definition 2.42
Voluntary disclosure-financial information and non-financial issues as corp govern principles
Non-financial disclosure 3.31
Way, Nicholas 'business review weekly'-ethical behaviour important and community Ethical behaviour 5.46
Wines & spirits retailers established 'The Cut Price Liquor Shop': an illegal collective boycott
Collective boycotts 6.18 CSA6.2 s45 'T'
Withholding supplies in legitimate commercial reasons Peter Williamson Pty Ltd v Capitol Motors
6.26 s48 'T' No Guilty
Withholding supplies remedies: supplies liable for damages at injured. Restraining the supplier
Withholder supplies 6.27
Withholding supplies: Ampol agreed to reinforce trade practices training & compliance program
ACCC v Ampol Petroleum (Victoria) Pty 6.26-27
Ltd s48 'T' 'Guilty'
Withholding supplies: did not want a price war on hands breach of s48 and fined TPC v Bata Shoe Co of AU Pty Ltd 6.25-26 s48,s45 'T' Guiltily
Withholding supplies: refuse to supply goods unless specific resale price is charged ACCC v Australian Safeway Stores Pty 6.24-25
Ltd & George Weston
s48&s45Foods
'T' Guilty
Ltd
Withholding supply: discounts to selling 'below cost' is allowed to withhold supplies.
Except for genuine clearance
sales***************************************************** Withholding supply not illegal********6.26******** s98 'T'
Workable competition: not perfect competition but feasible in real-world Mkt conditionsWorkable competition 6.08-09
Working group comprising AICD, CPA AU, Business Council of AU, Law council of AAMI Customer Charter-internal corp
AU & ICAA & securities institute of AU code 5.45
World bank in china recommended: dominate state ownership on mkt discipline &
regulatory capacity 2 bldg institutional investor base 3 strengthen banks role, enhancing Tenev, Zhang & Brefort: survey corp
creditor's rights gov 7.36
World Bank to aid countries in economic dev & commitment continuous dev corp governance IMF: balance of pay't & ex rate 1.14

p.36of86
 CPA107_Related
DESCRIPTION Question M1:1-6, M2:7-15, M3:16-24, M4:25-34, M5:35-44, M6:45-54,RELATED M7:54-60 PAGE# Corp Act/TPA
Japanese bank: 1 ex ante-investment & loan 2 interim-cashflows at co's a/c 3 ex post-corrective
Aoki & Okuno: corp governance structure
7.33
Europe reform of Corp governance institution: continuous improvement of corp governance A Modern Regulatory Framework for Co 7.26-27
Law Europe
Working group comprising AICD, CPA AU, Business Council of AU, Law council of AAMI Customer Charter-internal corp
AU & ICAA & securities institute of AU code 5.45
ASIC essential function to administer corp & commercial laws & to monitor compliance.AASB Role to dev, draft & issue a/c std1.16 s1(2)
Material personal interest requires "Real sensible possibility of conflict" Aberdeen Ry v Blaikie 3.22 s191c 'C'
Trustee dealt or attempted to deal with estate of those is obtained fm any other person is permitted
Aberdeen Ry v Blaikie: no enquiry permitted
3.21-22
Penalties:ACCC to court action for breaches Part IV by Federal Court impose monetary penalty
ACCC & TPA non-punitive orders 6.12-13 s76,80-82,87 'T'
ACCC to administer TPA ACCC advancing economic policy 1.19
Authorisation: dispensation ACCC grant in respect of some restrictive agreements/practices ACCC issue Authorisation 6.11-12 s88 'T'
Another $1 million in penalties & costs for Queensland fire protection cartel ACCC pursue corp collusive conduct R6.02 s45 'T'
Withholding supplies: Ampol agreed to reinforce trade practices training & compliance program
ACCC v Ampol Petroleum (Victoria) Pty 6.26-27
Ltd s48 'T' 'Guilty'
Compliance program 2 aspect, substantial c compliance program 2 actually implementedACCC successful
v Australian Safeway Stores Pty 6.03
Ltd
Withholding supplies: refuse to supply goods unless specific resale price is charged ACCC v Australian Safeway Stores Pty 6.24-25
Ltd & George Weston
s48&s45Foods
'T' Guilty
Ltd
Substantial Mkt power s46: Abused mkt position took advantage of power ACCC v Boral Ltd 6.36-37 s46 'T' Guilty'
Fixing, controlling/maintaining price, price fixing arrangement: Guilt and agreed to penalties
ACCC v Pioneer Concrete 6.17 s45 'T' Guilty
Compliance program effective importance in Federal court ACCC v. Nissan Motor Co (AU Ltd 6.03
Board: Formulation board committees strengthen independence & accountability to community Accountability & transparency 2.17

make a false or misleading representation with respect to the price of goods or services adv 600 now 450, but never 600 6.52 s53e 'T'
adv comply with SAA but only
represent that goods or services have sponsorship, approval, performance electrical compatibility & microwave
characteristics, accessories, uses or benefits they do not have oven not 6.52 & CS6.15 s53c 'T'
adv discounted shop-floor stk which is
falsely represent that goods are of particular standard quality, value, grade, composition, rtn fm three-month loan to someone
style or model or have a particular history or particular previous use use 6.52 s53a 'T'
False representation as to price examples Adv false representations as to price 6.55 T6.2 s53e 'T'
falsely represent that goods are new adv goods are new but is not 6.52 s53b 'T'
adv particular persons agreed to
falsely represent that a particular person has agreed to acquire goods or services acquire 6.52 s53bb 'T'

falsely represent that services are of particular standard, quality, value or grade adv tennis tournament but not the case 6.52 s53aa 'T'
Takeover: Directors reim re-election cost in breach of fiduciary duty although act in goodAdvancefaith Bank Australia Ltd v FAI Ins Ltd3.19 A3.04
Small print in adv: 'upto' & conditions apply' might be literally but create a misleading overall
Advertising
impression
small print: 'upto' 6.47
Differing time horizons: maximise short-term gains & exp in long-term approaching retirement Agency cost: Opportunistic 2.23
Opportunistic: Over-consumption, Empire building, Risk avoidance; differing time horizons Agency cost: Opportunistic 2.23
Maximising 'share price'/'profitability': advantages & disadvantage Agency cost: Performance-based remuneration
2.25
Performance-based remuneration: mitigate agency costs act in the shareholders' interest Agency cost: Performance-based remuneration 2.25
Bonding costs, Monitoring costs, Residual loss Agency costs 2.22
Bonding costs: including internal audit team, voluntary interim finical rept. Incurred contracts
Agency costs 2.22
Monitoring costs: costs of external audit & mgt compensation plans Agency costs 2.22
Residual loss: residual loss of value of the firm. Loss arising fm decision represent residual Agency
loss costs 2.22-23
Risk avoidance: avoid loss or engage risky depending how managers compensated Agency costs 2.23
Over-consumption of 'Perks'-incidental benefits gained in addition to income e.g. low intAgency loan costs: e.g. prestigious office 2.23
Empire Building: Acts by mgt to increase size 'empires' to justify increased salary, perks/power
Agency costs: e.g. pur subsidiary 2.23
Executive compensation guideline: motivating & retain employee; attract quality mgt &
share co reward and 4 basic principles: remuneration comparable with mkt; reward
linked to benchmark; individual elements identified & disclosed; transparency, Agency costs: executive compensation
accountability & fairness scheme 2.29
Threat of takeovers: unfettered abuse of opportunistic behaviour down profits to takeoverAgency target costs: non-agency incentive 2.30
Stock option: Corp Act required to disclosure in aggregate amount. AASB ED106 & IASB Agency costs: stock option & a/c treatment
2.27
Conflict minimsation factors: 1Takeovers Threat 2Shareholder/stakeholder activism 3ASA Agency
4AGM theory 2.30-31
Conflict minimsation factors: Corp governance rating agencies; Role of media Agency theory 2.32
Information asymmetry: A/c no. indicators performance & share price & shareholders wealth Agency theory: role for accounting 2.23
Agency theory: defined "Maximise their own benefit & information asymmetry" Agency theory: separate ownership & mgt 2.21
Crikey.com.au: point out theft, corruption, deception & collusion. Top paid executive , AGM & ASA, Corp governance rating
poor corp performer & takeover defence & Media: Conflict minimsation 2.31
Relief from breach of duty- Members in a general meeting may ratify a decision AGM member may ratify decision 3.35
Lessening of competition: resulted in a substantial lessening of competition Ah Toy J Pty Ltd v Thiess Toyota Pty Ltd6.19 s45(2) 'T' Guilty
Evaluation board performance-assessing success profitability and return on invested fundAICD & Bosch Rept 4.28
Alternate directors: director disqualified on conflict on interest, alternate director is not affected
Anaray Pty Ltd v Sydney Futures Ex Ltd3.10
Outsider sys as disclosure-based: 1 investor reliable info to make decision 2 regulation
intended to ensure complete info to investors 3 bank finance in short term 4 equity
shares significant than bonds & loans Anglo-American MC7.02
European cooperative relationships: insider model relies int on board of direct.
Protection stockmarket and threat of takeover, bank play active role, shareholders are Anglo-Saxon emphasizes competition
widespread & mkt processes 7.22-23
UK mkt-based system: Dependent equity mkt than large industrial economies "Cadbury Anglo-Saxon model of corp
code" governance 7.09-10
Shareholder value orientation: US, UK, AU, NZ adopted this model, influence European Anglo-Saxon& Asian shareholder value-based 7.13
Misleading & deceptive: "reasonable man" at common law no role connection TPA Annand & Thompson Pty v TPC 6.43 s52 'T' "Guilty'
Competitive products not sell by my dealers: depends likely anti-competitive Anti-competitive SA6.03a 6.31 s46 'T'
Duration of dealer is illegal considered anti-competitive Anti-competitive SA6.03b 6.31 s46 'T'
ACCC is not a policy advisor, combines a consumer protection role with protecting
competition in general sense Anti-competitive behaviour regulation 6.10

p.37of86
 CPA107_Related
Bank positioned in 3 forms: 1 ex ante: investment decision of co. loan application 2
interim: performance of ongoing business, cashflow 3 Ex post: financial performance, Aoki & Okuno: Japanese corp
intervening take corrective measure governance 7.33
Brand name, logos, packaging & labeling: label mislead prospective customers Apand v The Kettle Chip co. Pty Ltd 6.50 CSA6.13 s52 'T'
Corp governance: 1 timely & accurate disclosure of financial * non-financial records; 2
equitable treatment of shareholders; 3 clear rights & responsibilities of shareholders, APEC: basic principles & outcome key
directors & managers; 4 effective & enforceable accountability standards statements for government 1.13-1.14
Exclusive Australian agency appointed by overseas distributor is legal Appointed exclusive Australian agent SA6.03c 6.31 s46 'T'
Duty of care, skill & diligence: today's standard higher ASC v Gallagher 3.27 objective test
ASIC enforcement action in HIH; Harris Scarfe; One-Tel; NRMA ASIC major enforcement R1.05
Disqualify-ASIC power important difference the power of court and ASIC is liquidation ASIC powers to disqualify 5.39 s206d 'C'
ASIC role in Corp govern: Corp are directed & controlled; monitored & supervised & accountable
ASIC role in corp governance R1.04
Financial Services Reform Act 2001 & CLERP 9: ASIC sue Adler breach director duty ASIC v Adler (HIH) 5.07
Disqualified from managing a corp by ASIC ASIC v Keech 5.41
OECD & ASX code with regard to shareholders rights ASX & OECD shareholders rights 2.10 SA2.2
ASX Listing Rules state listed co must include annual report ' a statement disclosing
best practice recommendations set by ASX Corp governance
Council********************** ASX Corp Governance Council********* 4.14********
Principles of good Corp governance & Best practice recommendations OECD & ASX diff ASX Principles 1-9 2.14-15 SA2.4
CSR Ltd: set co's strategic direction & delegates responsibility for mgt ASX: listed co corp governance statement2.33
ASX role: conduct mkt in which investors & enterprises come together with confidence
to creat prosperity through sharing of risks & rewards. Listing rule need corp ASX: trading equities, debt securities
governance practices & index derivatives 1.17
Board's role in strategy difference ASX; OECD & Combined code 2.16-17 SA2.6
Principles of good Corp governance: OECD ASX & Combined code ASX; OECD & Combined code 2.15 SA2.5
ATO has a role to play in awareness & adoption of improved governance & disclosure issues ATO implementation major tax reform 1.18
Bribe: HK Public servant accept bribes: Civil penalty 'pur properties in NZ, only on trust Attorney-General
for co' for Hong Kong v Reid5.29
ASX require disclosure audit committee or reason why exist committee Audit committee: independent audit 2.18
Corp governance in Arts & Entertainment sector Australian Ballet 2.35
Misleading & likely to induce pur of securities Australian Securities Comm v McLeod 5.25 s999 'C'
Churning prohibited is 'likely' to achieve prohibited result "Effect - objective tests"
Australian Securities Comm v Nomura 5.22 s1041b 'C'
ASA encourage shareholder participation AGM and produce 'poor performers list' Australian Shareholders Association SA4.03 4.9
Protection of business reputation: protection exists whether registered or not Australian Society of A/cants v Federation
6.51of Australians52
Accountants
'T' Inc.
Corp governance principles recommended by Std AU follow OECD & categorised into
role, powers & responsibilities on the board, disclosure & transparency obligation,
rights & equitable Australian Standard AS8000 1.15 AS8000-8004
ASX: Australian Stock Exchange (ASX): Rule Australian stock exchange 1.18
Corp governance: checks & incentive to ensure managers maximise shareholders value Australian Treasury's Corp Law & Econ1.07 R
Anomalies -Refugee status in Australia & absence convicted of treason is automatically disqualified
Automatic disqualification 5.37
Automatic disqualified by court grant leave on application of ASIC Automatic disqualification 5.37
Director negligence including executive and non-executive director not auditor AWA Ltd v Daniels t/as Deloitte 3.06
Duty of care, skill & diligence: today's standard higher AWA Ltd v Daniels t/as Deloitte 3.27 objective test
Rights of consumers: 12-month warranty stub inside only 90 days Ballard v Sperry Rand Australia Ltd 6.57 s53g 'T'
Insider sys: redistribute control 1 pyramid corp structures 2 shareholder agreements 3
discriminatory voting rights 4 reduce the participation or influence of other minority Bank & business network: deeper
investors insiders 7.23-24
Competing with the company: non-executive director can join board of rival co Bell v Lever Bros 3.25
Committee structure: utilisation board experts; recognition geographic & time
limitations; freeing up full board agenda strategic issues. Subset of board formed to
exploit expertise of directors Benefit of committee structure 2.21
Board agenda and timetable Board agenda and timetable R4.01
Board of director responsibility: formulate strategy; dev policy; appoint remunerate & Board's responsibility: accountable to
senior executive mgt & ensure accountability shareholder 2.04
Take a bath: enhance future years rept lowest result in current year Bonus Plans: profit may 'real' or 'cosmetic'
2.26 (old)
AICD on CLERP legislation-1 minimisation of cost 2 cost-benefit on law amendments Bosch & AICD comment code of
3 consultation with legislation users 4 less black letter law 5 wealth creation 5 private conduct & corp practices in corp
co recognise governance 4.07 & 1.10
Corp governance issues: 1 directors function; 2 board structure & composition; 3 board
chairman; 4 board committees; 5 appointment & retirement board membership; 6
remuneration; 7 financial rept & auditing; risks mgt & internal controls; 8 code of
conduct Bosch Committee-AU 1.10
Remuneration & nomination committees set up with majority of non-executive directors Bosch Rept 4.27
Statements of business principle-maintaining high std of behaviour throughout Bosch-Codes of conduct 6.39
Ansell's personal int conflicted with duty: account to Boston for both comm & the bonuses Boston Deep Sea fishing & Ice Co v Ansell
5.28
Three pillars sustainable dev-bal economic dev, environmental protection & social progress Bourne, Greg-three pillar of developmentR4.08
Civil consequences of taking a bribe-general principles. Co & person paying bribe are victim Bribes-civil consequences 5.29
Criminal consequences of taking bribes: punishable or 10 years imprisonment or both Bribes-payment of a secret comm 5.29 s176 'C'
Managing a corp: includes directors powers broader to controls a co irrespective of position Brick & Pipe Industries v Occidental Life
5.35

Ethics as moral principle or a set or moral value is considered correct or goods Brokensha, Peter: Ethics 5.04
Int'l investors: BRT published Statement on Corp Governance stress 'soft' factors like
quality of director & personalities of directors. (Other changes also required) BRT involved debate 4.11-12
Stakeholder right: Board's primary duty is to the shareholders & should consider stakeholders
BRT stakeholders right similarity to OECD
2.12
Corp Governance principles: 1 duty of board oversee the CEO & senior mgt; 2 Mgt
should not conflict interest with company; 3 audit committee engagement an
independent audit; 4 auditor ensure independence; 4 equitably del with employees BRT USA no "one size fits all' board 1.13
Fiduciary duty: director owe duty also to shareholders if nature of transaction rise fiduciary
Brunninghausen
duty v Glavanics 3.16 A3.09 SA3.02
CSR: Business Council advocate adopting policies reflect a responsible co make up
CSR Business Council of Australia 4.20

p.38of86
 CPA107_Related
Business judgment-means any decision in respect of a matter relevant to business of the corp Business judgment 3.36
Buy goods if agrees to supply retailer
Acquisition of goods or services from particular person or classes of persons unless exclusively or discontinue supplies to
particular circumstances exist or certain conditions are met or agreed to discount 6.18 s45 'T'
Board of directors: function focus on conformance with regulations & the fiduciary CACG guidelines responsibilities to
duties of directors aimed to achieving improved corp performance for shareholders. ensure corp governance 2.15 R2.4
UK: 1 Cadbury-std of audit 2 Monks & Minow-lack of accountability, disclosure &
transparency 3 Lorsch & Maciver-adequacy of board structure & process 4 quality of Cadbury code of corp governance:1
directorial competencies 5 lack of CSR 6 Pound-growth of merger & acquisition Greenbury rept 2 Hampel rept 3
activities 7 Gregg-short-term basis corp performance 8 spate of business fraud 9 combined code 4 turnbull rept.
weakness of corp self-regulation Modern co Law 7.09
UK reform followed Cadbury code: Greenbury Rept, Hampel Rept, Combine code, Cadbury Code reforms corp
Turnbull Rept governance 7.10
Cadbury Committee UK audit
Corp governance: 1 no individual has unfettered powers "check balance"; 2 independent committee exclusively of non-
non-executives; 3 audit committee in board; 4. Corp governance procedures executive member 1.11
Institutional investor more concerned to move in & out of positions mkt for best rtn. "free-riding'
Cadbury Rept: Institutional investors 4.10
Corp governance: adopted a comprehensive action plan to address abusive executive CalPERS: USA publishes list of best
compensation plans in US corp & worst performing corp 1.12
Institutional investors-right to exercise its responsibilities as a corp owner & encourage CalPERS:Institutional investors-
other shareholders to do aimed at benchmarking corp governance individually 4.11
CASAC no recommendation for further provion because of adequate access already available CASAC no recommend in access info SA4.04 4.9
Shareholder participation in the modern listed public co: Final report CASAC report-Shareholder praticipationR4.04
Shareholder: AGM requisition, resolution thresholder notice of AGM, proxy
arrangement, disclosure of proxy directory electuary. No recommendation for further
regulatory provision CASAC report-Shareholder praticipation4.09 R4.04
Automatically disqualified because advisors incorrectly interpreted Chew v NCSC 5.37 SA5.26
Automatic disqualification Chew v NCSC 5.36
Misleading & deceptive: countervailing gullible or 'credulous' consumers misled Ciba-Geigy Canada Ltd v Apotex Inc 6.43 CSA6.8 s52 'T'
Duty of care, skill & diligence: 3 basic no greater skill, no need to attend all meeting; justified
City Equitable
trust Fire Insurance Ltd 3.27 objective test
IFAC: produced research report on Rebuilding Public confidence in Financial Rept Co should set out their ethical policies code
1.09 Exam
AICD code of conduct-Expansion on legal obligations Code of Conduct 5.44
Australian Institute of company Directors' Code of Conduct (AICD) Code of Conduct 5.43
Codes of conduct for individual co: advantage of flexibility & commitment by mkt participantsCode of Conduct 5.45
Ethical standards - "proactive" for forester high standards of behavious and "Law - reactive"Code of conduct: Law and Ethical 5.07
Ethics not sufficient to simply have corp governance legislation Cohen, Ethics is judgment, not rules 5.03
Special circumstances-can rise to a duty of fiduciary nature to individual shareholders notColeman
just co v Meyers 3.16
Comparative advertising: toothpaste- compare toothpaste, interim injunction granted forced Colgate-Palmolive
to abandon v Rexona 6.46 CSA6.10 s52 'T'
Wines & spirits retailers established 'The Cut Price Liquor Shop': an illegal collective boycott
Collective boycotts 6.18 CSA6.2 s45 'T'
Anti-competitive agreement: Collective Boycotts; Price-fixing; Secondary boycotts; CollectiveCollective
agreement
Boycotts; Price fixing 6.37 s45 'T'
Bait advertising: batteries: not obtained 'reasonable quantities' of prom coffee 'whilst stk last'/'ltd'
Collis v Coles Myer Ltd 6.48 CSA6.12 s56 'T'
Price Fixing agreement: prohibits a firm making or giving effect to provision in contract Collusion, include price fixing s45 6.16 s45 'T'
Collective boycotts: 3 steps involved 1 contract, arrangement or understanding; 2
between competitors; 3 have a boycott purpose Collusion, including price fixing s45 6.18-19 s45 'T'
Manufacturer of video recorders price suggest:pre-eminent expression competition-competition Collusive price fixing agreements45 6.16 CSA6.1 s45 'T'
UK: 1 new definition or role of board 2 open & rigorous on appointment of director 3
evaluation of performance of board 4 at least half independent non-executive 5
separation of chairman & CEO 6 chief executive no become chairman 7 closer
relationship between chairman & independent director 8 strengthened role for audit
committee Combined code 7.20
Ramsay's rept: Independence of au co auditors, 10 corp gov't principles & best practices Combined Code UK; Higgs rept & Smith 1.09
rept
Special disability: "special disability' of age & language difficulties Commercial Bank of Australia v Amadio 6.58
Hampel Rept: summary of conclusion & recommendations of committee on corp governance Committee on Corp Governance R3.01
Board structure: Role of committees. subset overall board formulated to deal with specificCommittees
nature role & board structure 2.18 T2.3
Remedies available to the co when director breach of duty***************************** Common law remedies *************** 3.32-33******
Mgt compensation: Performance-based remuneration, bonus plans, stock option Compensation: performance rept 2.25
Competition law goals: based on workable or effective competition achieving microeconomic Competition law goals 6.09-10
Competition policy: protection & preservation of competition & policy objectives Competition Policy in Australia 6.07-08
Compliance program effective: assist a business reduce risks procedures must audited & Compliance
review program 6.05
Compliance programs-The benefits for companies & their stakeholders Compliance program-avoidance of harmR6.01
Compliance program: designed to reduce organisation's risk of breaking the law Compliance program-integrated business6.04
Concerned effect, s 998 dealt with conduct intended 'likely' Conduct intended 'likely' SA5.17 5.22 s1041a/b,998 'C'
Dealer network limited territory selling particular customers is legal unless anti-competitive
Confining dealer network SA6.03d 6.31 s46 'T'
Board: ensure integrity of corp accounting & financial rept with independent audit &
controls & compliance; monitor effectiveness of governance process; oversee disclosure
& communication Conformance role of board 2.16
TPA PartV:D1unfair comm practices,D1Asetting std,D2 consume contract,D2Amanu consume Consumers gds protection 6.39 Part V D1,1a,2,2a 'T'
Market-based sys functional convergence by forces: 1 influence stock ex, toward IAS, global Convergence
co & diversity 7.39
Improper use of position in the company: break director obligation reflected in statutory position
Cooke v Deeks 3.25 s182 'C'
Taking up corp opportunity: Erring directors could not retain benefit to take back the contract
Cooke v Deeks: corp opportunity/position 3.24 s236 'C'
ASX deal with independence of directors, appointment, remuneration, audit, ethical
standards, auditors & board composition; Corp governance statements (CGS) details
obligations of continuous disclosure of financial matters & appointment of directors,
shareholders rights Corp Act & ASX Listing Rules SA4.08 4.17
Bubble Companies Act-Foundation of the current Corporation Act 2001 in England Corp Act 2001-Bubble Co Act 3.14

Large proprietary co, unlisted public co other co are required prepare annual rept, do not
need to contain corp governance statements. Unlisted public co stringent rept obligation
but Corp Act still doesn't require corp governance statements*************** Corp Act: annual report ******** 4.15*******

p.39of86
 CPA107_Related
AAMI Customer Charter aspects Corp code by AAMI 5.45
OECD principles of corp govern: Rights, Equitable treatment; role, disclosure; responsibilities
Corp govern: OECD principle R2.01 Slide 47-48
East asks important element: decision-making structure & role ensure effective
governance & financial control 2 clear definition of duties & responsibilities 3 more Corp governance codes important
rigorous monitoring & rept requirement element 7.30
ASX committee for identify & support best practice principle, improved ASX Listing Corp Governance Council: audit
Rule committee 1.18
East Asia corp governance dev 1 more accountable & transparent operation 2 ensuring
effective control & regulation by external agencies 3 training to dev understanding
sound corp governance practices Corp governance dev in east Asia 7.31
ASX Corp governance principles; 1 foundations for mgt & oversight; 2 Board to add
value; 3 Promote ethical & responsible decision making; 4 safeguard integrity in
financial rept; 5 timely & balanced disclosure; 6 respect the rights of shareholders; 7
recognise & manage risk; 8 enhanced performance with board & mgt effectiveness; 9
fair remuneration & responsibility; 10 recognise legitimate int of Corp governance principles: support in
stakeholders*************************************** guidelines********************** 4.14*15*****
Corp governance: fraudulent financial rept/inadequate accountability and audit Corp governance recent debate 1.09
US corp governance regulation correlation between mkt failure & collapses & bursts of legislative
Corp governance regulation & legislation
SA7.03 7.16
Corp governance: Asia economies rapid growth & co collapses need transparent Corp governance requirement for
accountability effective 1.08
Coles Myer-Corp governance statement Corp governance statement R4.07
Commonwealth Bank: responsibility for corp governance oversees the business Corp governance statement 2.34
Santos Ltd-Corp governance statement Corp governance statement R4.06
Southcorp Ltd: responsibility for guiding and monitoring business with policies Corp governance statement 2.33
ASX-Corp governance statements and policies 'annual report' Corp governance statement-ASX 4.13-15

Best practice co set own corp statement. 1 enforceable obligations: statute & common Corp governance: 3 level corp
law ASX, TPA or code; 2 Company's own corp governance statement; 3 Ethical governance principles. Only
standards accepted or promoted within community enforceable obligation against directors 3.04
ASX listing rule on corp governance: listed co notify the mkt immediately information
likely to have a material effect on share price - continuous & periodic disclosure
requirements******** Corp governance: ASX listing rules***** R4.05*******
Corp governance: factors driving increasing expectations- 1 Globalisation of mkt; 2
Advances of IT; 3 corp increased competition; 4 investors become sophisticated need Corp governance: factors increasing
accessible info expectations 1.08
Gov't makes laws by ASIC ACCC & ATO; recommendations: IASC ASX & AASB F1.1 Corp governance: role of governance 1.19-20
Int'l developments: UK: less black letter law; USA moved to black letter (Sarbanes-Oxley) Corp Governance: UK less law, USA to3.11 law
Corp governance-10 principles good
Good corp governance: not expected to applied rigidly will be a bench mark for good corp
corp *******************************
governance*********************************************************** * 4.14-15******
OECD principles-provide legislative protection of shareholders right by auditor to disclosureCorp governance-achieving goals 4.12
Ethics build in public & global gov't regimes for major reforms. Importance of ethics &
corp governance as one of the key issues directors & officers have to face in order to
regain credibility in the Mkt
****************************************************** Corp scandals with corp collapse******* 5.02-.03*****
CSR: focus human rights, community involvement & environmental impact & sustainability Corp social reporting CSR 4.20
Accountability is one of the cornstones of good corp governance Corporate governance 3.30
CGC: ASX high-level committee Recommendations Corporate governance council 1.18
East Asia main principle & objectives process: 1 ensuring clear & effective financial
control sturcture 2 dev external monitoring & control with improvement in legal 3
advancing training & dev program Corporate governance in East Asia 7.30
Mkt-based outsider model: 1 widespread equity ownership; 2 co law faces shareholder
int; 3 emphasis on minority shareholder protection; 4 disclosure require Corporate governance outsider model 7.04
Stakeholder: Corp & stakeholder relationship Table 2.1 Investors/Customers/suppliers.. Corporation & stakeholder relationship 2.06-07
Sponsorship and approval sponsorship, approval or affiliation it does not have Corporation claims 6.54 s53d 'T'
Comparative advertising: suits- compare of suit is permitted if it is not false, misleading/deceptive
Country Road Clothing v Najee Nominees 6.46Pty Ltd s52 'T' 'no contravention
Mareva injunctions-misappropriated co fund freezing director assets until identification asset
Court assistance-misappropriated co fund 5.32
Criminal penalty provision- s.184 dishonest or reckless Criminal penalty provision 3.34 s184 'C'
Corp social reporting (CSR) should examine policies & practices of co in relation to gov'tCSR rule SA4.12 4.22
Corp social reporting and the sunshine standard manifest four steps CSR-social reporting 4.20
Disqualification director carrying out the policy the corp in charge & not making decisionCullen
to it direction
v CAC 5.35
Director duty: complexity of co & challenges this imposes on directors to carry out legal
duties Daniels v Anderson 3.06
Legitimate interest to shareholder: short-term interest less importance than co commercialDarvall
concern v North Sydney Brick & Tile Co3.16Ltd
Sponsorship, approval, performance: adv a 16-days tour but only 15-days Dawson v World Travel Headquarters Pty 6.54 s53c ;'T'
De facto directors: Austin resign but continued 'help out friends' act as a de facto directorDCT v Austin resigned but continued duty 3.09 A3.08 s9bi 'C'
Misuse of Mkt power break: 1 substantial degree of power in relevant Mkt ; 2 taken
advantage of Mkt power; 3 1 of 3 unlawful purposes Décor Pty Ltd supply 6.31 CSA6.5 s46 'T'
Safe harbour: Statutory business judgment rule reluctant to intervene 'a safe harbour' defence
Defences: Statutory business judgment 3.35-36 s180.2 'C'
Director in question clearly did not have an understanding the way co should operate Delonga v Australian Securities Comm 5.41
Phoenix co & phoenix trading: litigated or reported few reported Deputy commissioner taxation v Woodings 5.34 SA5.24
Misleading & deceptive: car rental- misleading Dewhirst & Kay Rent-A-Car v Budget Rent-A6.45 Car Sys s52,53a.b.c,55 'T'
Board: Aligning director & shareholder interest Director & shareholder interest 4.04
Public co at least 3 directors (2 Australian) s201a2, proprietary co no less than 1 directorsDirector
s201a1 and officer s.9 3.07-08 s9 'C'; s201a
Removal of director-breach of duty by a director Director breach duty-removal of director3.32
Board-Role of the board carry out strategic aim of co to oversee mgt by CEO, other executive Director owe fiduciary duty individually4.04
De jure directors: 1 acting as solicitor 2 appointed by AGM 3 appointment subject to AGM Director: appointed by law 3.08
De facto director: those hold position as director in s9bi. Same obligation with de jure director
Director: De facto directors s9 (b) (i) 3.08 s9bi 'C'

p.40of86
 CPA107_Related
bona fide - director honestly believes in the best interest of co. Act in good faith in the
best int of the corp for directors and officers Directors and Officers statutory duties 3.14 s181 'C'
Duty to avoid conflict of interest by examination: contract/personal profits/competing with Directors
co behavior examination by court3.21 objective test
Duty to act bona fide in the best interests of the company: Fiduciary duty Directors' duties 3.36
Duty to act with care, skill and diligence: statute law obligation Not a fiduciary duty Directors' duties 3.36
Duty to avoid conflicts of interests: Fiduciary duty Common law Directors' duties 3.36
Duty to exercise powers for their proper purpose: Fiduciary duty Common Law Directors' duties 3.36
Duty to retain their discretionary powers: Fiduciary duty Common Law Directors' duties 3.36
Deed-of-settlement co-directors duties developed fm early predecessors of adm created co Directors duties-Deed-of-settlement 3.13
Company low origin: Trust Law & contract law Directors duty: Trust law & contract law3.14
Lie in maximisation co profit; made shareholder happy, bldg investor confidence, complyDirectors'
ASX ruleinterest 4.06
Directors automatically liable for losses suffered by third parties s 588G Directors liable liability SA5.08 5.11 S588g 'C'
Replaceable rule: 1 authorised by law, 2 AGM approve 3 Service contract authorising pay't****Directors pay't-Replaceable rule******** 3.26******** s202a&b 'C'
Personal or secret profits example-bribes; misuse fund; opportunities; confidential info; improper
Directors personal or secret profit 3.23
Remuneration: CLERP 9 listed public co insert a 'remuneration report' to annual director'sDirector's
report remuneration disclosure 3.26
Corp governance process determine policies: director obligation & duties; sturcture;
auditor; disclosure; transparency; procedures for appointment & succession Directors role: obligation 3.03
Full disclosure-foundation upon the integrity of equity mkt is built Disclosure & transparency SA7.01 7.07
Remuneration disclosure in ASX Principle of good corp governance and Best practice Disclosure of remuneration 3.26 s202a&b 'C'
Accountability-Shareholder, Lenders, Employees, Creditors, Regulators Disclosure: IT& Int'l increase disclosure3.31
Int'l standard-improving disclosure by new technology offers opportunities, fax Disclosure-Int'l standard 3.32
Information technology increase disclosure-improving disclosure Disclosure-new technology 3.31
Directors to confer a managing director powers with revoke or vary the delegation Discretion-s 198C 3.20 s198c 'C'
Delegation in minutes s.198D(3) exercise of power by delegate is as effective as directorDiscretion-s198D & s198D(3) 3.20 s198d,198d3 'C'
Automatic disqualification-disqualification starts on the day lasts for…. Disqualification of directors 5.36
Managing a corp-3 categories 1 automatic; disqualification by court; 3 disqualification byDisqualification
ASIC of directors 5.35 s206 'C'
ASIC: disqualified a person by court under three headings & example of disqualified director Disqualified director: s206C civil penalty
5.38 s206c 'C'
ASIC and ethical consideration Nicholas v commissioner for Corp Affairs Disqualify-ASIC ethical considerations 5.40 s206f 'C'
Corp governance: evolving & dynamic complexity of corp life, convergence &
divergence simultaneously Diversity & complexity of corp governance7.40
Part VC is a criminal offence of strict corp liability: s79,80,82 present civil & criminal regime
Division 1&1A, partV civil, partVC criminal
6.60 Part V D1,1a,2,2a 'T'
Mergers: concentrate on preventing accumulations of power by acquisition Dominance-affecting: mergers 6.37 s50 'T'
Unconscionable conduct: refused to enforce agreement for real estate agent & illiterate farmer
Downsett v Reid 6.57-58
Brand name, logos, packaging & labeling: lookalike shoes Dr Martens Australia pty ltd v Windsor 6.51
Smith Pty Ltd s52 'T'
Not a fiduciary duty, on a common law obligation. Director make profit take risks.
Section imposes objective 'reasonable person' test Duty of care, skill & diligence 3.28 s180 'C'
Duty to act bona fide-act in good faith, honestly, without fraud or collusion. Subjective test
Duty to act bona fide in best int of co 3.14
Director duty: 1 director had authority to exercise the power; 2 court looks at
motivation; 3 decide whether an action may be attributable to a number of Duty to act proper
purposes******************** purposes*********** 3.18********
Director obligation to prevent co insolvent at time a debt is incurred or personal liability
debt. Corp Act imposes director duty constantly on guard against not to incur further
debt when financial instability could lead new debt not being able to be met. directors
required to keep themselves informed as to financial position of
co*********************************** Duty to prevent insolvent trading******* 3.28-29****** s588G 'C'
Duty to prevent insolvent trading defences available to
director************************* Duty to prevent insolvent trading******* 3.29******** s588h 'C'
Creating/destroying majority voting power-breach of s 181 improper purpose manipulateDuty control
to retain discretion 3.19 s181 'C'
Director delegation in legislation or constitution permitting the board to do so. Often
breach found when co get financial diff Duty to retain discretion 3.20 s190 'C'
East Asia: 1 Information asymmetries are more severe 2 contracting costs are higher
because stk practices not dev enforcement of contracts 3 adm agencies are less able to
handle issue benefit fm detailed rule making & non-legal adm enforcement such as a/c
std, disclosure East Asia MC7.08
East Asia: board often no clearly defined role for non-executive director & lack of
knowledge of obligation & function of co officers; decision-making bodies not effective
in formal role, unable to exercise right, & boards are co-opted by dominant
shareholders; disclosure & transparency tend to kept a bare minimum. East Asia Corp governance MC7.09
Triple bottom line widely taken up not only accounting profession also environment Elkington, John: CSR 4.17
Manipulation mkt by conduct & statement: create false/misleading appearance active trade Endresz
sharesv Whitehouse 5.21 s1041a/b,998 'C'
Department of Defence qualified by auditor-general for internal records error value of eqip Energex: inappropriate pay't to CEO 2.37-38
Enron case analysis Enron case analysis 7.40-42
Enron case failure corp governance: failure to 1 disclose 2 transparency 3 board 4
conflict of int 5 conflict of int external auditor 6 failure in morality & ethical basis Enron case analysis SA7.08 7.42
Ok Tedi-BHP incurred loss in public relation failure of ethical & moral standard no 'blackEnvironmental
letter' cost-BHP 4.18-19
Body Shop environmental policy Environmental policy R4.10
Environmental a/c-keeping track depletion of co assets, assessing value of treatment & disposal
Environmental reporting SA4.09 4.18
Environmental accounting-conscience of all stakeholders Environmental reporting 4.17-18
Common Law and equitable duties-like a trustee and co is treated like a beneficiary Equitable duties and common law 3.14
Portfolio composition of institutional investors: important equity shares of US & UK institutional
Equity mkts of Germany & France 7.06 T7.3
Auditors don't owe 3 party duty of care unless intended induce plaintiff to act upon audit Esanda
report Finance Corp v Peat Marwick 6.49 s52 'T'
Corp governance in Sports & Leisure Sector Essendon Football Club 2.35
Law may less effective than voluntary code of conduct examples Ethical and Law SA5.04 5.7
Takeovers-Ethical aspects Ethical aspects of takeovers legislation 5.11
Way, Nicholas 'business review weekly'-ethical behaviour important and community Ethical behaviour 5.46
Director may owe a special duty to the specific shareholders rely on him Ethical conduct and co directors SA5.01 5.4
Director of a public co owes duties to corp as a whole not only the major shareholders Ethical conduct and co directors SA5.01 5.4
Egoism-Actions are moral when consequences are in the best long-term int of the individual Ethical conduct and co directors 5.05

p.41of86
 CPA107_Related
Ethical conduct result in Director & co. Criminal law & civil liability Ethical conduct and co directors SA5.03 5.6
Ethical principles - Utilitarianism; Egoism and The Kantian ethic Ethical conduct and co directors 5.04-5.05

Ethical principles-practical reasons 1 good corp reputation & quality employees

retaining; 2 failure of corp adopt ethical practices may cases prompt gov't intervention;
3 failure ensure compliance disregard for law & morality in corp conduct Ethical conduct and co directors 5.06
Ethics is judgment, not rules - importance of ethics in the culture of corp Ethical conduct and co directors 5.02-5.03
Good Reputation Index: Mgt of employees, environmental performance, social impact, ethic, Ethical
fin…
conduct and co directors 5.03
Utilitarianism-based on outcome, promoting greatest happiness among all stakeholders Ethical conduct and co directors 5.05
Ethics and black-letter law Ethics and black-letter law 5.06
Importance in the culture Accompanied by good leadership; instill corp value; law Ethics in the culture 5.03
Sponsorship, approval, performance: particular model of motor car servo-assisted brakes Eva v Mazada Motor 6.54 s53c 'T'
Misleading & deceptive-adv co mistake: falsely representing goods accessories they did not Evahave
v Mazda Motors 6.42 CSA6.7 s52 'T' "Guilty'
Goods of particular std, quality, value: winding back odometer of a car misrepresent previous Eva vuseSouthern Motors Box Hill 6.53 CSA6.14 s53a 'T'
Controls over distribution in the Mkt place: coercive behaviour in setting trading conditions Exclusive dealing s47 6.27-28 s47 'T'
Franchisee impact of tying condition would be no substantially lessen competition,
third-line forcing is illegal outright Exclusive dealing s47 6.28 & CS6.4 s47 'T'
Sundae Ice Cream Co. exclusive dealing: 5 general categories of vertical restraint Exclusive dealing s47 6.28 CSA6.4 s47 'T'
Third-line forcing: exclusive dealing prohibited outright-w/o prove a substantial competition Exclusive dealing-Third-line forcing 6.29 s47 'T'
Relief from breach of duty- The court may relieve a person from liability Excused act honestly & fairly 3.35 s1318(1) 'C'
Hampel recommended audit committee should non-executive directors with same obligations Executive & non-executive directors 3.10
Executive and non-executive directors: two basis Executive and non-executive directors 3.11
Remuneration committees-executive remuneration should linked to increased in co profitExecutive remuneration 4.27
make a false or misleading representation concerning the availability of facilities for the
repair of goods or of spare parts for goods facilities for repair of goods but not 6.52 s53ea 'T
Fraudulently inducing persons to deal in securities-wrongdoers issue statement s1041F False or misleading statement 5.25 s1041f 'C'
Likely effects and strikes at negligent conduct (careless of the truth) False or misleading statement in securities
SA5.20 5.25 s1041e 'C'
False or misleading statement in relation to securities s1041E "refer to statement" False or misleading statements 5.25 s1041e 'C'
s1041E 3 elements: materially false or misleading; 2 likely effect; 3 dissemination informationFalse or misleading statements in relation
5.24
to securities s1041e 'C'
European a/c: appropriate bal of power at board; audit committee examining financial
rept; policy on non-audit services, extended (long form) rept to board by external FEE & Winter report: emphasis wider
auditors in combination with oral presentation & in-depth ex of views; review the aspect of internal control & related
auditors role & independence processes of risk mgt 7.28 MC7.07
European corp governance-FEE rept int in 1 internal control 2 financial rept 3 audit
committee 4 rept by external auditors to shareholders & mgt 5 internal audit 6 FEE report: European accounting
shareholders meeting profession 7.27-28
Push came to shove, the voluntary scheme lacked teeth Fels: self-regulation 5.43
Appearance of sale brought about by ordinary Mkt methods misleading appearance real Fenwick share pricev Jeffries Industries Ltd 5.24 s998 'C'
Directors duties trust law is reason the duties 'fiduciary' relationship trustee & beneficiaryFiduciary duty-trustee & beneficiary SA3.06 3.30
Secret comm: Director can't gain advantage & cause detriment to the corp. Civil obligation Fiduciary relationship agent duty 5.27 s182, s1317e 'C'
Institutional investment: US & UK high equity shares, Germany & France considerable Financial assets of institutional
growth, Japanese declined proportion of institutional investment investors 7.05 T7.1&7.2
Resale price maintenance: scheme allowance retailers adhere to displayed recommended Frankfurter
price Pty Ltd v TPA 6.22 CSA6.3 s48 'T'
Prospectus issued 'frees shares' mislead members Fraser v NRMA Holdings Ltd 5.11 s710, s731 'C'
Reckless can connote dishonest where statements with careless disregards for the truth Fraudulently inducing persons to deal SA5.21 5.26 s1041f 'C'
Free Mkt : Wealth will be maximised by allowing Mkt s free of restrictions & co free to run Friedman, Milton: co should not pay tax1.21
Social responsibility of business is only to use resource to increase profit Friedman, Milton: not correct nowadays5.05
Disqualify power issues of commercial morality & standards of competence directors to reach Friend v Corp Affairs comm 5.40 s206 'C'
Fruit producers not supply fruit to
supermarkets that stocked imported
Supply of goods or services to particular persons or classes of persons fruit 6.18 s45 'T'
Breached agent duty to the principal not depend co suffered any detriment Furs Ltd v Tomkies 5.29
Improper use of position in the co: obligation of director to co reflected in statutory position
Furs Ltd v Tomkies 3.25 s182 'C'
Improper use of position in the company: break director obligation reflected in statutory position
Furs Ltd v Tomkies 3.25 s182 'C'
Taking up corp opportunity: Director need full disclosure to full board Furs Ltd v Tomkies 3.24 s181,183 'C'
Undisclosed benefits: set up subsidiary need repay profit, disclosed not only CEO also shareholders
Furs Ltd v Tomkies 3.23
Groups were important to countermand the power to companies Galbraith, John Kenneth USA economist1.21
Takeover law - Resolution of co more than 50% vote invalids. Gambotto v WCP Ltd SA5.11 5.14 s611 'C'
Information not generally available which as a material effect on the price Generally available information 5.18 s1042c(1) 'C'
Germany business: 1 strong concentration of ownership of individual enterprises 2
importance of small & medium-sized unincorp co 3 close correspondence between Germany: Central characteristic of
owners & managers 4 limited role play by stk mkt corp governance 7.25
European union dev corp governance: 1 privatisation of state-owned co; 2 growth &
diffusion of sharehold in countries; 3 increased merger & takeover activity Germany-small & medium-sized unicorn 7.24-25
Sponsorship, approval, performance: adv fire extinguishers failed efficiency by fire commissioner
Given v Snuffa Pty Ltd 6.54 s53c 'T'
False & misleading representation: monetary penalty imposed by ACCC Goods of particular std, quality, value 6.52-53 s53,55 'T'
Sarbanes-Oxley Act new laws, regulations & listing rules after Enron Gordon: Enron 'shareholder capitalism' 7.18-19
Duty to retain discretion: Director allow manager sign chq for co. Director liable to co for Gould
loss v Mt Oxide Mines Ltd 3.20 objective test
Duty to retain discretion: director to liable to the co for loss as a result of unauthorised pay't
Gould v Mt Oxide Mines Ltd 3.20 objective test
System of Environmental Economic a/c (SEEA)-Integrated environmental & Economic A/C Government expenditure on environment 4.19
2.40-41
Uhrig Rept summary of recommendations and better practice guidance for board Government statutory authorities board Q2.13
Competing with the company: tender a job by own co breached fiduciary duty Green v Bestobell Industries Pty Ltd 3.25
Nominations committees: clear terms of reference for committees responsibilities &
procedures should understanding independent directors should be free to act Greenbury & Hampel recom. all
independently independent director 4.27
Directors remuneration disclosure transparency report Greenbury Committee UK: 1.11
Remuneration, nomination and performance: Greenbury Committee key recommendationGreenbury committee-Remuneration 4.25-26

p.42of86
 CPA107_Related
Remuneration Committee of co should be comprised entirely of non-executive directors Greenbury committee-Remuneration committee 3.10
Recommendations of the Greenbury Report Greenbury Rept R4.13
Remuneration Committee: Cadbury & Greenbury effectively superseded by Hampel Greenbury specifically look at remuneration
4.25
General body: 'Corporations' as a general body & can’t discriminate between majority & Greenhalgh
minority v Arderne C 3.15 A3.02
Lobbying group: Gov't pass laws affect operations by frequently influence by submit
written or face-to-face discussions; groups: consumer; clubs; trade unions;
environmental & churches Groups: lobbying 1.20-21
Nominations committees should have nomination candidates & assessing CEO Hampel & Greenbury recom. all
performance, individual directors & board as a whole independent director 4.27
Corp governance contribution to business prosperity & accountability. Balance s/b corrected Hampel committee 'Supercode" 1.11
OECD: 'corp governance framework ensure strategic guidance of co, effective monitoringHampel of mgt Report: Board of directors 2.15 R2.3
Stakeholders right: employees, creditors, customer, suppliers, non-equity investors, regulators
Hampel& gov't
Report: Stakeholder & ASX 2.10-11
Institution investors-ins co, p fund, investment trusts & professional investment fund manager
Hampel Report-dialogue between investors4.10
Institutional investors express views should take active int in investing co - Hampel reporHampel Report-institutional investors SA4.05 4.11
Audit committee Half non-executive director Hampel Rept 3.11
Corp governance: People, teamwork, leadership, enterprise& skills produce prosperity.
Accountability require appropriate rule & regulations Hampel rept: good corp governance 4.13
ASX Principles 6 for rights of shareholders Hampel: Shareholder right & responsibilities
2.09-10
Standards Asso of AU (SAA): falsely representing gds approved by the std asso of AU SAA Hartnell v Sharp Corp 6.54 CSA6.15 s53c 'T'
NZ equity market is smallest mkt relative to GDP. 1 Small size firms, Dividend treats
equity , stk mkt not enjoy a strong reputation compliance & governance std not match
advanced ind mkt Healey for NZ public equity mkt 7.12
Performance-based compensation: lead active manipulation reported measures Kohn & Healy Healy: Alternative view performance-based
2.29
Bonus plans: not achieve target-take a bath; achieve-maximised profit; over target-reduceHealy:profit mgt manipulation reported 2.26
FRC recommendations: 1. Chairman should not involved chairman's remuneration; 2 Higgs & Smith's with FRC 'UK
half of board s/b independent non-executive directors; 3 AGM of non-executive standard setting board' recognised in
directors chaired by senior independent director without presence of the chairman 'comply or explain' principle 1.12
HIH case failure corp governance: failure to 1 realise responsibilities 2 domination by
CEO to acted as publicly owned 3 inadequate financial control 4 not due diligence 5
irresponsible operation & strategy 6 inadequate financial & accounting control 7 failure
of act diligently 8 fail to disclosure & transparency 9 indulgence while neglecting
responsibilities HIH SA7.09 7.44
HIH Insurance analysis HIH 7.43-44
Corp governance: broadest comprehends the framework of rules, relationships, sys & HIH Insurance Justice Owen view of
processes within & by which authority is exercised & controlled in corporations Corp governance 1.07
Competition in the Mkt place: business respond to changing of lower price and
improved choice for consumers & greater efficiency, higher economic growth &
increased employment Hilmer report point to competition 6.07
HL Bolton v TJ Graham: like human
Director role in proprietary & listed co: primary duty carry the corp governance policies being 3.05
Duty for act in best int but not contradicted (no order against directors) still invalid**********
Hogg v Cramphorn****************** 3.19********
Responsible business engagement with society-business is & should be integral part of societyHolme, Lord-Corp social responsibility R4.09
Advertising truth: does it convey a truthful impression Hornsby Bldg Info Centre v Sydney Bldg 6.41
Ingo Centre s52 'T'
Duty to act bona fide but improper purpose invalid*********************************** Howard Smith v Ampol Petroleum Ltd**** 3.19 ******** subjective test
IASB structure: IASC foundation Trustees appoint IASB exercise oversight & raise IASB assumed accounting standard-
funds needed , whereas IASB sole responsibility for setting accounting standards setting 1.15
World Bank to aid countries in economic dev & commitment continuous dev corp governance IMF: balance of pay't & ex rate 1.14
Reasonable grounds for suspecting; Suspecting and incurs a debt Incurring a debt s 588G(1A) 3.29 s588g(1a) 'C'
ASA-57% AU holder shares, age over 55. Transparent, communicative, answer &
accountable. Blacklist of 'poor performers' Individual investors - ASA 4.09 R4.03
O'Brien. Mary-increase in gingival investors will continue to have far-reaching effect Individual shareholder-transparent co 4.08
Bribes-payment of a secret comm making the pay't fails to disclose to other person.
Intention to induce the agent to act favourably to the payer & unfavourabley to the Industries & General Mortgage v
principal Lewis 5.28
Lobbying: AU Mining Industry Asso; AU Retailers Association; Business Council of
AU; National Farmers Federation; Victorian Chamber of Commerce; AU Chamber of
Manufacturers Industry & trade associations: lobbying 1.20-21
Information: matter of supposition and matters relating to the intention Information 5.18 s1042a 'C'
Insider trading: 1. Fairness mkt price; 2 fiduciary duties to co & shareholders; 3
preventing damaging mkt integrity; 4 prevent injury to
securities***************************** Inside trading prevent reasons********5.15-16****** s1042a/1043a 'C'
European countries: 1 ownership & control held by cohesive group of insider have long-
term stable relationships 2 insider group connection with drawn fm family int, allied
industrial concerns, bank & holding co 3 insider groups monitor mgt act under their
control Insider model 7.22
Family-based insider sys benefits: 1 flexibility & dynamism contributed to rapid
economic growth 2 unity of ownership & control eliminate principal/agent problem 3
investors support successful mgt teams & companies 5 sense of purpose & cohesion
with understanding of customary practices 6 strength & stability of tradition Insider sys SA7.07 7.39

Family-based insider sys cost: 1 persistent problems of neglect of minority shareholders

2 pyramidal structures acquire control of operation cashflow disproportionate to equity
stake in co 3 independence & diligence of board called into question 4 std of disclosure
& transparency are minimum 5 regulators are unable to act on poor information &
access 6 enforcement of contract is problematic because of weak courts Insider sys SA7.07 7.39
Outsider system: equity finance has more important as means of dev companies "Nestor & Insider
Thom" systems dependent loans fm bank7.02 & 7.05
Misleading or deceptive conduct is not a criminal offence only civilly liable. Repay the Insider trading & market manipulation,
damage or disqualified but no in misleading or deceptive
jail**************************************************** conduct******* 5.09******** s1041H 'C'
Insider information-prohibits insiders 'tipping' others with price-sensitive information Insider-trading legislation policy 5.17 s1043a 'C'

p.43of86
 CPA107_Related
Insider-trading legislation -apply to officers may benefit fm information & material effectInsider-trading
price legislation policy 5.17 s1042a/s1043a 'C'
Insider-trading legislation only officers of co would overall too limiting for two reasons Insider-trading legislation policy SA5.13 5.17 s1042a/1043a 'C'
Insider-trading: Corp Act prohibits would have a material effect on the price or value of securities
Insider-trading legislation policy******* 5.14-15****** p2d.1, s183 'C'
Director satisfy the ground claim defense when co insolvent at the time incurred a debt Insolvent SA3.06 3.30 s588h 'C'
Pro-competitive nature of intellectual property law a partial exemption Intellectual property: patent; copyright; 6.49
registered design;
s51trademark
'T'
IT-services centralised databases, data t/f,bar coding, video conferencing, email, fax, internet…
IT 4.23-24
IT-benefit on continuously and easily assess financial health of co. IT benefit 4.24
IT-obligations board to understand new technology. Co may losing important memory &IT history
obligations 4.24
IT-integrity & security of IT sys are absolutely vital IT possible causes 4.24
Electronic data collection by regulator to provide confidentially by ASIC, ASX, ACCC &ITATO regulator 4.25
France & Italy: France majority of shares owned by non-financial enterprise 2 cross-
participation is important element of corp governance 3 cross-praticipation shield
managers fm short-term pressure of mkt by making change in corp control more 7.26 &
difficult Italy & France MC7.06
Risk Mgt can be more effectively tracked, greater disclosure with reduced cost. IT-Risk Mgt SA4.13 4.25
East Asia: Financial crises & the beginning of reform:TH managed float, reform process Japan: for Asiakeiretsu sys, trust-based form 7.30-34
Financial institution s remained weak & unreformed. Corp law in Japan modeled on
German sys Japan: keiretsu sys, trust-based form 7.31
German & Japanese industry seem destined for ascendancy as relentlessly pursue export Japanesesuccess & Germany industry 7.16
Use of confidential information: improper use of position by endeavouring to keep assetsJeffreeaway v NCSC: creditor entitle to assets3.25 s183 'C'
Fair or Mkt Failure: s46 substantial degree of mkt power & s50 prohibition of mergers Joint Select Committee 6.37 s46,50 'T'
AU: financial mkt 1 progressive deregulation of financial mkt 2 globalisation of
financial mkt 3 financial product innovation 4 increasing prominence of institutional Joseph Healy: compare growth of AU
investors mkt 7.12
Shareholder: individual & institutional; Keasey: Int in wellbeing of the co is in long-termKeasey
success& Wright 2.05
Remuneration packages in research shown stk option tend greater link with profit & performanceKeasey & Wright: Remuneration comm4.27
Services of particular std, quality & value: misrepresenting standard of services-tennis tournament
Kiley v Lysfar Pty Ltd 6.53 s53aa 'T'
Performance-based compensation: extrinsic reward lead to active manipulation reported measuresKohn: Alternative view performance-based 2.29
Laws applicable unethical-misleading conduct, co takeover, insider trading, manipulation…. Law approach of ethical conduct 5.07
Chinese walls portable screens meant to act as a visual barrier, generally will not excludeLeakage
noise of information within organisation SA5.15 5.20
Trust-based form: governance relational contract generate sense obligation to trading partnersLearmont: trust-based form d
Legal compliance: sound legal compliance program reduce corp risk Legal compliance 6.04
Anti-competitive agreement: Agreement 'lessening competition' Lessening competition 6.19 s45e 'T'
US co proposal: 1 board maximum 10 directors 2 outside director nominated as lead
director 3 board meet major shareholder 4 Independent directors describe remedial in Lipton & Lorsh proposal adopted in
annual rept for co 3 out of 5 years US 7.07
ASX Guidance Note 9 - Disclosure of Corp Governance Practices R4.05 part B*************** Listed rule-ASX guidance note 9*** 4.16 R4.05B**
ASX Listing Rule - periodic disclosure and address issuers R4.05 part A****************** Listed rule-ASX listing rule******* 4.16 R4.05A**
US-outside directors have limited time, knowledge & expertise in co that they are
responsible for Lorsch & Maclver 7.07
Misleading & deceptive-shoes flaw: unqualified statement adv good 'top quality' Macfarlane v John Martin & co. Ltd 6.42 s53a 'T' 'Guilty'
Comparative advertising: power drill-'torture test' but make clear the adv Makita v Black & Decker 6.46 s52 'T'
Managing affairs information Managing affairs information R4.12
Managing corporation-disqualification of directors s206A Managing corporation 5.35 s206a 'C' P2d.6
Alternate directors: cannot act under a power of attorney as a director Mancini v Mancini 3.10
Buyback permitted when employees resigned but can't transfer share, co may buyback Manipulation of the market by conduct SA5.16 5.22 s1041a 'C'
Substantial Mkt power: withholding boots deter/prevent competitive conduct Mark Lyons Pty Ltd v Bursill Sportswear 6.33-34 s46&47 'T' 'Guilty'
Manipulation of the Mkt by conduct and statements "General section-liable with other section" Market manipulation s 1041A 5.20-21 s1041a 'C'
Manipulation mkt prohibited by protect community & integrity of mkt apply artificially price***
Market manipulation s 1041A "Effect"** 5.20******** s1041 'C'
Manipulation of the Mkt by conduct and statements s997 "intention" Market manipulation s 1041a "Effect"** 5.20-21 s1041a & s997
Eliminating/substantially damaging competitor: Predatory pricing/squeezing source of supply Market power: Prevent person entering mkt 6.34 s46 'T'
False trading & Mkt rigging transactions s1041b: artificial transaction result in the price Market rigging and false trading trans 5.22 s1041b,c 'C'/s52 T
Outsider systems-corp govern of US&UK 'heart of agency theory, corp govern principle Market-based
& co law' outsider model corp govern7.04
Mattress manufacturers agreeing to
supply a particular retailer only if it
ceases importing its own brand or
Supply of goods or services to particular persons or classes of persons unless particular agreeing to resell at recommended
circumstances exist or certain conditions are met or agreed to retail prices 6.18 s45 'T'
Use of confidential information: either director made improper use of info was in financial McNamara
diff v Flavel 3.24-25 s183 'C'
Misleading & deceptive: sold 'Big Mac' & wine different to lead not be misled McWilliam's Wines v McDonald's 6.44 s52 'T'
Predatory pricing s46: exclusive distribution sys maximised sales Melway Publishing Pty Ltd v Robert Hicks 6.35-36
Pty Ltd s46.7 S4f 'T' 'Guilty'
Authorisation of merger is available by ACCC for public benefits Merger or takeover 6.38 s50 'T'
Economic on new knowledge & info-based networked economy with potential to
capitalise on Metcalfe's Law-scale of a network expand linearly, use expands
geometrically. Metcalfe's Law: new economy 7.17
Board policies affect: trading; form of co; mgt style; legal; co financed; competition; infoMgtavailability
objective enhance shareholders value4.05
Sponsorship, approval, performance s 53c Michael Edgely Int'l v Ashtons Nominees 6.54 s53c 'T'
Rights of consumers: exchanged goods within 7 days Miller v Fiona's Clothes Horse of Counterpoint
6.56 CSA6.18
Pty Ltd s53g 'T'
But for test: directors are not required to ignore own interest but must not be 'substantial' Mills v Mills 3.18
Managerial capitalism: US corp successful grow managers become dominant players newMillstein: forms US sys 7.15
US sys encouragement of self-regulating by corp entities, supported by law around basic Millstein:
principle US sys 7.14
Corporations Act prov structure minority shareholder locked into shareholding Minority shareholder SA5.10 5.13 s636,606 'C'
Criminal law-misappropriation of corp funds theft for directors prosecuted under criminalMisappropriation
law of corp fund-R v Reid5.32
Directors must not misuse corp funds by mixing money with their own in intention************ Misappropriation of corp funds******** 5.31******** s181 'C'
False & misleading representation: s53a,aa,b,bb,c,d,e,ea,eb,f,g Misleading & False representation 6.52 s53 'T'
Misleading or deceptive conduct in relation to Corp securities TPA s 52 & s 1041H********** Misleading or deceptive conduct******* 5.08-09***** s1041H P6d.3 'C'
Prospectuses contravene s728(1) is civilly liable to parties who suffer loss by that conduct****
Misleading or deceptive statement****** 5.10******** s728 'C'
De facto directors: Yasseen is a de facto directors a liable Mistomorn Pty Ltd (in liq.) v Yasseen 3.09 A3.06-08 s9bi & s598 'C'

p.44of86
 CPA107_Related

Substantial degree mkt power: 1 substantially damaging competitor; 2 preventing entry

of person into the Mkt ; 3 deterring person from engaging in competitive conduct Misuse of market power 6.31 s46 'T'
Misleading & deceptive business conduct (s52):advertise, auditors role & intellectual property
Mkt & advertising 6.40-41 s52 'T'
UK: examined directors & auditor duties, investigated shareholder rights, explore new
corp rept, particular issued of rept & accountability by smaller co Modern Co Law Review 7.10
Misuse of market power: concentrate on controlling the activities of powerful firms Monopolisation 6.37 s46 'T'
Investor's interests-investment opportunity empowering for individual investors 'mum & Mum
dad' & Dad investors confident invest 4.08
Comparative advertising: batteries- mislead average consumer in overall impression 'up to'
Nationwide News Pty Ltd v ACCC 6.47 CSA6.11 s52 'T'

make a false or misleading representation concerning the need for any goods or services need for goods is not 6.52 s53f 'T'
Market-based sys: economies adopted this model of corp governance, equity is widely
distributed among individual & institutional investors Nestor & Thompson: market-based sys 7.04
Does not apply to proprietary co with one director s191 No distinction public and proprietary 3.22 s191c 'C'
Nomination committee: recommend potential board appointment of board members Nomination committee: consider board processes
2.20
ASX listing rules do not require a co have a nomination or remuneration committee Nomination or remuneration committee4.26
Act in good faith by nominee director in best interest of subsidiary precedence holding coNominee Director act in good faith 3.13 s187 'C'
Nominee directors: appointed to represent the interest of particular class of
shareholders. UK & AU request to act in the best interest of co as a whole Nominee directors 3.12
Non-executive directors benefits arise Non-executive directors SA3.01 3.11
Voluntary disclosure-financial information and non-financial issues as corp govern principles
Non-financial disclosure 3.31
Churning: prohibited by s1041B "Effect - objective test" North v Marra Developments Ltd 5.23 s1041b 'C'
Not acquire good because it supplies
Acquisition of goods or services from particular persons or classes of persons goods to discount house 6.18 s45 'T'
Legislation not distinction between small and other investors Not small and other investors 5.10 s728.3 'C'
Key governance issues: maintain solvency on containing cots to efficient & effective outcomes
Not-for -profit corp governance 2.36
Corp governance in not-for profit organisations Public sector & SME Not-for-profit organisations 2.34
Participants in the corp governance process Broad & Owner: Same director's liability in Not-for-profit organisations: Board
a for-profit co. Director usual act in unpaid or rec'd minimal director fee. Nominations role-Similar; Owners-focus
less formal. Role of board similar to for-profit co stakeholder 2.36
Authorisation & notification: exclusive dealing conduct can authorise on public benefit grounds
Notification applies to all exclusive dealing
6.30 s47 'T'
Exclusive dealing-anti-competitive: sufficient push price competitors s47 O'Brien Glass Ind. Pty Ltd v Cool & Sons 6.29
Pty Ltd s47 'T'
Int'l Capital Mkt: Business Sector Advisory Group on Corp Governance to OECD OECD 7.03
Board of directors is pivotal in relationship between shareholders & mgt. Principle A1-A7,OECD
B && C ASX difference 2.13 SA2.3
Corp governance: Principles of "Effective"-evaluate & improve the legal, institutional
& regulatory for corp governance to provide guidance & suggestions for stk ex, OECD dev principle for corp
investors, corp & other parties have a role in process of dev good corp governance governance 2.06-07
OECD Int'l-White Paper Asia
OECD 5 principles: 1 shareholders' rights protection; 2 shareholders equitable economies. Evaluate/improve corp
treatment; 3 stakeholders role; 4 disclosure & transparency; 5 board responsibilities governance 1.10
OECD Principle focus traded co best
AICD comments on OECD: Corp governance is important but behaviour of practice. Concern Shareholder &
shareowners & economic settings are more important stakeholders' rights R4.02
AICD commented on OECD principle made specific recommendation for minor changesOECD principles and AICD SA4.02 4.7
Corp governance statements (CGS) of Santos Ltd and Coles Myer Ltd in OECD PrincipleOECD Principles in CGS SA4.07 4.17
Asian countries revamped corp laws & regulations. Asian roundtable work towards full
convergence with int'l std. Full convergence is not possible, divergences will be OECD White paper on corp
disclosed by co governance 7.38
Corp governance: set of relationships between a co's mgt, board, shareholders & stakeholders
OECD: Corp governance 1.07 Exam
BRT: Board's duty is to shareholders & should consider stakeholders to enhances their value
OECD: employee is importance stakeholder 2.12
Equity market: Japan lies in middle of US/UK heavily equity-based mkt, EU smaller equity OECD:
mkt equity market 7.32
German: dual board structure. Two-tier board sturcture. Overlaps in membership
between two boards not allow with same firm & symmetric cross-overlaps between two
firms are also prohibited OECD: German business 7.25
Menu of choice approach to corp governance standard for appropriate to specific risk profile
OECD: Int'l corp governance code 7.39-40
Social accounting: OECD encourage protection of human rights & ensure 'effective
redress for violation of these right OECD: Social accounting 4.20
Shareholder right: 1 deal with shareholders rights 2 equitable treatment of shareholders OECD: with code of shareholder's right2.08 R2.01
One-Tel losses ignored until
CLERP9 & ASX corp governance principles: 1 ensure independence of auditor 2 bankruptcy& HIH collapse: director
continuous disclosure 3 improve shareholders meeting conduct 4 annual rept include abandonment ethical responsibilities to
disclosure of director 3 whistleblowing co 7.21
US mkt-based system: traditionally worked on a collegial basis under dominance of senior One-tier
mgt. board ratify strategic mgt decision
7.07
Auditors-Problems with applying misleading or deceptive conduct to auditors in past claim Opinion reasonably held: none liability R6.01 s52 'T'
Acquisition creep-<20% threshold may acquire & add'l 3% every 6 months w/o breach s611 Other forms of lawful takeover 5.13 s611, s606(1) 'C'
Exclusive dealing s47: no evidence exclusive dealing. Not producing anti-competitive effect
Outboard Marine AU v Hecar Investments 6.28 s47 'T' 'No Guilty'
Outsider strength 1 dispersed ownership & strong institutional investors 2 primacy of
shareholder int in co law 3 emphasis on protection of minority shareholder int 4
disclosure require 4 fluid capital investment in dynamic economy 4 competitive
performance Outsider system of corp governance SA7.05 7.22
Outsider sys 1 independence of audit & accountancy professions 2 lack of
accountability, disclosure & transparency of boards 4 adequacy of board structure &
process 4 quality of director competencies Outsider system of corp governance MC7.03
Outsider sys weakness: 1 over-dominant & over-paid CEO 2 weak boards of directors 3
failure in rept & transparency 4 short-term investment 5 instability of governance &
investment 6 cyclical volatility in dynamic economy Outsider system of corp governance SA7.05 7.22
Duty of care, skill & diligence: today's standard higher Overend & Gurney Co v Gibb 3.27 objective test
Over-regulation emerging: careful monitoring & tighter regulation for superannuation fund.Over-regulation SA7.04 7.19
Misleading & deceptive: a corp acted honestly label injunction Parkdale Custom Built Furniture v Puxu6.42 Pty Ltd s52 'T'

p.45of86
 CPA107_Related
Directors no duty owed to employee Parke v Daily News Ltd 3.17
Gratuitous pay't-inhibit altruism gratuitous pay't to worker & no duty owed to employeesParke v Daily News Ltd 3.15 A3.03
Prospectuses misleading or deceptive statement, s 710-715, s728(1) & (3)****************** Part 6D.3 fundraising documents******* 5.09-10***** s728.710-5 'C'
Misused of co funds: Money lent to directors to pur property, director held the property inPaulco trust
A. Davies (Aust) Pty Ltd v Davies 3.23
Civil penalty applies for breach; criminal penalty applies to breach s.184 Penalty 3.17 s181(1)&184 'C'
Statutory duty for a proper purpose Penalty 3.18 s181(1)&184 'C'
US:PF of CALPERS, New Yarok City, State of Connecticut, State of Minnesota & TIAA-CREF Pension funds particularly influential 7.08
Board: strategy in monitoring implementation of strategy & overseeing major capital
expenditure; selecting compensating, monitoring key executives & overseeing planning;
reviewing key executive & board remuneration, formal transparent board nomination
process Performance role of board 2.16
Withholding supplies in legitimate commercial reasons Peter Williamson Pty Ltd v Capitol Motors 6.26 s48 'T' No Guilty
Civil consequences: Account amount of bribe Petrotrade Inc v Smith 5.29
Phoenix co-director shift responsibility to a co "pull the plug" Phoenix co 5.33
Phoenix co-problem with current legislation Phoenix co 5.34
Phoenix co-unable to pay debts; acts intentionally to deny creditor; commence in 12 month Phoenix co 5.33
Alternate directors/Stand-in Director: not liable as director under insolvent trading legislation
Playcorp Pty Ltd v Shaw: call upon to act 3.10 A3.06 s201k 'C'
ASA-Poor performers 2004 list 19 co highlighted for special attention on Shareholder rate Poor
of rtn
performers 2004 - ASA R4.03
US with dedicated capital investment sys of Germany & Japan. US sys focused purely
on financial goals & measure & short-term performance, German & Japanese sys
characterized by long-term investment in industrial strategies to boost productivity &
capability Porter, Michael rept for US Council 7.13
Substantial purpose to relevant purpose preventing person entering mkt or engaging in competitive
Predatory pricing
conductcut price to rival driven
6.35
out s46 'T'
CSR: Why doesn't Dow Jones do a socially responsible investing index?' Prestbo, John: CSR 4.21
Deterring a person from engaging in competitive conduct Preventing person from entering any market 6.35
Price fixing exception: joint ventures agreements & joint buying & selling agreements Price fixing exception 6.17 s45a2&4 'T'
Price fixing by collective buying groups: buyer groups collectively acquired to agreementPrice fixing-collective buying groups 6.18 s45a4 'T'
Made in…' claims: 50% prod in that country s65ab, Built in… or Assembled in ..' ss52&53eb Product of… s65ac 6.56 s65,s52,s53 'T'
Proprietary large(1 criteria) & small (revenue >$10m; assets > $5m, staff >50 two criteria) Proprietary & public companies 1.05 s113,s9&s45A..
Prospectuses close before the contract renewed defence s731. Should lodge supplementary Prospectus
s719 SA5.07 5.10 s719,731 'C'

Personal liability of directors for losses experienced by investor acquiring shares in

reliance on the prospectus. Directors not liable if reasonable inquiries prior to the issue Prospectus; accuracy & completeness
of prospectus**** ******************************* 5.10******** s729,731 'C'
Prospectuses-underlying philosophy s 710 Prospectuses 5.10-11 s710 'C'
Internationalization of Corp governance: 1 society toward openness; 2 scale & activity
of corp in determining the prosperity & well-being of economies; increase individual
wealth in institutions investment (PF & ins co); effective monitoring & improved
standards Public interest explanations 7.03
Corp governance in public sector: Public sector accountable to relevant minister for
financial outcomes with bdg & effective delivery of ser with gov't policy Public sector corp governance 2.37
Need for good corp governance in the public sector: failure ensure obj &
accountabilities in pass Public sector corp governance 2.37
Uhrig Report on corp governance: dev a template of governance principles Public sector corp governance 2.38
Advertises: Hotel 'only a stones throw from the beach' but 300m from the beach Puffery & advertising: hotel 6.44 CSA6.9
Disqualify with notions of honesty and competence Punishing to poor judgment 5.39 s206d 'C'
Taking up corp opportunity: Director effectively full disclosure to board and members Queensland Mines Ltd v Hudson: 3.24 s181,183 'C'
Substantial Mkt power: mkt power :ability of a firm to raise price above cost s46 Queensland Wire Industries v BHP 6.33 s46 'T'
Take advantage of Mkt power/prohibit: using mkt power do something powerless competitor Queensland Wire Industries v BHP 6.34 s46 'T' 'Guilty'
De facto directors: director not re-elected in constitution at next AGM still as de facto director
R v Drysdale: director continued act in role
3.08 A3.03-04 s9bi 'C'
Material: co's dealings with customers in question, the coup is influence investors in dealing
R v shares
Evans and Doyle 5.19 s1042d 'C'
Secret Comm: serious act from both a legal & ethical perspective & sentence offenders R v Jamieson 5.30
Secret comm was a consequence a custodial sentence was warranted R v Kendrick 5.29-30
Bait advertising:2 offences 1 deliberate intention not to supply goods in reasonable
quantities; 2 not intention to not supply advertised goods in reasonable quantities but Raincheck enable to pick adv good up
can fall back on at specified price 6.48
s728(3) will apply where bad news concerning the co has been omitted fm disclosure document Ramsay, An Introduction to the CLERPSA5.06 5.10 s728 'C'
Bribes: offering bribes prohibits by s176(2) Crimes Act re Addstone Pty Ltd 5.30 s176 'C'
Third-line forcing Exclusive dealing: bldg society has insurance s47(6) Re Ku-ring-gai Co-operative Bldg Society 6.30Ltd s47(6) 'T' 'Guilty'
1. Recommended price, 2 price set out to recommended price only no obligation to co Recommended price 6.23 s97 'T'
Director act in good faith but not full disclosure profit give back Regal (Hastings) Ltd v Gulliver 3.23 SA3.5 s181,183 'C'
Secret comm: Director has to account co profit breached fiduciary duty, directors acted honestly
Regal (Hastings) Ltd v Gulliver 5.27 s182, s1317s 'C'
Free-Mkt : lobby groups against laws & regulations being proposed, unregulated free-Mkt Regulation vs deregulation: free mkt 1.21-22
Director s228-families of directors;ss217-227 entity w/o member; s 207 financial benefit'sRelated-party
229 transactions 3.26-27 s217-29,07 'C'
European relationship-based disadvantage: 1 discipline of mgt in securities mkt is weak
2 mkt for corp control is weak, eliminating threat of takeover 3 lack of dev of
institutional investors 4 less emphasis on public disclosure of info 5 shareholder
agreement & voting restriction allow minority group to exercise control 6 elaborate
governance procedure can be time-consuming 7 inter-locking business network
complacency rather than competitiveness Relationship-based sys SA7.06 7.28
European relationship-based insider sys advantage: 1 diverse int on board of direct 2
insider group monitor mgt & less agency problems 3 wide group of stakeholders
actively recognised 4 close relationship with bank provide stable finance 5 inter-corp
shareholding provide stability of ownership 6 established governance procedures 7
longer-term business strategies Relationship-based sys SA7.06 7.28
Europeans emphasis cooperative relationship & reaching consensus, Anglo-Saxon
tradition emphasis competition & mkt processes. Insider model relies on representation
of int on the board of directors Relationship-based sys 7.22 MC7.22

p.46of86
 CPA107_Related
China: 5 types 1 state-owned enterprises; town & village enterprises; 3 joint ventures; 4
foreign-owned enterprises; 5 listed public co. Listed co in A, B, H shares Relationship-based to a rule-based sys 7.35-37
Asia-Family-controlled co & business network: two-thirds of listed co family run & private Relationship-based
co with rules-based sys7.37-8 T7.5
Asia-Pacific relationship-based sys with rules-based sys & family control with close relationship
Relationship-based with rules-based sys7.28-29
Ethical perspective takeover law take into a/c a person's relevant interest in shares t/r to co
Relevant interest - takeover law SA5.12 5.14 s611 'C'
Director unstilted to rely reliance was made in good faith & after making independent assessment
Reliance-protection from adverse effects3.21 s189 'C'
Relief from breach of duty- Prov of co's constitution (its internal rules) may permit ratification
Relief from breach of duty 3.35 s199A 'C'
Civil penalty provisions- s 180, 181, 182 and 183; Criminal penalty provision s184************Remedies: s 180, 181, 182 and 183; 184****
3.34******** s180-184 'C'
Removal of a director-s 203C/D, 203E prevents removal of public co director Removal of a director 3.34 s203c,d,e 'C'
Remuneration/Compensation committee: review and recommendation of remuneration Remuneration/Compensation committee2.20
Controls over pricing in the Mkt place Resale price maintenance 6.21-22 s48;96.3,7;98.1 'T'
Taken action types of resales price maintenance not mutually exclusive: 1 making it
known goods will not supplier; 2 inducing or attempting to induce; 3 agreeing or
offering to agree; 4 using statements of price; 5 withholding supply
*********************************** Resale price maintenance************* 6.23*********
TPA s48 3 steps deterring: 1 supplier specified a price; 2 price specified or used by
supplier a minimum price; 3 supplier taken action to ensure stipulated resale price is
maintained********* Resale price maintenance************* 6.22******** s96, 98 'T'
ACCC Trade Association Retail Tobacco Sellers Asso of Victoria6.21 s45 'T'
Risk mgt is a process identify, analyse, value, treat, monitor & communicate the info
gathered for the benefit of co. Standards AU dev a Risk Mgt standard AS/NZS 4360 to
minimise risk Risk Mgt 4.22
ASX require disclose approach of risk & arrangement in place Risk Mgt process 4 reasons 4.23
CEO-Role of the CEO day-to-day operations, take charge mgt, strategy & identify law issue Role of the CEO and example 4.05 SA4.1
Performance-based compensation with cognitive moral development (CMD) allow Rutiedge & Karim: not accept self-int
ethical moral consideration constrain self-interest affect firm value basis 2.24
Liable if not accuracy and completeness; s 729 misleading statement in prospectuses s 731 and s 729 5.10 s731,729 'C'
Trading by corporations where an officer is aware of the information s1043A trading by corp aware of info 5.19-20 s1043a 'C'
Corp veil-persons control the co are separated in law from the co itself Salomon v Salomon-Phoenix co 5.32
Greenbury Report Recommendations- Santos Ltd and Coles Myer Ltd Santos Ltd & Coles Myer Ltd R4.13
CEO & CFO certify matters: cancers high earnings derived by senior Mgt Sarbanes-Oxley Act & US legislation 2.14 (old)
IFAC: emphasis responsibilities of mgt for info & financial mgt & internal controls to produceSarbanes-Oxley Act 2002 USA 1.09
Enron: CEO & CFO cert rept complies with rept requirement; misconduct co, CEO & Sarbanes-Oxley Act: Enron created-
CFO reim the co for bonus or equity or incentive-based compensation paid and prof fm off-balance sheet entities to hide 7.17-18
sales of securities realised in 12-month period after first publication of a/c liabilities& boost rept earnings MC7.04
Nominee Directors duty: Subsidiary precedence over the Society Ltd if no constitution Scottish Co-oper Wholes Soc v Meyer 3.12 s187 'C'
Custom no defence-ethical point 'finder's fees' to agents is common practice Secret comm is customary no defence 5.31
Bribes: not matter the co suffered loss or not, the issue of receiving personal gain in mgt role
Secret profit-payment of a secret comm 3.23
Code of conduct applicable to directors-self regulation as a form of regulation & Research Self-regulation as form of regulation 5.42
Self-regulation and ethics Self-regulation as form of regulation 5.43
Pricing of goods: 'savings' on 'recommended retail price' as 'puffery' adv Sest v Copperart Pty Ltd 6.54 CSA6.16 s53e 'T'
Enron means for the mgt & control of the modern business corp: some initial reflections Shareholder capitalism-American style R7.02
Case scenario - Act bona fide & proper purpose but conflict of int & not prevent insolvent Shedworks CS3.05 3.36

Irrational exuberance: scramble to make serious money overnight in dot.com revolution Shiller: dot.com 7.17
Misleading or deceptive conduct: e.g. investor failure to disclose was one factor to Silence: : failure to disclose
mislead s42 information MC5.03 p.5.05 s1041H
similar s53c focus on corp rather
represent that the corporation has a sponsorship, approval or affiliation it does not have product 6.52 s53d 'T'
Relevant Mkt s46: definition of 'Mkt ' mkt was wider not only Maldives Singapore Airlines v Taprobane Tours: 6.32 s46 'T' 'No Guilty'
Consumer may not carefully examine Chocolate box containing 250g but shaped 500g containersSlack filing 6.57 CSA6.19 s55 'T'
ASX concern SME need to conform with recommended audit committee SME classified as reporting entities 2.43
Corp governance for SME SME corp governance 2.41
Governance issues: long-term perspective; Risks of family firms; growth complexity;
Cadbury-fairness of rewards SME corp governance 2.42-43
Shareholder agreement: stakeholder issues assume greater importance for family-based
firms; particularly on employees SME corp governance 2.43
Victoria University, Growing Employment by Identifying & Supporting Growth Firms Project SME definition 2.42
Duty to act bona fide: refusal to register was bona fide & attacked shown to be in bad faith
Smith & Fawcett Ltd 3.15
Body Shop-'new bottom line' social rept recycling, waste mgt, animal right & complianceSocial Reporting 4.21
Corp governance in Social services: Brotherhood of St. Laurence Social services: Brotherhood of St. Laurence
2.35
Organisations: Purpose; Objective; Ownership & Governance Table 1.1 Sole trader/Private/Public/unincorp asso.1.06
An interest in a matter may give a standing notice to other directors s 192 & s193 ss 192-193 3.22 s192-193 'C'
Shadow directors s. 9 (b) (ii): Parent co liable shadow director Standard Chartered Bk AU v Antico 3.09 s9bii 'C'
Director obligation keep themselves informed as to financial affairs of co Statewide Tobacco Services Ltd v Morley 3.28
Redress 'delinquent' directors or others where there are grounds for an action, co
chooses not to sue. A member take action in the name of
co.*************************************** Statutory derivative action************ 3.33-34****** s236-7,41,03 'C'
Civil penalty s181(1) b and a criminal penalty for s184 Statutory duty for a proper purpose 3.18 s181(1) 'C'
Duty to exerciser powers for proper purposes. Objective test Statutory duty of good faith 3.17 s181(1) 'C'
Strategic alliance, partnering, joint ventures & trade associations Strategic alliances 6.20-21 s45 'T'
Alternate director not legal status when director for whom they are an alternative is present
Strathmore Group v Fraser 3.10
Puffery & advertising: coffee- adv compared price only puffery of products, not prohibit
imaginative adv but not misleading or deceptive Stuart Alexander & Co. v Blenders Pty Ltd
6.44
Director of a co who has a material personal interest must give notice of the interest Subsection & s191c 3.22 s191c 'C'
Director of subsidiary obtain benefit example-act in the best int avoid personal profit Subsidiary director obtain benefit SA3.02 3.13 s187 'C'
Mkt power misused when engaged irrelevant conduct in a competitive Mkt Substantial degree of mkt power-misused SA6.04c 6.37 s46 'T'
Mkt power misused committed an offence Substantial degree of mkt power-offenceSA6.04b 6.37 s46 'T'

p.47of86
 CPA107_Related
Quoting an exorbitant price to customer as effectively refusing supply Substantial degree of mkt power-price SA6.05e 6.37 s46 'T'
Seeking to compete when in a substantial mkt power, supply should not be refused Substantial degree of mkt power-refusing
SA6.04d 6.37 s46 'T'
Mkt share held by competitors, availability of imports, barriers to entry, financial strengthSubstantial degree of mkt power-when SA6.04a 6.37 s46 'T'
Relevant purpose for the corp in TPA s4F Substantial purpose 6.35 s4F 'T'
Remuneration committees: independent director paid wholly in share; CEO
substantially. Ultimate result of CEO's stewardship of co share price rose by 50% later Sunbeam Corp case: CEO take short-
fell term view 4.27
Corp governance-three surveys: who: surveyed co by region, relative premium, diff opinion Surveys for Corp governance R7.01
Misleading & deceptive: confused by misleading conduct Taco Co. of Australia v Taco Bell Pty Ltd
6.42 CSA6.8 s52 'T'
Formal takeover bid shares to be acquired more than 3% in 6 months permitted Takeover Law SA5.09 5.13 s611 'C'
Takeover law for formal takeover bid for share control below 20% to <20%. Takeover Law SA5.09 5.13 s611 'C'
Relevant interest: 1 holder share; 2 power to exercise or control exercise of right to
vote; 3 power to dispose or control exercise of a power to dispose of the shares Takeover Law - relevant interest 5.14 s608 'C'
Ethical aspects of takeovers: 1 Director have self-int; 2 shareholders need possession of
relevant information to sell share to offerer; 3 open & transparent
fashion********************** Takeover law key points s606********** 5.11-12***** s606(1) 'C'
Policy aspect of law: 1 acquisition of control in efficient, competitive & info mkt; 2
legislation not apply to proprietary co less than 50 members; 3 orderly & open fashion;
4 shareholders identity of offerer proposes to take over; 5 reasonable opportunity to
consider takeover; 6 equal opportunity in
benefits************************************************** Takeover legislation policy**********5.12******* s606(1) 'C'
Lawful takeover - reasons for selling their share to the bided and not to sell; acquisition creep**
Takeover: acquisition creep**********5.13******* s636,606 'C'
Mergers: direct/indirect acquisition shares/assets;effect of substantially lessening competition
Takeovers & mergers prevent 6.37 s50,45,46 'T'
World bank in china recommended: dominate state ownership on mkt discipline &
regulatory capacity 2 bldg institutional investor base 3 strengthen banks role, enhancing Tenev, Zhang & Brefort: survey corp
creditor's rights gov 7.36
Third-line forcing required: three parties; two product; requirement a 2nd product to be
taken fm a nominated third party as a condition of supply of the first product Third-line forcing 6.30
Exclusive dealing can be authorised , even 'third-line forcing' can be authorised Third-line forcing can be authorised SA6.03e 6.31 s46 'T'
Nominee director vote according to appointor's (parent co) instructions relieved fm breachingThorbyduty
v Goldberg 3.20 s187 'C'
Misleading & deceptive-cigarette: supported 'independent scientific analysis' must literally Tobacco
true Institute v AFCO 6.41 CSA6.6 s52 'T'
Misappropriated co funds: director caused money to benefit his own co breached duty Totex-Adon Pty Ltd v Marco 5.32
Duty to prevent insolvent: director failed to disclose co's worsening financial position to creditor
Tourprint Int'l Pty Ltd v Bott 3.30 s588h4 'C'
Not imposed criminal liability for easy to contravene and strict liability TPA SA5.05 5.9 s1041h 'C' & s52 T
Trade practices compliance program: Corp to maximise profits to ensure satisfactory return TPA 6.05-06
Anti-competitive absolute prohibitions: collusive price fixing, boycotts, third-line forc,resale..
TPA Anti-competitive 6.11
Anti-competitive substantial lessening of competition prohibitions TPA Anti-competitive 6.11
TPA amendments incorporating changes to the Commonwealth Criminal Code TPA D1,1A of Part V & Part VC 6.60 s79,s80,s82 'T'
Anti-competitive behaviour regulate: Part IV-restrictive trade proactive & V consumer protection
TPA Part IV & V 6.10
Collusion controls in the Mkt place: Contract, arrangement or understanding TPA s.45 6.14 s45 'T'
Substantial Mkt power: large or weighty or considerable, solid or big compared other firms TPA s46 substantial market power 6.33 s46 'T'
Franchising-regulated by a voluntary code of practice not mandatory code TPA s47,s45,s48 6.30 s47,45,48 'T'
Withholding supplies: did not want a price war on hands breach of s48 and fined TPC v Bata Shoe Co of AU Pty Ltd 6.25-26 s48,s45 'T' Guiltily
Compliance program: evidence of a corp culture seriously comply with requirement of the TPC
Actv CSR Ltd 6.06

Nature & extent; amount of loss; circumstances; degree of power; deliberateness of

contravention and the period; mgt conduct; corp culture & disposition to cooperate with
authorities responsible ************************************************* TPC v CSR Ltd****************** 6.13*******
Pricing of goods: dual-priced swing tag & higher price not available TPC v Cue Design Pty Ltd 6.55 s53e 'T' 'Guilty'
Collusion Mkt place: Collusion by a meeting to raise prices TPC v David Jones Pty Ltd 6.15 s45 'T' Guilty
Inducement: induce a retailer not to sell below to be resale price maintenance. is an inducement
TPC v Medad Pty Ltd 6.23 s48 'T' Guilty
Collusion Mkt place: parallel behaviour not illegal. TPC v Nicholas Enterprises 6.15 s45(2)aii&bii 'T' Guilty
Country of origin: 'Made in Scotland' misleading and deceptive Trade Mark Wee McGlen 6.55 CSA6.17 s53eb 'T'
Bosch rept & AICD support training by the board or professional training respectively*******Training: Co not require by law to training
4.28********
Cadbury committee-sponsoring org-internal control & leadership Treadway COSO: internal control/leadership
1.09
Triple bottom line examples-economic/financial for sales, social skill dev, environmentalTriple
… bottom line SA5.02 5.5
Elkington, John-Cannibals with Forks: Triple Bottom Line 'financial, environmental & social Triplea/c'
bottom line accounting SA4.11 4.19
Corp social responsibility-Triple bottom line 'environmental, social & financial reporting'Triple bottom line reporting 4.17
Kantian Ethic-moral laws capable of being universally applied by everyone Triple bottom line: reflected Kantian ethic
5.05
Fiduciary duties-relationship between trustee and investor Trustees-deed-of-settlement companies 3.13
Combined code: Hampel together Cadbury rept formulate 1/3 s/b non-executive, 3 minimum Turnbull rept broadened internal control1.12
Companies limited by guarantee: limitation on agreed to pay the guarantee Types of companies 1.04
Limited Liability Companies: limited by share are most common type of company Types of companies 1.04
Limited to the amt to the co when the shares were is limited to the amount o/s shares issuedTypes of companies 1.04 Exam
No-liability companies (NL appear in company's name) Types of companies 1.05
Proprietary and public companies: cannot openly solicit investment from the public Types of companies 1.05 s113&s9 'C'
Types of companies: Corps formed and registered under corp Act 2001 Types of companies 1.03
Unlimited liability companies: no limitation upon winding up, 'veil of incorp' does not apply
Types of companies 1.04
Gov't improvement: lack of effective governance for several authorities in unclear
delegation, no clarity relationship with Ministers & portfolio dept, lack of accountability
for exercise of power. Complicated by board impractical for gov't provide full
governing powers required be effective Uhrig Rept 2.39
Uhrig Rept principles benefit: improving 1.transparency & accountability;2.efficiency
of statutory authorities 3.effectiveness of statutory authorities Uhrig Rept 2.40
UK Corp governance reform: Dept of Trade & Industry boards foster inclusive relationships UK legal compel PF (NAPF)&combine 7.19-20code
Statutory derivative action-minority member or officer the right to bring action Ultra vires-minority member SA3.07 3.34
TPA Part IVA: unconscionability Unconscionable contracts 6.58
Unconscionable conduct: corp in trade/commerce; relation to business contracts/consumers Unconscionable standard from contract 6.59 s51 'T'

p.48of86
 CPA107_Related
Market-based sys: 1 disclosure based 2 bank less central in outsider model, bank
finance is short term,3 shareholder have right to voting power 4 investors' capacity to
discipline mgt is greater in ability to buy or sell the shares US & UK including AU and NZ 7.06
Mkt-based sys of corp governance in outsider systems with disclosure base 1
widespread equity ownership 2 shareholder int as primary focus of co law 3 emphasis
on minority shareholder protection 4 stringent requirement for disclosure US & UK including AU and NZ 7.04
US corp governance: continual intervention & second-guessing powerful institutional investor US corp governance SA7.02 7.09
Corp failure US reform & the regulation of corp governance: encouragement of corp self-regulation
US sys achieve highest level of efficiency
7.14
Indirect interest still caused a breach of duty by director as benefit fm co securing the loan
Victors Ltd v Linguard 3.22
Nominee directors-should not put interest of group ahead of interest of co as whole Walker v Wimborne 3.16
make a false or misleading representation concerning the existence, exclusion or effect warranty 12 month but inside only 90
of any condition, warranty, guarantee, right or remedy days 6.52 s53g 'T'
European Union toward int'l: important distinction: 1Co law 2 employee representation
3 stakeholder issues 4 shareholder rights & participation mechanics 5 board structure 6
roles & responsibilities 7 supervisory body independence & leadership 7 board
committees 8 disclosure Weil, Gotshal & Manages: corp gov in EU 7.24
New economy 1 grow without threat of recession 2 continues to expand without
increasing inflation 3 restructure efficiency & productivity 4 new IT & capital 5
function 6 balanced budget 7 globalised & export driven Weinstein: new economy 7.16
EU corp governance policy: 1 Co law 2 employee representation 3 stakeholder issues 4
shareholder rights & participation mechanics 5 board structure, role & responsibilities 6
independence & leadership 7 board committees 8 disclosure Well, Gotshal & Manges 7.24
Corp governance: Corp is fundamentally governed by a board of directors overseeing Wheeland & Hunger view of corp
top mgt with concurrence of shareholder governance 1.07
Whisky not made in Scotland but
picture of Scotsman will misleading &
make a false or misleading representation concerning the place of origin of goods deceptive 6.52 & 6.56 s53eb 'T'
But for test: Impermissible purpose to issue share to dilute shareholder Whitehouse v Carlton Hotel Pty Ltd 3.18 A3.05
Australia & New Zealand: AU dev outsider model NZ capital short term, arm's length & Widely-held: no one shareholder who
diffuse. Corp governance follows Anglo-Saxon model owned 10% or more of the equity 7.11-12
Withholding supplies remedies: supplies liable for damages at injured. Restraining the supplier
Withholder supplies 6.27
TPA: if 1 refuses to supply; supplies on disadvantageous terms; treat buyer less
favourable. Withholding supply by TPA 6.25 s48 'T'
Withholding supply: discounts to selling 'below cost' is allowed to withhold supplies.
Except for genuine clearance
sales***************************************************** Withholding supply not illegal********6.26******** s98 'T'
Workable competition: not perfect competition but feasible in real-world Mkt conditionsWorkable competition 6.08-09
World Business Council Sustainable
CSR: publish discussion paper, policies or code of conduct on CSR Dev 4.21
Misleading & deceptive: cricket: not to be judged according to knowledgeable cricket followers
World Series Cricket v Parish 6.43 s52 'T'
Australian Financial Review: Enron collapse disclosed US dysfunctional. Co a/c WorldCom: wrongly listed over $3b
misleading, auditor conniving, lawyers conspiring, rating agencies asleep, regulator exp as capital exp not reflected in co's
inadequate. Faith in US corp hasn't been so strained since 1900s' earning result. Adelphia Comm/Tyco 7.17
Misleading or deceptive conduct: not a misleading statement for election directorship NRMA Yates v Whitlam 5.09 s995, Part 6d.3 'C'

p.49of86
 CPA107_Related

s76,80-82,87 'T'

s48&s45 'T' Guilty

s45(2) 'T' Guilty

p.50of86
CPA107_Related

p.51of86
 CPA107_Related

s1041a/b,998 'C'

Part V D1,1a,2,2a 'T'

p.52of86
 CPA107_Related

s52 'T' 'no contravention'

s52,53a.b.c,55 'T'

p.53of86
 CPA107_Related

s198d,198d3 'C'

Part V D1,1a,2,2a 'T'

s1041a/b,998 'C'

p.54of86
 CPA107_Related

s182, s1317e 'C'

p.55of86
 CPA107_Related

s1042a/1043a 'C'

p.56of86
 CPA107_Related
s1042a/s1043a 'C'
s1042a/1043a 'C'

s46&47 'T' 'Guilty'

s1041b,c 'C'/s52 T

s46.7 S4f 'T' 'Guilty'

s1041H P6d.3 'C'

p.57of86
 CPA107_Related

s611, s606(1) 'C'

s47 'T' 'No Guilty'

p.58of86
 CPA107_Related

s181(1)&184 'C'
s181(1)&184 'C'

s48 'T' No Guilty

s113,s9&s45A..

s47(6) 'T' 'Guilty'

s182, s1317s 'C'

p.59of86
 CPA107_Related

s48;96.3,7;98.1 'T'

s46 'T' 'No Guilty'

s236-7,41,03 'C'

p.60of86
 CPA107_Related

s1041h 'C' & s52 T

s48,s45 'T' Guiltily

s45(2)aii&bii 'T' Guilty

p.61of86
 CPA107_Related

s995, Part 6d.3 'C'

p.62of86
 CPA107_C T
DESCRIPTION Question M1:1-6, M2:7-15, M3:16-24, M4:25-34, M5:35-44, M6:45-54,RELATED M7:54-60 PAGE# Corp Act/TPA
Corp governance principles recommended by Std AU follow OECD & categorised into
role, powers & responsibilities on the board, disclosure & transparency obligation,
rights & equitable Australian Standard AS8000 1.15 AS8000-8004
Duty of care, skill & diligence: 3 basic no greater skill, no need to attend all meeting; justified
City Equitable
trust Fire Insurance Ltd 3.27 objective test
Duty of care, skill & diligence: today's standard higher ASC v Gallagher 3.27 objective test
Duty of care, skill & diligence: today's standard higher AWA Ltd v Daniels t/as Deloitte 3.27 objective test
Duty of care, skill & diligence: today's standard higher Overend & Gurney Co v Gibb 3.27 objective test
Duty to avoid conflict of interest by examination: contract/personal profits/competing with Directors
co behavior examination by court3.21 objective test
Duty to retain discretion: Director allow manager sign chq for co. Director liable to co for Gould
loss v Mt Oxide Mines Ltd 3.20 objective test
Duty to retain discretion: director to liable to the co for loss as a result of unauthorised pay't
Gould v Mt Oxide Mines Ltd 3.20 objective test
Insider-trading: Corp Act prohibits would have a material effect on the price or value of securities
Insider-trading legislation policy*******5.14-15****** p2d.1, s183 'C'
Part VC is a criminal offence of strict corp liability: s79,80,82 present civil & criminal regime
Division 1&1A, partV civil, partVC criminal
6.60 Part V D1,1a,2,2a 'T' 10
TPA PartV:D1unfair comm practices,D1Asetting std,D2 consume contract,D2Amanu consume Consumersgds protection 6.39 Part V D1,1a,2,2a 'T' 15
ASIC essential function to administer corp & commercial laws & to monitor compliance.AASB Role to dev, draft & issue a/c std1.16 s1(2) 15
Manipulation mkt prohibited by protect community & integrity of mkt apply artificially price***Market manipulation s 1041A "Effect"** 5.20******** s1041 'C'
Manipulation of the Mkt by conduct and statements s997 "intention" Market manipulation s 1041a "Effect"** 5.20-21 s1041a & s997 16
Buyback permitted when employees resigned but can't transfer share, co may buyback Manipulation of the market by conduct SA5.16 5.22 s1041a 'C' 16
Manipulation of the Mkt by conduct and statements "General section-liable with other section" Market manipulation s 1041A 5.20-21 s1041a 'C' 16
Concerned effect, s 998 dealt with conduct intended 'likely' Conduct intended 'likely' SA5.17 5.22 s1041a/b,998 'C' 12
Manipulation mkt by conduct & statement: create false/misleading appearance active trade Endresz
sharesv Whitehouse 5.21 s1041a/b,998 'C'
Churning prohibited is 'likely' to achieve prohibited result "Effect - objective tests"
Australian Securities Comm v Nomura 5.22 s1041b 'C'
Churning: prohibited by s1041B "Effect - objective test" North v Marra Developments Ltd 5.23 s1041b 'C'
False trading & Mkt rigging transactions s1041b: artificial transaction result in the price Market rigging and false trading trans 5.22 s1041b,c 'C'/s52 T
False or misleading statement in relation to securities s1041E "refer to statement" False or misleading statements 5.25 s1041e 'C'
Likely effects and strikes at negligent conduct (careless of the truth) False or misleading statement in securities
SA5.20 5.25 s1041e 'C'
s1041E 3 elements: materially false or misleading; 2 likely effect; 3 dissemination informationFalse or misleading statements in relation
5.24
to securities s1041e 'C'
Fraudulently inducing persons to deal in securities-wrongdoers issue statement s1041F False or misleading statement 5.25 s1041f 'C'
Reckless can connote dishonest where statements with careless disregards for the truth Fraudulently inducing persons to deal SA5.21 5.26 s1041f 'C'
Misleading or deceptive conduct: e.g. investor failure to disclose was one factor to Silence: : failure to disclose
mislead s42 information MC5.03 p.5.05 s1041H
Misleading or deceptive conduct is not a criminal offence only civilly liable. Repay the Insider trading & market manipulation,
damage or disqualified but no in misleading or deceptive
jail**************************************************** conduct******* 5.09******** s1041H 'C'
Not imposed criminal liability for easy to contravene and strict liability TPA SA5.05 5.9 s1041h 'C' & s52 T
Misleading or deceptive conduct in relation to Corp securities TPA s 52 & s 1041H********** Misleading or deceptive conduct******* 5.08-09***** s1041H P6d.3 'C'
Information: matter of supposition and matters relating to the intention Information 5.18 s1042a 'C'
Insider trading: 1. Fairness mkt price; 2 fiduciary duties to co & shareholders; 3
preventing damaging mkt integrity; 4 prevent injury to
securities***************************** Inside trading prevent reasons********5.15-16****** s1042a/1043a 'C'
Insider-trading legislation only officers of co would overall too limiting for two reasons Insider-trading legislation policy SA5.13 5.17 s1042a/1043a 'C'
Insider-trading legislation -apply to officers may benefit fm information & material effectInsider-trading
price legislation policy 5.17 s1042a/s1043a 'C'
Information not generally available which as a material effect on the price Generally available information 5.18 s1042c(1) 'C'
Material: co's dealings with customers in question, the coup is influence investors in dealing R v shares
Evans and Doyle 5.19 s1042d 'C'
Insider information-prohibits insiders 'tipping' others with price-sensitive information Insider-trading legislation policy 5.17 s1043a 'C'
Trading by corporations where an officer is aware of the information s1043A trading by corp aware of info 5.19-20 s1043a 'C'
Proprietary and public companies: cannot openly solicit investment from the public Types of companies 1.05 s113&s9 'C'
Proprietary large(1 criteria) & small (revenue >$10m; assets > $5m, staff >50 two criteria) Proprietary & public companies 1.05 s113,s9&s45A..
Relief from breach of duty- The court may relieve a person from liability Excused act honestly & fairly 3.35 s1318(1) 'C'
Bribes: offering bribes prohibits by s176(2) Crimes Act re Addstone Pty Ltd 5.30 s176 'C'
Criminal consequences of taking bribes: punishable or 10 years imprisonment or both Bribes-payment of a secret comm 5.29 s176 'C'
Not a fiduciary duty, on a common law obligation. Director make profit take risks.
Section imposes objective 'reasonable person' test Duty of care, skill & diligence 3.28 s180 'C'
Safe harbour: Statutory business judgment rule reluctant to intervene 'a safe harbour' defence Defences: Statutory business judgment 3.35-36 s180.2 'C'
Civil penalty provisions- s 180, 181, 182 and 183; Criminal penalty provision s184************ Remedies: s 180, 181, 182 and 183; 184****
3.34******** s180-184 'C'
bona fide - director honestly believes in the best interest of co. Act in good faith in the
best int of the corp for directors and officers Directors and Officers statutory duties 3.14 s181 'C'
Creating/destroying majority voting power-breach of s 181 improper purpose manipulateDuty control
to retain discretion 3.19 s181 'C'
Directors must not misuse corp funds by mixing money with their own in intention************ Misappropriation of corp funds******** 5.31******** s181 'C'
Civil penalty s181(1) b and a criminal penalty for s184 Statutory duty for a proper purpose 3.18 s181(1) 'C'
Duty to exerciser powers for proper purposes. Objective test Statutory duty of good faith 3.17 s181(1) 'C'
Civil penalty applies for breach; criminal penalty applies to breach s.184 Penalty 3.17 s181(1)&184 'C'
Statutory duty for a proper purpose Penalty 3.18 s181(1)&184 'C'
Director act in good faith but not full disclosure profit give back Regal (Hastings) Ltd v Gulliver 3.23 SA3.5 s181,183 'C'
Taking up corp opportunity: Director effectively full disclosure to board and members Queensland Mines Ltd v Hudson: 3.24 s181,183 'C'
Taking up corp opportunity: Director need full disclosure to full board Furs Ltd v Tomkies 3.24 s181,183 'C'
Improper use of position in the co: obligation of director to co reflected in statutory position
Furs Ltd v Tomkies 3.25 s182 'C'
Improper use of position in the company: break director obligation reflected in statutory position
Cooke v Deeks 3.25 s182 'C'
Improper use of position in the company: break director obligation reflected in statutory position
Furs Ltd v Tomkies 3.25 s182 'C'
Secret comm: Director can't gain advantage & cause detriment to the corp. Civil obligation Fiduciary relationship agent duty 5.27 s182, s1317e 'C'
Secret comm: Director has to account co profit breached fiduciary duty, directors acted honestly
Regal (Hastings) Ltd v Gulliver 5.27 s182, s1317s 'C'
Use of confidential information: either director made improper use of info was in financial McNamara
diff v Flavel 3.24-25 s183 'C'
Use of confidential information: improper use of position by endeavouring to keep assetsJeffree away v NCSC: creditor entitle to assets3.25 s183 'C'
Criminal penalty provision- s.184 dishonest or reckless Criminal penalty provision 3.34 s184 'C'
Act in good faith by nominee director in best interest of subsidiary precedence holding coNominee Director act in good faith 3.13 s187 'C'
Director of subsidiary obtain benefit example-act in the best int avoid personal profit Subsidiary director obtain benefit SA3.02 3.13 s187 'C'
Nominee director vote according to appointor's (parent co) instructions relieved fm breaching Thorby duty
v Goldberg 3.20 s187 'C'
Nominee Directors duty: Subsidiary precedence over the Society Ltd if no constitution Scottish Co-oper Wholes Soc v Meyer 3.12 s187 'C'
Director unstilted to rely reliance was made in good faith & after making independent assessment
Reliance-protection from adverse effects3.21 s189 'C'
Director delegation in legislation or constitution permitting the board to do so. Often
breach found when co get financial diff Duty to retain discretion 3.20 s190 'C'
Director of a co who has a material personal interest must give notice of the interest Subsection & s191c 3.22 s191c 'C'

p.63of86
 CPA107_C T
Does not apply to proprietary co with one director s191 No distinction public and proprietary 3.22 s191c 'C'
Material personal interest requires "Real sensible possibility of conflict" Aberdeen Ry v Blaikie 3.22 s191c 'C'
An interest in a matter may give a standing notice to other directors s 192 & s193 ss 192-193 3.22 s192-193 'C'
Directors to confer a managing director powers with revoke or vary the delegation Discretion-s 198C 3.20 s198c 'C'
Delegation in minutes s.198D(3) exercise of power by delegate is as effective as directorDiscretion-s198D & s198D(3) 3.20 s198d,198d3 'C'
Relief from breach of duty- Prov of co's constitution (its internal rules) may permit ratification
Relief from breach of duty 3.35 s199A 'C'
Alternate directors/Stand-in Director: not liable as director under insolvent trading legislation
Playcorp Pty Ltd v Shaw: call upon to act3.10 A3.06 s201k 'C'
Remuneration disclosure in ASX Principle of good corp governance and Best practice Disclosure of remuneration 3.26 s202a&b 'C'
Replaceable rule: 1 authorised by law, 2 AGM approve 3 Service contract authorising pay't****Directors pay't-Replaceable rule******** 3.26******** s202a&b 'C'
Removal of a director-s 203C/D, 203E prevents removal of public co director Removal of a director 3.34 s203c,d,e 'C'
Disqualify power issues of commercial morality & standards of competence directors to reach Friend v Corp Affairs comm 5.40 s206 'C'
Managing a corp-3 categories 1 automatic; disqualification by court; 3 disqualification byDisqualification
ASIC of directors 5.35 s206 'C'
Managing corporation-disqualification of directors s206A Managing corporation 5.35 s206a 'C' P2d.6
ASIC: disqualified a person by court under three headings & example of disqualified director Disqualified director: s206C civil penalty
5.38 s206c 'C'
Disqualify with notions of honesty and competence Punishing to poor judgment 5.39 s206d 'C'
Disqualify-ASIC power important difference the power of court and ASIC is liquidation ASIC powers to disqualify 5.39 s206d 'C'
ASIC and ethical consideration Nicholas v commissioner for Corp Affairs Disqualify-ASIC ethical considerations 5.40 s206f 'C'
Director s228-families of directors;ss217-227 entity w/o member; s 207 financial benefit'sRelated-party
229 transactions 3.26-27 s217-29,07 'C'
Taking up corp opportunity: Erring directors could not retain benefit to take back the contract
Cooke v Deeks: corp opportunity/position 3.24 s236 'C'
Redress 'delinquent' directors or others where there are grounds for an action, co
chooses not to sue. A member take action in the name of
co.*************************************** Statutory derivative action************ 3.33-34****** s236-7,41,03 'C'
ACCC Trade Association Retail Tobacco Sellers Asso of Victoria6.21 s45 'T'
Buy goods if agrees to supply retailer
Acquisition of goods or services from particular person or classes of persons unless exclusively or discontinue supplies to
particular circumstances exist or certain conditions are met or agreed to discount 6.18 s45 'T'
Not acquire good because it supplies
Acquisition of goods or services from particular persons or classes of persons goods to discount house 6.18 s45 'T'
Another $1 million in penalties & costs for Queensland fire protection cartel ACCC pursue corp collusive conduct R6.02 s45 'T'
Anti-competitive agreement: Collective Boycotts; Price-fixing; Secondary boycotts; CollectiveCollective
agreement
Boycotts; Price fixing 6.37 s45 'T'
Collective boycotts: 3 steps involved 1 contract, arrangement or understanding; 2
between competitors; 3 have a boycott purpose Collusion, including price fixing s45 6.18-19 s45 'T'
Collusion controls in the Mkt place: Contract, arrangement or understanding TPA s.45 6.14 s45 'T'
Manufacturer of video recorders price suggest:pre-eminent expression competition-competition Collusive price fixing agreements45 6.16 CSA6.1 s45 'T'
Price Fixing agreement: prohibits a firm making or giving effect to provision in contract Collusion, include price fixing s45 6.16 s45 'T'
Strategic alliance, partnering, joint ventures & trade associations Strategic alliances 6.20-21 s45 'T'
Fruit producers not supply fruit to
supermarkets that stocked imported
Supply of goods or services to particular persons or classes of persons fruit 6.18 s45 'T'
Mattress manufacturers agreeing to
supply a particular retailer only if it
ceases importing its own brand or
Supply of goods or services to particular persons or classes of persons unless particular agreeing to resell at recommended
circumstances exist or certain conditions are met or agreed to retail prices 6.18 s45 'T'
Wines & spirits retailers established 'The Cut Price Liquor Shop': an illegal collective boycott
Collective boycotts 6.18 CSA6.2 s45 'T'
Collusion Mkt place: Collusion by a meeting to raise prices TPC v David Jones Pty Ltd 6.15 s45 'T' Guilty

Fixing, controlling/maintaining price, price fixing arrangement: Guilt and agreed to penalties
ACCC v Pioneer Concrete 6.17 s45 'T' Guilty
Lessening of competition: resulted in a substantial lessening of competition Ah Toy J Pty Ltd v Thiess Toyota Pty Ltd
6.19 s45(2) 'T' Guilty
Collusion Mkt place: parallel behaviour not illegal. TPC v Nicholas Enterprises 6.15 s45(2)aii&bii 'T' Guilty
Price fixing exception: joint ventures agreements & joint buying & selling agreements Price fixing exception 6.17 s45a2&4 'T'
Price fixing by collective buying groups: buyer groups collectively acquired to agreementPrice fixing-collective buying groups 6.18 s45a4 'T'
Anti-competitive agreement: Agreement 'lessening competition' Lessening competition 6.19 s45e 'T'
Competitive products not sell by my dealers: depends likely anti-competitive Anti-competitive SA6.03a 6.31 s46 'T'
Dealer network limited territory selling particular customers is legal unless anti-competitive
Confining dealer network SA6.03d 6.31 s46 'T'
Duration of dealer is illegal considered anti-competitive Anti-competitive SA6.03b 6.31 s46 'T'
Eliminating/substantially damaging competitor: Predatory pricing/squeezing source of supply Market power: Prevent person entering mkt
6.34 s46 'T'
Exclusive Australian agency appointed by overseas distributor is legal Appointed exclusive Australian agent SA6.03c 6.31 s46 'T'
Exclusive dealing can be authorised , even 'third-line forcing' can be authorised Third-line forcing can be authorised SA6.03e 6.31 s46 'T'
Misuse of market power: concentrate on controlling the activities of powerful firms Monopolisation 6.37 s46 'T'
Misuse of Mkt power break: 1 substantial degree of power in relevant Mkt ; 2 taken
advantage of Mkt power; 3 1 of 3 unlawful purposes Décor Pty Ltd supply 6.31 CSA6.5 s46 'T'
Mkt power misused committed an offence Substantial degree of mkt power-offenceSA6.04b 6.37 s46 'T'
Mkt power misused when engaged irrelevant conduct in a competitive Mkt Substantial degree of mkt power-misusedSA6.04c 6.37 s46 'T'
Mkt share held by competitors, availability of imports, barriers to entry, financial strength
Substantial degree of mkt power-when SA6.04a 6.37 s46 'T'
Quoting an exorbitant price to customer as effectively refusing supply Substantial degree of mkt power-price SA6.05e 6.37 s46 'T'
Seeking to compete when in a substantial mkt power, supply should not be refused Substantial degree of mkt power-refusing
SA6.04d 6.37 s46 'T'

Substantial degree mkt power: 1 substantially damaging competitor; 2 preventing entry

of person into the Mkt ; 3 deterring person from engaging in competitive conduct Misuse of market power 6.31 s46 'T'
Substantial Mkt power: large or weighty or considerable, solid or big compared other firms TPA s46 substantial market power 6.33 s46 'T'
Substantial Mkt power: mkt power :ability of a firm to raise price above cost s46 Queensland Wire Industries v BHP 6.33 s46 'T'
Substantial purpose to relevant purpose preventing person entering mkt or engaging in competitive
Predatory pricing
conductcut price to rival driven
6.35
out s46 'T'
Substantial Mkt power s46: Abused mkt position took advantage of power ACCC v Boral Ltd 6.36-37 s46 'T' Guilty'
Take advantage of Mkt power/prohibit: using mkt power do something powerless competitor Queensland Wire Industries v BHP 6.34 s46 'T' 'Guilty'
Relevant Mkt s46: definition of 'Mkt ' mkt was wider not only Maldives Singapore Airlines v Taprobane Tours: 6.32 s46 'T' 'No Guilty'
Substantial Mkt power: withholding boots deter/prevent competitive conduct Mark Lyons Pty Ltd v Bursill Sportswear 6.33-34 s46&47 'T' 'Guilty'
Fair or Mkt Failure: s46 substantial degree of mkt power & s50 prohibition of mergers Joint Select Committee 6.37 s46,50 'T'
Predatory pricing s46: exclusive distribution sys maximised sales Melway Publishing Pty Ltd v Robert Hicks 6.35-36
Pty Ltd s46.7 S4f 'T' 'Guilty'
Authorisation & notification: exclusive dealing conduct can authorise on public benefit grounds
Notification applies to all exclusive dealing
6.30 s47 'T'
Controls over distribution in the Mkt place: coercive behaviour in setting trading conditions
Exclusive dealing s47 6.27-28 s47 'T'
Exclusive dealing-anti-competitive: sufficient push price competitors s47 O'Brien Glass Ind. Pty Ltd v Cool & Sons 6.29
Pty Ltd s47 'T'

p.64of86
 CPA107_C T
Franchisee impact of tying condition would be no substantially lessen competition,
third-line forcing is illegal outright Exclusive dealing s47 6.28 & CS6.4 s47 'T'
Sundae Ice Cream Co. exclusive dealing: 5 general categories of vertical restraint Exclusive dealing s47 6.28 CSA6.4 s47 'T'
Third-line forcing: exclusive dealing prohibited outright-w/o prove a substantial competition
Exclusive dealing-Third-line forcing 6.29 s47 'T'
Exclusive dealing s47: no evidence exclusive dealing. Not producing anti-competitive effect Outboard Marine AU v Hecar Investments 6.28 s47 'T' 'No Guilty'
Third-line forcing Exclusive dealing: bldg society has insurance s47(6) Re Ku-ring-gai Co-operative Bldg Society 6.30Ltd s47(6) 'T' 'Guilty'
Franchising-regulated by a voluntary code of practice not mandatory code TPA s47,s45,s48 6.30 s47,45,48 'T'
Resale price maintenance: scheme allowance retailers adhere to displayed recommended Frankfurter
price Pty Ltd v TPA 6.22 CSA6.3 s48 'T'
TPA: if 1 refuses to supply; supplies on disadvantageous terms; treat buyer less
favourable. Withholding supply by TPA 6.25 s48 'T'
Inducement: induce a retailer not to sell below to be resale price maintenance. is an inducement
TPC v Medad Pty Ltd 6.23 s48 'T' Guilty
Withholding supplies: Ampol agreed to reinforce trade practices training & compliance program
ACCC v Ampol Petroleum (Victoria) Pty 6.26-27
Ltd s48 'T' 'Guilty'
Withholding supplies in legitimate commercial reasons Peter Williamson Pty Ltd v Capitol Motors 6.26 s48 'T' No Guilty
Withholding supplies: refuse to supply goods unless specific resale price is charged ACCC v Australian Safeway Stores Pty 6.24-25
Ltd & George Weston
s48&s45Foods
'T' Guilty
Ltd
Withholding supplies: did not want a price war on hands breach of s48 and fined TPC v Bata Shoe Co of AU Pty Ltd 6.25-26 s48,s45 'T' Guiltily
Controls over pricing in the Mkt place Resale price maintenance 6.21-22 s48;96.3,7;98.1 'T'
Relevant purpose for the corp in TPA s4F Substantial purpose 6.35 s4F 'T'
Authorisation of merger is available by ACCC for public benefits Merger or takeover 6.38 s50 'T'
Mergers: concentrate on preventing accumulations of power by acquisition Dominance-affecting: mergers 6.37 s50 'T'
Mergers: direct/indirect acquisition shares/assets;effect of substantially lessening competition
Takeovers & mergers prevent 6.37 s50,45,46 'T'
Pro-competitive nature of intellectual property law a partial exemption Intellectual property: patent; copyright; 6.49
registered design;
s51trademark
'T'
Unconscionable conduct: corp in trade/commerce; relation to business contracts/consumers Unconscionable standard from contract 6.59 s51 'T'
Advertising truth: does it convey a truthful impression Hornsby Bldg Info Centre v Sydney Bldg 6.41
Ingo Centre s52 'T'
Auditors don't owe 3 party duty of care unless intended induce plaintiff to act upon audit Esanda
report Finance Corp v Peat Marwick 6.49 s52 'T'
Auditors-Problems with applying misleading or deceptive conduct to auditors in past claim Opinion reasonably held: none liability R6.01 s52 'T'
Brand name, logos, packaging & labeling: label mislead prospective customers Apand v The Kettle Chip co. Pty Ltd 6.50 CSA6.13 s52 'T'
Brand name, logos, packaging & labeling: lookalike shoes Dr Martens Australia pty ltd v Windsor 6.51
Smith Pty Ltd s52 'T'
Comparative advertising: batteries- mislead average consumer in overall impression 'up to' Nationwide News Pty Ltd v ACCC 6.47 CSA6.11 s52 'T'
Comparative advertising: power drill-'torture test' but make clear the adv Makita v Black & Decker 6.46 s52 'T'
Comparative advertising: toothpaste- compare toothpaste, interim injunction granted forced Colgate-Palmolive
to abandon v Rexona 6.46 CSA6.10 s52 'T'
Misleading & deceptive business conduct (s52):advertise, auditors role & intellectual property
Mkt & advertising 6.40-41 s52 'T'
Misleading & deceptive: a corp acted honestly label injunction Parkdale Custom Built Furniture v Puxu6.42 Pty Ltd s52 'T'
Misleading & deceptive: confused by misleading conduct Taco Co. of Australia v Taco Bell Pty Ltd 6.42 CSA6.8 s52 'T'
Misleading & deceptive: countervailing gullible or 'credulous' consumers misled Ciba-Geigy Canada Ltd v Apotex Inc 6.43 CSA6.8 s52 'T'
Misleading & deceptive: cricket: not to be judged according to knowledgeable cricket followers
World Series Cricket v Parish 6.43 s52 'T'
Misleading & deceptive: sold 'Big Mac' & wine different to lead not be misled McWilliam's Wines v McDonald's 6.44 s52 'T'
Misleading & deceptive-cigarette: supported 'independent scientific analysis' must literallyTobacco
true Institute v AFCO 6.41 CSA6.6 s52 'T'
Protection of business reputation: protection exists whether registered or not Australian Society of A/cants v Federation6.51of Australians52
Accountants
'T' Inc.
Misleading & deceptive: "reasonable man" at common law no role connection TPA Annand & Thompson Pty v TPC 6.43 s52 'T' "Guilty'
Misleading & deceptive-adv co mistake: falsely representing goods accessories they did not Evahave
v Mazda Motors 6.42 CSA6.7 s52 'T' "Guilty'
Comparative advertising: suits- compare of suit is permitted if it is not false, misleading/deceptive
Country Road Clothing v Najee Nominees 6.46Pty Ltd s52 'T' 'no contravention'
Misleading & deceptive: car rental- misleading Dewhirst & Kay Rent-A-Car v Budget Rent-A 6.45 Car Sys s52,53a.b.c,55 'T'
False & misleading representation: s53a,aa,b,bb,c,d,e,ea,eb,f,g Misleading & False representation 6.52 s53 'T'
False & misleading representation: monetary penalty imposed by ACCC Goods of particular std, quality, value 6.52-53 s53,55 'T'
adv discounted shop-floor stk which is
falsely represent that goods are of particular standard quality, value, grade, composition, rtn fm three-month loan to someone
style or model or have a particular history or particular previous use use 6.52 s53a 'T'
Goods of particular std, quality, value: winding back odometer of a car misrepresent previous
Eva vuseSouthern Motors Box Hill 6.53 CSA6.14 s53a 'T'
Misleading & deceptive-shoes flaw: unqualified statement adv good 'top quality' Macfarlane v John Martin & co. Ltd 6.42 s53a 'T' 'Guilty'

falsely represent that services are of particular standard, quality, value or grade adv tennis tournament but not the case 6.52 s53aa 'T'
Services of particular std, quality & value: misrepresenting standard of services-tennis tournament
Kiley v Lysfar Pty Ltd 6.53 s53aa 'T'
falsely represent that goods are new adv goods are new but is not 6.52 s53b 'T'
adv particular persons agreed to
falsely represent that a particular person has agreed to acquire goods or services acquire 6.52 s53bb 'T'
Sponsorship, approval, performance: adv a 16-days tour but only 15-days Dawson v World Travel Headquarters Pty 6.54 s53c ;'T'
adv comply with SAA but only
represent that goods or services have sponsorship, approval, performance electrical compatibility & microwave
characteristics, accessories, uses or benefits they do not have oven not 6.52 & CS6.15 s53c 'T'
Sponsorship, approval, performance s 53c Michael Edgely Int'l v Ashtons Nominees6.54 s53c 'T'
Sponsorship, approval, performance: adv fire extinguishers failed efficiency by fire commissioner
Given v Snuffa Pty Ltd 6.54 s53c 'T'
Sponsorship, approval, performance: particular model of motor car servo-assisted brakes Eva v Mazada Motor 6.54 s53c 'T'
Standards Asso of AU (SAA): falsely representing gds approved by the std asso of AU SAA Hartnell v Sharp Corp 6.54 CSA6.15 s53c 'T'
similar s53c focus on corp rather
represent that the corporation has a sponsorship, approval or affiliation it does not have product 6.52 s53d 'T'
Sponsorship and approval sponsorship, approval or affiliation it does not have Corporation claims 6.54 s53d 'T'
False representation as to price examples Adv false representations as to price 6.55 T6.2 s53e 'T'

make a false or misleading representation with respect to the price of goods or services adv 600 now 450, but never 600 6.52 s53e 'T'
Pricing of goods: 'savings' on 'recommended retail price' as 'puffery' adv Sest v Copperart Pty Ltd 6.54 CSA6.16 s53e 'T'
Pricing of goods: dual-priced swing tag & higher price not available TPC v Cue Design Pty Ltd 6.55 s53e 'T' 'Guilty'
make a false or misleading representation concerning the availability of facilities for the
repair of goods or of spare parts for goods facilities for repair of goods but not 6.52 s53ea 'T
Country of origin: 'Made in Scotland' misleading and deceptive Trade Mark Wee McGlen 6.55 CSA6.17 s53eb 'T'
Whisky not made in Scotland but
picture of Scotsman will misleading &
make a false or misleading representation concerning the place of origin of goods deceptive 6.52 & 6.56 s53eb 'T'

make a false or misleading representation concerning the need for any goods or services need for goods is not 6.52 s53f 'T'
make a false or misleading representation concerning the existence, exclusion or effect warranty 12 month but inside only 90
of any condition, warranty, guarantee, right or remedy days 6.52 s53g 'T'
Rights of consumers: 12-month warranty stub inside only 90 days Ballard v Sperry Rand Australia Ltd 6.57 s53g 'T'
Rights of consumers: exchanged goods within 7 days Miller v Fiona's Clothes Horse of Counterpoint
6.56 CSA6.18
Pty Ltd s53g 'T'

p.65of86
 CPA107_C T
Consumer may not carefully examine Chocolate box containing 250g but shaped 500g containers Slack filing 6.57 CSA6.19 s55 'T'
Bait advertising: batteries: not obtained 'reasonable quantities' of prom coffee 'whilst stk last'/'ltd'
Collis v Coles Myer Ltd 6.48 CSA6.12 s56 'T'
Director obligation to prevent co insolvent at time a debt is incurred or personal liability
debt. Corp Act imposes director duty constantly on guard against not to incur further
debt when financial instability could lead new debt not being able to be met. directors
required to keep themselves informed as to financial position of
co*********************************** Duty to prevent insolvent trading*******
3.28-29****** s588G 'C'
Directors automatically liable for losses suffered by third parties s 588G Directors liable liability SA5.08 5.11 S588g 'C'
Reasonable grounds for suspecting; Suspecting and incurs a debt Incurring a debt s 588G(1A) 3.29 s588g(1a) 'C'
Director satisfy the ground claim defense when co insolvent at the time incurred a debt Insolvent SA3.06 3.30 s588h 'C'
Duty to prevent insolvent trading defences available to
director************************* Duty to prevent insolvent trading*******
3.29******** s588h 'C'
Duty to prevent insolvent: director failed to disclose co's worsening financial position to creditor
Tourprint Int'l Pty Ltd v Bott 3.30 s588h4 'C'
Ethical aspects of takeovers: 1 Director have self-int; 2 shareholders need possession of
relevant information to sell share to offerer; 3 open & transparent
fashion********************** Takeover law key points s606**********5.11-12***** s606(1) 'C'
Policy aspect of law: 1 acquisition of control in efficient, competitive & info mkt; 2
legislation not apply to proprietary co less than 50 members; 3 orderly & open fashion;
4 shareholders identity of offerer proposes to take over; 5 reasonable opportunity to
consider takeover; 6 equal opportunity in
benefits************************************************** Takeover legislation policy**********5.12******* s606(1) 'C'
Relevant interest: 1 holder share; 2 power to exercise or control exercise of right to
vote; 3 power to dispose or control exercise of a power to dispose of the shares Takeover Law - relevant interest 5.14 s608 'C'
Ethical perspective takeover law take into a/c a person's relevant interest in shares t/r to co
Relevant interest - takeover law SA5.12 5.14 s611 'C'
Formal takeover bid shares to be acquired more than 3% in 6 months permitted Takeover Law SA5.09 5.13 s611 'C'
Takeover law - Resolution of co more than 50% vote invalids. Gambotto v WCP Ltd SA5.11 5.14 s611 'C'
Takeover law for formal takeover bid for share control below 20% to <20%. Takeover Law SA5.09 5.13 s611 'C'
Acquisition creep-<20% threshold may acquire & add'l 3% every 6 months w/o breach s611 Other forms of lawful takeover 5.13 s611, s606(1) 'C'
Corporations Act prov structure minority shareholder locked into shareholding Minority shareholder SA5.10 5.13 s636,606 'C'
Lawful takeover - reasons for selling their share to the bided and not to sell; acquisition creep**
Takeover: acquisition creep**********5.13******* s636,606 'C'
Made in…' claims: 50% prod in that country s65ab, Built in… or Assembled in ..' ss52&53eb Product of… s65ac 6.56 s65,s52,s53 'T'
Prospectuses-underlying philosophy s 710 Prospectuses 5.10-11 s710 'C'
Prospectus issued 'frees shares' mislead members Fraser v NRMA Holdings Ltd 5.11 s710, s731 'C'
Prospectuses close before the contract renewed defence s731. Should lodge supplementary Prospectus
s719 SA5.07 5.10 s719,731 'C'
Prospectuses contravene s728(1) is civilly liable to parties who suffer loss by that conduct****
Misleading or deceptive statement******
5.10******** s728 'C'
s728(3) will apply where bad news concerning the co has been omitted fm disclosure document Ramsay, An Introduction to the CLERPSA5.06 5.10 s728 'C'
Legislation not distinction between small and other investors Not small and other investors 5.10 s728.3 'C'
Prospectuses misleading or deceptive statement, s 710-715, s728(1) & (3)****************** Part 6D.3 fundraising documents*******5.09-10***** s728.710-5 'C'

Personal liability of directors for losses experienced by investor acquiring shares in

reliance on the prospectus. Directors not liable if reasonable inquiries prior to the issue Prospectus; accuracy & completeness
of prospectus**** ******************************* 5.10******** s729,731 'C'
Liable if not accuracy and completeness; s 729 misleading statement in prospectuses s 731 and s 729 5.10 s731,729 'C'
Penalties:ACCC to court action for breaches Part IV by Federal Court impose monetary penalty ACCC & TPA non-punitive orders 6.12-13 s76,80-82,87 'T'
TPA amendments incorporating changes to the Commonwealth Criminal Code TPA D1,1A of Part V & Part VC 6.60 s79,s80,s82 'T'
Authorisation: dispensation ACCC grant in respect of some restrictive agreements/practices ACCC issue Authorisation 6.11-12 s88 'T'
Public co at least 3 directors (2 Australian) s201a2, proprietary co no less than 1 directorsDirector
s201a1 and officer s.9 3.07-08 s9 'C'; s201a
TPA s48 3 steps deterring: 1 supplier specified a price; 2 price specified or used by
supplier a minimum price; 3 supplier taken action to ensure stipulated resale price is
maintained********* Resale price maintenance************* 6.22******** s96, 98 'T'
1. Recommended price, 2 price set out to recommended price only no obligation to co Recommended price 6.23 s97 'T'
Withholding supply: discounts to selling 'below cost' is allowed to withhold supplies.
Except for genuine clearance
sales***************************************************** Withholding supply not illegal********6.26******** s98 'T'
Misleading or deceptive conduct: not a misleading statement for election directorship NRMA Yates v Whitlam 5.09 s995, Part 6d.3 'C'
Appearance of sale brought about by ordinary Mkt methods misleading appearance real share Fenwick
price
v Jeffries Industries Ltd 5.24 s998 'C'
Misleading & likely to induce pur of securities Australian Securities Comm v McLeod 5.25 s999 'C'
De facto directors: Yasseen is a de facto directors a liable Mistomorn Pty Ltd (in liq.) v Yasseen 3.09 A3.06-08 s9bi & s598 'C'
De facto director: those hold position as director in s9bi. Same obligation with de jure director
Director: De facto directors s9 (b) (i) 3.08 s9bi 'C'
De facto directors: Austin resign but continued 'help out friends' act as a de facto directorDCT v Austin resigned but continued duty 3.09 A3.08 s9bi 'C'
De facto directors: director not re-elected in constitution at next AGM still as de facto director
R v Drysdale: director continued act in role
3.08 A3.03-04 s9bi 'C'
Shadow directors s. 9 (b) (ii): Parent co liable shadow director Standard Chartered Bk AU v Antico 3.09 s9bii 'C'
Duty to act bona fide but improper purpose invalid*********************************** Howard Smith v Ampol Petroleum Ltd**** 3.19 ******** subjective test
AAMI Customer Charter aspects Corp code by AAMI 5.45
ACCC is not a policy advisor, combines a consumer protection role with protecting
competition in general sense Anti-competitive behaviour regulation 6.10
ACCC to administer TPA ACCC advancing economic policy 1.19
Accountability is one of the cornstones of good corp governance Corporate governance 3.30
Accountability-Shareholder, Lenders, Employees, Creditors, Regulators Disclosure: IT& Int'l increase disclosure3.31
Advertises: Hotel 'only a stones throw from the beach' but 300m from the beach Puffery & advertising: hotel 6.44 CSA6.9
Agency theory: defined "Maximise their own benefit & information asymmetry" Agency theory: separate ownership & mgt 2.21
AICD code of conduct-Expansion on legal obligations Code of Conduct 5.44
AICD commented on OECD principle made specific recommendation for minor changesOECD principles and AICD SA4.02 4.7
OECD Principle focus traded co best
AICD comments on OECD: Corp governance is important but behaviour of practice. Concern Shareholder &
shareowners & economic settings are more important stakeholders' rights R4.02
AICD on CLERP legislation-1 minimisation of cost 2 cost-benefit on law amendments Bosch & AICD comment code of
3 consultation with legislation users 4 less black letter law 5 wealth creation 5 private conduct & corp practices in corp
co recognise governance 4.07 & 1.10
Alternate director not legal status when director for whom they are an alternative is present Strathmore Group v Fraser 3.10
Alternate directors: cannot act under a power of attorney as a director Mancini v Mancini 3.10
Alternate directors: director disqualified on conflict on interest, alternate director is not affected
Anaray Pty Ltd v Sydney Futures Ex Ltd3.10
Anomalies -Refugee status in Australia & absence convicted of treason is automatically disqualified
Automatic disqualification 5.37
Ansell's personal int conflicted with duty: account to Boston for both comm & the bonuses Boston Deep Sea fishing & Ice Co v Ansell5.28

p.66of86
 CPA107_C T
Anti-competitive absolute prohibitions: collusive price fixing, boycotts, third-line forc,resale..
TPA Anti-competitive 6.11
Anti-competitive behaviour regulate: Part IV-restrictive trade proactive & V consumer protection
TPA Part IV & V 6.10
Anti-competitive substantial lessening of competition prohibitions TPA Anti-competitive 6.11
ASA encourage shareholder participation AGM and produce 'poor performers list' Australian Shareholders Association SA4.03 4.9
ASA-57% AU holder shares, age over 55. Transparent, communicative, answer &
accountable. Blacklist of 'poor performers' Individual investors - ASA 4.09 R4.03
ASA-Poor performers 2004 list 19 co highlighted for special attention on Shareholder rate Poor
of rtn
performers 2004 - ASA R4.03
Asia-Family-controlled co & business network: two-thirds of listed co family run & private Relationship-based
co with rules-based sys7.37-8 T7.5
Asian countries revamped corp laws & regulations. Asian roundtable work towards full
convergence with int'l std. Full convergence is not possible, divergences will be OECD White paper on corp
disclosed by co governance 7.38
Asia-Pacific relationship-based sys with rules-based sys & family control with close relationship
Relationship-based with rules-based sys7.28-29
ASIC enforcement action in HIH; Harris Scarfe; One-Tel; NRMA ASIC major enforcement R1.05
ASIC role in Corp govern: Corp are directed & controlled; monitored & supervised & accountable
ASIC role in corp governance R1.04
ASX committee for identify & support best practice principle, improved ASX Listing Corp Governance Council: audit
Rule committee 1.18
ASX concern SME need to conform with recommended audit committee SME classified as reporting entities 2.43
ASX Corp governance principles; 1 foundations for mgt & oversight; 2 Board to add
value; 3 Promote ethical & responsible decision making; 4 safeguard integrity in
financial rept; 5 timely & balanced disclosure; 6 respect the rights of shareholders; 7
recognise & manage risk; 8 enhanced performance with board & mgt effectiveness; 9
fair remuneration & responsibility; 10 recognise legitimate int of Corp governance principles: support in
stakeholders*************************************** guidelines********************** 4.14*15*****
ASX deal with independence of directors, appointment, remuneration, audit, ethical
standards, auditors & board composition; Corp governance statements (CGS) details
obligations of continuous disclosure of financial matters & appointment of directors,
shareholders rights Corp Act & ASX Listing Rules SA4.08 4.17
ASX Guidance Note 9 - Disclosure of Corp Governance Practices R4.05 part B*************** Listed rule-ASX guidance note 9*** 4.16 R4.05B**
ASX Listing Rule - periodic disclosure and address issuers R4.05 part A****************** Listed rule-ASX listing rule******* 4.16 R4.05A**
ASX listing rule on corp governance: listed co notify the mkt immediately information
likely to have a material effect on share price - continuous & periodic disclosure
requirements******** Corp governance: ASX listing rules***** R4.05*******
ASX listing rules do not require a co have a nomination or remuneration committee Nomination or remuneration committee4.26
ASX Listing Rules state listed co must include annual report ' a statement disclosing
best practice recommendations set by ASX Corp governance
Council********************** ASX Corp Governance Council********* 4.14********
ASX Principles 6 for rights of shareholders Hampel: Shareholder right & responsibilities
2.09-10
ASX require disclose approach of risk & arrangement in place Risk Mgt process 4 reasons 4.23
ASX require disclosure audit committee or reason why exist committee Audit committee: independent audit 2.18
ASX role: conduct mkt in which investors & enterprises come together with confidence
to creat prosperity through sharing of risks & rewards. Listing rule need corp ASX: trading equities, debt securities
governance practices & index derivatives 1.17
ASX: Australian Stock Exchange (ASX): Rule Australian stock exchange 1.18
ASX-Corp governance statements and policies 'annual report' Corp governance statement-ASX 4.13-15
ATO has a role to play in awareness & adoption of improved governance & disclosure issues ATO implementation major tax reform 1.18
AU: financial mkt 1 progressive deregulation of financial mkt 2 globalisation of
financial mkt 3 financial product innovation 4 increasing prominence of institutional Joseph Healy: compare growth of AU
investors mkt 7.12
Audit committee Half non-executive director Hampel Rept 3.11
Australia & New Zealand: AU dev outsider model NZ capital short term, arm's length & Widely-held: no one shareholder who
diffuse. Corp governance follows Anglo-Saxon model owned 10% or more of the equity 7.11-12
Australian Financial Review: Enron collapse disclosed US dysfunctional. Co a/c WorldCom: wrongly listed over $3b
misleading, auditor conniving, lawyers conspiring, rating agencies asleep, regulator exp as capital exp not reflected in co's
inadequate. Faith in US corp hasn't been so strained since 1900s' earning result. Adelphia Comm/Tyco 7.17
Australian Institute of company Directors' Code of Conduct (AICD) Code of Conduct 5.43
Automatic disqualification Chew v NCSC 5.36
Automatic disqualification-disqualification starts on the day lasts for…. Disqualification of directors 5.36
Automatic disqualified by court grant leave on application of ASIC Automatic disqualification 5.37
Automatically disqualified because advisors incorrectly interpreted Chew v NCSC 5.37 SA5.26
Bait advertising:2 offences 1 deliberate intention not to supply goods in reasonable
quantities; 2 not intention to not supply advertised goods in reasonable quantities but Raincheck enable to pick adv good up
can fall back on at specified price 6.48
Bank positioned in 3 forms: 1 ex ante: investment decision of co. loan application 2
interim: performance of ongoing business, cashflow 3 Ex post: financial performance, Aoki & Okuno: Japanese corp
intervening take corrective measure governance 7.33

Best practice co set own corp statement. 1 enforceable obligations: statute & common Corp governance: 3 level corp
law ASX, TPA or code; 2 Company's own corp governance statement; 3 Ethical governance principles. Only
standards accepted or promoted within community enforceable obligation against directors 3.04
Board agenda and timetable Board agenda and timetable R4.01
Board of director responsibility: formulate strategy; dev policy; appoint remunerate & Board's responsibility: accountable to
senior executive mgt & ensure accountability shareholder 2.04
Board of directors is pivotal in relationship between shareholders & mgt. Principle A1-A7, OECD
B && C ASX difference 2.13 SA2.3
Board of directors: function focus on conformance with regulations & the fiduciary CACG guidelines responsibilities to
duties of directors aimed to achieving improved corp performance for shareholders. ensure corp governance 2.15 R2.4
Board policies affect: trading; form of co; mgt style; legal; co financed; competition; infoMgt
availability
objective enhance shareholders value4.05
Board structure: Role of committees. subset overall board formulated to deal with specificCommittees
nature role & board structure 2.18 T2.3
Board: Aligning director & shareholder interest Director & shareholder interest 4.04
Board: ensure integrity of corp accounting & financial rept with independent audit &
controls & compliance; monitor effectiveness of governance process; oversee disclosure
& communication Conformance role of board 2.16
Board: Formulation board committees strengthen independence & accountability to community Accountability & transparency 2.17

p.67of86
 CPA107_C T
Board: strategy in monitoring implementation of strategy & overseeing major capital
expenditure; selecting compensating, monitoring key executives & overseeing planning;
reviewing key executive & board remuneration, formal transparent board nomination
process Performance role of board 2.16
Board-Role of the board carry out strategic aim of co to oversee mgt by CEO, other executive Director owe fiduciary duty individually4.04
Board's role in strategy difference ASX; OECD & Combined code 2.16-17 SA2.6
Body Shop environmental policy Environmental policy R4.10
Body Shop-'new bottom line' social rept recycling, waste mgt, animal right & complianceSocial Reporting 4.21
Bonding costs, Monitoring costs, Residual loss Agency costs 2.22
Bonding costs: including internal audit team, voluntary interim finical rept. Incurred contracts
Agency costs 2.22
Bonus plans: not achieve target-take a bath; achieve-maximised profit; over target-reduceHealy: profit mgt manipulation reported 2.26
Bosch rept & AICD support training by the board or professional training respectively******* Training: Co not require by law to training
4.28********
Breached agent duty to the principal not depend co suffered any detriment Furs Ltd v Tomkies 5.29
Bribe: HK Public servant accept bribes: Civil penalty 'pur properties in NZ, only on trust Attorney-General
for co' for Hong Kong v Reid5.29
Bribes: not matter the co suffered loss or not, the issue of receiving personal gain in mgt role
Secret profit-payment of a secret comm 3.23
Bribes-payment of a secret comm making the pay't fails to disclose to other person.
Intention to induce the agent to act favourably to the payer & unfavourabley to the Industries & General Mortgage v
principal Lewis 5.28
BRT: Board's duty is to shareholders & should consider stakeholders to enhances their value OECD: employee is importance stakeholder 2.12
Bubble Companies Act-Foundation of the current Corporation Act 2001 in England Corp Act 2001-Bubble Co Act 3.14
Business judgment-means any decision in respect of a matter relevant to business of the corp Business judgment 3.36
But for test: directors are not required to ignore own interest but must not be 'substantial' Mills v Mills 3.18
But for test: Impermissible purpose to issue share to dilute shareholder Whitehouse v Carlton Hotel Pty Ltd 3.18 A3.05
Cadbury committee-sponsoring org-internal control & leadership Treadway COSO: internal control/leadership
1.09
CASAC no recommendation for further provion because of adequate access already available CASAC no recommend in access info SA4.04 4.9
Case scenario - Act bona fide & proper purpose but conflict of int & not prevent insolvent Shedworks CS3.05 3.36
CEO & CFO certify matters: cancers high earnings derived by senior Mgt Sarbanes-Oxley Act & US legislation 2.14 (old)
CEO-Role of the CEO day-to-day operations, take charge mgt, strategy & identify law issue Role of the CEO and example 4.05 SA4.1
CGC: ASX high-level committee Recommendations Corporate governance council 1.18
China: 5 types 1 state-owned enterprises; town & village enterprises; 3 joint ventures; 4
foreign-owned enterprises; 5 listed public co. Listed co in A, B, H shares Relationship-based to a rule-based sys 7.35-37
Chinese walls portable screens meant to act as a visual barrier, generally will not excludeLeakage
noise of information within organisationSA5.15 5.20
Civil consequences of taking a bribe-general principles. Co & person paying bribe are victim Bribes-civil consequences 5.29
Civil consequences: Account amount of bribe Petrotrade Inc v Smith 5.29
One-Tel losses ignored until
CLERP9 & ASX corp governance principles: 1 ensure independence of auditor 2 bankruptcy& HIH collapse: director
continuous disclosure 3 improve shareholders meeting conduct 4 annual rept include abandonment ethical responsibilities to
disclosure of director 3 whistleblowing co 7.21
Code of conduct applicable to directors-self regulation as a form of regulation & Research Self-regulation as form of regulation 5.42
Codes of conduct for individual co: advantage of flexibility & commitment by mkt participants Code of Conduct 5.45
Coles Myer-Corp governance statement Corp governance statement R4.07
Combined code: Hampel together Cadbury rept formulate 1/3 s/b non-executive, 3 minimum Turnbull rept broadened internal control1.12
Committee structure: utilisation board experts; recognition geographic & time
limitations; freeing up full board agenda strategic issues. Subset of board formed to
exploit expertise of directors Benefit of committee structure 2.21
Common Law and equitable duties-like a trustee and co is treated like a beneficiary Equitable duties and common law 3.14
Commonwealth Bank: responsibility for corp governance oversees the business Corp governance statement 2.34
Companies limited by guarantee: limitation on agreed to pay the guarantee Types of companies 1.04
Company low origin: Trust Law & contract law Directors duty: Trust law & contract law3.14
Competing with the company: non-executive director can join board of rival co Bell v Lever Bros 3.25
Competing with the company: tender a job by own co breached fiduciary duty Green v Bestobell Industries Pty Ltd 3.25
Competition in the Mkt place: business respond to changing of lower price and
improved choice for consumers & greater efficiency, higher economic growth &
increased employment Hilmer report point to competition 6.07
Competition law goals: based on workable or effective competition achieving microeconomic Competition law goals 6.09-10
Competition policy: protection & preservation of competition & policy objectives Competition Policy in Australia 6.07-08
Compliance program 2 aspect, substantial c compliance program 2 actually implementedACCC successful
v Australian Safeway Stores Pty 6.03
Ltd
Compliance program effective importance in Federal court ACCC v. Nissan Motor Co (AU Ltd 6.03
Compliance program effective: assist a business reduce risks procedures must audited & Compliance
review program 6.05
Compliance program: designed to reduce organisation's risk of breaking the law Compliance program-integrated business6.04
Compliance program: evidence of a corp culture seriously comply with requirement of the TPCActv CSR Ltd 6.06
Compliance programs-The benefits for companies & their stakeholders Compliance program-avoidance of harmR6.01
Conflict minimsation factors: 1Takeovers Threat 2Shareholder/stakeholder activism 3ASA Agency
4AGM theory 2.30-31
Conflict minimsation factors: Corp governance rating agencies; Role of media Agency theory 2.32
Corp failure US reform & the regulation of corp governance: encouragement of corp self-regulation
US sys achieve highest level of efficiency
7.14
Corp governance contribution to business prosperity & accountability. Balance s/b corrected Hampel committee 'Supercode" 1.11
Corp governance for SME SME corp governance 2.41
Corp governance in Arts & Entertainment sector Australian Ballet 2.35
Corp governance in not-for profit organisations Public sector & SME Not-for-profit organisations 2.34
Corp governance in public sector: Public sector accountable to relevant minister for
financial outcomes with bdg & effective delivery of ser with gov't policy Public sector corp governance 2.37
Corp governance in Social services: Brotherhood of St. Laurence Social services: Brotherhood of St. Laurence
2.35
Corp governance in Sports & Leisure Sector Essendon Football Club 2.35
Corp governance issues: 1 directors function; 2 board structure & composition; 3 board
chairman; 4 board committees; 5 appointment & retirement board membership; 6
remuneration; 7 financial rept & auditing; risks mgt & internal controls; 8 code of
conduct Bosch Committee-AU 1.10
Corp Governance principles: 1 duty of board oversee the CEO & senior mgt; 2 Mgt
should not conflict interest with company; 3 audit committee engagement an
independent audit; 4 auditor ensure independence; 4 equitably del with employees BRT USA no "one size fits all' board 1.13
Corp governance process determine policies: director obligation & duties; sturcture;
auditor; disclosure; transparency; procedures for appointment & succession Directors role: obligation 3.03
Corp governance statements (CGS) of Santos Ltd and Coles Myer Ltd in OECD PrincipleOECD Principles in CGS SA4.07 4.17

p.68of86
 CPA107_C T
Cadbury Committee UK audit
Corp governance: 1 no individual has unfettered powers "check balance"; 2 independent committee exclusively of non-
non-executives; 3 audit committee in board; 4. Corp governance procedures executive member 1.11
Corp governance: 1 timely & accurate disclosure of financial * non-financial records; 2
equitable treatment of shareholders; 3 clear rights & responsibilities of shareholders, APEC: basic principles & outcome key
directors & managers; 4 effective & enforceable accountability standards statements for government 1.13-1.14
Corp governance: adopted a comprehensive action plan to address abusive executive CalPERS: USA publishes list of best
compensation plans in US corp & worst performing corp 1.12
Corp governance: Asia economies rapid growth & co collapses need transparent Corp governance requirement for
accountability effective 1.08
Corp governance: broadest comprehends the framework of rules, relationships, sys & HIH Insurance Justice Owen view of
processes within & by which authority is exercised & controlled in corporations Corp governance 1.07
Corp governance: checks & incentive to ensure managers maximise shareholders value Australian Treasury's Corp Law & Econ1.07 R
Corp governance: Corp is fundamentally governed by a board of directors overseeing Wheeland & Hunger view of corp
top mgt with concurrence of shareholder governance 1.07
Corp governance: evolving & dynamic complexity of corp life, convergence &
divergence simultaneously Diversity & complexity of corp governance
7.40
Corp governance: factors driving increasing expectations- 1 Globalisation of mkt; 2
Advances of IT; 3 corp increased competition; 4 investors become sophisticated need Corp governance: factors increasing
accessible info expectations 1.08
Corp governance: fraudulent financial rept/inadequate accountability and audit Corp governance recent debate 1.09
Corp governance: People, teamwork, leadership, enterprise& skills produce prosperity.
Accountability require appropriate rule & regulations Hampel rept: good corp governance 4.13
Corp governance: Principles of "Effective"-evaluate & improve the legal, institutional
& regulatory for corp governance to provide guidance & suggestions for stk ex, OECD dev principle for corp
investors, corp & other parties have a role in process of dev good corp governance governance 2.06-07
Corp governance: set of relationships between a co's mgt, board, shareholders & stakeholders OECD: Corp governance 1.07 Exam
Corp governance-three surveys: who: surveyed co by region, relative premium, diff opinion Surveys for Corp governance R7.01
Corp social reporting (CSR) should examine policies & practices of co in relation to gov'tCSR rule SA4.12 4.22
Corp social reporting and the sunshine standard manifest four steps CSR-social reporting 4.20
Corp social responsibility-Triple bottom line 'environmental, social & financial reporting'Triple bottom line reporting 4.17
Corp veil-persons control the co are separated in law from the co itself Salomon v Salomon-Phoenix co 5.32
Crikey.com.au: point out theft, corruption, deception & collusion. Top paid executive , AGM & ASA, Corp governance rating
poor corp performer & takeover defence & Media: Conflict minimsation 2.31
Criminal law-misappropriation of corp funds theft for directors prosecuted under criminalMisappropriation
law of corp fund-R v Reid5.32
CSR Ltd: set co's strategic direction & delegates responsibility for mgt ASX: listed co corp governance statement2.33
CSR: Business Council advocate adopting policies reflect a responsible co make up
CSR Business Council of Australia 4.20
CSR: focus human rights, community involvement & environmental impact & sustainability Corp social reporting CSR 4.20
World Business Council Sustainable
CSR: publish discussion paper, policies or code of conduct on CSR Dev 4.21
CSR: Why doesn't Dow Jones do a socially responsible investing index?' Prestbo, John: CSR 4.21
Custom no defence-ethical point 'finder's fees' to agents is common practice Secret comm is customary no defence 5.31
De jure directors: 1 acting as solicitor 2 appointed by AGM 3 appointment subject to AGM Director: appointed by law 3.08
Deed-of-settlement co-directors duties developed fm early predecessors of adm created co Directors duties-Deed-of-settlement 3.13
Department of Defence qualified by auditor-general for internal records error value of eqip Energex: inappropriate pay't to CEO 2.37-38
Deterring a person from engaging in competitive conduct Preventing person from entering any market
6.35
Differing time horizons: maximise short-term gains & exp in long-term approaching retirement Agency cost: Opportunistic 2.23
Director duty: 1 director had authority to exercise the power; 2 court looks at
motivation; 3 decide whether an action may be attributable to a number of Duty to act proper
purposes******************** purposes*********** 3.18********
Director duty: complexity of co & challenges this imposes on directors to carry out legal
duties Daniels v Anderson 3.06
Director in question clearly did not have an understanding the way co should operate Delonga v Australian Securities Comm 5.41
Director may owe a special duty to the specific shareholders rely on him Ethical conduct and co directors SA5.01 5.4
Director negligence including executive and non-executive director not auditor AWA Ltd v Daniels t/as Deloitte 3.06
Director obligation keep themselves informed as to financial affairs of co Statewide Tobacco Services Ltd v Morley 3.28
Director of a public co owes duties to corp as a whole not only the major shareholders Ethical conduct and co directors SA5.01 5.4
HL Bolton v TJ Graham: like human
Director role in proprietary & listed co: primary duty carry the corp governance policies being 3.05
Directors duties trust law is reason the duties 'fiduciary' relationship trustee & beneficiaryFiduciary duty-trustee & beneficiary SA3.06 3.30
Directors no duty owed to employee Parke v Daily News Ltd 3.17
Directors remuneration disclosure transparency report Greenbury Committee UK: 1.11
Disqualification director carrying out the policy the corp in charge & not making decisionCullento it direction
v CAC 5.35
Disqualified from managing a corp by ASIC ASIC v Keech 5.41
Duty for act in best int but not contradicted (no order against directors) still invalid**********
Hogg v Cramphorn****************** 3.19********
Duty to act bona fide in the best interests of the company: Fiduciary duty Directors' duties 3.36
Duty to act bona fide: refusal to register was bona fide & attacked shown to be in bad faith Smith & Fawcett Ltd 3.15
Duty to act bona fide-act in good faith, honestly, without fraud or collusion. Subjective testDuty to act bona fide in best int of co 3.14
Duty to act with care, skill and diligence: statute law obligation Not a fiduciary duty Directors' duties 3.36
Duty to avoid conflicts of interests: Fiduciary duty Common law Directors' duties 3.36
Duty to exercise powers for their proper purpose: Fiduciary duty Common Law Directors' duties 3.36
Duty to retain their discretionary powers: Fiduciary duty Common Law Directors' duties 3.36
East Asia corp governance dev 1 more accountable & transparent operation 2 ensuring
effective control & regulation by external agencies 3 training to dev understanding
sound corp governance practices Corp governance dev in east Asia 7.31
East Asia main principle & objectives process: 1 ensuring clear & effective financial
control sturcture 2 dev external monitoring & control with improvement in legal 3
advancing training & dev program Corporate governance in East Asia 7.30
East Asia: 1 Information asymmetries are more severe 2 contracting costs are higher
because stk practices not dev enforcement of contracts 3 adm agencies are less able to
handle issue benefit fm detailed rule making & non-legal adm enforcement such as a/c
std, disclosure East Asia MC7.08

p.69of86
 CPA107_C T
East Asia: board often no clearly defined role for non-executive director & lack of
knowledge of obligation & function of co officers; decision-making bodies not effective
in formal role, unable to exercise right, & boards are co-opted by dominant
shareholders; disclosure & transparency tend to kept a bare minimum. East Asia Corp governance MC7.09
East Asia: Financial crises & the beginning of reform:TH managed float, reform process Japan:
for Asia keiretsu sys, trust-based form 7.30-34
East asks important element: decision-making structure & role ensure effective
governance & financial control 2 clear definition of duties & responsibilities 3 more Corp governance codes important
rigorous monitoring & rept requirement element 7.30
Economic on new knowledge & info-based networked economy with potential to
capitalise on Metcalfe's Law-scale of a network expand linearly, use expands
geometrically. Metcalfe's Law: new economy 7.17
Egoism-Actions are moral when consequences are in the best long-term int of the individual Ethical conduct and co directors 5.05
Electronic data collection by regulator to provide confidentially by ASIC, ASX, ACCC &ITATO regulator 4.25
Elkington, John-Cannibals with Forks: Triple Bottom Line 'financial, environmental & socialTriplea/c'
bottom line accounting SA4.11 4.19
Empire Building: Acts by mgt to increase size 'empires' to justify increased salary, perks/power
Agency costs: e.g. pur subsidiary 2.23
Enron case analysis Enron case analysis 7.40-42
Enron case failure corp governance: failure to 1 disclose 2 transparency 3 board 4
conflict of int 5 conflict of int external auditor 6 failure in morality & ethical basis Enron case analysis SA7.08 7.42
Enron means for the mgt & control of the modern business corp: some initial reflections Shareholder capitalism-American style R7.02
Enron: CEO & CFO cert rept complies with rept requirement; misconduct co, CEO & Sarbanes-Oxley Act: Enron created-
CFO reim the co for bonus or equity or incentive-based compensation paid and prof fm off-balance sheet entities to hide 7.17-18
sales of securities realised in 12-month period after first publication of a/c liabilities& boost rept earnings MC7.04
Environmental a/c-keeping track depletion of co assets, assessing value of treatment & disposal
Environmental reporting SA4.09 4.18
Environmental accounting-conscience of all stakeholders Environmental reporting 4.17-18
Equity market: Japan lies in middle of US/UK heavily equity-based mkt, EU smaller equity OECD:
mkt equity market 7.32
Ethical conduct result in Director & co. Criminal law & civil liability Ethical conduct and co directors SA5.03 5.6
Ethical principles - Utilitarianism; Egoism and The Kantian ethic Ethical conduct and co directors 5.04-5.05

Ethical principles-practical reasons 1 good corp reputation & quality employees

retaining; 2 failure of corp adopt ethical practices may cases prompt gov't intervention;
3 failure ensure compliance disregard for law & morality in corp conduct Ethical conduct and co directors 5.06
Ethical standards - "proactive" for forester high standards of behavious and "Law - reactive"
Code of conduct: Law and Ethical 5.07
Ethics and black-letter law Ethics and black-letter law 5.06
Ethics as moral principle or a set or moral value is considered correct or goods Brokensha, Peter: Ethics 5.04
Ethics build in public & global gov't regimes for major reforms. Importance of ethics &
corp governance as one of the key issues directors & officers have to face in order to
regain credibility in the Mkt
****************************************************** Corp scandals with corp collapse*******
5.02-.03*****
Ethics is judgment, not rules - importance of ethics in the culture of corp Ethical conduct and co directors 5.02-5.03
Ethics not sufficient to simply have corp governance legislation Cohen, Ethics is judgment, not rules 5.03
EU corp governance policy: 1 Co law 2 employee representation 3 stakeholder issues 4
shareholder rights & participation mechanics 5 board structure, role & responsibilities 6
independence & leadership 7 board committees 8 disclosure Well, Gotshal & Manges 7.24
Europe reform of Corp governance institution: continuous improvement of corp governance A Modern Regulatory Framework for Co 7.26-27
Law Europe
European a/c: appropriate bal of power at board; audit committee examining financial
rept; policy on non-audit services, extended (long form) rept to board by external FEE & Winter report: emphasis wider
auditors in combination with oral presentation & in-depth ex of views; review the aspect of internal control & related
auditors role & independence processes of risk mgt 7.28 MC7.07
European cooperative relationships: insider model relies int on board of direct.
Protection stockmarket and threat of takeover, bank play active role, shareholders are Anglo-Saxon emphasizes competition
widespread & mkt processes 7.22-23
European corp governance-FEE rept int in 1 internal control 2 financial rept 3 audit
committee 4 rept by external auditors to shareholders & mgt 5 internal audit 6 FEE report: European accounting
shareholders meeting profession 7.27-28
European countries: 1 ownership & control held by cohesive group of insider have long-
term stable relationships 2 insider group connection with drawn fm family int, allied
industrial concerns, bank & holding co 3 insider groups monitor mgt act under their
control Insider model 7.22
European relationship-based disadvantage: 1 discipline of mgt in securities mkt is weak
2 mkt for corp control is weak, eliminating threat of takeover 3 lack of dev of
institutional investors 4 less emphasis on public disclosure of info 5 shareholder
agreement & voting restriction allow minority group to exercise control 6 elaborate
governance procedure can be time-consuming 7 inter-locking business network
complacency rather than competitiveness Relationship-based sys SA7.06 7.28
European relationship-based insider sys advantage: 1 diverse int on board of direct 2
insider group monitor mgt & less agency problems 3 wide group of stakeholders
actively recognised 4 close relationship with bank provide stable finance 5 inter-corp
shareholding provide stability of ownership 6 established governance procedures 7
longer-term business strategies Relationship-based sys SA7.06 7.28
European union dev corp governance: 1 privatisation of state-owned co; 2 growth &
diffusion of sharehold in countries; 3 increased merger & takeover activity Germany-small & medium-sized unicorn7.24-25
European Union toward int'l: important distinction: 1Co law 2 employee representation
3 stakeholder issues 4 shareholder rights & participation mechanics 5 board structure 6
roles & responsibilities 7 supervisory body independence & leadership 7 board
committees 8 disclosure Weil, Gotshal & Manages: corp gov in EU
7.24
Europeans emphasis cooperative relationship & reaching consensus, Anglo-Saxon
tradition emphasis competition & mkt processes. Insider model relies on representation
of int on the board of directors Relationship-based sys 7.22 MC7.22
Evaluation board performance-assessing success profitability and return on invested fundAICD & Bosch Rept 4.28
Executive and non-executive directors: two basis Executive and non-executive directors 3.11
Executive compensation guideline: motivating & retain employee; attract quality mgt &
share co reward and 4 basic principles: remuneration comparable with mkt; reward
linked to benchmark; individual elements identified & disclosed; transparency, Agency costs: executive compensation
accountability & fairness scheme 2.29

p.70of86
 CPA107_C T
Family-based insider sys benefits: 1 flexibility & dynamism contributed to rapid
economic growth 2 unity of ownership & control eliminate principal/agent problem 3
investors support successful mgt teams & companies 5 sense of purpose & cohesion
with understanding of customary practices 6 strength & stability of tradition Insider sys SA7.07 7.39

Family-based insider sys cost: 1 persistent problems of neglect of minority shareholders

2 pyramidal structures acquire control of operation cashflow disproportionate to equity
stake in co 3 independence & diligence of board called into question 4 std of disclosure
& transparency are minimum 5 regulators are unable to act on poor information &
access 6 enforcement of contract is problematic because of weak courts Insider sys SA7.07 7.39
Fiduciary duties-relationship between trustee and investor Trustees-deed-of-settlement companies 3.13
Fiduciary duty: director owe duty also to shareholders if nature of transaction rise fiduciary
Brunninghausen
duty v Glavanics 3.16 A3.09 SA3.02
Financial institution s remained weak & unreformed. Corp law in Japan modeled on
German sys Japan: keiretsu sys, trust-based form 7.31
Financial Services Reform Act 2001 & CLERP 9: ASIC sue Adler breach director duty ASIC v Adler (HIH) 5.07
France & Italy: France majority of shares owned by non-financial enterprise 2 cross-
participation is important element of corp governance 3 cross-praticipation shield
managers fm short-term pressure of mkt by making change in corp control more 7.26 &
difficult Italy & France MC7.06
FRC recommendations: 1. Chairman should not involved chairman's remuneration; 2 Higgs & Smith's with FRC 'UK
half of board s/b independent non-executive directors; 3 AGM of non-executive standard setting board' recognised in
directors chaired by senior independent director without presence of the chairman 'comply or explain' principle 1.12
Free Mkt : Wealth will be maximised by allowing Mkt s free of restrictions & co free to run Friedman, Milton: co should not pay tax1.21
Free-Mkt : lobby groups against laws & regulations being proposed, unregulated free-Mkt Regulation vs deregulation: free mkt 1.21-22
Full disclosure-foundation upon the integrity of equity mkt is built Disclosure & transparency SA7.01 7.07
General body: 'Corporations' as a general body & can’t discriminate between majority & Greenhalgh
minority v Arderne C 3.15 A3.02
German & Japanese industry seem destined for ascendancy as relentlessly pursue export Japanese
success & Germany industry 7.16
German: dual board structure. Two-tier board sturcture. Overlaps in membership
between two boards not allow with same firm & symmetric cross-overlaps between two
firms are also prohibited OECD: German business 7.25
Germany business: 1 strong concentration of ownership of individual enterprises 2
importance of small & medium-sized unincorp co 3 close correspondence between Germany: Central characteristic of
owners & managers 4 limited role play by stk mkt corp governance 7.25
Corp governance-10 principles good
Good corp governance: not expected to applied rigidly will be a bench mark for good corp
corp *******************************
governance*********************************************************** * 4.14-15******
Good Reputation Index: Mgt of employees, environmental performance, social impact, ethic, Ethical
fin…
conduct and co directors 5.03
Governance issues: long-term perspective; Risks of family firms; growth complexity;
Cadbury-fairness of rewards SME corp governance 2.42-43
Gov't improvement: lack of effective governance for several authorities in unclear
delegation, no clarity relationship with Ministers & portfolio dept, lack of accountability
for exercise of power. Complicated by board impractical for gov't provide full
governing powers required be effective Uhrig Rept 2.39
Gov't makes laws by ASIC ACCC & ATO; recommendations: IASC ASX & AASB F1.1 Corp governance: role of governance 1.19-20
Gratuitous pay't-inhibit altruism gratuitous pay't to worker & no duty owed to employeesParke v Daily News Ltd 3.15 A3.03
Greenbury Report Recommendations- Santos Ltd and Coles Myer Ltd Santos Ltd & Coles Myer Ltd R4.13
Groups were important to countermand the power to companies Galbraith, John Kenneth USA economist1.21
Hampel recommended audit committee should non-executive directors with same obligations Executive & non-executive directors 3.10
Hampel Rept: summary of conclusion & recommendations of committee on corp governance Committee on Corp Governance R3.01
HIH case failure corp governance: failure to 1 realise responsibilities 2 domination by
CEO to acted as publicly owned 3 inadequate financial control 4 not due diligence 5
irresponsible operation & strategy 6 inadequate financial & accounting control 7 failure
of act diligently 8 fail to disclosure & transparency 9 indulgence while neglecting
responsibilities HIH SA7.09 7.44
HIH Insurance analysis HIH 7.43-44
IASB structure: IASC foundation Trustees appoint IASB exercise oversight & raise IASB assumed accounting standard-
funds needed , whereas IASB sole responsibility for setting accounting standards setting 1.15
IFAC: emphasis responsibilities of mgt for info & financial mgt & internal controls to produce
Sarbanes-Oxley Act 2002 USA 1.09
IFAC: produced research report on Rebuilding Public confidence in Financial Rept Co should set out their ethical policies code
1.09 Exam
Importance in the culture Accompanied by good leadership; instill corp value; law Ethics in the culture 5.03
Indirect interest still caused a breach of duty by director as benefit fm co securing the loan
Victors Ltd v Linguard 3.22
Information asymmetry: A/c no. indicators performance & share price & shareholders wealth Agency theory: role for accounting 2.23
Information technology increase disclosure-improving disclosure Disclosure-new technology 3.31
Insider sys: redistribute control 1 pyramid corp structures 2 shareholder agreements 3
discriminatory voting rights 4 reduce the participation or influence of other minority Bank & business network: deeper
investors insiders 7.23-24
Institution investors-ins co, p fund, investment trusts & professional investment fund manager
Hampel Report-dialogue between investors 4.10
Institutional investment: US & UK high equity shares, Germany & France considerable Financial assets of institutional
growth, Japanese declined proportion of institutional investment investors 7.05 T7.1&7.2
Institutional investor more concerned to move in & out of positions mkt for best rtn. "free-riding'
Cadbury Rept: Institutional investors 4.10
Institutional investors express views should take active int in investing co - Hampel reporHampel Report-institutional investors SA4.05 4.11
Institutional investors-right to exercise its responsibilities as a corp owner & encourage CalPERS:Institutional investors-
other shareholders to do aimed at benchmarking corp governance individually 4.11
Internationalization of Corp governance: 1 society toward openness; 2 scale & activity
of corp in determining the prosperity & well-being of economies; increase individual
wealth in institutions investment (PF & ins co); effective monitoring & improved
standards Public interest explanations 7.03
Int'l Capital Mkt: Business Sector Advisory Group on Corp Governance to OECD OECD 7.03
Int'l developments: UK: less black letter law; USA moved to black letter (Sarbanes-Oxley) Corp Governance: UK less law, USA to3.11 law
Int'l investors: BRT published Statement on Corp Governance stress 'soft' factors like
quality of director & personalities of directors. (Other changes also required) BRT involved debate 4.11-12
Int'l standard-improving disclosure by new technology offers opportunities, fax Disclosure-Int'l standard 3.32
Investor's interests-investment opportunity empowering for individual investors 'mum & Mum dad' & Dad investors confident invest 4.08

p.71of86
 CPA107_C T

Irrational exuberance: scramble to make serious money overnight in dot.com revolution Shiller: dot.com 7.17
IT-benefit on continuously and easily assess financial health of co. IT benefit 4.24
IT-integrity & security of IT sys are absolutely vital IT possible causes 4.24
IT-obligations board to understand new technology. Co may losing important memory &IT history
obligations 4.24
IT-services centralised databases, data t/f,bar coding, video conferencing, email, fax, internet…
IT 4.23-24
Japanese bank: 1 ex ante-investment & loan 2 interim-cashflows at co's a/c 3 ex post-corrective
Aoki & Okuno: corp governance structure 7.33
Kantian Ethic-moral laws capable of being universally applied by everyone Triple bottom line: reflected Kantian ethic
5.05
Key governance issues: maintain solvency on containing cots to efficient & effective outcomes
Not-for -profit corp governance 2.36

Large proprietary co, unlisted public co other co are required prepare annual rept, do not
need to contain corp governance statements. Unlisted public co stringent rept obligation
but Corp Act still doesn't require corp governance statements*************** Corp Act: annual report ******** 4.15*******
Law may less effective than voluntary code of conduct examples Ethical and Law SA5.04 5.7
Laws applicable unethical-misleading conduct, co takeover, insider trading, manipulation…. Law approach of ethical conduct 5.07
Legal compliance: sound legal compliance program reduce corp risk Legal compliance 6.04
Legitimate interest to shareholder: short-term interest less importance than co commercialDarvall
concernv North Sydney Brick & Tile Co3.16
Ltd
Lie in maximisation co profit; made shareholder happy, bldg investor confidence, complyDirectors'
ASX ruleinterest 4.06
Limited Liability Companies: limited by share are most common type of company Types of companies 1.04
Limited to the amt to the co when the shares were is limited to the amount o/s shares issued
Types of companies 1.04 Exam
Lobbying group: Gov't pass laws affect operations by frequently influence by submit
written or face-to-face discussions; groups: consumer; clubs; trade unions;
environmental & churches Groups: lobbying 1.20-21
Lobbying: AU Mining Industry Asso; AU Retailers Association; Business Council of
AU; National Farmers Federation; Victorian Chamber of Commerce; AU Chamber of
Manufacturers Industry & trade associations: lobbying 1.20-21
Managerial capitalism: US corp successful grow managers become dominant players newMillstein:forms US sys 7.15
Managing a corp: includes directors powers broader to controls a co irrespective of position
Brick & Pipe Industries v Occidental Life
5.35
Managing affairs information Managing affairs information R4.12
Mareva injunctions-misappropriated co fund freezing director assets until identification asset
Court assistance-misappropriated co fund5.32
Market-based sys functional convergence by forces: 1 influence stock ex, toward IAS, globalConvergence
co & diversity 7.39
Market-based sys: 1 disclosure based 2 bank less central in outsider model, bank
finance is short term,3 shareholder have right to voting power 4 investors' capacity to
discipline mgt is greater in ability to buy or sell the shares US & UK including AU and NZ 7.06
Market-based sys: economies adopted this model of corp governance, equity is widely
distributed among individual & institutional investors Nestor & Thompson: market-based sys 7.04
Maximising 'share price'/'profitability': advantages & disadvantage Agency cost: Performance-based remuneration
2.25
Menu of choice approach to corp governance standard for appropriate to specific risk profile
OECD: Int'l corp governance code 7.39-40
Mgt compensation: Performance-based remuneration, bonus plans, stock option Compensation: performance rept 2.25
Misappropriated co funds: director caused money to benefit his own co breached duty Totex-Adon Pty Ltd v Marco 5.32
Misused of co funds: Money lent to directors to pur property, director held the property inPaul
co trust
A. Davies (Aust) Pty Ltd v Davies 3.23
Mkt-based outsider model: 1 widespread equity ownership; 2 co law faces shareholder
int; 3 emphasis on minority shareholder protection; 4 disclosure require Corporate governance outsider model 7.04
Mkt-based sys of corp governance in outsider systems with disclosure base 1
widespread equity ownership 2 shareholder int as primary focus of co law 3 emphasis
on minority shareholder protection 4 stringent requirement for disclosure US & UK including AU and NZ 7.04
Monitoring costs: costs of external audit & mgt compensation plans Agency costs 2.22

Nature & extent; amount of loss; circumstances; degree of power; deliberateness of

contravention and the period; mgt conduct; corp culture & disposition to cooperate with
authorities responsible ************************************************* TPC v CSR Ltd****************** 6.13*******
Need for good corp governance in the public sector: failure ensure obj &
accountabilities in pass Public sector corp governance 2.37
New economy 1 grow without threat of recession 2 continues to expand without
increasing inflation 3 restructure efficiency & productivity 4 new IT & capital 5
function 6 balanced budget 7 globalised & export driven Weinstein: new economy 7.16
No-liability companies (NL appear in company's name) Types of companies 1.05
Nomination committee: recommend potential board appointment of board members Nomination committee: consider board processes
2.20
Nominations committees should have nomination candidates & assessing CEO Hampel & Greenbury recom. all
performance, individual directors & board as a whole independent director 4.27
Nominations committees: clear terms of reference for committees responsibilities &
procedures should understanding independent directors should be free to act Greenbury & Hampel recom. all
independently independent director 4.27
Nominee directors: appointed to represent the interest of particular class of
shareholders. UK & AU request to act in the best interest of co as a whole Nominee directors 3.12
Nominee directors-should not put interest of group ahead of interest of co as whole Walker v Wimborne 3.16
Non-executive directors benefits arise Non-executive directors SA3.01 3.11
NZ equity market is smallest mkt relative to GDP. 1 Small size firms, Dividend treats
equity , stk mkt not enjoy a strong reputation compliance & governance std not match
advanced ind mkt Healey for NZ public equity mkt 7.12
O'Brien. Mary-increase in gingival investors will continue to have far-reaching effect Individual shareholder-transparent co 4.08
OECD & ASX code with regard to shareholders rights ASX & OECD shareholders rights 2.10 SA2.2
OECD Int'l-White Paper Asia
OECD 5 principles: 1 shareholders' rights protection; 2 shareholders equitable economies. Evaluate/improve corp
treatment; 3 stakeholders role; 4 disclosure & transparency; 5 board responsibilities governance 1.10
OECD principles of corp govern: Rights, Equitable treatment; role, disclosure; responsibilities
Corp govern: OECD principle R2.01 Slide 47-48
OECD principles-provide legislative protection of shareholders right by auditor to disclosure
Corp governance-achieving goals 4.12
OECD: 'corp governance framework ensure strategic guidance of co, effective monitoringHampelof mgt Report: Board of directors 2.15 R2.3
Ok Tedi-BHP incurred loss in public relation failure of ethical & moral standard no 'blackEnvironmental
letter' cost-BHP 4.18-19
Opportunistic: Over-consumption, Empire building, Risk avoidance; differing time horizons Agency cost: Opportunistic 2.23
Organisations: Purpose; Objective; Ownership & Governance Table 1.1 Sole trader/Private/Public/unincorp asso.1.06
Outsider strength 1 dispersed ownership & strong institutional investors 2 primacy of
shareholder int in co law 3 emphasis on protection of minority shareholder int 4
disclosure require 4 fluid capital investment in dynamic economy 4 competitive
performance Outsider system of corp governance SA7.05 7.22

p.72of86
 CPA107_C T
Outsider sys 1 independence of audit & accountancy professions 2 lack of
accountability, disclosure & transparency of boards 4 adequacy of board structure &
process 4 quality of director competencies Outsider system of corp governance MC7.03
Outsider sys as disclosure-based: 1 investor reliable info to make decision 2 regulation
intended to ensure complete info to investors 3 bank finance in short term 4 equity
shares significant than bonds & loans Anglo-American MC7.02
Outsider sys weakness: 1 over-dominant & over-paid CEO 2 weak boards of directors 3
failure in rept & transparency 4 short-term investment 5 instability of governance &
investment 6 cyclical volatility in dynamic economy Outsider system of corp governance SA7.05 7.22
Outsider system: equity finance has more important as means of dev companies "Nestor & Insider
Thom"systems dependent loans fm bank7.02 & 7.05
Outsider systems-corp govern of US&UK 'heart of agency theory, corp govern principle Market-based
& co law' outsider model corp govern
7.04
Over-consumption of 'Perks'-incidental benefits gained in addition to income e.g. low int Agency
loan costs: e.g. prestigious office 2.23
Over-regulation emerging: careful monitoring & tighter regulation for superannuation fund. Over-regulation SA7.04 7.19
Participants in the corp governance process Broad & Owner: Same director's liability in Not-for-profit organisations: Board
a for-profit co. Director usual act in unpaid or rec'd minimal director fee. Nominations role-Similar; Owners-focus
less formal. Role of board similar to for-profit co stakeholder 2.36
Performance-based compensation with cognitive moral development (CMD) allow Rutiedge & Karim: not accept self-int
ethical moral consideration constrain self-interest affect firm value basis 2.24
Performance-based compensation: extrinsic reward lead to active manipulation reported measures
Kohn: Alternative view performance-based2.29
Performance-based compensation: lead active manipulation reported measures Kohn & Healy Healy: Alternative view performance-based
2.29
Performance-based remuneration: mitigate agency costs act in the shareholders' interest Agency cost: Performance-based remuneration2.25
Personal or secret profits example-bribes; misuse fund; opportunities; confidential info; improper
Directors personal or secret profit 3.23
Phoenix co & phoenix trading: litigated or reported few reported Deputy commissioner taxation v Woodings 5.34 SA5.24
Phoenix co-director shift responsibility to a co "pull the plug" Phoenix co 5.33
Phoenix co-problem with current legislation Phoenix co 5.34
Phoenix co-unable to pay debts; acts intentionally to deny creditor; commence in 12 month Phoenix co 5.33
Portfolio composition of institutional investors: important equity shares of US & UK institutional
Equity mkts of Germany & France 7.06 T7.3
Principles of good Corp governance & Best practice recommendations OECD & ASX diff ASX Principles 1-9 2.14-15 SA2.4
Principles of good Corp governance: OECD ASX & Combined code ASX; OECD & Combined code 2.15 SA2.5
Puffery & advertising: coffee- adv compared price only puffery of products, not prohibit
imaginative adv but not misleading or deceptive Stuart Alexander & Co. v Blenders Pty Ltd
6.44
Push came to shove, the voluntary scheme lacked teeth Fels: self-regulation 5.43
Ramsay's rept: Independence of au co auditors, 10 corp gov't principles & best practices Combined Code UK; Higgs rept & Smith 1.09
rept
Recommendations of the Greenbury Report Greenbury Rept R4.13
Relief from breach of duty- Members in a general meeting may ratify a decision AGM member may ratify decision 3.35
Remedies available to the co when director breach of duty***************************** Common law remedies *************** 3.32-33******
Removal of director-breach of duty by a director Director breach duty-removal of director3.32
Remuneration & nomination committees set up with majority of non-executive directors Bosch Rept 4.27
Remuneration Committee of co should be comprised entirely of non-executive directors Greenbury committee-Remuneration committee 3.10
Remuneration Committee: Cadbury & Greenbury effectively superseded by Hampel Greenbury specifically look at remuneration
4.25
Remuneration committees: independent director paid wholly in share; CEO
substantially. Ultimate result of CEO's stewardship of co share price rose by 50% later Sunbeam Corp case: CEO take short-
fell term view 4.27
Remuneration committees-executive remuneration should linked to increased in co profitExecutive remuneration 4.27
Remuneration packages in research shown stk option tend greater link with profit & performance
Keasey & Wright: Remuneration comm4.27
Remuneration, nomination and performance: Greenbury Committee key recommendationGreenbury committee-Remuneration 4.25-26
Remuneration/Compensation committee: review and recommendation of remuneration Remuneration/Compensation committee2.20
Remuneration: CLERP 9 listed public co insert a 'remuneration report' to annual director'sDirector's
report remuneration disclosure 3.26
Residual loss: residual loss of value of the firm. Loss arising fm decision represent residual
Agency
loss costs 2.22-23
Responsible business engagement with society-business is & should be integral part of society
Holme, Lord-Corp social responsibility R4.09
Risk avoidance: avoid loss or engage risky depending how managers compensated Agency costs 2.23
Risk Mgt can be more effectively tracked, greater disclosure with reduced cost. IT-Risk Mgt SA4.13 4.25
Risk mgt is a process identify, analyse, value, treat, monitor & communicate the info
gathered for the benefit of co. Standards AU dev a Risk Mgt standard AS/NZS 4360 to
minimise risk Risk Mgt 4.22
Santos Ltd-Corp governance statement Corp governance statement R4.06
Sarbanes-Oxley Act new laws, regulations & listing rules after Enron Gordon: Enron 'shareholder capitalism' 7.18-19
Secret comm was a consequence a custodial sentence was warranted R v Kendrick 5.29-30
Secret Comm: serious act from both a legal & ethical perspective & sentence offenders R v Jamieson 5.30
Self-regulation and ethics Self-regulation as form of regulation 5.43
Shareholder agreement: stakeholder issues assume greater importance for family-based
firms; particularly on employees SME corp governance 2.43
Shareholder participation in the modern listed public co: Final report CASAC report-Shareholder praticipationR4.04
Shareholder right: 1 deal with shareholders rights 2 equitable treatment of shareholders OECD: with code of shareholder's right 2.08 R2.01
Shareholder value orientation: US, UK, AU, NZ adopted this model, influence European Anglo-Saxon
& Asian shareholder value-based 7.13
Shareholder: AGM requisition, resolution thresholder notice of AGM, proxy
arrangement, disclosure of proxy directory electuary. No recommendation for further
regulatory provision CASAC report-Shareholder praticipation4.09 R4.04
Shareholder: individual & institutional; Keasey: Int in wellbeing of the co is in long-termKeasey
success& Wright 2.05
Small print in adv: 'upto' & conditions apply' might be literally but create a misleading overall
Advertising
impression
small print: 'upto' 6.47
Social accounting: OECD encourage protection of human rights & ensure 'effective
redress for violation of these right OECD: Social accounting 4.20
Social responsibility of business is only to use resource to increase profit Friedman, Milton: not correct nowadays5.05
Southcorp Ltd: responsibility for guiding and monitoring business with policies Corp governance statement 2.33
Special circumstances-can rise to a duty of fiduciary nature to individual shareholders notColeman
just co v Meyers 3.16
Special disability: "special disability' of age & language difficulties Commercial Bank of Australia v Amadio 6.58
Stakeholder right: Board's primary duty is to the shareholders & should consider stakeholders
BRT stakeholders right similarity to OECD
2.12
Stakeholder: Corp & stakeholder relationship Table 2.1 Investors/Customers/suppliers.. Corporation & stakeholder relationship 2.06-07
Stakeholders right: employees, creditors, customer, suppliers, non-equity investors, regulators
Hampel & gov't
Report: Stakeholder & ASX 2.10-11
Statements of business principle-maintaining high std of behaviour throughout Bosch-Codes of conduct 6.39
Statutory derivative action-minority member or officer the right to bring action Ultra vires-minority member SA3.07 3.34
Stock option: Corp Act required to disclosure in aggregate amount. AASB ED106 & IASB Agency costs: stock option & a/c treatment
2.27
System of Environmental Economic a/c (SEEA)-Integrated environmental & Economic A/C Government expenditure on environment 4.19

p.73of86
 CPA107_C T
Take a bath: enhance future years rept lowest result in current year Bonus Plans: profit may 'real' or 'cosmetic'
2.26 (old)
Taken action types of resales price maintenance not mutually exclusive: 1 making it
known goods will not supplier; 2 inducing or attempting to induce; 3 agreeing or
offering to agree; 4 using statements of price; 5 withholding supply
*********************************** Resale price maintenance************* 6.23*********
Takeover: Directors reim re-election cost in breach of fiduciary duty although act in goodAdvance
faith Bank Australia Ltd v FAI Ins Ltd 3.19 A3.04
Takeovers-Ethical aspects Ethical aspects of takeovers legislation 5.11
Third-line forcing required: three parties; two product; requirement a 2nd product to be
taken fm a nominated third party as a condition of supply of the first product Third-line forcing 6.30
Threat of takeovers: unfettered abuse of opportunistic behaviour down profits to takeoverAgency
target costs: non-agency incentive 2.30
Three pillars sustainable dev-bal economic dev, environmental protection & social progress Bourne, Greg-three pillar of development R4.08
TPA Part IVA: unconscionability Unconscionable contracts 6.58
Trade practices compliance program: Corp to maximise profits to ensure satisfactory return TPA 6.05-06
Triple bottom line examples-economic/financial for sales, social skill dev, environmentalTriple
… bottom line SA5.02 5.5
Triple bottom line widely taken up not only accounting profession also environment Elkington, John: CSR 4.17
Trust-based form: governance relational contract generate sense obligation to trading partners
Learmont: trust-based form d
Trustee dealt or attempted to deal with estate of those is obtained fm any other person is permitted
Aberdeen Ry v Blaikie: no enquiry permitted
3.21-22
Types of companies: Corps formed and registered under corp Act 2001 Types of companies 1.03
Uhrig Report on corp governance: dev a template of governance principles Public sector corp governance 2.38
Uhrig Rept principles benefit: improving 1.transparency & accountability;2.efficiency
of statutory authorities 3.effectiveness of statutory authorities Uhrig Rept 2.40
2.40-41
Uhrig Rept summary of recommendations and better practice guidance for board Government statutory authorities board Q2.13
UK Corp governance reform: Dept of Trade & Industry boards foster inclusive relationships UK legal compel PF (NAPF)&combine 7.19-20code
UK mkt-based system: Dependent equity mkt than large industrial economies "Cadbury Anglo-Saxon model of corp
code" governance 7.09-10
UK reform followed Cadbury code: Greenbury Rept, Hampel Rept, Combine code, Cadbury Code reforms corp
Turnbull Rept governance 7.10
UK: 1 Cadbury-std of audit 2 Monks & Minow-lack of accountability, disclosure &
transparency 3 Lorsch & Maciver-adequacy of board structure & process 4 quality of Cadbury code of corp governance:1
directorial competencies 5 lack of CSR 6 Pound-growth of merger & acquisition Greenbury rept 2 Hampel rept 3
activities 7 Gregg-short-term basis corp performance 8 spate of business fraud 9 combined code 4 turnbull rept.
weakness of corp self-regulation Modern co Law 7.09
UK: 1 new definition or role of board 2 open & rigorous on appointment of director 3
evaluation of performance of board 4 at least half independent non-executive 5
separation of chairman & CEO 6 chief executive no become chairman 7 closer
relationship between chairman & independent director 8 strengthened role for audit
committee Combined code 7.20
UK: examined directors & auditor duties, investigated shareholder rights, explore new
corp rept, particular issued of rept & accountability by smaller co Modern Co Law Review 7.10
Unconscionable conduct: refused to enforce agreement for real estate agent & illiterate farmer
Downsett v Reid 6.57-58
Undisclosed benefits: set up subsidiary need repay profit, disclosed not only CEO also shareholders
Furs Ltd v Tomkies 3.23
Unlimited liability companies: no limitation upon winding up, 'veil of incorp' does not apply
Types of companies 1.04
US co proposal: 1 board maximum 10 directors 2 outside director nominated as lead
director 3 board meet major shareholder 4 Independent directors describe remedial in Lipton & Lorsh proposal adopted in
annual rept for co 3 out of 5 years US 7.07
US corp governance regulation correlation between mkt failure & collapses & bursts of legislative
Corp governance regulation & legislation SA7.03 7.16
US corp governance: continual intervention & second-guessing powerful institutional investor
US corp governance SA7.02 7.09
US mkt-based system: traditionally worked on a collegial basis under dominance of senior One-tier
mgt. board ratify strategic mgt decision
7.07
US sys encouragement of self-regulating by corp entities, supported by law around basic Millstein:
principle US sys 7.14
US with dedicated capital investment sys of Germany & Japan. US sys focused purely
on financial goals & measure & short-term performance, German & Japanese sys
characterized by long-term investment in industrial strategies to boost productivity &
capability Porter, Michael rept for US Council 7.13
US:PF of CALPERS, New Yarok City, State of Connecticut, State of Minnesota & TIAA-CREF Pension funds particularly influential 7.08
US-outside directors have limited time, knowledge & expertise in co that they are
responsible for Lorsch & Maclver 7.07
Utilitarianism-based on outcome, promoting greatest happiness among all stakeholders Ethical conduct and co directors 5.05
Victoria University, Growing Employment by Identifying & Supporting Growth Firms Project SME definition 2.42
Voluntary disclosure-financial information and non-financial issues as corp govern principles
Non-financial disclosure 3.31
Way, Nicholas 'business review weekly'-ethical behaviour important and community Ethical behaviour 5.46
Withholding supplies remedies: supplies liable for damages at injured. Restraining the supplier
Withholder supplies 6.27
Workable competition: not perfect competition but feasible in real-world Mkt conditionsWorkable competition 6.08-09
Working group comprising AICD, CPA AU, Business Council of AU, Law council of AAMI Customer Charter-internal corp
AU & ICAA & securities institute of AU code 5.45
World bank in china recommended: dominate state ownership on mkt discipline &
regulatory capacity 2 bldg institutional investor base 3 strengthen banks role, enhancing Tenev, Zhang & Brefort: survey corp
creditor's rights gov 7.36
World Bank to aid countries in economic dev & commitment continuous dev corp governance IMF: balance of pay't & ex rate 1.14

p.74of86
CPA107_C T

60
6 1
9 2
9 3

9.6 4
9.6 5
9.6 6
7.2 7

p.75of86
CPA107_C T

p.76of86
CPA107_C T

p.77of86
CPA107_C T

p.78of86
CPA107_C T

p.79of86
CPA107_C T

p.80of86
CPA107_C T

p.81of86
CPA107_C T

p.82of86
CPA107_C T

p.83of86
CPA107_C T

p.84of86
CPA107_C T

p.85of86
CPA107_C T

p.86of86