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Media Reflection Assignment

Essay by   •  November 11, 2018  •  Essay  •  507 Words (3 Pages)  •  121 Views

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Media Reflection Assignment

This article examines various issues surrounding directors such as their breach of fiduciary duties and the appointment of directors. The first issue to be explored is the resignation of ABC’s chairman Justin Milne as well as the company’s managing director Michelle Guthrie. This was because as directors both seriously breached their fiduciary duties to the company in trying to dismiss two high profile reporters because they were deemed to be unpopular with the current government. Under the classification of fiduciary duties, these were breaches of loyalty and good faith for the company. These obligations originate from the concept of equity, whereby a person with the fiduciary capacity must be in a position that is trustworthy and acts in a manner that achieves positive outcomes for beneficiaries. Since the relationship between a company and a director is fiduciary, directors are also responsible. Hence, in this article the directors have acted in a manner that was not in good faith or in the best interest of the ABC company and tried to use their powers inappropriately for a political agenda, causing conflicts and failing to retain discretion. The idea that directors must act in the best interest of the company can also be applied here. This is highlighted in s181 of the Corporation’s Act 2001, whereby ‘a director or other officer of a corporation must exercise their powers and discharge their duties: in good faith in the best interests of the corporation and for a proper purpose’. While the two directors may believe they are acting in the best interest of the company, both the court and company may not consider that to be the case. In terms of statutory remedies for this case, the court would have the right to disqualify directors, with ASIC being responsible to act against directors that have breached their duties. Hence, this article highlights how acting in good faith can be objective in nature, therefore there is a need for rational directors.

The next point being examined is the appointment of directors. Under s201G of the Corporation’s Act 2001, ‘a company may appoint a person as a director by resolution passed in a general meeting’. This article highlights how the current ABC board of directors lacked legitimacy because the opinion of the nominations panel was ignored. Directors were being appointed by the government which in turn politicised the board of directors and was what caused the issue with board appointments. Not only does this go against the procedure highlighted in s201G of the legislation, it causes directors to be unable to remain as loyal or act in good faith for the company. This is emphasised by the board not responding effectively to the evidence that was put against Justin Milne, potentially because of their political affiliations, with Milne himself being elected as chairman despite being a close friend of Malcolm Turnbull. This has highlighted some of the potential flaws in the appointment system for directors, as the rules for appointment are not always upheld properly, leading to issues within the company.

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