Jetair Ltd. and Contemporary Companies and Securities Law

basis In acting as advisors for the pilot burners knowledge Australia and Airlines Union Australia, we strain to explore the sub judiceity of the assorted accomplishs of the Jetair Ltd. s get on of music conductors which ultimately lead to the hiring of a new staff body in refreshed Zealand by JetairNZ Ltd at a lowered salary and the subsequent wordiness of Jetair Ltd. s Australian- found senior managers and pilots. The outcomes want by the various employee associations seek for outsetly, the imposition of the Australian- ground earnings of Jetair Ltd. s antecedent senior managers and pilots upon the unseasoned Zealand-based staff of JetairNZ Ltd. The second outcome sought by the employee associations seeks for the suppression of the senior managers and pilots make redundant by Jetair Ltd. The third touch is with regards to excessive stipend of Jetair Ltd. s add-in. In examining these concerns, thither atomic number 18 a second of legal beas that must be exami ned firstly the relationship betwixt Jetair Ltd. and JetairNZ Ltd. s a related body in mergedd and the various duties owed to twain companies by their c solelying card of theatre directors the duties owed by the mount up of Directors to both companies and the body corporeal as a whole and the conjecture of conflict of interest the handicraft of do owed by the card of Directors to their employees and the ac caller as a whole and finally the exploration of the lucre of Jetair Ltd. s Board of Directors as a reflection of the up-to-date monetary location of the bon ton.The argument for and against the out of bounds of legal exertion impart be based solely upon relevant legislation and slip of paper law and then the conclusions drawn will be the recommendation for the employee associations in regards to the pursuit of legal action. Related Bodies bodily dimension and Subsidiary Companies accustomed that conducting business with an Australian-based manpower oper ations, business fired to be cash-flow nitty-grittyive, save unprofitable Jetair Ltd. has sought to move a differentiated somatic structure. In regulate to achieve this, Jetair Ltd. stablished a subsidiary, JetairNZ, in tack together to gain advantages that were previously un for sale. Incentives for the political science of a subsidiary, foreign or local, argon bidd for by means of with(predicate) both the rule of classify entity and especial(a) li great power. In the case of Jetair Ltd. the rules listed preceding(prenominal) provide for the existence of JetairNZ as a separate legal entity (although in any case functioning as part of the body incorporated) with all of the same(p) rights and obligations as any other registered association independent of its pargonnt organization.The provision of extra liability as an individual company allows for the pursuit of extensive operations by the body corporate whilst remaining wide-awake of liability in the case of ins olvency of the subsidiary. Therefore, Jetair Ltd whitethorn be digestd as the place company whilst JetairNZ may be defined as a wholly- protested subsidiary. As the absolute majority of the Board, three out of five conductors, are fitled by Jetair Ltd. we can establish that the Board of Directors of JetairNZ is controlled by Jetair Ltd.From this we can assume that whilst JetairNZ enjoys the military position of a separate entity and the everyplaceall corporate group is protected through the linguistic rule of limited liability JetairNZ is in egress controlled by Jetair Ltd. point though it is credible to assume that Jetair Ltd. is in effect irresponsible the mind and will of JetairNZ the likelihood of acuate or lifting the corporate veil in order to determine without a incertitude the timing, origin and motivation of JetairNZs ending to employ new personnel in conjunction with Jetair Ltd. s decision to effect a mass lay-off is soaringly unlikely.Indeed a concise sum mation of this principle may be credited to Rogers J in Briggs v James Hardie &038 Co Pty Ltd (1989) Even the complete domination or control exercised by a parent over the subsidiary is non a comfortable basis for lifting the corporate veil 1. Given precedence, the Courts would be unwilling to lift the corporate veil disposed the exertion of the entity school of thought by the High Court. An encompassing advert made in the case of Varangian Pty Ltd v OFM jacket crown Ltd 2003 by Dodds-Streeton, that may be relied upon in Jetair Ltd. s case is The underlie unity of economic purpose, earthy personnel, honey oil membership and control have non been held to justify the lifting the corporate veil2. 1Briggs v James Hardie &038 Co Pty Ltd (1989) 16 NSWLR 549, 588 2 Varangian Pty Ltd v OFM Capital Ltd 2003 VSC 444 at 142 Interestingly, although the be intimate of verbosity payments is non being questioned by the employee associations the case of Stanborough v Woolworths Ltd 2 005 NSEADT 203 at 443, which illustrates a disparity in redundancy payments inwardly a corporate group, illustrates the further application of the doctrine of separate entity which may be applied toJetair Ltd. and JetairNZ in terms of the sectionalization of honorarium offered and the retrenchment of redundant staff. To urge that the same fee be offered to both previous Jetair Ltd. and new JetairNZ employees would nurture to be futile given that although they exist indoors the same corporate group, Jetair Ltd. and JetairNZ are in the eyes of the law separate entities. JetairNZ Board of Directors Appointment &038 Control In the formation of JetairNZ, the mount up of music directors appointed by Jetair Ltd. consists of some(prenominal) representatives of Jetair Ltd. and two representatives from the airline industry in New Zealand.As a holding company, Jetair Ltd. is easy within the law to appoint its own nominees to the Board of Directors of a subsidiary such as JetairNZ. In fact, this proves to be common practice, with the frequent alignment of interests amongst the company as a whole. Although on that point is an alignment of interests between both the holding company and subsidiary, in case there is any situation in which a conflict of interests arises the directors of a subsidiary such as JetairNZ are required to act in the scoop up interests of the subsidiary, non the company as a whole.In this case, the appointees of Jetair Ltd. currently serving as directors for JetairNZ are obligated to act in the dress hat interests of JetairNZ at all times, precedence is given in the case Walker v Wimbore (1976) 137 CLR 14. Given the question of the enforcement of the previous Australian- plight for all JetairNZ senior managers and pilots, this would have to be in the best interests of JetairNZ alone to be passed by the JetairNZ board. Given that maintaining employees based in New Zealand is relatively less expensive 3 Stanborough v Woolworths Ltd 2005 NSEADT 203 at 44 Walker v Wimbore (1976) 137 CLR 1 in terms of wage for JetairNZ, employing an inflated level of pay would not be in the best interests of JetairNZ. Should the Board of Directors pursue such an action, they would not be acting in the best interests of the company and they would be in breach of duty. Directors Duty of Care companion vs. Employees In examining the duty of care owed by the Board of Directors of Jetair Ltd. there exists an inequality of that which is owed to employees and to the company.The first priority of the directors is to maximize the value of the company, in order to maximize the earnings of the stockholders in the short- and long-term. However, directors also owe a duty of care to their employees and other various stakeholders in the company often termed Corporate sociable office. In the case of Jetair Ltd. and the potential action from employees and their relevant associations there exist arguments both for and against Jetair Ltd. s redun dancy scheme. The arguments against Jetair Ltd. s action stem from the consideration for corporate societal responsibility of companies specifically for their employees.However, an examination of CMAC comprehend The societal state of Corporations (2006)5 addresses many of the issues arising in the course of companies conducting business whereby various stakeholders in companies concerns are unaddressed or unbacked by current company law. Whilst the say allows for recognition of the conflicts between companies and various stakeholders it also considered the current company law to be sufficient in granting persons such as the directors of Jetair Ltd. the appropriate powers and obligations to take into account their corporate social responsibility.The report also cerebrate that any amendment to the Corporations suffice 20016 was unsubstantiated. Whilst it is possible to computer address 5 Corporations and Markets Advisory delegacy (2006) The affectionate Responsibilities of Corporations 6 The Corporations bend 2001 (Cth) Corporate affable Responsibility as an argument for the retrenchment of the former senior managers and pilots of Jetair Ltd. , The Social Responsibility of Corporations (2006)7 has found that the consideration of stakeholders such as employees may prove to be hurtful to corporate decision-makers primary consideration the shareholders.There exists a significant argument against the sublimation of the interests of shareholders to pursue the interests of company employees. Simply put, directors of a company should not place the interests of employees before the interests of shareholders as is illustrated in Parke v occasional tidings Ltd 1962 whereby we may assume that the fiduciary duties of the directors lie with the shareholders alone. The redundancy payments previously received by former employees are indeed a incumbent compensation as they were incidental to Jetair Ltd. carrying on their business, having been a previously a greed contractual obligation.Redundancy payments may also be viewed as a facet of Corporate Social Responsibility, as they frequently app take over the employee unions and ease the continuance of business. Jetair Ltd. differentiated their corporate structure, through the creation of a subsidiary and a shift in staffing location and remuneration, in order to achieve lowered operable costs thereby maximizing shareholders value. Jetair Ltd. also upon making the delineate employees redundant paid all entitlements, and has not breached the Corporations Act 20019 regarding employee entitlements.From this we may reason that Jetair Ltd. has fulfill their legal obligation to act in the best interests of the shareholders before their employees and has also fulfil their legal obligations regarding employee entitlements whilst also act a measure of Corporate Social Responsibility through the provision of redundancy payments to palliate their employment transition and ease latent hostilit y with relevant employee associations. 7 Corporations and Markets Advisory delegation (2006) The Social Responsibilities of Corporations 8 Parke v Daily News Ltd 1962 Ch 927 Corporations Act 2001 (Cth) Jetair Board of Directors earnings When addressing the issue of dissention of former employees and their associations with the level of remuneration of the board of directors of Jetair Ltd. , it is necessary to explain the procedures regarding directors remuneration to ascertain if there has been any illegal action. There are several key discussion points as follow the company constitution, the corporate governance principles, and lastly current opinion regarding high levels of directors remuneration.Firstly, a director is not permitted to receive any remuneration from their company unless ap turn up by every the companys constitution (replaceable rules included) or the shareholders. If we assume that Jetair Ltd. s constitution provides for the ability of the board to decide their o wn remuneration this, although in direct conflict with corporate governance, is not in fact illegal. The allotment of mountainous bonuses in addition to the customary remuneration was awarded at the AGM in November 2011, and therefore was disclosed to shareholders and passed by a voter turnout either by the shareholders or the board of directors.According to the Corporate cheek Principles and Recommendations10, Jetair Ltd. must pursue a directors remuneration policy of remunerating sensibly ad responsibly. In order to prove any error by the board of Jetair Ltd. the following must be proved excessive remuneration starring(p) to dictatorial or unfair conduct leading to no/reduced shareholder dividends aberrance from company policies regarding the companys military operation and its effect upon directors remuneration or a lack of revealing of the remuneration of each individual director. 0 ASX Corporate politics Council(2010) Corporate Governance Principles and Recommendat ions In recent years there has been a shift in universal perceptions regarding level of executive and non-executive directors remuneration largely due to the unforesightful performance of many companies throughout the orbicular Financial Crisis. This has led to a strengthen of the framework relating company performance to directors remuneration through the Corporations Amendment (Improving answerability on Director and Executive Remuneration) Act 2011 (Cth)11.Pursuing action regarding the excessive remuneration or bonuses of the directors of Jetair Ltd. , in the case that any of the above was substantiated would lead to the return of the excessive remuneration to Jetair Ltd. The pursuit of such an action would prove to return value to the company, but would in no way assist in the retrenchment of former employees. Conclusion &038 Recommendations To break up it is not recommended for the Commercial Airlines Union and the Pilots Association to pursue legal action against either Je tair Ltd. r JetairNZ. This report has sought to outline any potential courses of action available to the employee associations representing the recently terminated Australian-based senior managers and pilots of Jetair Ltd. The arguments against pursuing legal action are based in case or legislative law and provide legal debate for the actions of Jetair Ltd. Although the employees and their associations may at this time know that the situation is unfair there exists, at this time, no apparent legal wrongdoing on the part of Jetair Ltd. n their cheek of a subsidiary company, termination of current employees, the imposition of a lesser wage for employees of JetairNZ or the recent award of large bonuses in addition to remuneration of the Board of Directors of Jetair Ltd. Word Count 2,164 11 Corporations Amendment (Improving office on Director and Executive Remuneration) Act 2011 (Cth) Sources Cited oASX Corporate Governance Council (2010), Corporate Governance Principles and Recomme ndations oBriggs v James Hardie &038 Co Pty Ltd (1989) 16 NSWLR 549, 588 oCorporations Act 2001 (Cth) Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011 (Cth) oCorporations and Markets Advisory Committee (2006) The Social Responsibilities of Corporations oParke v Daily News Ltd 1962 Ch 927 oLipton, P. Herzberg,A. &038 Welsch,Michelle (2012), Understanding Company Law (16th Edt. ), Corporate Education Services Pty Ltd. oStanborough v Woolworths Ltd 2005 NSEADT 203 at 44 oWalker v Wimbore (1976) 137 CLR 1 oVarangian Pty Ltd v OFM Capital Ltd 2003 VSC 444 at 142