A promoter main duty is to offer sufficient funding or capital for the company, and to ensure that all the formalities required by the statute for incorporation are met. The promoters have a fiduciary duty to the company and its shareholders. The promoters cannot use secret corporate information for their personal gain or advantage. Becky and Asif can sue Candy to reclaim the gift of Rex 2010 for breach of fiduciary duties. Promoters normally owe fiduciary duties to the company that they are forming. They should thus disclose any profit they are making from the promotion either to the company shareholders or to an independent board. The company many sue a promoter for disgorgement of the profit and for rescission in case there is a breach of duty. Becky and Asif can also replace Candy as a shareholder because the gift of Rex 2010 created a conflict of interest between Candy and the company. When shareholders have a conflict with the decision taken by one of the employees, he or she can be changed or replaced in accordance to its articles or the pertinent law provisions. Furthermore, a company enjoys an independent existence and is used by shareholders to achieve the shareholders economic purposes. The company can thus be used as a means of replacing or seeking compensation from Candy because she created a risk of loss of compensation for the company. The gift was a business courtesy- it was a gift from a client. Before accepting the gift, Candy should have informed the other partners and not kept the gift for personal use, instead she created a conflict of interest by having a business relationship with Yienshiu. The most imperative character of Candy’s job was not to acquire a secret gain at the expense of the company. Candy-a promoter- had a legal obligation not to make secret proceeds from promoting the company without the consent of the other promoters (Tengku Abdullah v Mohd Latiff bin Shah Mohd, 2 MLJ 265) . She also had the legal duty of disclosing to the Company about the gift by Yienshiu. She was not transparent in her dealings with the other shareholders and thus did not remain true to her fiduciary duties (Fairview Schools Sdn. Bhd v Indrani a/p Rajaratnam (No1) 1 MLJ 110). The rights of the two shareholders-Becky & Asif- were harmed by an act done to the company, it is to the company that they should look to institute appropriate action because though the company and shareholders suffered the same wrong, it is only the two shareholders right that was infringed. Candy was seen by Becky and Asif as a fiduciary of the company because her relationship with the other shareholders was supposed to be one of confidence and trust. Candy owed legal and ethical duties to the company as well as to Becky & Asif which she did not honor. She did not exercise due care while carrying out her duty and did not subordinate her personal interests to the organisation of the company. Candy abused her position of reliance at the company in spite of the fact that Becky & Asif expected her to devote her full working efforts and time to the interests of the company and to stay away from any doings that would conflict or distract the company interests. When Asif and Becky protested about the client not honoring his contractual obligations, he told them to ask for Candy’s Rex 2010 and sell it for compensation for making him famous. This
Company Law for Accounts Name Institution Question 1- This question focuses on whether any action should be taken against Candy about the gift of Rex 2010. Candy, a promoter accepted a gift from a client without Asif and Becky (other promoters) awareness and this caused a conflict of interest which made the company not to be compensated after the client decided not to honour his contractual obligations…
Accounting practices of the modern times are faced with numerous factors to account for in the contemporary business environment. Social and environmental accounting is a contemporary component of accounting principles and standards. It goes beyond the formal record keeping and financial reporting to encompass internal and external information demands by accounting stakeholders in the economies.
Whoever undertakes to audit the legal issues should have a clear target of evaluation and analysis. Should be bound to given cord of principals in his attempt to come up with the analysis and research (Guta, 2004, p.341). Some of the values expected of the professional accountants are integrity, having the objective in the work they undertake, practicing the independence during the execution of the duty, generating the confidence in the analysis they do, and also should show or should be a professional in the field of law.
A statutory auditor is a certified external auditor who has the statutory obligation to certify the accountability of the firm’s financial statements in accordance with professional auditing standards (European Commission 2011). In order to ensure stakeholder confidence regarding the transparency of the auditing process, it is necessary to promote the independence of statutory auditors.
Accounting conceptual framework exists to for an objective approach to evaluation and resolution of the concerns and is developed by an established body. Regulatory framework defines rules and regulations that concerns accounting practices. Such rules and regulations vary across countries and this paper discusses accounting conceptual framework and accounting regulatory framework in the United Kingdom.
Corporate scandals such as the collapse of Enron invariably turn the attention of the public to the ethical stance of accountants and the ethical values of financial analysts and evaluators as also their claim to professionalism. Professionalism is clearly associated with ethical integrity and this is especially true on the case of financial reporting and accounting.
As Fedoryshyn and Tyson (2003) have indicated, the factors responsible for this decline are likely to be many and varied. One of the most alarming trends related to the reduction in accounting majors is the diminishing number of high school students who express interest in pursuing professions in accounting.
cal and generally practised accounting procedure that have shaken the confidence in large corporations and accounting firms of late, but rather their moral and ethical intention behind those practices that have come into question. The virtue of independent auditors has suffered
re, the modern business organisations tend to employ potential accountants with the aim of coping up with such complexities towards the accomplishment of predetermined business targets (Boyce & et. al., 2001). It will be vital to mention that in order to serve the above
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