Corporation law Essay Example | Topics and Well Written Essays - 1500 words

Corporation law - Essay Example In her role as accountant, Emma should ensure that the employees, management and the external advisers possess the required skills in managing the business finances. The case scenario indicates that the employee in charge of the accounts was unwell and this distorted all the financial records. Therefore, Emma could have ensured maintenance of all the financial records to enhance effective communication of any information like the Trouble Shooter’s dues and other affairs of the company. As a result, appropriate enquiries could have remained informed on the financial position of the company. As the financial director, Emma could have ensured that the financial records remained updated. The financial director must ensure information on the financial affairs of the company by presenting the current financial viability as well as the impacts related with any further debts (Bosen 2009, p.96). The directors failed in their duty of preventing insolvent trading. At the time of debts, t he company was already insolvent, and Ying engaged in trade with OHS solutions. The law sets out the contravention levels where the directors pay a civil penalty for failing to prevent the incurred debts when aware of the insolvency of the company. Ying new that OHS was insolvent, and he proceeded to trade with the company. According to the Corporation Law, this presents a criminal offense when the directors failed in preventing the company from incurring such debts even after the awareness on the company’s insolvency. The consequences for breaching the duty involve the compensation order where the court may order the director to compensate the companies the equivalent of the suffered loss. This results due to failure of preventing the company from making losses while insolvent. The managing corporation of OHS Solutions could have been disqualified under the justification of sections s206C. In their prevention of breach of duty, directors must account for the fundamental prin ciples. This ensures availability of information on financial affairs of the company and enhances immediate identification of the concerns on the financial position of the company. The company assesses realistically any financial difficulties experienced by the company (Davis 2002, p.403). Failure of the directors in monitoring the company’s solvency as well as the investigation of the financial difficulties and consideration of the timely advice results in breach of duty. The executive director; Satish and non-executive directors; Emma and Ying must have been involved in active monitoring of the OHS Solutions’ financial position. The directors must ensure proper financial records for the company as well as reasonable inquiries to enhance an understanding of the cash flow requirements and financial position of the company. The director must monitor the position of the company to ensure its capability in paying the debts. This requires that the director be remain inform ed on the ongoing basis that rely solely on the financial statements. In the quest for sufficient information of the company, the financial director must ensure they monitor the preparation of the financial records as well as reviewed the company’s capabilities in repayment of debts. The actual steps by the director must ensure proper information on the company’s situation. The director, as in case of Emma, may not be involved directly in