Jetair Ltd. and Contemporary Companies and Securities Law

presentation In acting as advisors for the pilot programs intimacy Australia and Airlines Union Australia, we assay to explore the legality of the respective(a) activitys of the Jetair Ltd. s add-in of handlers which ultimately lead to the hiring of a new staff body in sweet Zealand by JetairNZ Ltd at a lowered salary and the subsequent verbosity of Jetair Ltd. s Australian- ground senior managers and pilots. The outcomes desire by the various employee associations seek for for the first base time, the imposition of the Australian- found lucre of Jetair Ltd. s antecedent senior managers and pilots upon the brand-new Zealand-based staff of JetairNZ Ltd. The second outcome sought by the employee associations seeks for the retrenchment of the senior managers and pilots make redundant by Jetair Ltd. The third line of work is with regards to excessive compensation of Jetair Ltd. s card. In examining these concerns, in that location atomic number 18 a tote up of legal aras that must be examined firstly the relationship amid Jetair Ltd. and JetairNZ Ltd. s a related body corporal and the various duties owed to both(prenominal)(prenominal) companies by their panel of film directors the duties owed by the menu of Directors to both companies and the body in bodilyd as a whole and the fortuity of conflict of interest the duty of dispense owed by the plug-in of Directors to their employees and the all(a)iance as a whole and finally the geographic expedition of the hire of Jetair Ltd. s Board of Directors as a reflection of the received fiscal view of the partnership.The argument for and against the involvement of legal execution forget be based solely upon relevant legislation and font law and so the conclusions drawn will be the recommendation for the employee associations in regards to the pursuit of legal action. Related Bodies incarnate retention and Subsidiary Companies wedded that conducting business with an Australian -based custody operations, business boot outd to be cash-flow humanityationive, tho unprofitable Jetair Ltd. has sought to track a differentiated somatic structure. In hostelry to achieve this, Jetair Ltd. stablished a subsidiary, JetairNZ, in beau monde to gain advantages that were previously un gettable. Incentives for the composition of a subsidiary, foreign or local, be stomachd for through with(predicate) both the rule of recount entity and hold li skill. In the case of Jetair Ltd. the rules listed supra provide for the existence of JetairNZ as a separate legal entity (although in any case functioning as part of the body incarnate) with all of the kindred rights and obligations as any other registered party independent of its p bent organization.The provision of trammel liability as an individual follow allows for the pursuit of extensive operations by the body corporate whilst remaining wakeful of liability in the case of insolvency of the subsidiary. T herefore, Jetair Ltd whitethorn be delineate as the guardianship company whilst JetairNZ whitethorn be defined as a wholly- avered subsidiary. As the mass of the Board, three out of five theatre music conductors, are chastenessled 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 shape of a separate entity and the everyplaceall corporate group is protected through the linguistic rule of limited liability JetairNZ is in military reward controlled by Jetair Ltd. nevertheless though it is glib to assume that Jetair Ltd. is in effect autocratic the mind and will of JetairNZ the likelihood of cracking or lifting the corporate veil in order to determine without a enquiry the timing, origin and motivation of JetairNZs finale to employ new personnel in conjunction with Jetair Ltd. s decision to effect a mass lay-off is postgraduately unlikely.Indeed a concise summatio n of this principle may be credited to Rogers J in Briggs v James Hardie & Co Pty Ltd (1989) Even the complete domination or control exercised by a parent over the subsidiary is non a suitable basis for lifting the corporate veil 1. Given precedence, the Courts would be unwilling to lift the corporate veil granted the coat of the entity school of thought by the High Court. An encompassing input signal made in the case of Varangian Pty Ltd v OFM groovy Ltd 2003 by Dodds-Streeton, that may be relied upon in Jetair Ltd. s case is The underlying unity of economic purpose, earthy personnel, common land membership and control have not been held to justify the lifting the corporate veil2. 1Briggs v James Hardie & Co Pty Ltd (1989) 16 NSWLR 549, 588 2 Varangian Pty Ltd v OFM Capital Ltd 2003 VSC 444 at 142 Interestingly, although the issue of redundancy payments is not being questioned by the employee associations the case of Stanborough v Woolworths Ltd 2005 NSEADT 203 at 443, which illustrates a disparity in redundancy payments in spite of appearance 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 mutant of salary offered and the retrenchment of redundant staff. To beseech that the same salary be offered to both previous Jetair Ltd. and new JetairNZ employees would enhance to be futile given that although they exist in spite of appearance the same corporate group, Jetair Ltd. and JetairNZ are in the eyes of the law separate entities. JetairNZ Board of Directors Appointment & Control In the formation of JetairNZ, the poster of directors appointed by Jetair Ltd. consists of several(prenominal) representatives of Jetair Ltd. and two representatives from the airline industry in New Zealand.As a holding company, Jetair Ltd. is wellspring within the law to appoint its own nominees to the Board of Directors of a subsidiary much(prenominal) as Jet airNZ. In fact, this proves to be common practice, with the frequent alignment of interests amongst the company as a whole. Although thither 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 stovepipe interests of the subsidiary, not 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 surpass 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- pay 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 NSEAD T 203 at 44 Walker v Wimbore (1976) 137 CLR 1 in terms of wages for JetairNZ, employing an inflated level of hire 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 guild 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 amicable obligation. 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 redundan cy scheme. The arguments against Jetair Ltd. s action stem from the consideration for corporate sociable responsibility of companies specifically for their employees.However, an examination of CMAC paper The tender province 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 uncorroborated by current company law. Whilst the account 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 transaction 20016 was unsubstantiated. Whilst it is possible to have-to doe with 5 Corporations and Markets Advisory direction (2006) The genial Responsibilities of Corporations 6 The Corporations twist 2001 (Cth) Corporate neighborly 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 fooling intelligence service 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 needed compensation as they were incidental to Jetair Ltd. carrying on their business, having been a previously agreed contractual obligation.Redundancy payments may also be viewed as a facet of Corporate Social Responsibility, as they frequently app silence 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 running(a) costs thereby maximizing shareholders value. Jetair Ltd. also upon making the represented 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 fulfil their legal obligation to act in the best interests of the shareholders before their employees and has also carry out their legal obligations regarding employee entitlements whilst also prosecute a measure of Corporate Social Responsibility through the provision of redundancy payments to avail their employment transition and ea se stress with relevant employee associations. 7 Corporations and Markets Advisory charge (2006) The Social Responsibilities of Corporations 8 Parke v Daily News Ltd 1962 Ch 927 Corporations Act 2001 (Cth) Jetair Board of Directors profit 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 system 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 be 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 own rem uneration this, although in direct conflict with corporate governance, is not in fact illegal. The tryst of thumping bonuses in addition to the inveterate remuneration was awarded at the AGM in November 2011, and therefore was disclosed to shareholders and passed by a vote all by the shareholders or the board of directors.According to the Corporate brass instrument Principles and Recommendations10, Jetair Ltd. must pursue a directors remuneration policy of remunerating sanely ad responsibly. In order to prove any erroneousness by the board of Jetair Ltd. the following must be proved excessive remuneration lead-in to tyrannical or unfair conduct leading to no/reduced shareholder dividends discrepancy from company policies regarding the companys process and its effect upon directors remuneration or a lack of apocalypse of the remuneration of each individual director. 0 ASX Corporate regime Council(2010) Corporate Governance Principles and Recommendations In recent years t here has been a shift in public perceptions regarding level of executive and non-executive directors remuneration largely due to the brusk performance of many companies throughout the ball-shaped Financial Crisis. This has led to a fortify of the framework relating company performance to directors remuneration through the Corporations Amendment (Improving business 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 & Recommendations To come together it is not recommended for the Commercial Airlines Union and the Pilots Association to pursue legal action against either Jetair Ltd. r JetairNZ. This report has sought to strategy 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 conclude for the actions of Jetair Ltd. Although the employees and their associations may at this time whole step that the situation is unfair there exists, at this time, no apparent legal wrongdoing on the part of Jetair Ltd. n their giving medication 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 Recommendations oBrigg s v James Hardie & 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. & 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