Legal Issues

Legal Issues

Safe guarding the interests of a company is an essential factor that ensures even those in the leadership position will be incapable of impacting them negatively. The submitted article titled “The Duty of Directors not to Accept Benefits from Third Parties” considers specific laws that have been introduced for the purpose of protecting company interests[1]. There are specific questions which I kept asking when reading through this submission. In the content, it is thoroughly discussed that accepting benefits from third parties prevents the company from achieving success as losses may be experienced. However, I cannot stop asking what happens if the director was acting in the best interests of the company? Will the action still be considered as a crime against the company, considering the fact that the company will benefit as a result? Another factor that leaves me wondering is what types of benefit is the author referring to? There could be financial benefits or other benefits such as favors from suppliers. Does the type of benefit matter?

From having read the article, I have managed to come across various pieces of information that have enlightened my knowledge on the topic. First, I now understand why companies are always against directors being given any benefits from other parties other than the organization itself. This is because they will end up feeling influenced to act more in the favor of that third party and not in the favor of the company itself[2]. He will want to keep on receiving the benefits. Second, even though it may not be mentioned as it is, receiving any form of benefit from a third party is categorized in the same group as bribes. Accepting bribes is a crime that is punishable by law. Therefore, by accepting benefits, the director not only risks his leadership position in a company but also risks being punished by law.

I support the opinion that if the directors breach these duties as stated in the Acts, then they must be liable for any profits they may have made or the losses that the company they serve suffered[3]. This is because they are the leaders of the company, and should therefore, know that their actions matter a lot. They should be ready to accept any punishment if they fail to heed to what is expected of them in the organization. As the leader of the organization, the director should never act in a way that will jeopardize the success of the company.

From my experience, I can agree with the idea that the rule should only apply when there is a conflict of interest[4]. This is because, benefits may be given to directors in the form of rewards for showcasing outstanding performance by leading the organization effectively. For instance, they may be given benefits in the form of awards, which does not lead to conflict of interest or duty

I think worse punishment is needed if the director accepts benefits which lead to the loss of a company. The courts should ensure that they pay for the loss thoroughly. In most instances, I have seen directors being fired for accepting benefits, only for them to be employed in other companies[5]. Therefore, losing job positions is not punishment enough. They need to pay in cash, from their savings, or serve jail term for the offense. This step will deter other directors from following in the same footsteps.

In conclusion, this submission has covered essential parts regarding the issue. However, I would like to add on the fact that company directors should always be monitored so as to determine whether or not they are engaging in activities that may be jeopardizing the success of the organization. This is because there are those who may be good at hiding such activities until it is already too late for the company

Bibliography

Hall, Tom. “Bribery Act one year on.” Conference & Incentive Travel (July 2012): 28-29. Hospitality & Tourism Complete, EBSCOhost(accessed January 7, 2018).

Loewenstein, Mark J. “Malone v. Brincat: An Expansion of Corporate Fiduciary Duties?.” Corporate Governance Advisor 7, no. 2 (March 1999): 27. Business Source Complete, EBSCOhost (accessed January 7, 2018).

Mills, Charles R. “Money Market Fund Insurance: the Duty of Directors.” Investment Lawyer 6, no. 12 (December 1999): 9. Business Source Complete, EBSCOhost (accessed January 7, 2018).

Polding, Tim. “The Companies Act 2006.” Manager: British Journal Of Administrative Management no. 62 (April 2008): 28-29. Business Source Complete, EBSCOhost (accessed January 7, 2018).

Thornley-Gibson, Rebecca. “Are You Ready For The Uk Bribery Act?.” Travel Law Quarterly 2, no. 3 (September 2010): 158-160. Hospitality & Tourism Complete, EBSCOhost (accessed January 7, 2018).

[1]Tim Polding. “The Companies Act 2006.” Manager: British Journal Of Administrative Management no. 62 (April 2008)

[2]Tom Hall “Bribery Act one year on.” Conference & Incentive Travel (July 2012)

[3]Charles Mills R. “Money Market Fund Insurance: the Duty of Directors.” Investment Lawyer 6, no. 12 (December 1999)

[4]Mark Loewenstein J. “Malone v. Brincat: An Expansion of Corporate Fiduciary Duties?.” Corporate Governance Advisor 7, no. 2 (March 1999)

[5] Rebecca Thornley-Gibson. “Are You Ready For The Uk Bribery Act?.” Travel Law Quarterly 2, no. 3 (September 2010)

ACED ESSAYS