Overview of the company
Telstra is one of the telecommunications companies in Australia which operates and builds telecommunication networks. The company markets voice, television, mobile, and internet access. The company is a member of S&P/ASX 20 and the largest telecommunication company in Australia. The company originated from PMG, commonly known as Postmaster-General Department, which was formed in 1901. Currently, the company offers what they refer to as a full range of communications services. The company provides 18.8 million retail mobile services. The company’s current services are long and local distance telephone calls, cable distribution services, information services, broadband access and content services, data, and internet services. The company currently operates via nine business segments: Telstra Enterprise Government, Telstra media group, Telstra Consumer and Country Wide, Telstra Business, Telstra Innovation, Telstra Wholesale, products, and marketing (Ross, 2017, p. 27).
Overview of the Australian Corporations Act 2001
Corporations Act 2001 (Cth), or what is known as CA 2001, is an act of the Commonwealth of Australia that sets out rules and regulations with business entities in Australia both at interstate and federal levels. The Act deals specifically with companies and deals with entities like managed investment schemes and partnerships. The act is part of Australian corporations’ law. The act regulates matters like companies’ operations and formations, fundraising, takeovers, and officers’ duties. It is also important to note that the Australia corporations’ act of 2001 has been revised several times; lastly, it was done on16th August 2010. It is also important to note that the act has been amended to provide what Australian law experts refer to an as safe harbor for directors about insolvent trading. According to the act, a director is a person who is liable for an insolvent trading company. In addition directors of a company may also be liable if company was suspected to be unable to pay its debts (Actofcorporations, 2013, p. 47).
This means that according to the corporation’s act, a company director can avoid personal liability for if certain criteria is met as outlined in the act. The debt must be incurred in the ordinary court of business. Second, the dept must be during the appointment of a liquidator or administrator, and during the six months starting on 25th March 2020. Also, the act has given another definition of a director, i.e. that person involved in a certain company’s affairs. According to the act a director must be a person who is over 18 years of age. Also, they must a person who is not otherwise disqualified from holding any office this is outline by section 206C. Third the person who has not been undischarged bankrupt or any subject to personal insolvency agreement Part X. According to the act 2001 a company needs to have at least one director. According to the corporation’s act 2001 is required to make judgement in good faith for the company, and not have that material personal interest. Also as spelt out by the act directors are under duty to exercise discretion meaning that they ought to be independent. They also have that right to deliberate and avoid conflict of interest. This means that as company directors need not to compete with the company. In case conflict of interest arise then they must disclose the interest to the company else they commit an offense (Black, 2014, p. 117)
Overview of Telstra Company directors
As per resolutions of the company’s board, Telstra directors are considered to be part of Telstra Corporation Limited. The company comprises of 12 directors; these include the chairman, deputy chairman, the CEO, and other nine directors who are considered to be board members. The youngest of all the company CEO who is part of company directors is known as Bridget Loudon. Also in its list of directors is what the company introduced in 2016 as a new business unit known as Technology Innovation and Strategy; this reflects a greater focus on innovation and the company ambition to become one of the world class technology company. This was made of external appointments with Kelvin Russel, Stephen Elop, and Alexandra Badenoch joining on August 2016 as directors (O’Leary, 2017, p. 119)
Q1) Internal rules of the company
The company CEO is supposed to communicate to all other company directors on the company’s general status using a language that is understandable to all the members. The company employees are required to promote the company culture both within the company and outside. Also they are required to avoid rudeness. The company CEO is required to ensure that appropriate actions is taken against staff who are rude. It is also as per the company’s internal rules that the CEO of the company ought to ensure that only the authorized staff communicate with media or external entities about the company. The company also needs to have an advocate responsible for outlining company legal requirements and discussing its legal compliance (Easton, 2013, p. 231).
Q2) Procedure and requirement for the appointment for the Directors
First, under the internal company rules, the company cannot operate without at least one director. Also the director must be a human not another company. However the company is a public limited company; this means that it must have at least two directors. It is also important to note that to be a company director in Australia, one needs to consent to writing. To be eligible to be a company director in Australia, one needs to be at least 18 years of age. Second, it is essential to note that; one cannot be a director if they have an undischarged bankrupt. At Telstra Company directors are appointed by shareholders at what the company has referred to as the Annual General meeting that is the AGM or the Extra-ordinary General Meeting. Here a resolution for the appointment is then put to a vote and later it is passed if the majority of the company shareholders are voted in favor. It is also important to note that when a director’s vacancy arises unexpectedly, the remaining directors can temporarily appoint a new director. The appointment can later be confirmed by the company shareholders in a general meeting as soon as possible. Also shareholders can appoint a committee to check on the various candidates who prefer to be directors; here the committee is delegated power to appoint a new director to the current existing directors. Later, the appointed director is confirmed in a general meeting (Palmer, 2016, p. 225).
For the appointment to the position of a company director for Telstra Company; one must first have that knowledge in telecommunications and innovation. This indicates that the director needs to have that clear understanding of data communications and digital disruptions. Second, directors must have that knowledge in finance and governance; this means that for the appointment to a director position one must clear knowledge in auditing, treasury, and capital markets. Third for the appointment to be a director at the company one must have that clear understanding of Telstra and industries in which the company operates. Forth, they need to have that capacity to devote at any required time and attention to all company activities (Cheffins, 2017, p. 107).
The procedures for appointment to director position starts with first reviewing the succession plans by the current board of directors. The Board of directors then makes recommendations to the company shareholders regarding the appointment or any form of re-appointment. If the shareholders access the position is truly vacant, the existing board of directors are required to determine the appropriate strategy and process of for appointment. The shareholders then select an appointment committee who are required to advertise the post of director Australian public diaries and media stating the required qualifications, experience, and skills. Candidates are them called upon to present their skills to the committee and select suitable candidates. A candidate is selected and later presented to the current board of directors for vetting and further assessment who them present the candidate if qualified to the company shareholders for approval (Barr, 2017, p. 119).
Q3) Telstra Directors’ duties
The areas of governance at Telstra company focus on five areas: board composition, performance and strategy, risk management, compliance and governance, remuneration, and refreshed Telstra code of conduct. All the company directors’ needs are in the company board. The directors are responsible in overseeing the company financial position. Second there are supposed to approve decisions of the company specifically about the company capital. Third the company directors are supposed to oversee the company external audit activities and closely monitor the company internal audit. Third, the directors are required to review all the company’s risks that have that potential of impacting the company business activities. Forth, the company directors are required to influence and monitor the company culture and reputation, ethical standards which is achieved by the company and what is not achieved. Fifth, the directors are required to access the company legal compliance, overseeing corporate governance framework which includes approving of the company code of conduct. The company directors are also required to monitor the health and safety of all its employees, especially in the current crisis of COVID-19 and environmental performance. They are also required to oversee shareholder reporting and setting out diversity objectives (Harris, 2107, p. 157)
Q4) When directors are considered breaching their duties
At first it is important to note that directors’ duties at Telstra Company must be in line with corporations Act 2001. All the stated duties are all binding to all directors within the company. The basic directors’ duties at Telstra Company are acting with diligence and care. Breach of this duty specifically involves director’s engaging in any form of risky financial transactions without ant foreseeable benefit to the Telstra Company. Second they are required to act in good faith and to the basic interest of the company. Breach of this duty involves engaging in conflict of interest. Third is not using the position of the company director improperly. Breach of this duty involves taking advantage of another company which Telstra company competitor. Lastly is not trading while the company has been declared insolvent. In case any of these breaches is said to occur within the company then the company shareholder can start proceedings against the said director personally (AMRO, 2016, p. 46).
Q5) Available defenses for directors breaching their duties
After determination of breach of duties by a certain director at Telstra company. The company shareholders are required to determine if it’s true the duties have been breached. Here the company shareholders are required to consider whether or not certain director actions of the director have been authorized by the company constitution, the company board of directors, and the company shareholder meetings. In such cases, the available defense mechanism is through a panel appointed by the company shareholders, which comprises an external entity that Australian legal officer or the court. When company directors are said to have breached their duties, they are always advised to seek any form of legal advice. Also, they are advised to review company documents to gain an understanding of the available options (Marcus, 2018, p. 15).
Q6) Consequences of breaching directors; duties
Breaching of duties by company directors can result in severe consequences. Some of the consequences include criminal sanctions example, imprisonment; this can only involve if it is proved that the director acted in bad faith or was dishonest. Second are civil sanctions that involve fines, and lastly is commercial consequences, which include taking away any form of financial benefits such as pension benefits and disqualification from their position (Gerrand, 2017, p. 57).
References
Actofcorporations, 2013. Commonwealth of Australia. Laws in Australia, III(1), pp. 15-78.
AMRO, A. C. B. B., 2016. Telstra Corporation Limited.. 3rd ed. New York: Springer Press.
Barr, 2017. Broadband bottleneck. 4th ed. Chicago: Wiley Press.
Black, A., 2014. CLERP and the new Corporations Law. 3rd ed. New York: s.n.
Cheffins, B. a. B., 2017. Outside director liability across countries. Australian Companies, I(2), pp. 90-113.
Easton, S. a. H., 2013. Agency costs at Telstra: a case study. Australian Economic Review, II(38), pp. 229-232.
Gerrand, P., 2017. Revisiting the Structural Separation of Telstra. Telecommunication Journal of Australia 54, III(2), pp. 15-68.
Harris, 2107. Relief from liability for company directors. 4th ed. Chicago: John & wiley Press.
Marcus, J. W. C. a. C., 2018. Separation of Telstra. Economic considerations, international experience, II(2), pp. 13-19.
O’Leary, 2017. Telstra sale: Background and chronology. 2nd ed. New York: John & Wiley Press.
Palmer, A. a. J. C., 2016. Telstra (Transition to Full Private Ownership) Bill. Telstra Company, III(4), pp. 221-227.
Ross, P. a. B., 2017. Downsizing and Outsourcing at Telecom New Zealand and Telstra. Telstra Company, 1(3), pp. 34-78.
