Corporate Law deals with everything to do with a corporate entity. It deals right from the formation of a company to its operations and continues till the extent of liquidation of the company.

A corporation is a large company or a group of companies which are authorized to act as a single entity and recognized as such in the eyes of law. They enjoy the rights and responsibilities that an individual possesses.

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Question: 'Is it in the interests of a corporate entity to be as profitable as possible, for example, or very large, or socially responsible? Given that these questions seem incapable of being answered, it would be impossible to assign any definite content to a duty framed in terms of benefiting the enterprise as such.'(Parkinson J Corporate Power and Responsibility, (2000) Oxford University Press, page 77)

Critically discuss the above statement in light of the statutory duty of directors introduced by section 172 Companies Act 2006 and legislative obligations relating to broader issues of good corporate governance.

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Answer: (answered by our corporate law assignment experts in Australia)

Introduction

A majority of businesses usually exists for the sole purpose of generating income. This income is generated in the form of profits. Profits are calculated as the excess amount of money earned above the normal cost of production. This income is used to run all the operations of the company and acts as a source of income for the entrepreneurs of the business. Generation of profit forms the most basic purpose of an organization. However, organizations that are in existence for the purpose of generating a profit are referred to as not-for-profit organizations. For the business whose intention is to generate profit, it is in their best interests to ensure that they generate as much profit as possible. This can be achieved by reducing the operational costs of the business to be as low as possible. This will increase the profit margins for the business.

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