Contortions of Corporate Law

Question: Discuss about the Contortions of Corporate Law. Answer: The Hardie Group was engaged in the manufacture of the products of manufacture of asbestos for the last seventy years in the territories of NSW, Western Australia, and Queensland. The product of asbestos includes brake lining, cement, piping, and insulation. The Hardie Group was not the sole company to face the claims of compensation regarding asbestos. The estimated value of the claims of Asbestos in Australia is approximately dollar six billion. James Hardie made the immigration to the territory of Australia in the year of 1888 from Scotland. The Company was indulged in the mining of companies. In the twentieth century, the Company became the biggest distributor and manufacturer of the products of building, pipes, insulation and the brake linings. In the territory of South Australia, New South Wales, Victoria, Western Australia and Queensland, the Hardie Group created the plant of asbestos. When people started working with the products of asbestos, they started to develop certain diseases relating to pleural abnormalities. The abnormalities were malignant mesothelioma and asbestosis. In the month of December in 2001, the shareholders of the Hardie Group made a strong point to by the way of voting to make the relocation of the Company from territories of Holland to the territories of Ireland regarding a parent company. The decision of moving from the territory of Netherland to Ireland was considered as a strategy to make the separation of the company from the from the liabilities of the compensation of liabilities. Hence, in accordance to the voting of the shareholders the company moved from the territory of Holland to the territory of Ireland. The procedure of moving involved in a transaction of making the transform the Industries of James Hardie NV to James Hardie Industries SE. In the year of 1978, the pleural abnormalities and the other diseases related to asbestos started to creep in among the initial workers who are involved with the asbestos. There were several news paper articles in the West Australian news paper regarding the impact of the use of asbestos in the health of the workers of asbestos and their families. While several other companies were involved in the claims of the asbestos, more than fifty percent of the claim of asbestos was brought against the Group of James Hardie before the NSW Dust Disease Tribunal in the year of 2002. The term corporate social responsibility refers to the form self regulation that exists in the companies for the integration in the model of business. The policy of corporate social responsibility acts and functions as a mechanism of self regulation wherein any business ensures and monitors its compliance that is active with the legal spirit. The corporate social responsibility also refers to the ethical standards and the international norms that are considered by the companies. The James Hardie group also possesses certain social responsibility towards the society. The primary responsibility lies in the fact that the compensation has to be provided to the people who are suffering from the direct use of asbestos. It is the responsibility of the company to first settle all the claims that are against the Company. After making the movement to the Netherlands, the James Hardie Group hardly received any tax benefits than expected. The liabilities of the Group reached A$574.3 million. The MCRF then asked for extra funds from the Group. The Group then offered the MCRF an amount of A$18 million of its assets. The offer was rejected by the MCRF. The liabilities of the Group increased to A$1.573 billion in the year 2003. The shortfall of the funding emerged as the greatest concern and the chances for the victims to receive the compensation were less. After this, the James Hardie Group made the refusal to accept any further claims or liabilities on that basis that the James Hardie Group and the MCRF were two separate legal enterprises. On the 12th of February in the year 2004, there held a judicial inquiry that was commissioned by the Government of NSW. The findings that emerged out of the judicial inquiry was very critical for the management of the Hardie Group. The findings of the inquiry made the stipulation of the fact that the estimation of the liabilities of Hardie Group was based on predictions that were unfounded. Hence, those predictions were not adequate. The need for lifting the corporate veil of the James Hardie Group was in highly in demand. The lifting of the corporate veil or the piercing of the veil is regarded as the legal decision that is taken to treat the duties and the rights of any corporation those liabilities and rights of the shareholders. In the general terms, the corporations or the companies are regarded as the separate legal enterprise that is responsible solely for its debts. The countries were adopting the principles of the Common Law recognize the element of the separate entity of corporations but also possess the need to pierce the corporate veil in several exceptional circumstances. In this respect, a simple can be stated. In case, any businessman acting as the director of any corporation left his job by signing a contract that he would not compete with the company in future. Now he opens another company that competes with the company. He can take the plea that it is the company and not him who is competing with the company. Hence, the need of lifting of corporate veil arises in these circumstances. The judicial enquiry above-stated was conducted by the Government of NSW was for lifting the corporate veil. The judicial enquiry revealed that the value of the investments that were held by the Amaca, the Amaba were subject to several conditions, and that were relating to a single fact these subsidiaries were not separate from the James Hardie Group. The enquiry also made the establishment of the fact that the James Hardie Group was under no obligation in the legal terms to provide for the compensation. Though the enquiry held that the Hardie Group was under no legal obligation, there was immense social and political on the Group to make the deal of compensation. There started the global movement of union against the Hardie Group and for making ban on the products of the Group. The law has failed in lifting the corporate veil is evident when the judicial enquiry has made the consideration and the establishment of the fact that the Hardie Group is not liable to make the payment of the compensation and claims. After the conducting the judicial enquiry the prosecutors brought the criminal and civil charges against the CEO and the senior executives for indulging into making fraudulent statements in relation with the MCRF. In the year of 2007, the members of the Group was charged by the ASIC for making the breach of the Corporations Act of 2001. The breach of the Corporations Act included the breach of the duties of the directors to act with diligence and care. After the results of enquiry, the Hardie Group entered into negotiations with the trade unions and the governments to make the establishment of certain system of compensation fund for the victims who are eligible for the products of the products of Hardie Group. In the year of 2009, the NSW Supreme Court banned the previous chairwoman and the previous directors from acting as the directors for a term of five years. The previous CEO of the Company named Peter McDonald was banned for a term of fifteen years and was subjected to a fine of $350000. Reference List Spender, P. (2005). Second Michael Whincop Memorial Lecture WEAPONS OF MASS DISPASSION James Hardie and Corporate Law.GR/FFITH LAW REVIEW, 14(2), pp.280-292. Glasbeek, H. (2012). Contortions of Corporate Law.Australian Journal of Corporate Law, 27, pp.132 - 167. von Nessen, P. and Herzberg, A. (2011). James Hardies asbestos liability legacy in Australia: Disclosure, corporate social responsibility and the power of persuasion.Australian Journal of Corporate Law, 26, pp.58-85. von Nessen, P. and Herzberg, A. (2011). James Hardies asbestos liability legacy in Australia: Disclosure, corporate social responsibility and the power of persuasion.Australian Journal of Corporate Law, 26, pp.58-85. Glasbeek, H. (2012). Contortions of Corporate Law.Australian Journal of Corporate Law, 27, pp.132 - 167. Spender, P. (2005). Second Michael Whincop Memorial Lecture WEAPONS OF MASS DISPASSION James Hardie and Corporate Law.GR/FFITH LAW REVIEW, 14(2), pp.280-292.