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Type Of Director Duties Based On Enron Case

Type Of Director Duties Based On Enron Case

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Published by misseiza
Type Of Director Duties Based On Enron Case From The Perspective Company Law In Malaysia
Type Of Director Duties Based On Enron Case From The Perspective Company Law In Malaysia

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Categories:Types, School Work
Published by: misseiza on Apr 13, 2009
Copyright:Attribution Non-commercial

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02/07/2013

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CONTENTPageCONTENT1CHAPTER 1INTRODUCTION 2-3
1.1Introduction 21.2The Issue 3
CHAPTER 2ENRON CORPORATION4-7
2.1Enron : A Background42.2Enron Scandal52.3Creative Accounting : The Special Purpose Entities (SPEs)6
CHAPTER 3ENRON DIRECTORS8-10
3.1Enron Board Of Directors83.2The Role Of Board Of Directors In Enrons Collapse & Bankruptcy9
CHAPTER 4OUR LAW PERSPECTIVE11-16
4.1From The Perspective Of Company Law In Malaysia114.1.1Duty To Acting Bona Fide114.1.2Duty To Act For Proper Purposes124.1.3Duty To Avoid Conflict Of Interest134.1.4Duty Of Care, Skill And Diligence134.2SPEs In Malaysia14
CHAPTER 5CONCLUSION17-19
5.1Conclusion175.2Recommendations18
REFERENCES20
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CHAPTER 1INTRODUCTION1.1Introduction
Theoretically, the control of a company is divided between two bodies: the board of directors,and the shareholders in general meeting. In practice, the amount of power exercised by the boardvaries with the type of company. In small private companies, the directors and the shareholderswill normally be the same people, and thus there is no real division of power. In large publiccompanies, the board tends to exercise more of a supervisory role, and individual responsibilityand management tends to be delegated downward to individual professional executive directors(such as a finance director or a marketing director) who deal with particular areas of thecompany's affairs.Another feature of boards of directors in large public companies is that the board tends tohave more de facto power. Between the practice of institutional shareholders (such as pensionfunds and banks) granting proxies to the board to vote their shares at general meetings and thelarge numbers of shareholders involved, the board can comprise a voting bloc that is difficult toovercome. However, there have been moves recently to try to increase shareholder activismamongst both institutional investors and individuals with small shareholdings.It is worth noting that in most cases, serving on a board is not a career unto itself. Insidedirectors are not usually paid for sitting on a board in its own right, but the duty is insteadconsidered part of their larger job description. Outside directors on a board likewise arefrequently unpaid for their services and sit on the board as a volunteer in addition to their other  jobs.
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1.2The Issue
As a director of a company, the responsibilities are set out in the Company Law ("the Law").Failure to fulfill the duties may lead to being sued or prosecuted. Enron case may explain someof the major duties of directors and issues facing directors in running a company. This includesecurity fraud, bank fraud, money laundering, making false statement, misleading the public andinsider trading doing by the Enron former directors. This case will give a reality scenario aboutwhat happen in real business now. It will also lead us to the main problem about theresponsibilities and duties of the directors from the perspective of Company Law in Malaysia.
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