Social Capital And Sustainable Development

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Social Capital And Sustainable Development

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Question:
Discuss about the Social Capital and Sustainable Development.

Answer:
Introduction:

Mario and his siblings are angry about the discontent that Jason has been stirring up among the Galli grandchildren, some of whom they see as lazy and undeserving. So, the board of GML resolves not to pay a dividend to the A Class shareholders this year and instead, to retain earnings to fund the development of the organic vineyard at Robinvale. The Corporation Act 2011 section 254W stated the dividend rights of the share holders which defines the various facts where the company shares in A class of shares holders has the equal dividend rights with the other shareholders of the company. However, the board of GML resolves not to pay a dividend to the A Class shareholders this year (Alstadsæter, Jacob and Michaely 2017).
The Corporation Act 2001 of Australia stated the acts for the shares and shareholders right to have the dividend amounts. The company earns their dividend amount out of the expenses from their profit which the shareholders have right to claim the amounts from the profits. The directors of the company hold the duty to provide equal amounts of dividend capital to all shareholder of the company (Graetz and Warren2016). Along with that they also include the partly paid shares or permanent shares payment to the shareholders as per the legislations of the Corporation Act 2001 of Australia. They hold other rights too. Shareholders of the company have the rights to attend and participate in the meetings of the company which are published and proposed by the directors of the same company. They also hold the rights to receive annual reports of the company which has been given in the Annual General Meeting. The shareholders have right to receive the dividend amount which has been company has earn out of the profit or extra rewards and must distribute among the shareholders (Alstadsæter, Jacob and Michaely 2017).
The shareholders has right to participate and present their decision in the meetings of the company where company has decides about the Statues and the constitution of the corporation as per the decision of the members of the board. As being the shareholders of the company they also hold the rights to check every minute book and security registers of the corporation (Alstadsæter, Jacob and Michaely 2017). The section 254W of the Corporation Act stated such legislations in the dividend rights that the A Class of shares of the public company has the equal dividend rights along with the other shareholders of the company. It should be provided by the company under some circulation and resolution as per the constitution of the corporation. The A Class of shares holders has rights to claim the dividend amounts from the profits of the company (Boutilier 2017).
Therefore as per the case study, Galli grandchildren have rights to take legal action for nonpayment of the dividend capital out of the profit of the corporation. It is the duty of the directors that they should look after such matters about the payment of the dividend amounts to the shareholders of the company but instead of this they want to retain earnings to fund the development of the organic vineyard at Robinvale. Therefore the board of directors has breach their duties under the section of 181, 182, 183 and 184 of the Corporation Act 2001 (Alstadsæter, Jacob and Michaely 2017).
At FWPL, Mario and Nick Galli are concerned about the level of dissatisfaction among the A Class shareholders. They would like FWPL to be able to buy out the A Class shareholders at a value to be fixed by an independent expert. Therefore according to the Corporation Act if they want to buy a share buyback it will become a profitable way for them. The share buyback is a process which makes a strategic way for the company for making profits for them. In this process the company buys their own stock of shares. The Company prepare for an offer where they buy back their own share from the shareholders of the company for getting benefits or rewords from share buyback process. Therefore the company offers to the shareholders for buying the shares from the shareholder of the company and after the shares are sold back to the company from that moment the company cancel the shares with the same shareholders (Alstadsæter, Jacob and Michaely 2017).

For the private company the process has equal access to the other shareholders as per the equality and some selective shares which only offered for the selected shareholders. Under this process especially it uses the dividend component and capital component. Therefore the share buyback will able to lowering shares numbers of the company which helps to increase the share price and then company cash back the amounts to the shareholders and any other investors who invest in the company. The capital amount of the stock of the company which helps them to pay the surplus cash to the investors and make them believe that the company will able to pay the share amount (Boutilier 2017).
Alternatively FWPL wanted to get rid of the A Class shares by way of a reduction of capital. Therefore they need to reduce the share capital amount. Under the section 256B of Corporation act stated the legislation which has several terms where the company may make reduction without the authorization. However, the corporation may make reduction of the capital amount to the all shareholders not otherwise unauthorized if the company is able to reduce the share capital amount in a fair and reasonable reason (Yagan 2015).
Therefore if there is no prejudice is exists then it is the ability and liability for the company to pay the reduction amount to its creditors according to the Corporation Act 2001. It also legislate the provisions by the shareholders to reduce the share capital under the section 256C of the Corporation Act 2001 (Boutilier 2017). Now if the company canceled the uncalled capital, under this process it helps to reduced of the share capital. In addition the reduction of the share can be occurring by the equal reduction or the selective reduction of the shareholders. The equal reduction only applicable for the ordinary shares which must applied to each and every holder of ordinary shares for the ordinary shares and which must applied to each and every holder of ordinary shares of that particular corporation (Graetz and Warren2016). Therefore they are bound to follow certain terms of reduction under the Corporation Act 2001 where reduction amount should be equal for the every holder of the ordinary shares in the company. When any situation has arises the selective reduction of share capital none of the conditions or terms is allowed to apply as per the selective shareholders from where the selective reduction will be occurring. FWPL company directors are wanted to reduce the share capital from the shareholders. They must propose a form 2560 notification where they provide the notice of the meeting to pass the resolution for the reduction of the share capitals and submitting every document which are related to the reduction and the notice of the meeting should be sent to the shareholders (Yagan 2015).

Reference
Alstadsæter, A., Jacob, M. and Michaely, R., 2017. Do dividend taxes affect corporate investment?. Journal of Public Economics, 151, pp.74-83.
Boutilier, R., 2017. Stakeholder politics: Social capital, sustainable development, and the corporation. Routledge.
Dent Jr, G.W., 2014. Corporate Governance Without Shareholders: A Cautionary Lesson from Non-Profit Organizations. Del. J. Corp. L., 39, p.93.
Graetz, M.J. and Warren, A.C., 2016. Integration of corporate and shareholder taxes.
Grinblatt, M. and Titman, S., 2016. Financial markets & corporate strategy.
Knepper, W.E., Bailey, D.A., Bowman, K.B., Eblin, R.L. and Lane, R.S., 2016. Duty of Loyalty (Vol. 1). Liability of Corporate Officers and Directors.
Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and practices. Oxford University Press, USA.
Yagan, D., 2015. Capital tax reform and the real economy: The effects of the 2003 dividend tax cut. The American Economic Review, 105(12), pp.3531-3563.. Capital tax reform and the real economy: The effects of the 2003 dividend tax cut. The American Economic Review, 105(12), pp.3531-3563.

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