Fiscal policy, taxes, government debt and budget deficits.

There are two main types of fiscal policy: pro-cyclical and anti-cyclical.

Pro-cyclical – spending goes up, taxes go down in the boom. It gives the boost to the development, but doesn’t allow to collect enough money in reserves in case if the economy is overheated or slowed its pace of development.

Find a proper policy for a current situation in world economy. Budget deficit – when the government spends more that earns from taxes and other operations. Reason: to fuel up economic recovery in times of turmoil or just because it became a necessity. Drawback: Future generations will bear the consequences.

Government debt – the same drawback. More of debt – more expensive new financing is and higher burden is for future generations. If government debt is rising, reasons have to be discovered and problems have to be addressed. For instance, by devaluating own currency. It is a big blow on those who keeps money in currency or has credits in currency, but it makes an obstacle for importing and makes exports cheaper.

Taxes – find the limit, how high should be those taxes.

54. Liability of directors and officers.

The duties of a director have been established through statutes, regulations and case law and can be broken down into the following areas:

1) Duty of care and skills (to act with ‘the care an ordinary man would take in the same circumstances on his own behalf’ and with the skill expected from someone with his ‘particular knowledge and experience).

2) Fiduciary Duty (act honestly, in good faith and best interest of the company with no conflicts of interest)

3) Statutory Duty (obligation imposed by corporate legislation, such as (1) disclosure of personal-interest contracts, (2) filing of required information with the appropriate authorities, (3) keeping of statutory books).

The claims against directors may arise from unhappy Shareholders, Creditors, Regulators, Employees, Auditors, Liquidators, Customers, Suppiers.

Examples:

1) Mergers and Acquisitions – Following takeover the acquired company’s shareholders commence legal action against its former directors alleging that they were misled about the terms of the acquisition.

2) Environmental – Following the spillage of a pollutant proceedings are brought by the Environment Agency against the Directors.

3) Employment Practices – An employee takes action against a supervisor for harassment and discrimination.

Future:

• Regulation is increasing

• There is a greater awareness on the part of third parties of the duties and responsibilities of a Director

• Shareholders and other third parties are becoming more aware of their rights

• Lawyers are now able to act on behalf of plaintiffs on a no win no fee basis.

Date: 2015-02-03; view: 591