If found guilty they should be liable for imprisonment and repayment of funds dishonestly obtained

Question 1: Directors acting dishonestly should be criminally investigated If found guilty they should be liable for imprisonment and repayment of funds dishonestly obtained Discuss Use Agency theory to support your answer TZ Limited is a Sydney-based technology company It is in the business of “internet of things” (IOT) locking device technology IOT objects are objects that have built-in intelligent with a unique profile and with the ability to transfer data over a network without requiring human-tohuman or human-to-computer interaction On February 10th, 2017, The Sydney Morning Herald published an article titled “Former TZ boss Andrew Sigalla jailed for up to 10 years for $9 million fraud” which was written by Michaela Whitbourn, a Legal Affairs and Investigative Reporter at The Sydney Morning Herald She argued that company directors have been neglecting their legal duties and it resulted in the Chairman defrauding the company They failed to act with propriety Directors only acknowledged their legal duties when they saw “the prospect hefty penalties if they fail to meet their legal duties” The corporate watchdog started to warn the company directors when a case already happened It is then too late for a warning It is evidence that the company directors think lightly of their duties and their loose action follows As a result, the Chairman had to go behind the bar and the money taken could not be taken back An agency relationship is formed when one or more principals (e.g an owner) engage another person as their agent (or steward) to perform a service on their behalf (ICAEW, 2005) Agency theory is defined as a point of view at the problem that can arise in a business relationship between one person delegates decision-making authority to another (Hill & Jones, 2007) This provides a way to understand why managers not always act in the best interests of stakeholders and why they might sometimes behave unethically and perhaps also illegally They are motivated by different self-interests In the case of Andrew Sigalla, the agency relationship arose when Andrew Sigalla, the principal, delegated decision-making authority to his company directors, his agents Andrew Sigalla represents shareholders of the company However, only he was found guilty of 24 counts of defrauding the company As he delegated his decision-authority to his agents, they had the rights to make decisions on behalf of him However, the company directors did not conduct their legal duties substantially Despite the fact that the Chairman took the company’s money, the former Board of Directors shown no signs of notice on the taken money Not until the former Board of Directors was replaced in 2009, was Sigalla questioned for his certain payments he made to take the company’s money In other word, the former Board of Directors should have known what the Chairman had been doing Nevertheless, they did not act to prevent the Chairman from making illegal payments With the delegation of decision-making authority, the company directors should have been able to stop the Chairman from defrauding the company Therefore, they should be held liable for Andrew Sigalla’s frauds too  ... decision-making authority, the company directors should have been able to stop the Chairman from defrauding the company Therefore, they should be held liable for Andrew Sigalla’s frauds too ... word, the former Board of Directors should have known what the Chairman had been doing Nevertheless, they did not act to prevent the Chairman from making illegal payments With the delegation of decision-making... company’s money, the former Board of Directors shown no signs of notice on the taken money Not until the former Board of Directors was replaced in 2009, was Sigalla questioned for his certain payments