200183 Law of Business Organisations Western Sydney University

Western Sydney University

200183 Law of Business Organisations Western Sydney University

Final Exam Notes SEPARATE LEGAL ENTITY: LIABILITY OF COMPANY FOR CLAIMS OF OWNER/EMPLOYEE 3 ………………………………… SEPARATE LEGAL ENTITY: PERSONAL LIABILITY OF OWNERS …………………………………………………………….4 SEPARATE LEGAL ENTITY: EXISTANCE OF COMPANY WITHOUT DIRECTORS ………………………………………………5 SEPARATE LEGAL ENTITY: LIFTING OF CORPORATE VEIL …………………………………………………………………6 SEPARATE LEGAL ENTITY: LIFTING OF CORPORATE VEIL IN CORPORATE GROUPS ……………………………………….7 PROMOTERS: CONSIDERATION ………………………………………………………………..8 PROMOTERS: LIABILITY FOR PRE-REGISTRATION CONTRACT ……………………………………………….9 PROMOTERS: FIDUCIARY DUTIES (SECRET PROFIT) ………………………………………….10 CONSTITUTION: CONTRACT BETWEEN COMPANY AND MEMBERS ……………………………………………..11 CONSTITUTION: CONTRACT BETWEEN COMPANY AND DIRECTORS ……………………………………………12 CONSTITUTION: OBJECT CLAUSE ……………………………………………………………13 DIRECTORS: CONSIDERATION ………………………………………………………………..14 MEMBERS’ POWERS TO MANAGE COMPANY ………………………………………………….15 COMPANY’S LIABILITY UNDER CONTRACT ……………………………………………………16 COMPANY’S LIABILITY IN TORT ………………………………………………………………17 COMPANY’S LIABILITY IN CRIME ……………………………………………………………..18 MEMBERS’ MEETING: ABILITY TO CALL MEETING …………………………………………….19 MEMBERS’ MEETING: IRREGULARITIES ……………………………………………………….20 MEMBERS’ MEETING: REMOVING DIRECTORS ………………………………………………..21 DIRECTORS: DUTY OF CARE ………………………………………………………………….22 DIRECTORS: DUTY TO AVOID CONFLICT OF INTEREST – DUTY OF GOOD FAITH (e.g. SECRET PROFIT) ……………………………………………………………………….24 DIRECTORS: RELATED PARTIES TRANSACTION ……………………………………………….26 DIRECTORS: DUTY TO PREVENT INSOLVENT TRADING …………………………………………………….27 DIRECTORS: DUTY TO ACT FOR PROPER PURPOSE ………………………………………………………..28 DIRECTORS: DUTY TO ACT FOR PROPER PURPOSE IN RELATION TO SHARE ISSUE 30 ………….. MEMBERS’ REMEDIES: EXPROPRIATION OF SHARES ………………………………………….32 MEMBERS’ REMEDIES: DERIVATIVE ACTION …………………………………………………..33 MEMBERS’ REMEDIES: OPPRESSION ………………………………………………………….34 1 Downloaded by Homework Score ([email protected]) lOMoARcPSD|5960618MEMBERS’ RIGHTS: ACCESS TO BOOKS ………………………………………………………35 CAPITAL MAINTENANCE: SHARE BUY-BACK AND REDUCTION OF CAPITAL 36 ………………….. CAPITAL MAINTENANCE: DIVIDENDS OUT OF DEBT ………………………………………….37 FUNDRAISING: PROPRIETARY COMPANY ……………………………………………………..38 FUNDRAISING: PUBLIC COMPANY …………………………………………………………….39 FUNDRAISING: MISLEADING INFORMATION IN DISCLOSURE DOCUMENTS 40 …………………… PRIORITY OF CHARGES ………………………………………………………………………41 EXTERNAL ADMINISTRATION ………………………………………………………………….42 WINDING-UP ………………………………………………………………………………….44 VOIDABLE TRANSACTIONS ……………………………………………………………………45 2 Downloaded by Homework Score ([email protected]) lOMoARcPSD|5960618SEPARATE LEGAL ENTITY: LIABILITY OF COMPANY FOR CLAIMS OF OWNER/ EMPLOYEE STEPS: • Apply principle of Separate Legal Entity first • Check any exceptions ❑ PTY LTD is a proprietary company because it has PTY in its name. ❑ LTD is a public company because it has no PTY in its name. All the sections referred to in the issues are from the Corporations Act (Cth.). ISSUE: Is liable for injuries of <owner/employees>? Can claim payment of debentures? LAW: – SOLOMON’S CASE states that a company is a separate legal entity different from its owners or managers. – s119 states that a company is a separate legal entity coming into existence on registration. – s124(1) states that a company has full legal capacity. APPLICATION: is a registered company and therefore a separate legal entity different from . As such, has full legal capacity to contract: there is an employment contract between and since <owner/employee> is an employee of . The courts do not regard and as one due to the concept of separate legal entity. Since <owner/employee> was injured during work, XYZ is liable for these injuries. is a registered company and therefore a separate legal entity different from . As such, has full legal capacity to contract: there is debenture contract between and since <owner/employee> holds debentures of . The courts do not regard and as one due to the concept of separate legal entity. CONCLUSION: is liable for injuries of <owner/employees>. can claim payment of debentures. 3 Downloaded by Homework Score ([email protected]) lOMoARcPSD|5960618SEPARATE LEGAL ENTITY: PERSONAL LIABILITY OF OWNERS STEPS: • Apply principle of Separate Legal Entity first • Check any exceptions ❑ PTY LTD is a proprietary company because it has PTY in its name. ❑ LTD is a public company because it has no PTY in its name. All the sections referred to in the issues are from the Corporations Act (Cth.). ISSUE: Are owners of a company personally liable for debts of the company? LAW: – SOLOMON’S CASE states that a company is a separate legal entity different from its owners or managers. – s119 states that a company is a separate legal entity coming into existence on registration. – s124(1) states that a company has full legal capacity. APPLICATION: is a registered company and therefore a separate legal entity different from . The courts do not regard and as one due to the concept of separate legal entity. CONCLUSION: Creditors cannot hold of personally liable for debts of the company.

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