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Law Notes Business Associations Notes

Introduction To Company Constitution Organs Board Of Directors And Gm Notes

Updated Introduction To Company Constitution Organs Board Of Directors And Gm Notes

Business Associations Notes

Business Associations

Approximately 289 pages

These are comprehensive yet succinct notes. They set out the relevant legal principles, and material facts from a range of cases in order to demonstrate how those legal principles have been applied.

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BA 1-5 Intro to Constitution, Organs, Board of Directors and GM

Table of Contents

BA 1-5 Intro to Constitution, Organs, Board of Directors and GM 1

1 Introduction to the Corporation and Incorporating Under Australian Law 3

Types of business associations 3

Companies under the CA (prop v public; limited by shares/guarantee etc) under s 112 3

Proprietary vs public companies 3

Proprietary: small vs large proprietary companies 3

Types of company liability: shares vs guarantee etc 4

Deciding whether or not to incorporate 4

Registration of companies under CA 4

How to register – lodge application under s 117 4

Naming company 5

What ASIC does with registration application: s 118, 119 6

Effect of registration 6

Obligations on company - must set out name on all public docs: s 153(1) 6

Company rights 6

Legal personhood of company: s 124 7

Company’s pre-registration contract: ss 131 – 3 9

Small business guide – for proprietary companies limited by shares – see CA. 9

Appendix of statute: 9

S 45A Types of companies 9

112 Types of companies 11

113 Proprietary companies 11

114 Minimum of 1 member 12

117 Applying for registration 12

Procedures for registration – ss 117 – 121 and s 114 - detail 15

2 separate legal personality 16

Salomon 17

3 piercing the corporate veil 20

Statute: s 588G: 20

Ground 1# Fraud or improper conduct (Gilford; Jones v Lipman) 20

Ground 2#: Agency (SSK) 20

Ground 3#: Issues when a corporate group and involuntary creditors 22

4(A) Corporate Constitution and decision making 22

Constitution: adopting, modifying, distributing, its effect, limiting effect: ss 136 – 140 23

S141 – Table of Replaceable Rules 25

4(B) Board of Directors 27

1. Intro: Powers of directors v shareholders 27

Principles: re Directors’ Independence in the Exercise of their Powers: Automatic Self-Cleansing; Marshall’s Valve Gear 29

Cases: Automatic Self-Cleansing; marshall’s valve gear; john shaw 29

2. Have directors been validly appointed? Appointment, Remuneration, and Cessation of Appointment 30

Corporations Act 2001 Part 2D.3 32

Executive Directors’ Service Contracts 34

3. Has the Board made an effective decision? s 248A - G 34

4(C) General Meeting: Part 2G.2 ss 249 onwards 38

Procedure for general meetings and passing resolutions 39

2. Have the disclosure obligations been met? s 249L; Holmes; Fraser v NRMA; Re Marra; also s 12DA 45

3. If the formalities haven’t been complied with, could the resolution of the general meeting still be valid under the doctrine of unanimous consent? 51

4. Issues with GM curing contraventions of Director? 51

1 Introduction to the Corporation and Incorporating Under Australian Law

Types of business associations

Three types of business associations: sole trader, unincorporated associations and corporations.

  1. Sole trader: individual

  2. Unincorporated associations: (partnerships, limited partnerships, joint ventures, syndicates, trusts, unincorporated non-profit associations),

    1. Note on unincorporated associations: s 115(1): Cannot have a partnership that has as an object gain for itself or members, and is greater than 20 people. Have to incorporate.

    2. (exception – for some professions or calling specified since ethical rules or regulating statute of some professions have traditionally restricted practice in incorporated form. See Corporations Regulations reg 2A.1.01

  3. Corporations include:

  • Associations incorporated under associations incorporated act

  • Co-ops

  • Chartered corporations

  • corporations created by special act of pmt

  • banks and insurance companies

  • ATSI corporations

  • Credit unions, permanent buildings societies and friendly societies

  • Companies under the CA: under s 112 below

    1. A company registered under CA or predecessor statute is referred to as a company: s 9 , 1378

    2. Where CA refers to corporations and body corporate extends to reach of provisions to corporations formed under other statutes or sources of power and to unincorporated bodies with some corporate characteristics: s 9

Companies under the CA (prop v public; limited by shares/guarantee etc) under s 112

Proprietary companies:

(Definition: company that is registered as or converts to a proprietary company under the CA: s 45A(1)

Limited by shares
Unlimited with share capital
Public companies: Limited by shares
Limited by guarantee
Unlimited with share capital
No liability company
Proprietary vs public companies
  • Proprietary companies: (no more than 50 non-employee shareholders (s 113(1), and cannot engage in any behavior which would require disclosure under part 6D to investors ( s 113(3)):

    • Limited by shares

    • Unlimited with share capital

  • Public companies: (Greater disclosure requirements: need to produce both financial reports and have external auditor.)

    • Limited by shares

    • limited by guarantee

    • unlimited with share capital

    • no liability ( s 112(2)

Proprietary: small vs large proprietary companies
A small proprietary company generally has reduced financial reporting requirements (s 292(2)).
Proprietary companies

Small proprietary company: S 45A(2)

If it satisfies at least 2 of s 45A(2)(a), (b) or (c).

(a) consolidated revenue for financial year of company and controlled entities is less than $25 mill

(b) value of gross assets at end of financial year of company and controlled entities less than $12.5 mil

(c) company and entities it controls have fewer than 50 employees at end of financial year

Large proprietary company: satisfies at least 2:

  1. consolidated revenue for financial year of company and controlled entities is $25 mill or more

  2. value of gross assets at end of financial year of company and controlled entities is $12.5million or more

  3. company and entities it controls have 50 or more employees at end of financial year

Types of company liability: shares vs guarantee etc
  • Types of company liability:

    • Limited by Shares: Liability is limited to the paid up value of your share plus any outstanding amount on partially paid shares.

    • Limited by Guarantee: Limited to...

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