Uni Melb Corporations Law 85% Exam Notes

Description

Exam Start Checklist: 4 Topic 2 5 A Checklist: 5 B Step 1 – Incorporation 5 Registration – Other matters 5 C Step 2 – Separate Legal Entity 8 D Step 3 – corporate veil 9 Step – lifting corporate veil, company as an instrument of sham 9 The company as an instrument of sham 9 Step – lifting corporate veil, company as an agent of the shareholder 11 The company as agent of the shareholder 11 Step – corporate veil in corporate groups 12 CORPORATE GROUPS 12 S 46(a)(i) – Controlling the composition of the board test 14 S 46(a)(ii) – Ability to cast test 15 S 46(a)(iii) – Holding company owns more than 50% of subsidiaries shares 15 S 50(c) – The holding company is a ‘grandparent’ or ‘great-grandparent’ of the subsidiary 16 s 50AA - One ‘controlling’ the other (broad concept of control) 16 Subsidiary company v holding company 16 Types of Companies 16 S 122 CA – Types of Companies 16 Classification according to member’s liability 17 I. CLASSIFICATION ACCORDING TO MEMBERS LIABILITY 17 Limited liability companies 17 Company limited by guarantee 18 No liability companies 19 Unlimited liability companies 19 Classification based on whether public or proprietary company 20 CLASSIFICATION ACCORDING TO WHETHER PUBLIC OR PROPRIETARY 20 Public companies (Ltd) 20 Proprietary companies (Pty Ltd) 20 II. Topic 3 - Managing companies 23 Decision-making organs of the company 23 Requirements for directors 23 Internal governance, management rules and the statutory contract 23 Enforcing Constitution 24 Replaceable rules 26 Management of the company 27 General provisions – board of directors 27 Proprietary company 28 Public company 29 Types of directors 30 Decision making 32 Director’s decision making 32 Members’ decision making 34 Powers of Shareholders 40 PROCEDURAL IRREGULARITIES 51 III. Topic 4 55 A Checklist: 55 B Flowchart: 57 Criminal and tort liability 57 Criminal liability 57 Tort liability 59 C Cases 60 IV. Duties 62 Overview of duties 62 A Who owes duties – directors and officers 62 B Duty to not trade while insolvent – s 588G 64 1. Holding co liability 588V 72 S 46(a)(i) – Controlling the composition of the board test 73 S 46(a)(ii) – Ability to cast test 74 S 46(a)(iii) – Holding company owns more than 50% of subsidiaries shares 75 S 50(c) – The holding company is a ‘grandparent’ or ‘great-grandparent’ of the subsidiary 75 s 50AA - One ‘controlling’ the other (broad concept of control) 75 C Duty to act in good faith and in the best interests of the Co – ss 181(1)(a), general law 77 D Duty to act for a proper purpose – ss 181(1)(b), general law 80 E Duty of care and diligence – ss 180; Duty of care, skill and diligence – general law 83 F Conflict rule – general law / equitable fiduciary duty (Boardman; Bell Group) 93 G Profit Rule – general law / equitable fiduciary duty (Regal; Qld Mines) 97 H Duty not to misuse position or information – 182, 183 101 I Duty to notify + not vote if material personal interest – 191, 195, 194 102 The interest: 104 Pty Co + other Ds are aware of nature + extent of interest + its relation to affairs of Co; or 104 All the following conditions are satisfied (, notice has already been given):; or 104 D has given standing notice of the nature + extent of interest under s 192 and notice is still effective in relation to interest 105 1. Resolution needs to identify D + interest + relation to Co 105 Resolution needs to say Ds satisfied the interest shouldn’t stop D voting or being present 105 J Related Party Transactions – Ch 2E, 208, 209 106 a) D of Public Co 107 b) Controlling entity’s Ds 107 c) People making up controller if Public Co is controlled by an entity that isn’t body corporate 107 d) Spouses of people referred to in (a), (b) and (c) 107 1. Parents 107 2. Children 107 V. Consequences of breaching duty 112 VI. Shareholder Actions 114 A Effect of ratification – only for conflict & profit rules, not statutory breaches 114 B Consti is a contract btw SHs and Ds – s 140 115 C Equity 115 D Statutory derivative action – ss 236-237 119 E Winding up – order made under s 461 122 F Oppression – 234, 232 125 1. (a) Co be wound up 129 (b) Co’s constitution be modified or repealed 129 (c) Regulating conduct of co’s affairs in the future 130 (d) Court can force the purchase of any shares by any SH 130 (e) Court can force the purchase of shares with an appropriate reduction in co’s share capital 130 (f) Institute/prosecute/defend/discontinue specific proceedings, or authorise a SH to (considered in Re Spargos) 130 (h) Appointing a receiver or manager of any or all of the co’s property (Jenkins v Enterprise) 130 (i) Restraining a person from doing a specified act or (i) requiring a person to do an act 130 G Statutory injunction s 1324 131 Breach CA 131 Attempt to breach CA 131 (c) aiding, abetting, counselling or procuring a person 131 (d) inducing or attempting to induce, whether by threats, promises or otherwise 131 (e) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention 131 (f) conspiring with others to contravene 131 VII. Contractual liability 133 A Directly s 127 133 B Indirectly (through an agent) s 126 134 C Assumptions an outsider can make that help them bind the Co – 128, 129 136 VIII. Corporate criminal and tort liability 140 IX. Attributing liability of people to Co under a civil provision of CA – 1317QE 140 X. Share Capital 141 A Capital reduction – 259B, 259D 141 B NOT EXAMINABLE - Share Buyback – 257A 144 C NOT EXAMINABLE - Dividends – 254T 145 D Providing financial assistance – 260A 146