HD Corporations Law Exam Summary

Description

I . DIRECTORS DUTIES (Definitions, s180, CL Duty of Care and Defences) 5 Exam Questions to Consider… 5 Is the accused a Director or Officer? What is a director? 5 Types of Directors 7 ASIC v King 7 Shafron v ASIC 8 Deputy Commissioner of Taxation 8 Yasseen 8 ASIC v Citigroup 8 Grimaldi 9 Morley 9 Duties – Has [accused] breached a statutory obligation/fiduciary duty? 9 Statutory Duty of Care, Skill and Diligence (s180(1)) 9 Defences 11 The business judgement rule (s180(2)) 11 Delegation (s190(2)) 12 Reliance (s189) 13 ASIC v Macdonald 13 Relief under s1318 – Exoneration by court 14 The CL Duties of Care, Skill and Diligence 14 CL Duty of Bona Fide – the Duty to act in the best interests of the company 14 Common Law 14 Group Scenarios 16 II. DIRECTORS DUTIES (ss181, 182, 183, 191, 195 and Fiduciary Duty) 17 Statutory Duty of Good Faith/Best Interests (s181(1)) 17 Fiduciary Duties 18 No Profits or No Conflicts Fiduciary Duty 18 Corporate opportunity – situation that causes a breach of NP & NC as of position 20 Statutory Prohibition on the misuse of position (s182) 21 Acts that have been held to be improper use of position: 22 Statutory Prohibition on Misuse of information (s183) 22 Statutory Duty to Disclose Material Personal Interest (s191) 23 Statutory Voting Restrictions on Interested Directors – Public Companies (s195) 26 III. INSOLVENCY 28 Statutory Duty to prevent insolvency/insolvent trading (s588G) 28 IV. MEMBERS OF A CORPORATION, SHAREHOLDERS RIGHTS AND DIVIDENDS 31 Members of a Corporation 31 Can members usurp the powers of directors? 31 Shareholders 31 Types of shares; 31 Issuing Shares 31 Alteration of the rights of shareholders 31 Procedure for variation of class rights – s246B 32 Officers 32 Directors 32 Executive Directors 32 Non-executive directors 33 Appointment of directors 33 The board 33 Creditors 34 Does the Company need to pay dividends? 34 Three Part Test (s254T) 34 Dividends (S254T) 34 When does the company incur a debt? (S254V) to determine if dividends can b 35 Debt: Debentures 35 Debt: Security Interest (s51A) 35 V. CORPORATE CONSTITUTION 36 The Corporate Constitution 36 Internal Management Rules (s134) 36 Replaceable Rules (s141) – (Statutory Contract Breaches) 36 Remedies for contravention of a Replaceable Rule 36 Altering the company constitution 37 Restrictions 37 VI. CORPORATE CONTRACTING AND AGENTS 38 Corporate Contracting – How does a company enter a contract? 38 Entering into a contract 38 Direct entry 38 Via the actions of an agent; 38 Conferral on a Managing Director (s198C) 39 Conferral on a Single Director 40 Via ratification. 40 Assumptions with dealing with companies (s128, s129) 40 Dealings 40 State of mind (potentially relevant) 40 VII. DECISION MAKING 43 Decision Making 43 Delegation 43 General Meeting 43 Member meeting 43 Member decision making 43 VIII. CIVIL PENALTY PROCEDURE 44 Civil Penalty Procedure 44 Criminal Penalties 45 IX. RIGHTS AND REMEDIES (Oppression, SDA and Winding up) 47 Rights and Remedies 47 Members Remedies in statute: 47 Oppression Remedies Part (s232 – 235) 47 The relevant sections of the ACT 47 Oppression Remedy Exam Questions 49 Standing? 49 Conduct 49 Grounds for Complaint 50 Oppressive behaviour (s232(d)) 50 Unfairly prejudicial or discriminatory (s232(e)) 50 Statutory derivative action (s236 – s242) 51 Clarification – Statutory derivative action – s236 54 Remedy Notes 55 Standing 55 Winding up – Liquidation (s461) 57 Winding up under s461 57 Winding up under s459A – winding up due to company’s insolvency 58 Injunction Remedy – s1324 60 X. VOLUNTARY ADMINISTRATION AND RELIEF (Ratification/Exoneration) 61 Voluntary Administration the only non-liquidation arrangement in this course ) (Part ). 61 Process of Voluntary Administration (VA) 61 Deed of Company Arrangement 62 Effect of the voluntary administration 63 Relief 63 General Law 63 Ratification 63 Statutory Relief 64 Exoneration 64 XI. CORPORATIONS AND COMPANIES 66 Corporations/Companies 66 Types of Corporations and Types of Companies 66 Proprietary Company 66 Public Company 66 A large Pty Company 66 Registration of a Company 66 Consequences of Registration 66 Separate Legal Personality – CL Background 67 Limited Liability and Separate Legal Entity 67