This blog is solution for Business Company Law Assignment help and it discuses about the corporation law in Australia.
List and describe each type of company that it is possible to register under the Corporations Act 2001 (Cth).
Issue: The main issue is that which the most suitable company structure is for Butch’s company?
Under the Corporations Act 2001, any organisation that wants to do any kind of business in Australia can register itself under the Corporations Act 2001 and according to the Section 112 of the Corporation Act 2001 there are mainly two types of companies that can be registered and they have been discussed below:
Public companies that includes limited by Share Company, limited by Guarantee Company, Unlimited with share capital and no liability company
“A company can register as a no liability company under the Corporations act 2001 if the company in question has a share capital and the company’s constitution must state that the sole purpose of the company is to do mining work only, also the company would have no contractual right under its constitution to recover calls made on its share from a shareholder who fails to pay them”
“Also a “no liability company” should not engage in any other activity except mining and the director of such company should not let some proportion or whole part of the claim or mine and he should not make any contract for working any land on tribute except when the letting or contract has been approved by a special resolution“.
Unlimited company with share capital: unlimited company with a share company can be proprietary or public and in this type of company the members become personally liable for the debts incurred by the company
Company limited by shares: this type of company can be proprietary or public and in this type of company the members’ personal liability is limited to any unpaid subscription price of their personal share in the company
Public company limited by guarantee: This type of company is a public company therefore these companies are required to make complete disclosure and reports, as is given under the Corporations Act 2001.These type of companies cannot issue shares.
Application: After discussing all the company structures we can say that the best suited company structure for Butch’s company would be the public no liability company as in this company Butch is interested in doing mining work.
To conclude we can say that the best suited company structure for Butch’s company would be a “no liability company”, as a no liability company is mainly used for the purpose of mining and Butch’s company wants to gain large capital and a no liability company is provided with some exceptions in relation to a public company generally.
Issue: what is the nature of the legal relationship that exists through a company’s rules between?
Butch and Diamond Pty Ltd; and
Ralph and Diamond Pty Ltd
According to the Corporations Act 2001 (Cth), the legal relationship is as following:
Diamond Pty Ltd: according to the Corporations Act 2001, a company is a separate legal entity and it is a separate legal person, where it is detached from the shareholders, directors, employees, agents, and mangers. In the case Salomon v A Salomon & Co Ltd (1897) it was held that a company is a separate legal entity.
Butch: as Butch is the owner of the company therefore he will be the Managing director of the company. In the case of
“Shirlaw v Southern Foundries ltd, (1939)”where it was held that ““[A] director to whom the board, being empowered to do so by the [replaceable rules or coporate constituion] delegates its powers of management, or some of them, and this delegation is usually, if not invariably, made subject to the overriding authority of the board”
Ralph: The members of a company are known as shareholders and they have some rights and duties. In the case Salomon v A Salomon & Co Ltd (1897) it was held that the shareholder is not personally liable for the debts of the company.
So according to the company rules Butch is the owner and managing director of the company and if there is any insolvent trading then Butch can be personally liable to the creditors under the section 588G of the Corporations Act 2001.According to company rules Ralph is the shareholder in the company Diamond Pty Ltd. And he will not be personally liable for the debts of the company.
Analyse each of the following 2 proposed rules:
- Director removal rule;
- Proxy rule
Issue: The issue is whether each of the proposed rules could be properly included in a new constitution and would be enforceable.
A company’s internal management is managed by the following way:
- By a provision of the Corporations Act 2001 that applies to a company and is known as replaceable rules;
- By a constitution;
- By a combination of both as given under section 135 and 136 of the Corporation Act
A company has the right to modify or repeal its constitution, or any provision of the constitution and this can be done by passing a special resolution, this resolution needs a notice of 21 days and an agreement of seventy five percent of the votes that were cast and these provisions have been discussed under section 136, 137, 140, 249H and 249L of the Corporation Act 2001
Removal of the director 203D, under this section it is given that “a public company may by a resolution remove a director from the office despite anything in
(a) The company’s constitution (if any); or
(b) An agreement between the company and the director; or
(c) An agreement between any or all members of the company and the director”
Proxy rule under section 249X, it is given that the following can appoint a proxy:
“A member of a company who is entitled to attend and cast a vote at a meeting of the company’s members may appoint a personas the member’s proxy to attend and vote for the member at the meeting.
(1A) the person appointed as the member’s proxy may be an individual or a body corporate”.
The director removal rule is given under the section 203D of the Corporation Act 2001 and the proxy rule is given under the section 249X of the Corporation Act.
To conclude we can say that the director removal rule will not be valid and enforceable as in section 203D of the act it is given that the members of a company can remove a director despite any rule given in the constitution. The proxy rule will be valid and enforceable as is provided under the Section 249X of the act as it says that the members can appoint a proxy at the meetings.
- Austlii.edu.au, CORPORATIONS ACT 2001 – SECT 112Types Of Companies (2015) <http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s112.html>.
- Commerce.wa.gov.au, 20.4 Incorporation under the Corporations Act – INC. – A Guide for Incorporated Associations (2008) <http://www.commerce.wa.gov.au/associationsguide/Content/20_The_End_of_the_Road/20.4_Incorporation_under_the_C.htm>
- Roman Tomasic, Stephen Bottomley and Rob McQueen, Corporations Law in Australia (Federation Press, 2002).
- Asic.gov.au, Constitution and Replaceable Rules | ASIC – Australian Securities and Investments Commission (2014) <http://asic.gov.au/for-business/starting-a-company/constitution-and-replaceable-rules/
- Austlii.edu.au, CORPORATIONS ACT 2001 – SECT 203Dremoval By Members–Public Companies<http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s203d.html
- Austlii.edu.au, CORPORATIONS ACT 2001 – SECT 249Xwho Can Appoint A Proxy (Replaceable Rule For Proprietary Companies And Mandatory Rule For Public Companies–See Section 135) <http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s249x.html