BLAW20001 Final: Corporations Law (TOTAL NOTES)
5 Jun 2018
School
Department
Course
Professor
Corporations Law
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1
Contents
Summary and Course Structure ....................................................................................................................... 7
Note abbreviations .............................................................................................................................................. 7
Types of questions – what to look for ........................................................................................................... 7
Approach .......................................................................................................................................................... 7
Topic 1 - Companies and the Regulatory Scheme ......................................................................................... 7
A. Functions of companies ............................................................................................................................. 7
B. Companies distinguished from unincorporated associations .............................................................. 8
(i) Partnerships ............................................................................................................................................ 8
(ii) (Unincorporated) Joint ventures ......................................................................................................... 9
(iii) Non-profits ........................................................................................................................................... 9
C. Distinguishing from other incorporated associations ........................................................................... 9
D. Theories of the company, debate about their role ............................................................................... 9
(i) Theory I – Managerialist ..................................................................................................................... 10
(ii) Theory II – Contractual ...................................................................................................................... 10
(iii) For whom to managers of public companies manage? ................................................................ 10
(iv) PJC Corporate Responsibility Report – 2006 ....................................................................................... 12
(v) CAMAC Social responsibility of corporations report – 2006 ................................................................ 12
E. Nature of the modern company .............................................................................................................. 12
(i) Louis K Liggettt Co v Lee 288 US 517 (1932), 541-80 (Brandeis J + Cardozo J, dissent) ................. 12
(ii) Armour, Hansman, Kraakman – What is Corporate Law? ........................................... 13
F. Regulation of companies in Australia .................................................................................................... 14
Topic 2 – Incorporation and its Effects .......................................................................................................... 15
A. Incorporation process .............................................................................................................................. 15
(i) Basic ....................................................................................................................................................... 15
(ii) How a company is registered – Pt 2A.2 ........................................................................................... 15
B. Consequences of incorporation ............................................................................................................... 16
C. Classes of company .................................................................................................................................. 16
(i) Companies limited by shares- ............................................................................................................ 16
(ii) Shareholders (see topic 9) .................................................................................................................. 17
D. Proprietary companies, the distinction between large and small ..................................................... 17
(i) s 45A – Types of company .................................................................................................................. 17
(ii) Advantages of a pty company........................................................................................................... 18
E. Corporate personality – the consequences of separate legal personality .......................................... 19
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2
(i) Separate legal personality ................................................................................................................... 19
ii The companys property is not that of its members ....................................................................... 20
iii The companys right of action is not that of its shareholders ................................................... 20
Broderip v A Salomon & Co Ltd [1895] 2 Ch 323 ................................................................................. 20
Salomon v A Salomon & Co Ltd [1987] AC 22 – see Lord McNaghten 47-54 .................................. 21
F. Limited liability ......................................................................................................................................... 21
G. Lifting the corporate veil ......................................................................................................................... 22
(i) Where the company is used to perpetuate fraud ............................................................................. 22
(ii) Where a company structure is used to avoid an existing legal duty ........................................... 23
(ii) Where there is an under-resourced company, they may be found as agents/where there is a
corporate group, the veil might be lifted ............................................................................................... 24
(iii) where statute infers or explicitly lifts the veil ................................................................................ 27
Briggs v James Hardie & Co Ltd (1989) 16 NSWLR 549 (567-81) ............................................................ 27
H “nderson Piercing the veil on corporate groups in “ustralia the Case for Reform ... 28
I Ramsay and D Noakes Piercing the Corporate veil in “ustralia ..................................... 31
H. Corporate Groups .................................................................................................................................... 33
(i) What is a corporate group?: ................................................................................................................ 33
(ii) the implications of being a part of a corporate group .................................................................... 34
Protection to creditors ................................................................................................................................... 35
A. Liability for directors – duty to prevent insolvent trading – s 588G ................................................. 35
(ii) Elements of insolvent trading ........................................................................................................... 36
(iii) Defences to s 588G – s 588H ............................................................................................................. 39
(iv) Result ................................................................................................................................................... 42
”. Liability of holding company for subsidiarys debt – s 588V-Y ......................................................... 43
(i) Which process? ..................................................................................................................................... 43
(ii) Elements of liability for s 588V .......................................................................................................... 43
(iii) Defences .............................................................................................................................................. 44
(iv) Result ................................................................................................................................................... 44
Case example: Walker v Wimborne (1976) 137 CLR 1 ............................................................................ 44
Topic 3- Managing companies ......................................................................................................................... 45
A. Internal governance rules ........................................................................................................................ 45
(i) Sources of rules ..................................................................................................................................... 45
(ii) Adopting a constitution ..................................................................................................................... 45
(iii) Corporate governance rules – a statutory contract ....................................................................... 46
B. Decision-making organs of the company .............................................................................................. 49
Directors s 201A ........................................................................................................................................ 49
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Document Summary
Types of questions what to look for 7. 1 (i) separate legal personality 19 (cid:507)ii(cid:508) the company(cid:514)s property is not that of its members 20 (cid:507)iii(cid:508) the company(cid:514)s right of action is not that of its shareholder(cid:507)s(cid:508) 20. Broderip v a salomon & co ltd [1895] 2 ch 323 20. Briggs v james hardie & co ltd (1989) 16 nswlr 549 (567-81) 27. H nderson (cid:515)piercing the veil on corporate groups in ustralia(cid:497) the case for reform(cid:516) (cid:507)(cid:344)(cid:342)(cid:342)(cid:351)(cid:508) 28. : 33 (ii) the implications of being a part of a corporate group 34. 43 (ii) elements of liability for s 588v 43 (iii) defences 44 (iv) result 44. Case example: walker v wimborne (1976) 137 clr 1 44. Shareholders s 114 49: division of power between shareholders/directors 49. The normal division 49: management of the business of companies 50. John shaw & sons v shaw 1935 greer lj at 134 50. Nrma v parker 1986 mclelland j 51.
