BTF1010: Commercial Law: Company Law + Duties of company directors

7 Pages
100 Views
Unlock Document

Department
Business Research
Course
BTC1110
Professor
Mark Bender
Semester
Spring

Description
Chapter 12: Introduction to Company Law The nature of a company:  A company is an independent legal entity with rights and powers of its own  A company must be registered The powers of a company:  S124(1) of the Corporations Act 2001 (Cth) provides that from the date of registration, a company has the full legal capacity of a natural person.  Humans are natural persons whereas both humans and companies are legal persons  A company remains a legal person with full legal capacity until it is finally deregistered: s601 AD(1) Types of companies:  Proprietary Companies: o Can be formed by one person o Membership limited to 50 persons (excluding employees who hold shares) o It is prohibited from doing anything that would require lodgement of a disclosure document o Must have share capital  Public Companies: o Needs a minimum of one member and 3 directors to be formed o May have unlimited number of members o It may invite the public to subscribe for any shares in the company o Limited liability company Companies limited by shares:  The extent of a member’s liability to contribute to the debts of the company in the event of a winding up, is restricted to the amount unpaid on the issue price of the shares held by the member  E.g. if a shareholder owns 100 shares with an issue price of $1 per share but has only paid 30c on each of the shares, the remaining liability is 70c per share or $70. Companies limited by guarantee:  Must be public  The liability of the guarantors to contribute to the debts of the company is limited to the amount guaranteed. Unlimited companies:  May be proprietary or public  No limitation on a member’s liability and members are liable to contribute whenever calls are made. The liability of members may extend to their personal assets. No liability companies:  Must be public  Restricted to mining companies Consequences of the principle of separate identity:  The rule in Salomon’s case: a company is recognised as a separate legal entity with independent existence from its members and shareholders  Salomon v A Salomon & Co Ltd [1897]  Further examples of the rule: Lee v Lee's Air Farming [1961] AND Pioneer Concrete Services Ltd v Yelnah Pty Ltd [1987] Company Partnership Number of Public: minimum of one, no max. Minimum of two, max of 20 members Proprietary: Minimum of one, max of 50 (excluding employee shareholders) Liability of Varies according to the type of Unlimited and may extend to private members company assets Formation By ASIC registration under the By private partnership agreement Corporations Act 2001 (Cth) Property and Belong to the company as such Vests in the partners assets and not to the members Management Vests in the directors and Vests in the partners. Each individual company officers acting in partner is entitled to share in the accordance with the constitution management subject to the terms of subject to the Corporations Act the partnership agreement Legal Action Company may sue and be sued in Partners sue and are sued personally its own name (jointly or severally) Agency Directors/officers may be agents Each partner is an agent of the for the company. Members are partnership, unless restricted by the not agents merely by virtue of partnership agreement membership Alteration of Must be carried out in the way A matter of mutual consent between constitution prescribed by the Corporations partners act Continuity of Death, bankruptcy or retirement Dissolution may be necessary upon existence of a member does not affect the death, bankruptcy or retirement of a company partner Status A separate legal entity exists Has no separate legal existence from distinct from its members the partners How does a company create contracts?  Companies have full legal capacity to contract.  How does a company sign a contract? o using a company seal: s 127(2) o Without using a company seal: s 127(1). When is a company bound by the actions of its agents?  A company may be bound by contracts entered into by agents acting on its behalf.  Section 126 covers situation where a person has actual authority to act on behalf of the company o 126(1) A company’s power to make, vary, ratify or discharge a contract may be exercised by an individual acting with the company’s express or implied authority and on behalf of the company. The power may be exercised without using a common seal.  The company will also be liable for the acts of its officers, employees and agents acting within their apparent authority: See Freeman & Lockyer v Buckhurst Park Properties Ltd [1964] People having dealings with a company may make certain assumptions:  S128 states that people having dealings with a company are entitled to make a number of assumptions about a company and its officers, unless they know or suspect that the particular assumptions are not correct: s128(4) o (1) A person is entitled to make the assumptions in section 129 in relation to dealings with a company. The company is not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect. o (2) A person is entitled to make the assumptions in section 129 in relation to dealings with another person who has, or purports to have, directly or indirectly acquired title to property from a company. The company and the other person are not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect. o (3) The assumptions may be made even if an officer or agent of the company acts fraudulently, or forges a document, in connection with the dealings. o (4) A person is not entitled to make an assumption in section 129 if at the time of the dealings they knew or suspected that the assumption was incorrect.  S129 lists the assumptions that persons dealing with a company may make under s128 o Constitution and replaceable rules complied with o (1) A person may assume that the company's constitution (if any), and any provisions of this Act that apply to the company as replaceable rules, have been complied with. o Director or company secretary o (2) A person may assume that anyone who appears, from information provided by the company that is available to the public from ASIC, to be a director or a company secretary of the company: o (a) has been duly appointed; and o (b) has authority to exercise the powers and perform the duties customarily exercised or performed by a director or company secretary of a similar company. o Officer or agent o (3) A person may assume that anyone who is held out by the company to be an officer or agent of the company: o (a) has been duly appointed; and o (b) has authority to exercise the powers and perform the duties customarily exercised or performed by that kind of officer or agent of a similar company. o Proper performance of duties o (4) A person may assume that the officers and agents of the company properly perform their duties to the company. o Document duly executed without seal o (5) A person may assume that a document has been duly executed by the company if the document appears to have been signed in accordance with subsection 127(1). For the purposes of making the assumption, a person may also assume that anyone who signs the document and states next to their signature that they are the sole director and sole company secretary of the company occupies both offices. o Document duly executed with seal o (6) A person may assume that a document has been duly executed by the company if: o (a) the company's common seal appears to have been fixed to the document in accordance with subsection 127(2); and o (b) the fixing of the common seal appears to have been witnessed in accordance with that subsection. o For the purposes of making the assumption, a person may also assume that anyone who witnesses the fixing of the common seal and states next to their signature that they are the sole director and sole company secretary of the company occupies both offices. o Officer or agent with authority to warrant that document is genuine or true copy o (7) A person may assume that an officer or agent of the company who has authority to issue a document or a certified copy of a document on its behalf also has authority to warrant that the document is genuine or is a true copy. o (8) Without limiting the generality of this section, the assumptions that may be made under this section apply for the purposes of this section.  Customary Powers: s129 (3) as above  A managing director has customary authority to do all those things in the ordinary management of the company, including hiring staff and contractors (See Freeman & Lockyer v Buckhurst Park properties Ltd [1964]) and borrowing money for the ordinary purpose of the company.  A company secretary is regarded as having customary authority to make contracts concerning the internal administrative matters of the company (See Panorama Developments Ltd v Fidelis Furnishing Fabrics Ltd [1971]) When do the assumptions not apply?  A person is not entitled to make assumptions contained in s129 if, at the time of the dealings, he or she knew or suspected that the assumption was incorrect s128(4)  See Sunburst Properties Pty
More Less

Related notes for BTC1110

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit