Claw2201 Study Notes
Limited Liability: where shareholders, and or stakeholders are only liable for assets already invested.
Characteristics of Companies:
- Regulated by Corporations Act 2001 (Cth), which is enforceable by ASIC.
- Considered a legal person before the law
- Minimum of one member S.114
- A company has the legal capacity and powers of an individual both in and outside this jurisdiction. A company also has the powers of a body corporate. . . . “ S.124
- “The business of a company is to be managed by or under the direction of the directors” S.198A
- “A proprietary company must have at least 1 director. That director must ordinarily reside in Australia.” S.201A
- “A public company must have at least 3 directors (not counting alternate directors). At least two must ordinarily reside in Australia” S.201A
Unlimited Liability
Corporate Veil: legal concept that distinguishes between a companies personality and that of its shareholders. It protects shareholders from being personally liable for debts and other obligations incurred by the company.
Promoter: A person involved in the establishment of a company
Twycross V Grant (1877) 2 CPD 469 at 541 per Cockburn CJ:
“[A promoter is] one who undertakes to form a company with reference to a given project and to set it going and takes the necessary steps to accomplish that purpose.”
Promoter can include those whom will share in the profits as a result of company creation – Tracy V Mandalay Pty Ltd (1953) 88 CLR 215
Walker V Winbourne (1976) 137 CLR 1 – Companies held in groups are obliged to act in the interests of the sole company opposed to the association.
Industrial Equity Ltd V Blackburn (1977) 137 CLR 567
Lifting the Veil – by the Statute
- Directors liability for insolvent trading
- Uncommercial transactions
- Security interest granted to officers
- Financial assistance
- Taxation legislation
Common Law * Fraud (Re Darby [1911] 1 KB 95 * Avoidance of pre-existing legal
Characteristics of Companies:
- Regulated by Corporations Act 2001 (Cth), which is enforceable by ASIC.
- Considered a legal person before the law
- Minimum of one member S.114
- A company has the legal capacity and powers of an individual both in and outside this jurisdiction. A company also has the powers of a body corporate. . . . “ S.124
- “The business of a company is to be managed by or under the direction of the directors” S.198A
- “A proprietary company must have at least 1 director. That director must ordinarily reside in Australia.” S.201A
- “A public company must have at least 3 directors (not counting alternate directors). At least two must ordinarily reside in Australia” S.201A
Unlimited Liability
Corporate Veil: legal concept that distinguishes between a companies personality and that of its shareholders. It protects shareholders from being personally liable for debts and other obligations incurred by the company.
Promoter: A person involved in the establishment of a company
Twycross V Grant (1877) 2 CPD 469 at 541 per Cockburn CJ:
“[A promoter is] one who undertakes to form a company with reference to a given project and to set it going and takes the necessary steps to accomplish that purpose.”
Promoter can include those whom will share in the profits as a result of company creation – Tracy V Mandalay Pty Ltd (1953) 88 CLR 215
Walker V Winbourne (1976) 137 CLR 1 – Companies held in groups are obliged to act in the interests of the sole company opposed to the association.
Industrial Equity Ltd V Blackburn (1977) 137 CLR 567
Lifting the Veil – by the Statute
- Directors liability for insolvent trading
- Uncommercial transactions
- Security interest granted to officers
- Financial assistance
- Taxation legislation
Common Law * Fraud (Re Darby [1911] 1 KB 95 * Avoidance of pre-existing legal