公司法

Sole T radersA Sole Trader or Sole Proprietor is a one person business where the ownership of the business is lodged totally with one (natural) person. The business has no separate entity from the owner.A Sole Trader has Unlimited Liability and is personally responsible for the liabilities of the business. A sole trader has no separate entity from the business.A Sole Trader has very few business regulations to comply with except with for example Business Names Legislation, Occupational Health, Safety and Taxation.Business Names legislation requires registration of any business name which is not the same as its operators. A business is always sued in the name of the owner, not the business name, it has no entity of its own. AssociationsAn Association according to the common law is any body of 2 or more persons who form an organization, club or society, whether for the purposes of profit or not. An Association which distributes profits as Dividends to its members is a partnership.An Association which is not incorporated is called an Unincorporated Association and is subject to very unclearState common law throughout Australia. An Unincorporated Association has no particular legal entity.Carlton Cricket and Football Social Club v Joseph.The Committee of an Unincorporated Association may be personally liable for any debts, torts or liabilities incurred on behalf of the association. Bradley Egg Farm v Clifford. Peckham v Moore.Members of an Association are only bound by an associations rules if they were aware of the rules, intended to be legally bound, so that they form a legal contract. Cameron v Hogan.Incorporated Associations are Associations which have incorporated under special legislation in their state. In V ictoria this is called the Associations Incorporation Act 1981.An Incorporated Association has a separate legal entity from its members and committee. An Incorporated Association can employ people, hold bank financial reports, hold property and sue and be sued. There are a number of legal requirements such as having meetings, a constitution and a list of officers.An Incorporated Association must register with 5 or more persons and can conduct business trading, but must not distribute the profits as dividends to its members or it will be a partnership.An Incorporated Association which has less than 5 members or trades while insolvent will make the members Severally and Jointly liable.The Management of an incorporated association.Unless the rules of the association provide otherwise, the first committee is the committee that existed before the incorporation processThe Committee must appoint a public officer, who may hold other offices, and may be removed for a number of reasonsSpecial resolutions may be passed if three quarters of the members vote on a matterDuties of committee members s29AA member of former member of the committee of an incorporated association must not knowingly or recklesslymake improper use of information acquired by virtue of his position in the incorporation, or gain directly or indirectly for himself or herself or to cause detriment to the incorporated association.A member of the committee must not knowingly or recklessly make improper use of his or her position in the incorporated association, so as to gain, directly or indirectly, any pecuniary benefit or material advantage, or cause detriment to the incorporated associationDisclosure of interest s29BA member of the committee of an incorporated association who has any direct or indirect pecuniary interest in a contract, or proposed contract, with the incorporated association:Must as soon as he or she becomes aware – must disclose his or her interest to the committee, andMust disclose the nature and extent of his or her interest in the contract to the members at the next annual general meetingUnless the member is gaining because they are an employeeVoting on a contract in which a member has an interest s29CA member of the committee of an incorporated association who has any direct or indirect interest must not t ake part in any decision of the committee, unless he or she is a member of the committee by virtue of the fact that they belong to a class of persons for whose benefit the association was createdAgencyAgency is the relationship of 3 parties, the Principal, the Agent and a Third Party. An Agent is authorised to act on behalf of the Principal to create a legally binding relationship with the Third Party. An Agent is not normally a party to a contract between a Principal and Third Party.An Agent may have wide discretionary powers or have limited tasks.Agents may be appointed in writing, orally or impliedly.There are different typesof Agents: Del Credere Agents, Special Agents, General Agents.If a Principal ‘Holds Out’ a person as their Agent, they will be ‘Estopped’ from denying the Agency. The Principal must then take responsibility for the Agent and the Agent must take responsibility also for their actions.An Agent has a Fiduciary relationship to the Principal, this is a duty of good faith and trust. An Agent has a contract with the Principal to carry out their duties, breach of this contract will allow the Principal to sue the Agent. An Agent can sue the Principal similarly for breach, for example for not paying commission.Joint V enturesA Joint V e nture is where separate entities conduct some combined project or venture, sharing the resulting product, not as a business in common, but as independent operators in their own right. Pursell v Newberry.Joint V enturers always retain their separate entit y, they do not operate or own mutual assets in a business, but rather by association.Distinguishing a Joint V enture from a Partnership, or any other business form is a question of fact. The facts considered would be the form of agreement, mutuality and relationship of the parties.A Joint V enture may still be determined by the courts to be a Partnership, despite the intentions of the parties United Dominions Corporation Ltd v Brian Pty Ltd. The parties may refer to themselves as a Joint V enture but still be in fact a Partnership. Canny Gabriel Case.Joint V enturers are distinguished from Partnerships:Joint V enturers receive a pre-determined share of the enterprise product.Joint V enturers are not subject to the Partnership Act and consequent mutual right s and obligations.Joint V enturers are responsible for their own individual liabilities and obligations.Joint V enturers can sell their share to another, subject to the Joint V enture Agreement.Joint V entures are popular because members can:Conduct separate business and even compete in different areas with fellow Joint V enturers.Each Joint V enturer is liable only for their own activities.Each Joint Venturer can make their own taxation arrangements and raising of capital.Joint V enturers have a lot of privacy and can keep secret their affairs from another member.Joint V entures are not subject to any particular regulation other than the business form of their organisation.SyndicatesA Syndicate is a combination of persons who have become associated for the purpose of promoting some businessenterprise. Syndicate members seem to have fewer mutual or common interests than those existing between jointventurers. Beckingham v The Port Jackson & Manly Steamship Co.A Syndicate is very similar to a Joint Venture in that the members are individuals and retain their separate entities, they do not have sufficient mutuality to form a Partnership.Whether an association of persons is a Syndicate is a question of fact.There is little law to define what a Syndicate is.A Syndicate may (like a Joint V enture) be construed as Partnership for taxation purposes. Taxation law defines business entities differently to that of the common law or the Partnership Act.Sarich v FCT. Tikva Investments Pty Ltd v FCT.TrustsA Trust is composed of 3 parties, the Settlor who entrusts property or money to a Trustee, the Trustee then manages the property/money for the benefit of Beneficiaries.A trust is usually created by a Settlor who draws up a deed which sets out all the parties and details of the Trust.The Trustee and the Settlor are in a contractual relationship. The Trustee is in a fiduciary relationship with the Beneficiaries.A Trust has no separate legal entity from the Trustee, the Trustee is liable for all the liabilities of the Trust.A Trust is run according to the rules of the Trust Deed, though the Law of Trusts will imply many rules.A Trust can sometimes arise because of a series of events or force of law, these are called Non Express Trusts.Where the Trust has been deliberately created this is an Express Trust.Because the Trustee is personally liable, a Trustee may be a Company with Limited Liability so that the personal assets of the Manager are protected.The Settlor, Trustee and Beneficiaries can occupy more than one role. The Settlor can be the Trustee and a Beneficiary according to the Trust Deed.A Trading Trust is a Trust which has a business with incomings and out goings. Sometimes Trusts are used to split income between Beneficiaries so that less tax is paid.Discretionary Trusts are Trusts where the Trustee has a lot of decision making power, this is in contrast to Fixed Trusts where the Trustee has no real decision making power.Unit T rustsA Unit Trust is a Trading Trust. Investors pool their capital for the purposes of investment. The capital is divided into Units, each Unit Holder owning Units according to their contribution.A Trustee invests the money into a business venture and the dividends are then paid back to the Unit Holders. The Unit Trust is run according to a Trust Deed. The investors are Settlors who contribute capital to a fund, the Trustee is usually a Limited Company which appoints a Manager to invest the funds.When profits are made, these are transferred back to the Unit Holders who are the Beneficiaries.Unit Trusts often invest in Equity or Shares, Property and Real Estate, Mortgages and lending and many other ventures. Emu and Ostrich Farming is now a popular Unit Trust in Australia.Unit Trusts have many advantages:The Trustee has Limited Liability.Unit Holders can pool their small amounts of capital to achieve a viable investment.Unit Trusts are means of spreading the risks of an investment.Units are usually readily transferable and can be sold.Unit Holders have many rights under the Trust Deed and can force payment. Unit Holders directly own the property of the Trust. Unit Holders can wind up the Trust at any time.Unit Trusts may some disadvantages in that it is only as good as the Manager.A Unit Trust may have a Deed which allows for shortfalls to be paid by the Unit Holders.A Unit Holder might lose all their capital as well as their earnings.A Public Unit Trust is defined by the Tax Act and relates to Units which are traded on the Stock Exchange or offered to the Public. They are treated as Companies for the purposes of Taxation. Unit Trusts are not Partnerships since there is no mutuality between the parties. Smith v Anderson.PartnershipsThe Law of Partnerships is composed of Common Law and the Partnership Act of each State of Australia. The Partnership Act will imply various rights and liabilities into the Partnership agreement.Partnerships are groups of 2 or more legal persons who associate in a mutual business enterprise and distribute the profits amongst themselves.Partnerships are defined in S.5 of the Partnership Act as the relation which subsists between persons carrying on a business in common with a view to profit.Partnerships are defined by whether:a commercial relationship exists between the parties.whether there is a common, mutually agreed or systematic business conducted by the parties. whether the business is conducted with a view to profit which is then distributed as dividends to the partners.Whether a partnership exists is a question of fact.Partnerships may be Implied from s5 or they may be Express or deliberately created by the persons. Sometimes persons may not be aware they are in a Partnership, they may believe it to be a Joint V enture. Canny Gabriel. United Dominions v Brian.An Association and a Joint V enture are not Partnerships because an Association does not distribute dividends to its members, and the Joint V enture does not carry on a mutual business.A Business is defined in the Partnership Act in s3 as every ‘trade, occupation or profession’.A Business is normally an ongoing commercial relationship and a series of activities undertaken between mutual persons. A single transaction does not normally constitute a business in common. T urnbull v Ah MouyA Partnership must be a Business in Common. Where the persons conduct separate businesses and contract as separate entities, then they do not have a business in common. Checker T axicab v Stone. Keith Spicer v MansellA person may still be a partner where they do not participate actively in a business, but have mutual rights.A Partnership must have a view to profit, this excludes an Association.Statutory Rules in determining a PartnershipSection 6 of the Partnership Act expands the rules for determining if a Partnership exists. These rules are that:Joint Tenancy and Tenancy in Common (Ownership) does not by that very fact create a Partnership. s.6(1). People may co-own property but not be in a Partnership. French v Styring. Davis v Davis.Sharing of Gross Returns (Revenue) does not by that very fact create a Partnership. Persons may share the Gross Revenue from property but for reasons other than being in a Partnership. s.6(2). Cribb v Korn.Receipt of a Share of Profits does indicate that there is a Partnership, unless the persons can showthat they do so for some other reason than being in Partnership. Profits as distinct from Gross Revenue shows that there is some mutual understanding and assessment of costs which makes the relationship look more like a Partnership.Section 6(3) states various reasons why a person may receive a share of profits without being in a Partnership, these are:Repayment of debt as a share of profitsPayment of Agent or Employee with a share of profits. Cox v HickmanPayment to a widow or child of dead partner in the form of a share of profitsRepayment of a loan by a share of profits. Walker v HirschPayment of a share of profits on a yearly basis in exchange for the sale of a businessDifferent T ypes of PartnershipsSalaried Partners, do not own the Partnership but are recognised as senior persons in the business.Silent Partners, may own the business but take no part in the running of the business.Sub-Partnership, one Partner shares the interest they have in one Partnership with another Partnership, effectively being in 2 Partnerships at the same time.Limited Liability Partnerships: Silent Partners who contribute Capital but take no part in the running of the Partnership may have limited liability (to the extent of what they contribute). The Partnership must have at least one general member.General Rules of PartnershipsPartners have Unlimited Liability which means that their personal assets are liable if the Partnerships Assets are insufficient.Partners have no distinct entity personally from the Partnership. Partners pay personal tax and can be sued personally for anything done in the name of the Partnership. Partners cannot hold contracts with their own Partnership.Partnerships can be 2 to 20 legal persons, but more than 20 is deemed to be an outsized Partnership and must incorporate under the Corporations Law, unless it falls within in an exempt category which allows for greater numbers of Partners.s.115Partners must register a Business Name if the Partnership is named something other than the names of the Partners themselves.Dissolving (Ending) a Partnership s.36When the Partnership operates for a fixed period of time or for a one off venture and that time or venture expires. When a Partner gives notice that the Partnership is to be dissolved and there is no agreement to keep it going. Bankruptcy and Death will end a Partnership, unless the Partners have an agreement to overcome this.Illegal Partnerships, where the business of the Partnership has become illegal.A Court may end a Partnership where:A Partner is declared of unsound mind and incapable, where through some disability a Partner cannot continue in the Partnership.Where a Partner is guilty of conduct or an offence which affects the Partnership.Where a Partner continually breaches the Partnership Agreement.Where the Partnership cannot be carried on without making a loss.Where a court is satisfied that it is just and equitable to dissolve the Partnership.When a Partnership is dissolved then there is a legal process for who receives the property of the Partnership.Partners Dealings with OutsidersPartners are both Principals and Agents of their Partnership. s.9Partners are liable for the actions of fellow Partners where those actions:are connected to the business of the Partnership. Mercantile Credit v Garrod.are actions done in the usual business manner of the Partnership. Golberg v Jenkinsare actions of a type normally carried on by the Partnership,Unless the Partner does not have authority and the outsider was aware of the lack of authority.An outsider on discovering that a person was a Partner cannot hold the Partnership liable, they must have been aware that a Partnership existed.Liability of Partners for T orts and ContractsJoint Liability is where the Partners named in litigation are sued together. No further action can be taken against the partnership.Several Liability allows Partners to be sued individually at any time for the liabilities of the Partnership. Torts, Crimes and other wrongs allow for Several Liability. s.14. A Partnership will be liable for wrongs whether they receive any benefit or not. Polkinghorne v Holland.The Partnership Act distinguishes between obligations where Liability is Joint or Joint and Several. Contractual obligations are joint liabilities.Partnership by EstoppelHolding Out or allowing another person to appear as if they are a Partner, either directly or indirectly by conduct will prevent a Partnership later denying the pretender is a Partner. The Partnership must take the liability of a person pretending to be a Partner.The Partnership will be ‘Estopped’ from denying that person is a Partner. The person who allows themselves to appear as a Partner will also have to take responsibility as a Partner. s.18.Relations Between the PartnersPartners may draw up an agreement or Deed which sets out the roles, rights and obligations within the Partnership. Where an agreement is silent on a matter then that will be determined by the Partnership Act. s.23Certain Rules are implied by the Partnership Act s.24.Property bought by the Partnership belongs to the Partnership and must only be used within the Partnership. Property purchased with Partnership funds is Partnership property.Rights and Duties Between Partners. s.28Partners are entitled to share equally in the Capital and Profits of the Business.Partners are entitled to re-imbursement of any expenses or injuries incurred in the ordinary course of business. Partners are only entitled to 6% interest on their lending to the Partnership.All Partners can take part in the Management of the Partnership.No new Partner can be admitted without the consent of other Partners.Differences of opinion are to be decided by a Majority of Partners.The Partnership Books and Accounts are to be available to all Partners on request.Partners have a Fiduciary Relationship to each other. s.32 - 34.Partners retiring from the Partnership remain liable for all debts and obligations incurred during their time in the Partnership. New Partners are not liable for old debts. s.21.The ASICCompany Law in Australia is composed of the Common Law and a Statute called The Corporations Law, along with a number of other Statutes such as the Tax Assessment Act and The Trade Practices Act, Occupational Health Safety Act. The Corporate Law Reform Act has made significant changes to Corporations Law.The ASIC is the Australian Securities and Investments Commission it is the Executive body which administers Company Law. The ASIC:Reports to the Government/ disseminates information and advises private sectorActs as a Watchdog over the activities of Companies.Prosecutes offendersAdvises both the Government and Corporations as to Company Law.Keeps Databases of information and Registers for the Public. (ASCOT)Registers newly incorporated companies.Has a number of associated bodies such as The Panel for Takeovers and various Accounting Bodies. Corporations and Securities Panel, Company and Securities Advisory CommitteeThe ASIC now has an expanded form and regulates the financial sector: all investments agents, insurance and superannuation industries, it provides consumer advice and legislative reform advice.Some of these reforms are now reflected in the Corporate Law Reform Program Act 1999Significant changes in the new program are:the introduction of a statutory business judgment ruleintroduction of a statutory derivative action for shareholdersclarification of directors duties, particularly regarding care and diligence, good faithability of directors of subsidiaries to make decisions in good faith (favouring the parent)Changes to civil penalties applying to directorsfundraising has been made easier and increased the range of options, outside of just the prospectusaccounting standards have been changedTakeovers have been made easier in order to improve the efficiency and information process of a takeover. right of ex directors to inspect the books. indemnity of legal costs of company officers and auditors. Concept of the Company FormOnce created it is an entity in its own right s119 and has a legal personality to do what a human can do s124 (or more such as issuing securities)A shareholders liability is limited to the paid value of their share s515 - 529, though a company can call up the unpaid amount s254M(1)Advantages of the corporate FormSeparation of entities: shareholders and managers are separate entities from the company itself. Limited liability of members. The company can make contracts with members since they are separate. The company can sue and be sued in its own right. Continual existence, ready transference of ownership. . Tax advantages. . A useful means of raising capital . A means of risk taking and entrepreneurshipDisadvantages of the Corporate FormGreater regulation and penalties - registers, accounts and annual returnsLess privacy - the ASIC can examine as can members and even outsiders at certain timesApplication of the Corporations Law which is expensive and onerousCorporations Law only applies to Companies which are incorporated under the Corporations Law Legislat ion s.9. It includes 'registrable' bodies which are organisations operating outside their State of jurisdiction.Corporations created by legislation, Trade Unions s116, Building Societies, Royal Charter Companies are not covered by this legislation. s66A. Outsized partnerships must incorporate s.115.Different T ypes of CompaniesCompanies can be classified in different ways, according to their liability s112 or whether they are a Public or Proprietary Company.Companies sometimes change their Status. s 162, 162-66 note Pt 2B.7 changing company typeAll companies can incorporate with one member s 114Corporations Law designates 5 different types of Company according to their liability. s.112.These are:Company Limited by Shares s 112(1). Shareholders are only liable for the value of their Shares, even if the Company is insolvent s516.Company Limited by Guarantee. Companies which do not have Share Capital and where the members Guarantee a fixed amount if the Company is wound upCompanies Limited by Guarantee and Shares No new Companies in this form can be registered.An Unlimited Company s112(1)(d). The members of this Company are personally liable for all the liabilities of this CompanyNo Liability Company. These are Mining Companies under the Mining Act and the Company will not guarantee to return any Capital or Debt s.112 (2) & (3).Public and Proprietary CompaniesCompanies registering under the Corporations Law are either Public or Proprietary Companies s112(1).* Proprietary Companies must have the following: S.113It must have Share Capital. It includes unlimited companies but not No Liability Companies.It must limit its Shareholders 1 to 50 (with the exception of Employee Shareholders) s.113.It must not engage in an activity that requires disclosure to investors s.113(3).Proprietary Companies are further divided into Small Proprietary Companies and Large Proprietary Companies. s.45A. Small Proprietary Companies are any Proprietary Company which has 2 of the following criteria: Turnover for the Financial Y ear is less than $10mTotal Assets are less than $5mThe Company has less than 50 EmployeesA Large Proprietary Company is one which does not qualify as a Small Proprietary Company.A Small Proprietary Company has Advantages such as not having to prepare financial reports each Y ear or to have an Audit s.292. Small Proprietary Companies replace the old Exempt Proprietary Companies.Proprietary Companies have certain Advantages not allowed to Public Companies. These include:Proprietary Companies can have only one Director and One Shareholder and take the advantages of a one person company.Proprietary Companies do not have to hold an Annual Meeting. S.250N, 250P. Resolutions can be signed without having a Meeting. S.249AProprietary Companies can make Loans to Directors ss207, 208.Proprietary Companies have no upper Age Limit on Directors (72 years).An Auditor can be appointed from the members of a company. s 324A Liquidator can be appointed from the Membership of the Company. S 532(1)A proprietary company can restrict (pre-empt) the free transfer of its shares s254D.A proprietary company can remove a director at any time (subject to its constitution) s203CThere are some disadvantages such as the limit of shareholders to 50 and the restriction on raising capital.Public CompaniesPublic Companies have no limit to their Shareholders but have at least 3 Directors s201A(2).It can make invitations to the Public with disclosure statements or a Prospectus to buy its Securities.Directors must Retire at 72 years of Age.Directors can always be removed from the Company.It has no restriction on raising capital from the public or issuing securitiesIt must have a company secretary s204AMust hold an annual general meeting s250NMust lodge annual financial reports s292One Person CompaniesAll companies can form with only one member s 114 and a proprietary company may have only one director. Special provisions apply:Bankruptcy of a sole director/shareholder s201F(3),(4),(5)Death or Mental incapacity of sole director s201F(2),(4),(5)One director can appoint another director merely by signing s 201F(1)Resolutions can be passed without a meeting, by placing it in writing s 249B(1)Power of a sole director s198E(1)Remuneration of sole director s202COutsiders dealing with the company can assume that the director acts on behalf of the company s128, 129Other T ypes of CompaniesHolding Companies are those which control a subsidiary Company. There are some special provisions in the Corporations Law such as Group Accounts. Subsidiary Companies are owned by another Majority. S46.Foreign Companies are Companies incorporated in another country.T rustee Companies are incorporated trustees which can manage people's estates by licence. Registration of a CompanyTo Incorporate there are Pre-registration Steps and Post registration Steps.Pre-registration has been simplified.One form is needed to apply for registration and it must contain type of company proposed company name (if any - reservation of a name s601DA), potential members, shares (numbers and amounts), directors (all details) and address or registered office, office hours (for a public company), place of business s 117. If a guarantee company - the amount guaranteed. If a public company with a constitution - a copy of its constitution.If the ASIC is satisfied that all the necessary steps have been complied with, they issue a Certificate of Incorporation and an Australian Company Number s119 and comes into existence s118 from that point.Post-registration: the Company must appoint a Company Secretary (if a public company) s204AThe Company must use the Australian Company Number on all Company Documents.Share Registers (and other Registers) must be established. Minute Books, Financial records must be established, A Public Officer must be appointed.The name of the company must be displayed and there must be regular office hoursShares must be IssuedThe Company must lodge within a month of Incorporation all the details of its Address and names and addresses of Directors.A public company must hold an annual general meeting within 18 months of its registration s250NLifting the Veil of IncorporationOn the Incorporation of a Company it becomes a distinct Legal Entity, a Legal Person. This Legal Entity is distinct from its Employees and Members and comes into existence at the time of registration* s.119.The Company has the same liability as a Natural Person. s124. Members are only liable for the Paid Up V alue of their Shares.A Company cannot be used to Cover or V eil what is Illegal, Fraudulent, Against Public Interest.If Individuals cover their wrongful activities, then a Court may Lift the V eil of Incorporation or the Shield of。