Corporate Law Notes

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Sole Proprietor (Pg 50 3-120) Individual Person

Partnership (Pg 50 3-130) • Association of people (2 or more, not more than 20, except law & accounting firms) (CA 2001 Section 115, Pg 668) • Carrying on a business with a common view to profit

Other Forms of Business (Pg 52, 3-140 3-160) Joint Ventures • Contractual agreement to conduct a particular venture or related ventures • Not a separate legal entity • Assets & obligations of the venture are the venturers personally • Parties not conducting a business “in common” • Venturers are not agents of each other • Liability is serval and not joint Not for profit organisations: • Clubs • Unincorporated associations • Incorporated associations

No separation between the business and the person conducting the business

• Not a separate legal entity • No legal steps to create a partnership (but have a partnership agreement) • Partners are liable for each other (agents to each other) • Partnership dissolves and reforms when a partner leaves or a new partner joins • Not taxed separately Limited Partnership • Limited partners are those who only contribute capital to a business but are not involved in day-to-day management • Must have at least 1 general partner

Trust Managed Investment Scheme Syndicates

1

Companies
Advantage: • Limited Liability • Perpetual Succession • Free Transferability of Interest • Can have large number of members (more than 20) • Corporate law as standard form contract between participants • Company charges • Taxation consideration Disadvantage: • Establishment and administration costs • Publicity • Public law obligations

Types of Companies (CA 2001 Sec 112(1), Pg 667)
Public Companies (Pg 62-63) • Listed & Unlisted Public Companies Limited by shares (CA 2001 Sec 9, Pg 645) • Most common and appropriate form • Membersʼ liability limited to the amount contributed to company Proprietary Companies • Large & Small Proprietary Limited by shares (CA 2001 Sec 9, Pg 645) • Most common and appropriate form • Membersʼ liability limited to the amount contributed to company

Limited by guarantee • Liability of members limited to respective amounts members guarantee to contribute to co. if it winds up

Unlimited with share capital • Members have no limit placed on their liability • Are often companies of particular profession (e.g law and accounting firms) with cannot carry out business as limited companies

Unlimited with share capital • Members have no limit placed on their liability • Are often companies of particular profession (e.g law and accounting firms) with cannot carry out business as limited companies No liability (CA 2001 Sec 112(2), Pg 667) • Activities limited to mining • No statutory or contractual right to recover unpaid calls 2

Public Company (Ltd)
• No limit to no. of members • Able to raise funds from the public via prospectus • Directors are usually separated from shareholders • May or may not be listed • Minimum of 3 Directors (Sec 201A) Additional obligations imposed on public companies (Pg 64): • Required to hold AGM, Sec 250N • Required to lodge Financial Reports, Sec 292 • Special restrictions on transactions with related parties, Ch 2E • Must have 3 directors, 2 residing in Australia, Sec 201A(2) • Must have a secretary, Sec 204A • Resignation of auditor of a Ltd Co. requires consent of ASIC, Sec 329 • Directorsʼ report must contain statements about qualifications, attendance at meetings, shareholdings or contracts of directors. Listed vs Unlisted (Pg 71 - 73) • Must comply with ASX listing rules • Continuous disclosure • Corporate governance • Listing creates an organised, liquid and transparent market for securities • Investors generally prepared to pay a higher price for a liquid security than an illiquid one • Lower cost of capital (lower risk, lower expected returns) • Increased prestige • Better relationship with lenders and suppliers How to List? (Pg 73, 3-540) • Follow ASX requirements (Ch 1 of Listing Rules) •...
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