Company Law Notes

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Chapter 2 (Topic 2): Registration and its effects

Characteristics of a company

-Companies are artificial entities with rights and liabilities separate from their shareholders or members

-s119: company comes into existence as a body corporate at the beginning of the day on which it is registered with the name specified in its certificate of registration

-This legal entity is separate from its members so assets of the company are not the assets of its members and contracts entered into by the company will create rights and liabilities that vest (giao cho) in the company and not in its members

Effect of registration

-The powers and liabilities of a company are the direct consequences of its creation as a distinct legal entity

-s124 – the legal capacity and powers of company include the capacity and powers of an individual and a body corporate.

• The powers of an individual include power to acquire and dispose of property and the right to sue.

• The powers as a body corporate under s124 include

-issue shares and debentures

-grant options over unissued shares

-distribute the company’s property among its members

-grant a security interest in uncalled capital

-grant a circulating security interest over the company’s property and

-do anything it is lawfully authorized to do so

-Because a company is a separate legal entity it follows that it may enforce its rights by suing and conversely it may incur liabilities and be sued by others

• Shareholders or members cannot sue on behalf of their company to enforce a right of the company

• Pt 2F.1A (ss236-242) permits a member or officer to seek leave (permission) of the court to bring legal proceedings on behalf of the company where the company is unwilling to do so ( statutory derivative actions (chapter 17)

• Company can be sued or sue by its own members

-A company may own property distinct from the property of its

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