BLAW20001 Lecture Notes - Lecture 1: Corporations Act 2001, Listing Rules, Limited Voting
19 Jun 2018
School
Department
Course
Professor
WEEK 1 CORPORATE LAW
‘IRAC’ Approach
Issue: which issue or issues are involved in the question?
Rule of law: what precise legal rule or rules are relevant to the facts?
Application to the facts: how does it apply to the facts of the problem?
Conclusion.
Use cases and legislation to practice answers.
What is company law? A general term used to describe the legal rules governing:
-Formation and termination of companies
-Characteristics of companies
-Relationships between participants in companies (directors, officers, shareholders, creditors)
-Companies dealing with outsiders
The aims/purpose of a company include:
-Investor protection
-Commercial stability and consumer confidence
-Balancing competing interests
-Certainty- standard from rules
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-Sources of Company Law:
-Legislation/statute and Act- law made by parliament. For this course, the Corporations Act.
-Case Law/precedent/common law/general law comes from previous judgements of higher courts.
-Other sources of rules include corporations Regulations, ASIC Act, ASIC exemptions, accounting standards,
ASX Listing Rules (for listed companies)
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-Corporations Act 2001 (Cth) covers formation and termination of companies, relationships between
participants in companies, company financing and flexibilities to raise capital. 1 July 1998- Corporations Act
amended to enable the use of companies for small, one-person businesses.
-ASIC- Australian Securities and Investment Commission
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-Operation of Company Law:
-Private law which decides disputes between shareholders v the company and the company v shareholders.
-Public law that allows ASIC to punish wrongdoers and seek compensation for the company.
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-Capital structure:
-Equity capital: from shareholders, not generally repaid during the life of the company. Shareholders are
referred to as ‘members’ in the Act and are ‘owners’ of the company.
-Debt capital: owed by the company to outside creditors (employees, suppliers, lenders). Can be a form of
secured debt in the form of a mortgage. Must be repaid whether the company is profitable or not. When the
company can’t pay its debts it becomes insolvent and is liquidated.
-Secured creditors > priority creditors > unsecured creditors > shareholders
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-Debt v equity finance:
-Debt- obligation to pay interest and principle
-Equity- raising capital from shareholders through share issue. You don’t have to pay dividends.
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-Separate legal entity doctrine: Company and owners are separate and distinct legal entities
-A company’s obligations and liabilities are its own, and not those of its participants.
-A company can sue and be sued in its own name.
-A company has perpetual succession.
-A company’s property is not the property of its participants.
-A company can contract with its controlling participants.
-A company is a separate tax payer.
-Salomon v Salomon, Lee v Lee’s Air Farming Ltd, Macaura v Northern Assurance
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-Can the company enter into contracts with its owners?
-Applying principles from Salomon and Lee, a company can enter into a contract with its owners because of
the concept of separate legal entity.
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find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
A general term used to describe the legal rules governing: Relationships between participants in companies (directors, officers, shareholders, creditors) Case law/precedent/common law/general law comes from previous judgements of higher courts. Other sources of rules include corporations regulations, asic act, asic exemptions, accounting standards, Corporations act 2001 (cth) covers formation and termination of companies, relationships between participants in companies, company financing and flexibilities to raise capital. 1 july 1998- corporations act amended to enable the use of companies for small, one-person businesses. Private law which decides disputes between shareholders v the company and the company v shareholders. Public law that allows asic to punish wrongdoers and seek compensation for the company. Equity capital: from shareholders, not generally repaid during the life of the company. Shareholders are referred to as members" in the act and are owners" of the company. Debt capital: owed by the company to outside creditors (employees, suppliers, lenders).
