Breaches and Remedies: Common Law, Equitable Principles, Corporations Act 2001

This essay will discuss obligatory elements in implementing the breach of Section 184 of the Corporations Act 2001 by Mr Clive Palmer. Corporation law is a wide concept of law which comprise of all the legal issues related to Business organisations. With the help of reference to relevant case law this essay will argue that Mr Palmer breached section 184 of the Corporation Act 2001 by not acting in good faith, improper use of position and information and intentional bad business judgements. This essay will provide sufficient evidence that Mr Palmer should be examined by ASIC, hence agreeing with the voluntary administrator.

Corporations Law can be described as the interaction between directors, employees, financier, consumers and the community. Corporations law can be implied to this case as Water Corporations, a government owned company had a responsibility upon entering into a contract with Norvik Industries to provide an attention to skill when connecting the water line. To provide fully trained employees to undertake this job. This involved double checking there work.

This essay will explain the concepts of separate personality and limited liability and their significance in company law. The principle of separate personality is defined in the Companies Act 2006(CA) ; “subscribers to the memorandum, together with such other persons as may from time to time become members of the company are a body corporate by the name contained in memorandum.” This essentially means that a company is a separate legal personality to its members and therefore can itself be sued and enter into contracts. This theory was birthed into company law through the case of Salomon v Salomon and Co LTD 1872. This case involved a company entering liquidation and the unsecured creditors not being able to claim assets to compensate them. The issue in this case was whether Mr Salomon owed the money or the company did. In the end, the House of Lords held that the company was not an agent of Mr Salomon and so the debts were that of the company thus creating the “corporate Veil” .

Maximum Possible Points: The maximum number of points you may earn for this assignment is 50.

In Week one of Contemporary Business Law, Team A learned about substantive, procedural, criminal, civil, common, and statutory law. In the reading assignments for week one, we discerned the differences that separate the laws and how the courts enforce the laws. Corporations and businesses are awarded protections under the Amendments to the Constitution of the United States that protect them from fraudulence. The following essay covers Team A interpretation of the different laws and how the laws pertain to corporations, businesses, and our current places of employment.

Learning Objective 1.2 ~ discuss the different types of companies which may be formed under the Corporations Act 2001

In the case Pastizzi Café Pty Ltd v. Hossain (No 4) NSWSC 808 (28 July 2011) there is a relatively straightforward conflict involving five principals (three individuals and two corporate entities) in which a number of legal issues come to the fore. Briefly, the events in question occur over the span of nearly five years and involve a partnership between Deborah Ross, Leonard Ross and Miraj Hossain to own and manage Pastizzi Café Pty Ltd. Though the case is straightforward, the events are somewhat convoluted--in sum, Ms Ross is guarantor of the start-up costs and in April 2007, Ms Ross and Mr. Hossain receive $1 share in the new company, Mr. Ross, for other legal reasons, does not receive a share (Pastizzi Café v Hossain, 3,4). Eventually, Mr. Hossain and his company, Talukder Enterprises Pty Ltd make the claim that Mr. and Ms Ross are making all management decisions, but that this is illegal since he argues that Mr. Ross is not a partner, shareholder or director. Mr. and Ms. Ross vehemently disagree. (Pastizzi Café v Hossain, 4, 5). Further, Mr. and Ms Ross argue that Mr. Hossain agreed in a meeting on 12 November 2010 to sell his third of the partnership, and there arose a question as to the value of the business. (Pastizzi Café v Hossain, 5). On February 7, 2011, Mr. Hossain locks both Mr. and Ms. Ross out of the restaurant and establishes his own business on the property. Both sides seek damages.

In many misfeasance cases against directors, those breaches maybe relatively uncontroversial. This draws into focus the question of whether the director has any common law or statutory defence, including the Duomatic principle and ratification by shareholders (CA 2006 S.239), available to a claim against him for restitution to the company. S.239(6)(a) preserves the Duomatic rule that if an informal unanimous consent is reached among voting shareholders, it is unnecessary to pass such ratification resolution through general meeting or written resolution. The first part will examine the scope and requirements of this rule to illustrate the validity of such assent. S.239(7) leaves the door open for rules of law, which refers to common law principles, to continue guiding ratification. It will be assessed how these rules impose limitations on the general ratification power conferred by s.239.

The Corporate personhood, a universal legal model, grants corporations genuine rights and responsibilities similar to those of individual citizens. This concept proved useful in American jurisprudence in that it simplified one’s interactions with huge conglomerates. Citing the Fourteenth Amendment of the constitution, the term corporate personhood served to consider corporations similar to individuals. In that vane, corporate entities like individuals could join contracts as a single unit, corporate entities like individuals could be named in civil lawsuits as a single group and corporate entities like individuals could make decisions that would hold the enterprise responsible as a single entity even though the decisions were

In case of a company, by incorporation it gains a corporate personality which is separate or distinct from the members who compose it. The property of the company belongs to it and not its members; it may sue or be sued in its own name ; it may enter into contracts with third parties independently and even the members themselves can enter into contract with the company According to Section 34(2) of the Companies Act , upon issue of the certificate of incorporation , the subscribers to the memorandum and other persons , who may from time , be the members of the company, shall be a body corporate, which is capable of exercising all the functions of an incorporated company and having perpetual succession and a common seal. Thus the company becomes a body corporate which is capable immediately of functioning as an incorporated individual. With the incorporation, the entity of the company becomes institutionalized. This principle of the independent corporate existence and the principle of corporate personality of a company were recognized in the case of Saloman v. Saloman & Co . In this case Salomon was a boot and shoe manufacturer. He incorporated a company named Salomon & Co Ltd, for the purpose of taking over and carrying on his business. The seven subscribers to the memorandum were Salomon, his wife, his daughter and four sons and they remained the only members of the company. The company went into liquidation within a year. The unsecured

The majority in Gambotto held that an expropriation to secure taxation and administration advantages was not a proper purpose, as it does not protect the company from harm – rather, it results in a gain to the majority. In application to this matter, we suggest that it is distinctly unlikely that this alteration will be considered to have been for a proper purpose. The alteration penalises Alfred’s non-attendance at director’s meetings when this is not, in all actuality, one of his duties as a director. Therefore, the amendment is not likely to meet the requirement of avoiding significant detriment to the company based solely on the issue of Alfred’s attendance.

The instructor may vary the emphasis on different issues by altering the study questions and by the choice of video clips. The case is well suited for courses and classes concerning corporate governance, valuation, mergers and acquisitions, and corporate social responsibility. The following objectives of the case allow students to:

There is no clear framework of the rules that would cover the contingencies of a ruling to pierce the corporate veil Idoport Pty Ltd v National Australia Bank Ltd. The corporate Veil usually protects owners and shareholders from being held liable for corporate duties. Yet again a decision made by the court to lift that veil and would place the liability on shareholders, owners, administrators, executives and officers of the company without ownership interest. The purpose of this essay is to conduct an analysis on the concept of lifting the corporate veil and to review the different views on its fairness and equitability to present a better understanding of the notion, the methods used was throughout researching the numerous scholars views on the subject, case law and statutes examples, and the evidence provided by the empirical study of Ramsay & Noakes. When we discuss the lifting the corporate veil the first case that pops out is the case of Salomon V A. Salomon & Co Ltd, since the decisions of applying the corporate veil were first formed as a consequence of this case. The idea covers all of company law and distinguishes that a company is a separate legal entity from its members and directors. Furthermore, spencer (2012); have indicated that one of the core principles that followed the decision in Salomon v Salomon was the wide acceptance one man company’s. However In order to form a

This act modified the methods for many different subjects, such as financial and non-financial reporting, company communications with shareholders, and the responsibilities of company heads. The main role of the Act is to get managers to act in the best interests of shareholders. It additionally requires managers to think about the long-term effects of decisions; the welfares of the business’s staff; the business’s connections alongside suppliers, clients, and others; and the impression of the company’s procedures on the surrounding area. The Company Law Review Group was established by the government in 1998 in order to contemplate ways to modernize company law. The Company Law Review guidelines were the starting point for the modifications suggested by the Company Law Reform White Paper released in 2005. Then the White Paper proposals turned into an outline for a Bill, which then finally received official approval and passed in 2006, (companieshouse.gov.uk, 2014).

The protections under the Corporations Act suffice to guard the minority from the majority’s unfair wrongdoing. In fact, the Australian corporate law provides significant protections on shareholders. To support the argument, this essay discusses Foss v Harbottle rule and derivative action. It also elaborates exceptions to the rule, especially ‘fraud on the minority’ and statutory protections available for the minority protection under the Corporations Act. These are analysed in views of organic theory, economic theory and aggregate theory. It concludes with that specific protections for the minority are unnecessary because these may lose the balance of a corporation and the minority and majority members.