Company Law Summary

Corporations Law is a difficult course. The phenomena giving rise to disputes in the company law context are complex. The corporate law is a mix of statute, common law, and equity. The typical failure rate of the equivalent course in the Griffith Law School (while I was teaching there) is 30%. The failure rate of the undergraduate Company Law course at Nathan in semester 2, 2010 was close to this figure. To pass this course well, you might find the following tips useful. I will use power point slides for most of my lectures.

The reading guides, as well as the tutorial questions, will also be posted on a weekly basis. The function of the reading guide is to tell you the topics to be covered in the relevant lecture and the readings you are expected to do before coming to the lectures. The abbreviation “TB” means the Lipton, et al textbook. The numbers in the square brackets, which will appear in the reading guides, denote the paragraphs in the TB you are required to read. The reading guides do not serve as the textbook, or a summary thereof.

It is impossible to survive the course just by reading the reading guides. It is therefore imperative for all of the students to have a copy of the textbook. As Corporations Act 2001 is an important source of company law rules that we are going to study, it is equally imperative for you to acquire a copy of the Act. You must form the habit of reading the Corporations Act and not just rely on approximations provided in the text, cases, or lectures. Attending lectures regularly and prepared can make a big difference in terms of learning outcomes.

Likewise, you should go to your tute sessions prepared. The final exam will have pretty heavy weighting on problem solving and your tute classes teach you how to resolve hypothetical problems. Summarise the legal rules that you have studied every week and clarify issues that you do not understand with me or your fellow students. Try and complete the multiple choice exercises contained in each week’s reading guide. I will not have enough time to provide detailed comments or clarification on every topic in my lectures.

Certain topics, especially those which I believe you would be able to master through your own reading, will be covered in the lectures in a more cursory manner. Learning objectives By the end of the week, you should understand: The nature of a company The relevance of company law The core features of company law The regulatory framework in Australia The separate legal personality (or ‘entity’) doctrine The nature of a Companies Reading: Textbook (TB) [1. 05] – [1. 20] 1 What is a Company? A company is an artificial entity which the law recognises as a separate legal person. See part 2. 4. below.

1 Sources of Company Law There are three sources of company law rules, namely • Legislation • Case law • The company constitution: This is not the Australian Constitution (which you covered in Weeks 1 and 2 of Business Law), but rather the Constitution sets out the rules for the internal management of the Company (for a more detailed discussion, see TB [1. 05]. 2 The relevance of company law • As at November 2008, the total number of companies registered in Australia was 1. 66 million. It is the dominant form of business organisation. • Many of you will be company directors and/or shareholders.

As directors, you need to understand your statutory duties. As shareholders, you have statutory rights against the company and its directors. • As an accountant, company directors will from time to time seek advice, which ultimately requires a lawyer. With your foundation understanding of Company Law, you should be able to identify the legal issue and refer your client to a lawyer; • You need Company Law knowledge in order to properly advise clients on tax issues. For example: taxation for holding and subsidiary companies; dividend distributions; and share sales.

• Many accountants become insolvency practitioners. As an insolvency specialist, you will be interpreting and applying the corporate insolvency, receivership, voluntary administration and liquidation provisions of the Corporations Act on a daily basis. • Accountants are typically asked to prepare, on behalf of their clients, ASIC (Australian Securities and Investment Commission, the company regulator) documents such as registration and change of company name, notification of resolutions, retirement of directors etc. To complete these forms, accountants need to know the law.

• The doctrinal importance of company law lies in the fact that general private law and commercial law are not equipped to resolve all types of disputes between different stakeholders of a company enterprise. 2 The notion of “separate legal person”: Reading: TB [1. 05] The law sees an incorporated entity as a person who is capable of owning and holding property, entering into transactions and committing civil and criminal wrongs. A company, as a separate legal entity, is not to be treated as the same person as the company’s risk capital providers, i. e. , shareholders, or its directors. This is illustrated in section 6 below.