BLAW 2006 Company Law

BLAW 2006 COMPANY LAW FOR BUSINESS

SUMMER SCHOOL – 2015

ASSIGNMENT

In February, Butch made the decision that he was going to register a company to own and operate a diamond mine. He estimated that the company would need to raise $20M by way of a share issue and he planned to approach the members of his golf club, which has 100 wealthy members. Butch considered that the company would only need $10M of the $20M in the initial exploration phase but would require the further $10M in the critical operational phase that would follow.

Butch was uncertain as to the type of company he should register. He planned to be the Managing Director of the company and to have his close friend Patsy as Chairman. Butch wanted to keep the affairs of the company confidential and retain control of its management but without the large amount of capital required, the company would not be able to undertake its objectives.

In April, Butch contracted with some mining engineers to assist with the mining operations in October. Butch signed the contract with the mining engineers as “agent of Diamond Pty Ltd”.

In June, Butch registered Diamond Pty Ltd with no constitution. Ralph is a shareholder in Diamond Pty Ltd. Ralph becomes aware that the directors of the company are considering the creation of a constitution with the following rules:

i) that no director may be removed from office by the members; ii) that members may only appoint directors of the company as proxies to general meetings; iii) that the company’s activities are restricted to diamond mining.

In early October, Butch advises the mining engineers that Diamond Pty Ltd is not going to go ahead with the contract as it no longer requires their services.

REQUIRED:

With reference to the Corporations Act 2001 (Cth) and case law, you are required to answer the questions set