...Issue Andrew, Brian, Colin, Diana and Elizabeth are the directors of Pandora Diamonds, which decided becoming more competitive. Therefore it needs to expand its business and it feels with the increased volumes of sales it would be able to lower its prices and become more competitive. It retained a $4 million dollar loan from Bonza Bank Ltd. $3 million is used to buy more stock and $1 million is used to buy a large new warehouse and showrooms from Space Solutions Pty Ltd. However, there are few directors were not really care about the company. Colin was not present at the meeting when these decisions were made. Elizabeth had not attended the meeting as usual but signed the requisite documentation agreeing to the expansion of the business and the getting of the loan. Diana who attended, said she did not know if she agreed and abstained from voting. Andrew and Brian both voted to go ahead with the expansion and the getting of the loan. At about this time Brian had established contact with Victor, who was setting up a new business as a jewellery retailer. Victor was looking for reliable suppliers, but said he would not deal with Pandora Diamonds and Gems Pty Ltd as he did not like Andrew, the Managing Director. Not wishing to miss out on such a lucrative business opportunity, Brian arranged to set up his own business as a jewellery wholesaler and a contract was entered into between Victor and Brian for the supply of jewellery. Six months later, Brian resigned as a director...
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...Assignment - Corporations Law Question 1 worth 25 marks James is a graphic designer and shareholder in Snowzone Pty Ltd (“Snowzone”) a profitable graphic design company. He holds 200 of the 1,000 issued shares. The other 800 shares are divided equally between the other 16 graphic designers in Snowzone. Two of these other 16 graphic designers are the directors of the company. James did not support the election of these directors but a majority of the other shareholders voted for them. The company has paid dividends to the shareholders from time to time but not for the last 3 years. Snowzone uses computer hardware supplied by Nicola Pty Limited. The 2 directors of Snowzone are in fact shareholders in another computer hardware supplier, Zabriski Pty Limited, and they, together with some of the shareholders of Snowzone favour a change in the hardware supplier to Zabriski Pty Limited. The directors accordingly call an extraordinary general meeting so that the shareholders can vote on a change of the hardware supplier. James has consistently voiced his opposition to a change to Zabriski Pty Limited. James has also recently begun contacting other shareholders seeking their support in requesting that the directors pay a small dividend in the current year. He has little success with the shareholders but still puts his proposal to the directors. Snowzone’s directors and the majority of shareholders, several of whom are relatives (family)...
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...Corporation Law, (HI 5027) Assignment -2 Part-A The director’s duty to prevent insolvent trading is in s588G of Corporations Act, however there no separate law to prevent insolvent trading.s588G of corporation Law deals with protecting creditors in dealing with companies. Creditors usually don’t require protection of s588G because many creditors can protect themselves from the risk of their loan being not paid by obtaining security for the loan for example giving mortgage. So in Case the company becomes bankrupt then secured creditor will have their loan repaid but all creditors do not have this security so the parliament has enacted the s588G which says that it is the fundamental duty of the director to prevent his company from trading while it is insolvent (Hanharan,Ramsay& Stapledon 2012). The duty of the director to prevent insolvent trading is to be followed by all directors but does not apply to officers other than directors also according to s9 definition of director applies to shadow and de facto directors . Section 588G says that the director of the company is liable if the company incurs a debt, company becomes insolvent when it incurs debt, the director suspects the company will become insolvent if it incurs debt and director knows that has reasonable grounds to suspect that company will become insolvent (Hanharan et al 2012). If a director does not prevent a company from incurring a debt then they, or any reasonable person in their place, should have suspected...
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... Moreover, the reduction would in effect diminish the pool of funds available to the company to pay its creditors. The rule in Trevor v Whitworth has been incorporated into Ch 2J of the Corporations Act 2001.Certain provisions of the Corporations Law 2001 seek to enforce the rule Trevor v Whitworth. There are a few Sections of the Corporations Act 2001 that enforce the maintenance of capital principle (or the rule of Trevor v Whitworth). Section 254T of the Corporations Act 2001 stated that a dividend may only be paid from profits. The Section 254T of the Corporations Act 2001 states that a company must not pay a dividend unless: the company’s assets exceed its liabilities before the dividend is declared and the excess is sufficient for the payment of the dividend, and; the payment of the dividend is fair and reasonable to the company’s shareholders as a whole and; the payment of the dividend does not materially prejudice the company’s ability to pay its creditors. This means that a dividend can be sourced otherwise than from profits. Moreover, Section 259 A of the Corporations Act 2001 prohibits self-acquisition. A company directly acquiring its own shares is prohibited. Nevertheless, this prohibition is subject to exceptions where a company is allowed under Section 257A of the Corporations Act 2001 to buy back shares if:...
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...convened and a resolution was made that stated that Betty acted improperly and failed to discuss the contracts with board members. As a result, the three contracts have been labeled as void and ultra vires and Bechdo Pty does not recognize them. The paper seeks to advise, Bechdo Pty Ltd, BB Ltd, Jillo Pty Ltd, and Con Development Ltd in regard to their liabilities and legal rights to the contract. Moreover, advice is given on legal grounds that may be taken by Bechdo Pty Ltd against Betty, Charlie, and Doris. Rules First, a corporation or a limited company is an artificial entity which is independent of its member founders, and is capable of engaging in a contract, suing, or get sued as an entity. Therefore, as an independent entity a limited company can sue its shareholders if they engage in malicious acts which do not abide to the set laws (Chen-Wishart n.d). A contract is an agreement entered by two or more people. The agreement should be enforceable by the law and it can...
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...Assignment Word Count (including footnotes):1997 Due Date: 16/4/2012 Name of Tutor: Michael Duffy Name of Unit: Corporation law Question 1 (a). Issue: can shareholders force the company comply with the replaceable rule and clause2.1? Under s134, a company’s internal management may be governed by provisions of the Corporations Act that apply to the company as replaceable rules, by constitution, or by a combination of both. Orchard Downs Pty ltd’s internal management is governed almost exclusively by its own constitution. The only replaceable rules it uses are the replaceable rule in s201G and the replaceable rule in s203C. In this case, Norm, Sean and Anne are the only shareholders of Orchard Downs Pty Ltd. They received a letter informing them that the board had appointment Betty as a director without holding a general meeting. The shareholders were all unsatisfied with appointment of Betty. However, the board of directors told them that as s201G was a replaceable rule, they were not obliged to comply with it. Under s135(3), a failure to comply with applicable replaceable rules is not of itself a contravention of the Corporations Act. However, the constitution and replaceable rules have effect as a contract. Hence, the shareholders can sue the company breach the contract. Section 140(1)(a) provides that a company’s constitution (if any) and replaceable have effect as a contract between the company...
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...Corporations • Corporate attributes o Legal entities o Creature of the state ▪ State statute ▪ Uniform model corporations act o Limited liability ▪ Owners = shareholders ▪ Sign agreements to buy stock in this corp • Certain $ investment • Whatever they invest of promise to invest they are held liable for ▪ Free transfer of stock • Don’t need consent to transfer stock/liability/rights ▪ Perpetual existence – unique to corporations • When a shareholder dies the corporation doesn’t die/dissolve ▪ Centralized management • Corp structure(see written notes) ▪ Is a person ▪ Is a citizen (of the state where it is created(can make political contributions ect.) • Classification of Corporations o Public or Private ▪ Public – governmental bodies o Profit or non profit ▪ Profit – Shareholders ▪ Non-profit – Don’t have shareholders simply have board of directors o Domestic or foreign ▪ Foreign could get franchise tax if they aren’t a state corporation but are making money in that state o Close held/publicly held ▪ Close – only a few shareholders o Professional corporations ...
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... - This Code shall be known as "The Corporation Code of the Philippines". Sec. 2. Corporation defined. - A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence. Sec. 3. Classes of corporations. - Corporations formed or organized under this Code may be stock or non-stock corporations. Corporations which have capital stock divided into shares and are authorized to distribute to the holders of such shares dividends or allotments of the surplus profits on the basis of the shares held are stock corporations. All other corporations are non-stock corporations. Sec. 4. Corporations created by special laws or charters. - Corporations created by special laws or charters shall be governed primarily by the provisions of the special law or charter creating them or applicable to them, supplemented by the provisions of this Code, insofar as they are applicable. Sec. 5. Corporators and incorporators, stockholders and members. - Corporators are those who compose a corporation, whether as stockholders or as members. Incorporators are those stockholders or members mentioned in the articles of incorporation as originally forming and composing the corporation and who are signatories thereof. Corporators in a stock corporation are called stockholders or shareholders. Corporators in a non-stock corporation are called members. Sec. 6. Classification...
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...March 23, 2012. Approved, May 1, 1980 Batas Pambansa Bilang 68 THE CORPORATION CODE OF THE PHILIPPINES Be it enacted by the Batasang Pambansa in session assembled: TITLE I - GENERAL PROVISIONS DEFINITIONS AND CLASSIFICATIONS Section 1. Title of the Code. – This Code shall be known as “The Corporation Code of the Philippines.” (n) Section 2. Corporation defined. – A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence. (2) Section 3. Classes of corporations. – Corporations formed or organized under this Code may be stock or non-stock corporations. Corporations which have capital stock divided into shares and are authorized to distribute to the holders of such shares dividends or allotments of the surplus profits on the basis of the shares held are stock corporations. All other corporations are non-stock corporations. (3a) Section 4. Corporations created by special laws or charters. – Corporations created by special laws or charters shall be governed primarily by the provisions of the special law or charter creating them or applicable to them, supplemented by the provisions of this Code, insofar as they are applicable. (n) Section 5. Corporators and incorporators, stockholders and members. – Corporators are those who compose a corporation, whether as stockholders or as members. Incorporators are those stockholders...
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...INTRODUCTION TO CORPORATION ACCOUNTING Corporation – an artificial being created by operation of law having the rights of succession and the power, attributes and properties expressly authorized by law or incident to its existence. Characteristics of a Corporation 1. Separate legal entity – A corporation is an artificial being with a personality separate from that of its individual owners. 2. Created by operation of law – A corporation is generally created by operation of law. The mere agreement of the parties cannot give rise to a corporation. 3. Rights of succession – A corporation continues to exist notwithstanding the withdrawal, death, insolvency or incapacity of the individual owners. Changes in the ownership structure do not dissolve a corporation. 4. Powers, attributes, properties expressly authorized by law – Being a creation of law, a corporation can only exercise powers provided by law and powers which are incidental to its existence. 5. Ownership divided into shares – Proprietorship in a corporation is divided into units known as shares of stocks. 6. Board of Directors (BOD) – Management of the business is vested in a board of directors elected by the stockholders. The BOD is the governing body or decision-making body of the corporation. Comparison between Partnership and Corporation Partnership|Corporation| Formed by 2 persons.|Formed by 5 persons| || Starts with agreement among partners; may be formed orally.|Starts with the issuance...
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...Duties of Corporate People It is probably best to elaborate a little on what a corporation is before expounding on the duties of corporate people. A corporation is an organizational unit that is formed with the approval of the government and given the same legal rights as a real individual. A sole corporation comprises of a single person but an collective corporation is made up of a group of individual. This organization is approved to conduct business and/or other activities on behalf of the corporation such as issuing shares in an effort to increase capital or begin a business (Mallor, Barnes, Bowers and Langvardt, 2010). All corporations need someone to manage the business. While the shareholders assume shares in an organization, it is not customary for them to handle the business aspect of the corporation. A Board of Directors consists of individuals or members elected or appointed by the shareholders. This primal governing body performs as the entity; sets policies and guidelines; hold the power to appoint individuals as officers and safeguards the best interests of the corporation. This appointed body of individuals is charged to manage the company’s affairs and is ultimately accountable for the overall activities of the organization (Prado-Lorenzo & Garcia-Sanchez, 2010). Further responsibilities of the board encompass the “Duty of Care,” “Duty of Loyalty” and “Business Judgment Rule.” The most important of the three is the “Duty of Care” which defines that...
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...North South University LAW 200 Assignment # 2 Prepared for: Barrister A.M. Masum Faculty of Business North South University Prepared by: ID NAME 062 528 030 M.Montasir Imran Khan Section: 02 Page | 1 “A proper balance of the rights of majority and minority shareholders is essential for the smooth functioning of the company.”- Explain & Illustrate? 1. Introduction: The basic principal relating to the administration of the affairs of a company is that “the will of the majority is supreme”. The general rule is that the decisions of the majority shareholders in a company bind the minority. 1 In a world that recognizes ‘simple majority rules’, minority shareholders of companies are by default vulnerable to oppression, disregard and unfair treatment by majority shareholders who are in control of the company. Majority shareholders also have certain obligations to minority shareholders in their capacity of controlling the corporation. In certain cases this minority shareholder right can be exercised directly against a shareholder, without having to go against a corporation or through the derivatives action process.2 In such case a proper balance of the rights of majority and minority shareholders is essential for the smooth functioning of the company. The oppression of minority or mismanagement of a company by majority therefore calls for some remedial action. 3 Today’s minority shareholders come to the corporation with varied attitudes and agendas. Although...
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...dividends, or excluding the minority of directors by voting. Because of that, the legal system allows shareholders to take “derivative actions” to balance the power of directors. Derivative actions are the effective tools to solve this problem. However, it is not well proven in the real world. The purpose of protection and effect on company of derivative actions in practice will be discussed. Derivative Actions There are two types of derivative actions, common law derivative actions and statutory ones. For common law derivative action, it is taken based on case laws such as Foss and Harbottle case. In this case, two shareholders, Richard Foss and Edward Starkie Turton claimed the board of directors decided to misuse the land in Manchester of company which made company wasted many on the mortgage. Then, they sued the five directors because of their misbehavior, on behalf of company to claim the remedy. Finally, the case is dismissed. Thus, there are proper plaintiff rules and majority rules applied before common law derivative actions. In general, company affairs should be solved by majority general meeting rule instead of legal action, and directors have the power to decide whether or not to sue on in protection of the rights of the company. However, there is exception, if there is fraud to minority, where shareholder can bring an action only on behalf of company where wrongdoers are in...
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...Australian School of Business School of Taxation and Business Law LEGT 2741 BUSINESS ENTITIES TUTORIAL GUIDE SESSION ONE 2012 1 LEGT 2741 BUSINESS ENTITIES Tutorial Guide TUTORIALS PURPOSE The purpose of the questions in the tutorial guide is to help interpret and apply the lecture material. Additionally, the tutorial problems and questions also allow you to practice for the final exam which will consist of similar questions. Note: there will be no answers given out to the tutorial questions or past exam papers in class or posted to Blackboard. The purpose of the questions is to allow you to apply the course material and gauge your own level of competence. Simply giving you the suggested answers will defeat this purpose. It is your responsibility to attend tutorials prepared so that you can gauge your own level of competence and are able to contribute to class discussion. However, if you are uncertain and wish to explore a topic further or test your understanding of past exam questions, please do not hesitate to consult with your tutor or lecturer. The purpose of this tutorial guide is also to allow students to develop the skills (both verbal and written) necessary to analyse problems which may arise in practice. The guide is designed to allow each student to reach the goal of being able to apply theory, knowledge and problem solving technique to fact situations that may arise in company law. It is essential that students learn to select the important issues...
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...voluntarily agreed to form a stock corporation under the laws of the Republic of the Philippines; AND WE HEREBY CERTIFY: FIRST: That the name of the said corporation shall be “SOLAR POWER PANEL CORPORATION”; SECOND: That the nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the Business Corporation Code of the Republic of the Philippines. THIRD: That the principal office of the corporation is located in the Municipality of Bayambang, Province of Pangasinan, Philippines; FOURTH: That the term for which said corporation is to exist for fifty (50) years from and after the date of issuance of the certificate of incorporation; or shall have perpetual existence. FIFTH: That the names and residences of the incorporators of the corporation are as follows: NAME NATIONALITY RESIDENCIES Gloria S. Santiago Filipino 334 Diaz, Bautista, Pangasinan Faye Liza G. Eco Filipino Sarah Jane DV. Maniling Filipino Marcelo D. Tamayo Jr. Filipino Ariel M. Ochinang Filipino Ryan A. Kaiklian Filipino Jesie R. Galam Filipino Froilyn C. Camacho Filipino Jezziel B. Requilman Filipino Mary Eleanore J. uy Filipino Eizyl Z. Soriano Filipino Francis G. Romero Filipino Elvin P. Oriel Filipino SIXTH: That the number 0of directors or trustees of the corporation shall be five (5); and the names and...
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