LAW OF ASSOCIATIONS LECTURE 5

1. LAW OF ASSOCIATIONS LECTURE5 LAW EXTENSION COMMITTEE

2. THESE SLIDES These slides are an adjunct to, and not a substitute for, the printed notes

3. REGISTERING A COMPANY - PART 2A • Part 2A.1 - What companies can be registered? • Section 112 - Types of companies • Section 113 - Proprietary companies • Section 114 - Minimum of one member • Section 115 - Restrictions on size of partnerships and associations • Section 116 - Trade Unions cannot be registered

4. HOW A COMPANY IS REGISTERED - PART 2A.2 • Section 117 - Applying for registration • Section 118 - ASIC gives company ACN, registers company and issues Certificate • Section 119 - Company comes into existence on registration • Section 119A - Jurisdiction of incorporation and jurisdiction of registration • Section 120 - Members, Directors and Company Secretary of company • Section 121 - Registered office • Section 122 - Expenses incurred in promoting and setting up company • Section 123 - Company may have company seal

5. EXERCISE OF COMPANY POWERS • Governed by Part 2B.1 • Section 124 - Legal capacity and powers of a company • Section 125 - Constitution may limit powers and set out objects • Section 126 - Agent exercising a company’s power to make contracts • Section 127 - Execution of documents (including Deeds) by the company itself

6. ASSUMPTIONS PEOPLE DEALING WITH COMPANIES ARE ENTITLED TO MAKE • Governed by Part 2B.2 • Section 128 - Entitlement to make assumptions • Section 129 - Assumptions that can be made under Section 128 • Section 130 - Information available to the public from ASIC does not constitute constructive notice.

7. ADVANTAGES OF REGISTRATION • Separate legal personality • Limited liability • Flexibility • Perpetual succession • Transferability and transmissability of shares • Imputation of taxation • Power to acquire, hold and dispose of property • Capable of suing and being sued

8. DISADVANTAGES OF REGISTRATION • Limitations on shareholders bringing proceedings on behalf of the company • Limited role that shareholders have in management • Penalty provisions applying to defaulting officers and directors • Fees and paperwork associated with compliance • No privilege against self-incrimination (Section 187 Evidence Act)

9. THE COMPANY AS A SEPARATE LEGAL ENTITY • Salomon v A. Salomon & Co Limited [1897] AC 22 • Lee v Lee’s Air Farming [1961] AC 12

10. LIFTING THE CORPORATE VEIL • At Common Law • Fraudulent use of the corporate form • Agency • Re FG (Films) Limited [1953] 1 WLR 483 • Smith, Stone and Knight Limited v Birmingham Corporation [1939] 4 All ER 116 • The James Hardie Commission of Inquiry • Groups of Companies • DHN Food Distributors Limited v Tower Hamlets London Borough Council [1976] 1 WLR 852 • Hobart Bridge Co Limited (In Liquidation) v Commissioner of Taxation [1951] HCA 33 ; (1951-52) 25 ALJR 225

11. LIFTING THE CORPORATE VEIL • By statute • The insolvent trading provisions (Section 588G-588Z and 592-593) (to be dealt with in Lecture 6) • Winding up on the just and equitable ground (brought forward from Lecture 6)

12. JUST AND EQUITABLE GROUND • The Court may order the winding up of a company if the court is of the opinion that it is just and equitable that the company be wound up - Section 461(1)(k) • Ebrahimi v Westbourne Galleries Limited [1973] AC 360 • Examples: • A management deadlock prevented the company from pursuing a cause of action • It was impossible from the beginning to achieve the objects for which the company was formed (failure of substratum) • New directors cannot be appointed to fill a vacant corporate board • There had been serious fraud, misconduct or oppression in regard to the affairs of the company • Failure by the company to comply with its statutory and constitutional requirements • The company is being used to commit fraud • There has been an irretrievable breakdown in the relationship between members

13. NEXT : LECTURE 6 Insolvent trading