Constitution Of OPQR PTY LTD

Definition

Question:

Describe constitution of opqr pty ltd. 

1. Definitions:

The following definition shall be applicable in the constitution of OPQR PTY LTD (“OPQR”), unless otherwise provided:

“Act” shall mean the Australian Corporation, 2001

“ASIC” means the Australian Securities and Investment Commission.

“Company” shall mean OPQR Pty Ltd.

“Constitution” means the constitution of OPQR Pty Ltd.

“Director” means the director that is appointed by the shareholders and other members of the organization.

“Dividend” means any provisional or concluding dividend

“Member Present” shall mean the member who are present at the time of a meeting and are called for such meetings either by themselves or by the attorney, proxy or any other corporate body.

“Preference Rate” shall mean the rate that is calculated by the directors based on the percentage of shares held by each of the shareholder.

“Seal” means any common seal of the company.

“Securities” means the shares as per the Act.

1.1 Interpretation:

The words in this constitution that are stated in bold, italics or headings are only for understanding and the meaning of the words remain unchanged unless specified otherwise.

The replaceable rules shall be applicable to the class of preference share. 

The Directors of the company have the authority to issue shares in the Company, the shares, however, may include limited shares or options of shares, or as the Director may think fit. Subject to the Act, a share or an options share may be issued. Each of the shares shall have restrictions imposed on them and may be accompanied by special rights.

3.1 Preference Shares

An H class of preference share is issued and shall be subject to the following conditions on the member who holds it:

• The right to attend and receive notice of meetings
• The right to obtain payment of the dividend from the share that is issued.
• The rights of the members who hold such shares are contained as part of this constitution.

An I class of preference share is issued and shall be subject to the following conditions on the member who holds it:

• The rights to attend and receive notice of meetings of the undertaking and at the same time also have the right to use one vote for each poll.
• The right to obtain payment of the dividend from the share that is issued
• The rights of the members who hold such shares are contained as part of this constitution.

An J class of preference share is issued and shall be subject to the following conditions on the member who holds it:

• The rights to attend and receive notice of meetings of the undertaking and at the same time also have the right to use one vote for each poll.
• The right to obtain payment of the dividend from the share that is issued
• The rights of the members who hold such shares are contained as part of this constitution.

3.2 Redeemable Preference Share:

A K class of preference share is issued and shall be subject to the following conditions on the member who holds it:

• The rights to attend and receive notice of meetings of the undertaking and at the same time also have the right to use one vote for each poll.
• The right to receive dividend on the share that is issued.
• The rights of the members holding redeemable shares are contained as part of this constitution.

An L class of preference share is issued and shall be subject to the following conditions on the member who holds it:

• The right to attend meetings and receive notice of meetings, however, there may be no right to vote in the meeting.
• The right to payment of a “cumulative preferential Dividend”
• The rights of the members shall be contained in this constitution

An M class of preference share is issued and shall be subject to the following conditions on the member who holds it:

• The rights to attend and receive notice of meetings of the undertaking and at the same time also have the right to use one vote for each poll.
• The right to payment of a “cumulative preferential Dividend”
• The rights of the members shall be contained in this constitution

3.3 Preference and Redeemable Shares Generally:

1. preference shares is issued by the company. The share includes preference shares or redeemable shares at the option of the company.
2. The members who hold preference share have the right to receive dividend of share and the dividend may be cumulative with respect to the Dividends or may be non-cumulative.
3. The members of such issue of share have the right to receive payment out of the profits of the company.
4. The payment may be cumulative depending on the dividends.
5. The payment may be non-cumulative as well.
6. the members who hold the preference share have the right to wind up the company.
7. The members have the right to wind up the company or reduce the capital of the company.
8. The members who hold cumulative preference shares have the right to wind up the company or reduce the capital of the company.
9. The members who hold redeemable preference share is subject to the following terms and conditions, the company has the option to redeem the share the members hold at any time concerning the total number of shares that the members hold.
10. The company has the right to redeem the shares at any point of time irrespective of the total number of shares that the members hold.
11. payment of the price issued on the share.
12. In case of a cumulative preference share payment of the accrued dividend that is unpaid.
13. The member who holds the preference share shall have the same right as the member who holds an ordinary share. Both the members shall have the right to attend meetings and receive notice of meetings.
14. the holder of a preference share shall have the same right as the member of an ordinary share.
15. the member who holds a preference share does not have the right to vote in a meeting, other than this all other rights of the shareholder are same as the holder of an ordinary share.
16. the holder of a preference share does not have the right to vote in meetings except invited on a proposal.
17. the member shall be told to attend the meeting and vote with respect to the share capital of the economy, the rights that are associated with the share that was issued, for a decision that is pending for the winding up of the company and disposal of the property of the company.
18. at the time when the company is winding up, the members of the company have the right to exercise their right to vote. At the time of redemption of such a share, the capital of the company shall be adjusted to reflect the redemption. The certificate of share for each preference must state the class to which it belongs. 

A company has similar legal powers and capacity like that of individuals both outside and within the jurisdiction. According to section 124 subsection 1 of the Corporations Act, 2001, a company has legal authority and rights, which are same to that which an individual possesses. This section provides the details of the powers and rights of a registered company (Brown and Sukys 2012). According to this section, the company has the power to issue shares and it has the power to cancel the shares that are issued. The company has the right to issue redeemable or irredeemable debentures. The company has the liberty of revising the options that are available with regard to the issue of shares of the company. The shares include the used shares as well as the unused shares. A registered company can also conduct a fair division of property. The division is conducted between the members of the company; the benefits can be taken either in cash or in kind. The company shall also be given the authority to grant a capital called “uncalled capital.” The company has the responsibilities to make proper arrangements for the registration of the company (Brown and Sukys 2012). Registration of the company is very important because it was often seen that the rights of the company were mixed with the rights of the members if the company. The main reason for the incorporation of this section was to ensure that the company is treated like a separate entity distinct from their members.

Powers and Issuance of Shares

Part 2B of the Corporations Act, 2001, contains sections 128 and 129. Both the sections are interrelated. According to section 128 of the Act, an individual can make deductions under section 129 of the Act concerning the dealings and workings of the company (Cavitch 2015). The company cannot declare a proceeding as illegal based on assumptions. This section gives the authority to the company to make assumptions under section129 of the Act. According to section 129, subsection 1 of the Act, an individual can make assumptions that the Corporations Act, 2001 and the constitution of the company that has replaceable rules bind a company.

Section 588G of the Corporations Act, 2001 imposes an obligation on the directors of the company to prevent trading that is insolvent in nature. An insolvent trading occurs when the company is not able to or is not in the position to pay the debts that it is entitled to pay to its debtors (Cavitch 2015). In such a situation, the company can be declared as insolvent. Section 588M gives authority to the creditor, who has suffered loss because of the director, who has contravened any of his duties as a result of which the company is unable to pay the debt of the creditor. The creditor has to prove that he or she suffered a loss because the company has become insolvent or the debt was not paid to him at the time when the company suffered the loss and lastly, when the company is wound up. Only when these conditions are satisfied, a company can be declared as insolvent (Godwin 2014).

According to section 588M (1) (d), a creditor must be entitled to compensation if they establish that the directors contravened their duty because of which the company suffered loss. However, many people do not known the concept of insolvent trading and the doctrine of corporate veil is also applicable in certain scenarios. The shareholders of the company can hold the directors of the company for breaching their duties in a way in which the company became insolvent. The doctrine of lifting of corporate veil is also applied here especially when companies are in an insolvent trading. In such scenarios, the shareholders may hold the directors liable for breach of trust and breach of duties. It is because of this, that this section was included in the Corporation Act. Hence, to hold the directors liable for breach of trust section 588M was included in the Corporations Act, 2001 (Godwin 2014). 

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