As per the corporation Act 2001 (CTH), the Sec- 993 D defines the offences of failing to pay the loan money into an account as required. It is an offence of strict liability where the company failed to pay the loan for any circumstances. As per the company license, the company must pay the loan amount to the creditor when the time period gets over.
The sec of 1314 defines the continuing the offences where the company failed to perform in given time.
As per the case study, the fact is ZZ is a company who manufactured the high power speed boats. They take some amounts of loans from the East Bank by using their assets as security for the loans. When the company faced a downturn in their boat sales, they were unable to pay the loan amount. Now, as per their action EB can take actions against them.
However, the ZZ has a good records to the payment with MS , so they can give them a particular notice period =for payment of the debts.
Roy the liquidator of the company ZZ who has rights to give decisions as per the sec- 477 of Corporation Act 2001 which are related with the relation of the financial matter of the company. They must give the decision as per the benefits of the company. As per the sec- 530B the liquidators has the rights to take the possession to the company’s financial book.
Therefore, as per the recent situation of the company’s financial condition Roy can stsed that ZZ can gift any ship to Bruce which can be compatible with the budget of the company.
Conclusion
As per the case study, it can be conclude that the company must pay their debt amounts of loan to the bank and the payment of the materials to the supplier.
2.1. The issue is whether the directors of the DH has breach their duties and if they did not then there is any remedies or not.
2.2. The issue is whether Nino ad Rocky also breach their duties in relation with Dh and then the remedies can be applied or not.
2.3. The issue is whether Rocky considered as a director of the Pezzente when he is also part of DH.
2.4. The issue is whether the member of the DH has any riht to give the farewell to Rocky or not.
As per the Sec- 180 of the Corporation Act 2001 the directors have duties towards the company and as well as for the employees. The directors must maintain their duties with the proper care and diligence. The sec- 181 gives the rights f good faith with the best interest of the company and the sec-182 gives the powers to the directors to use their position which help them to get the advantages for the company.
If the directors breach their duty toward the company, they may face the consequences or the penalties for the breach.
As per the case there are there directors Charlie, Nino and Rocky of DH. They hold their special position in the company. When there was a financial crisis has arisen, they ignored the whole issue and not mentioned to Charlie who hold the position of the managing director. However Rockey who is one of the director give resign letters and joined his cousin’s business which make some conflicts with DH which the whole business purposes.
2.1. When the directors take the decision to start a new project, Rockey had a connection with his cousin that he will rewarded therefore he breach the duties and failed to maintain his position as a director and breach the sec 180, 181 and 182 of the corporation act. The company can take legal actions against the directors.
2.2. The directors of the company have breached their duties. When Nino and Rocky has the knowledge about the financial crisis of the company they did not mentioned to Charlie another director. Without having the knowledge about the financial condition, Charlie made the plan for the new projects. Therefore he can take actions against other two directors. The directors are liable with the civil penalties.
2.3. When Rockey give the resignation from DH, he has every right to join any other corporation. Therefore as per case study, if Pezzente’s appoint Rockey as a director, it is legal as per the Corporation Act 2001.
2.4. As per sec- 248C defines the rights of the directors to call a meeting. As per the case study, the member of DH’s call for a meeting to objects to DH’s farewell gift to Rocky. The sec- 249CA defines the rights of the directors that they may call for the meeting in the company with the members.
Conclusion
As per the case study, it can be concluded that the directors have duties towards the corporation which he should not breach for his own benefits because it affects the company and make the loss.
3.1. The issue is whether the board of both the companies, Jenglot and Boa had breached any provision of Corporation Act 2001 regarding the annual financial reporting.
3.2. The issue is whether Ellie has any power to access the financial statement of a company.
3.3. The issues are whether Ellie has any statutory duty regarding Boa and whether there are any penalties regarding the breach of any such duties.
3.4. The issue is whether SSS have able to their duty regarding the Boa’s financial services.
The crisis regarding the case is based on the provisions regarding the Corporation Act 2001. There are some queries that take place regarding the financial service and the accounting methods of the unlisted company, Boasorte Ltd. (Boa). The provisions that are applied in this case are sections 298 to sections 300A, section 316A relating to the obligation that to be followed up in case of financial reporting. Section 324 CE and section 324 CH are applied in respect of an auditor’s power. Section 1289 and section 307 are applicable on the queries regarding the auditor’s statutory duties.
The case is based on the accounting process that is generated in the unlisted company named, Boa. The accountant of that company, Jenglot had made an imaginary character about her past life and started to think that she had some supernatural power regarding the human senses. She had not maintained the finance papers of the company and done the account-based calculation on the wall of a tree situated within the premises of the company. The directors of the company had allowed all these things.
The Corporation Act 2001 is applicable to the cases relating to the company in Australia. It is a fact that the mentality of the accountant of the unlisted company named Boa is against the rules provided under the Act. An unlisted company is a public company that can have either unlimited shares or limited shares. It is the rule that a company, whether unlisted or not should have to file their annual report to the Australian Security and Investment Commission. According to section 314 of the Corporation Act 2001, it is necessary to submit the annual report of a company before four months of every financial year. The financial report consists of three parts, such as director’s report, financial report and auditor’s report. This rule is mandatory in nature.
Being an auditor in the firm named SSS, Ellie has an authority to ask for the financial statement of Boa. The duty of the Auditor is to keep the books of accounts, all finance-based record to prepare a finance report. It is her duty to see where if the company has taken no illegal processes. Section 1289 of the Corporation Act 2001 has provided certain privileges to the auditor in respect of financial documents.
Statutory duties are those duties that are mandatory in nature. An auditor of a company plays an important role in case of the financial keeping. Section 324 CE of the Corporation Act 2001 has provided certain rules that are to be followed by the auditors. It is the duty of the auditor to ask for the financial records of a company and to find out the exact calculation or accounting record of the company for maintaining clear account process and take responsible steps in that behalf and submit the report before the Australian Security and Investigating Commission under section 311 of Corporation Act 2001.
If there is any, breach relating to the statutory duties by Ellie that is mentioned under the provision of sections 311, 601HG and 990K of the Corporation Act 2001. If Ellie fails to submit proper report to the ASIC, she shall be held liable for this and has to face criminal penalties regarding the same. She could be suspended from her post under section 1292 (11).
On the fourth part of the case, it has been observed that the financial firm SSS had failed to perform their duties in respect of Boa. They have failed to abide by the rules provided by the Corporation Act and act as an irresponsible way. The auditing and taxation procedure of Boa had not been followed up properly and the facts were known to SSS, but they had not taken any step to control this.
Conclusion:
Therefore, it can be concluded that it is the statutory duty of a company and the auditor of a company to follow the rules provided by the Corporation Act and act in a rational way. The financial report should be submitted to the ASIC.
4.1 The issue is whether Hugo’s declaration is correct regarding the annual general meeting and the voting procedure regarding the constitutional change.
4.2. The issue is whether the contract with Frankie was valid.
4.3. The issues are whether the members of the company have any statutory right over the issue relating the dividend policy and what the outcome of it is.
4.4. The issue is whether Sassy could do anything for the deficiency of time regarding the Annual General Meeting.
In this case, there had been a dispute occurred in relation to the Annual General Meeting of an unlisted company and a contract that took place between the directors of the company and Frankie, a licensed tax agent. Section 250N of the Corporation Act 2001 has provided the rule regarding the occurrence of Annual General Meeting by a company, which is mandatory in nature. Section 249T of the Act provides the rule relating to the quorum procedure. There is a provision regarding the proxy vote procedure under section 250A of the Corporation Act 2001 mentioned.
The case has been evolved with two friends who had opened a company that is unlisted in nature. Rafferty and Saxon were the director and principal shareholder of that company. Hugo was the chairperson of the company. According to section 249T of the Corporation Act 2001, it is a mandatory norm that two members are must in case of holding general meeting . This process is known as Quorum. In this case, there were three members present at the meeting. However, in this case it has been mentioned that as per the provision of company constitution there shall be 5 members in the quorum. The mandatory provision of Corporation Act will prevail over the constitution.
It is a general rule of contract that the parties should sign the contract agreement. This is an indication towards the consent over the fact of the contracting articles. It is a fact that the date of signing of the two directors is different. However, this cannot be enough to make the contract invalid.
The members of a company will raise their voice regarding the dispute matter in the general meeting or they can submit their vote against it. Dividends are a share of the company’s profit that are given to the share holders of a company. The members shall have the option to oppose against it.
The notice regarding the annual meeting of a company should be sent within a reasonable period. The members of the company got the notice just one week ago. Sassy can avoid the meeting based on that.
Conclusion:
Therefore, it can conclude that the AGM can be upheld based on insufficient vote. The contract between the directors and Frankie was valid. The members of the company has a right to raise their voice in the meeting and the members even can avoid the meeting as the norms relating the notice of the meeting has not followed the Act.
5.1. The issues are whether there is any need to hold an annual general meeting and whether the general meeting can be called for.
5.2. The issue is whether there is any need to make some report the company’s progress.
5.3. The issue is whether there is any provision regarding the complaint against failure of director’s registration process.
5.4. The issue is whether a company can be sub-classified by the Corporation Act 2001.
Section 250N of the Corporation Act 2001 describes the rules regarding the Annual General Meeting of a company or corporation. Section 249D of the Corporation Act 2001 prescribes the rules regarding the call for general meeting. A company can be sub-classified under the Corporation Act as per the provision of section 112. Section 1072F of the Corporation Act describes the process relating to transfer of shares by the directors.
This case is based on the contradiction between the boards of directors of a company. As per section 250N of the Corporation Act where there has been a mandatory provision regarding the preparing an annual general meeting within eighteen months after its registration. The present company was set up in 2009 and one of the Boards of director, Sia revealed her wish to held the AGM in 2011. Thus, it is necessary to hold the meeting. Further, as per section 249D, on request of the members of a company, a general meeting can be formed by the directors. Thus, she can call a general meeting on the request of at least 5% of the members.
Sia can ask a report for seeking the progress of the company, as she has a right regarding this as one of the directors of the company.
As per section 1072F, it is important to register the transferring share and the directors of a company should not required to register the same any fees has been paid in regards to the shares or there has been a lien in regards to the shares. In this case, no such provisions have been mentioned. Thus, Sia cannot lodge any complaint against the other directors.
Section 112 describes the provision regarding the sub-classification of a company. A proprietory company can be classified into two types- limited shares and unlimited shares. The public company can be classified into four types- limited by share, limited by guarantee, unlimited with share capital and no liability company.
Conclusion:
It can conclude that a company should follow the norms of the Corporation Act 2001 in order to avoid any dispute regarding the same.
5.1. The main significance of the case of Salomon v A Salomon & Co Ltd is that the principle of corporate personality has been upheld by the ruling of this case.
The word corporate veil denotes a concept that differentiates the personality of a company or corporation from the personalities of its shareholders. It helps the shareholders from being liable for the debts of the company or from any other obligation.
The principle of corporate veil can be lifted where any shareholder of the company defrauds others by using the name of the company.
5.2 The rights of a shareholder are: rights in regards to assets of the corporation, stock related rights, right to get dividends from the boards of directors of a corporation, rights to inquire into the books of the corporation. The shareholder can sue a company for the wrongful acts of the company. They are eligible to get their shares regarding the liquidation of the corporation’s share.
5.3. Personal Property Securities Act 2009 is enacted to secure the interest in the personal property. By personal property, it is meant as the property other than real estate. This Act not only secures the interest in the personal property, but also secures the payment of a debt or other obligation.
5.4. Section 51C of the Corporation Act 2001 defines the term circulating security interest. By circulating interest, it is meant those interests that are including within the provision of Personal Property Securities Act 2009. Under the Act, it is mentioned that the assets should be circulating in nature and the grantor should have title over the property. A floating charge can be defined as a circulating interest.
On the other hand, those assets that are not floating in nature are called non-circulating assts.
5.5. Chapter 6D of Corporation Act 2001 deals with the provision regarding the fundraising by sale of security. There are certain categories that can be found in the prospectus of a company. They are subject-based index of fundraising; media-based fundraising; consultation paper related to stakeholders’ feedback; fundraising related to offer documents, ASIC form-based fundraising and corporate finance fundraising.
5.6. The Term Auditor Independence Denotes The Independence That An Auditor Got Parties Whose Financial Interests Were Harmed By The Wrong Audit This Concept Ensures a free atmosphere to the auditors to carry out their work with an objective manner.
The legislation is banning the audit firms to hold the shares of the clients to achieve the independence of the auditors.
5.7. The auditors are liable from The Aspects Of Civil as well as criminal. The auditors are liable if they infringe any provision of law. The audit is a subject under the company’s Act too. Thus, they can be held liable under this Act and they can be suspended from their post.
5.8. A company’s constitution is that kind of document that specify the norms, which governs the relationship between the company, its officials and shareholders.
It is not mandatory to form a constitution. However, it may help the company to proceed with a systematic way. The rules of it help to bind the company. It creates an effect on the contract that signed between the company and others.
5.9. Trust is a legal entity created by a party by which the others get some rights to manage the assets of the first party. The assets are collected with a view to the beneficial interest of the third party.
There are numbers of trusts in Australia. They are: unit trust, discretionary trust, testamentary trust and hybrid trust.
5.10. Liquidation process is like winding up a company. A liquidator collects and releases the assets of a company. However, a liquidator does not do anything without being paid by the creditors. If the company has insufficient assets, any creditor may reimburse the cost of the liquidator. Liquidator may apply before the court in case of additional assets.
5.11. Statutes act like law. It prescribes certain rules that the authorities have to follow. The constitution of a company can be said to be a statutory contract.
5.13. Legal right of a shareholder are: attend the election or termination process of directors; right to transfer the shares; inquire into the company’s reports; get the share of dividends; right to sue the company so that they can act lawfully.
5.14. Pari Passu is a Latin term that means equal step. Before the winding up of a company, the creditors enforce the measures with a view to get the debt owed to them. This helps to ensure the equal distribution of assets. This process known as Pari passu rule.
5.15. Section 45A of the Corporation Act 2001 provides rule regarding the financial report by small proprietary company. Section 294 of the Corporation Act describes the procedure regarding the preparation of financial report.
5.16. The act that are beyond the authority of the corporation, are known as Ultra Vires act. These act falls outside the province of corporate charter.
5.17. Equity funding are the additional shares of a common stock. Debt funding are the process of borrow the money and not giving up ownership.
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