1. 1 LAW OF ASSOCIATIONS LECTURE 5 LAW EXTENSION COMMITTEE

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

3. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 13 NEXT : LECTURE 6 Insolvent trading