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Introduction: Corporations Law

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Question 1

Issues

The company shifted its business to boot making, at first it run as a sole proprietorship to a limited company that is Salomon Limited and it is incorporated with members of Salomon’s family and Salomon himself. The actual amount for the transfer of shares and debentures was paid to Salomon for the assets of the organization. After then, the business of the company has failed that leads towards the need for liquidation. It is the right of Salomon to recover against the debentures and claim for unsecured creditors. 

For almost one hundred years the principle of independent legal entity has continued with Anglo-Australian corporate law. Equity holders are not liable for an organizations debt; they are far their investments and they do not have a proprietary interest in the assets of the business. “Piercing the corporate veil” and “lifting the corporate veil”[1] are two phrases of the corporate veil. Piercing the corporate veil means the liabilities as well as rights of the company and the equity holders of the company and Lifting the corporate veil referred that there are some regard for the shareholders with few legal entities.

To avoid such claimed unjustness rejection, the liquidator in place of the insecure creditors, claimed that the limited company was fake, and was basically an agent of Salomon, and for that reason, Salomon as a principal was personally responsible for the debts[2]. In contrast, the liquidator look for a separate personality of the company that is different from the member of the company Salomon, so as to form Salomon was liable for the organization’s loan as if he will continue to act the trade as a unique business.

Rule

Court proclaimed the limited company to be a myth and the reason behind that Salomon's was assimilated of the limited company opposing for the real purpose of the then Companies Act, 2001 [3]. This becomes the hindmost that had managed by the business as representative of Salomon. However, Salomon is accountable for the debt collection during the course of different agencies.

However, The House of Lords, just after appeal, backed the upward unanimously and ruling held that it is the rights and responsibilities of the independent person and it becomes the only motive of the person those takes part in the development of the business that is totally immaterial in discussing the rights as well as liabilities of a person[4]. Therefore the fiction of the “corporate veil” among owners as well as company itself was rigidly made by the Salomon’s case.

Application

Beginning with this case the regulations for company that have been regarded as an inflexible model in different important cases such as Mac aura v Northern Assurance Company, Farrar case and Lee v Lee’s Air Farming Limited.

The legal fiction of "the corporate veil", describes that an organization has a legal personality independent as well as separate with the recognition of the company’s equity holders. However, such obligations as well as liabilities, or any rights of the organization are separate with its equity holders to the range of the capital contribution that is termed as “limited liability”. This is the fiction that conceived to allow team of different individuals to chase the purpose of an economy as one unit, except for the disclosure to liabilities and risks of someone’s capacity. 

On the other hand, a company can carry out contracts, owned assets, doing investments, increase debts and assumes other obligations and rights that are independent of their members. However, the company can sue in their own that smooth the legal course too. At last, the most fascinating importance of SLP is that the company holds on to the death of its members. 

It is found that in Australia it is still not possible to discern any type of broad principle of company law that indicates the circumstance that the court should be lifting the corporate veil. The case distress declares a definite unsecured creditor in the liquidation process of the limited company that is the company has Salomon being the major shareholder of the company and he is personally responsible for the organization’s loan[5]. However, the above matter was if anyway the legal uniformity of the company, the equity holder was held responsible for the debt above the offering of capital, so as to reveal these members to inexhaustible liability. 

The legal fiction of “the corporate veil”, describes that an organization has a legal character independent and separate from the recognition of the company’s equity holders. However, any liabilities, or any rights of the organization are separate from its equity holders to the proportion of the capital contribution which is known as “limited liability”. This fiction was conceived to allow groups of people to pursue the purpose of an economy as a single unit, except for the exposure to liabilities or risks of one’s capacity. 

On the other hand, an organization can implement contracts, own assets, doing investments, add debts and assumes other obligations and rights that are independent of their members. However, the company can sue in their own that smooth the legal course too.

Conclusion

At last, the most fascinating importance of SLP is that the company holds on to the death of its members. Considering everything, Salomon's decision remains leading and continued to support Company law. Sham, Fraud and Façade are not comprehensive and these are left for interpretation and discretion.

Question 2

Issue

The “Sydney Investment Pty Ltd.” directors have a business of property dealing and purchasing a site in Newcastle for a $2 million investment in the marketing of the property. The discussion is that buying a Newcastle costs $2 million but Andrew is purchasing a site is approx $1.5 million in the month of July 2022. The director of Sydney Pty Ltd. is advised that a purchasing of properties at a cost of $2 million. A “Walton’s Stores (Interstate) Ltd. V Maher 164 CLR 387” case law concerned with an equitable type of doctrine for a promissory to estoppels in relation to contract law[6]. It is concerned with a situation that allows for a promise and is relied on though a formal written has been executed. A fact is that case is owned by a property in a Nowra that is going to a lease. A building on this land that Walton’s wanted to demolish and relied on a Waltons store that represents a store Walton is with a contract to enter and demolished existing buildings. 

An issue faced by Andrew is not dealing with the other board member of “Sydney Investment Pty Ltd.”. Andrew is not disclosed their personal interest with others related to a purchase of sites acquired with a cost of $ 1.5 million. The financial product is comprised of units of diversified types of property trusts. The application for investment is that a trust is made for an application that is accompanying a trust and available to disclosure statements[7]. The terms and conditions of performance data are contained for a section of risk that is deciding for investment and lodging into an application for an investment in a trust. The advice for a financial amount of a product is independent of financial advice that is being suitability invested to their objectives and finds requirements. 

Rule

The meeting with other board members in a Sydney investment is to discuss a proposal that Andrew is not disclosed with personal types of interest in a site. Charles and Brain are believed that Andrews is acting in the best of their interest of a company that does not raise any type of question on a site. The "corporation act 2001" imposed additional types of fiduciary types of duties in the entities that are incorporated with legislation. This act helps Andrews for taking advice to Brain and Charles for purchasing a site at a cost of $ 2 million. An individual is appointed with a company that complies with an act and in duties is appointed for a board of government is specifically bound[8]. A duty to act imposes a civil type of obligation and officers who corporate with their powers are in a good faith. Under section 184 having a breach of the corporation act that will offend a criminal for a director is reckless to international types of dishonesty.

Active duty with diligence is in a corporation act that provides an obligation of the city that is having a reasonable type of degree for caring and diligence into power and discharging of duties. It is making a judgment for a reasonable type of care degree in a particular type of business and for a judgment. Making a judgment in the case of purchasing a site is in a good faith and with a proper amount of purpose. The material of personal types of interest is in a matter of subject for a judgment and informs for an extent believes to appropriate[9]. A rational is believes in a judgment and has the best amount of interest in a corporation and with diligence. A duty of avoiding information utilization is to have a civil type of obligation for a person that is obtaining information for a board of a director is the corporation to utilize the information for gaining a benefit. Avoiding of proper types of a position for a “Sydney Investment Pty Ltd.” directorAndrews for a corporation is making of improper types of utilizing is in their a position for gaining the advantage. A corporation act specifies to a director that is committed an offense utilizing dishonesty. A breach of statutory types of duties is under a corporation act that is range up to $2 million with the act of the corporation. 

Application

The application for a legal federation of contract law is included an agreement, Intention, Capacity, Consideration, and Legality. The agreement is offered by Andrews to another board member that is accepted with a definite type of agreement is in between parties. It is making a clear amount offer that a party accepts it. An exception is limited to circumstances for a contract and the agreement is without consideration and exchanging of promises[10]. The intention for entering into a contract is bounding to it and a contract is been seriously intended to develop a legal type of obligation and have legal consequences. Both types of parties have a contract into a necessity for a mental capacity to understand common law and consider younger people. A duty to act imposes a civil type of obligation and officers who corporate with their powers are in a good faith. A corporation act specifies to a director that is committed an offense utilizing dishonesty. A contract is to be violable for mental intoxication and unable for understanding a contract.

The case of "SALOMON V SALOMON" is concerned with a claim to unsecured creditors for a liquidation process in a Salomon Ltd. that has a majority in a shareholder. An issue is regarding separate types of legal identities that are controlled and liable for their debt[11]. A commencing with a case of Salomon is been followed for an uncompromising in several types of subsequent cases. A legal fiction is enunciated for a company that is separate for identifying shareholders for Brain and Charles. It is corporate fiction that is devised for enabling groups for an economic purpose. Moreover, a company is sued for their to their member and exception wellbeing. A legal principle is an overarching rule with an exception through a veil to piercing with a case.

Conclusion

The advice for a financial amount of a product is independent of financial advice that is being suitability invested to their objectives and finds requirements. The agreement is offered by Andrews to another board member that is accepted with a definite type of agreement is in between parties. The intention for entering into a contract is bounding to it and a contract is been seriously intended to develop a legal type of obligation and have legal consequences. Considering everything, Salomon's decision remains leading and continued to support Company law. Sham, Fraud and Façade are not comprehensive and these are left for interpretation and discretion.

References

  • “<%= Corporation Act %>” (Department of the Premier and Cabinet) <https://www.premiers.qld.gov.au/publications/categories/policies-and-codes/handbooks/welcome-aboard/member-duties/corp-act-2001-c.aspx> accessed December 23, 2022
  •  “Corporations Act 2001 (Cth)” (ALRC) <https://www.alrc.gov.au/publication/for-your-information-australian-privacy-law-and-practice-alrc-report-108/16-required-or-authorised-by-or-under-law/corporations-act-2001-cth/> accessed December 23, 2022
  • “Corporations Act 2001” (Corporations Act 2001) <https://www.legislation.gov.au/Details/C2019C00216> accessed December 23, 2022
  • “Estoppel” (Armstrong Legal) <https://www.armstronglegal.com.au/commercial-law/estoppel/> accessed December 23, 2022
  • “Financial Planning, Investment, Funds Management” (GDAOctober 26, 2021) <https://www.gdagroup.com.au/> accessed December 23, 2022
  • “General Duties of Directors - Corporations Act 2001 (Cth)” (Handbook Home) <https://lawhandbook.sa.gov.au/ch05s04s03.php> accessed December 23, 2022
  • “Six Principles of Contract Law: Peaceful Path to Settlement” (Peaceful Path to Settlement | Financial agreements for divorce and separationSeptember 4, 2020) <https://peacefulpath.com.au/six-principles-of-contract-law/> accessed December 23, 2022
  • Berger KP, “Salomon v. Salomon & Co Ltd [1897] AC 22” (translexMay 25, 2020) <https://www.trans-lex.org/310810/_/salomon-v-salomon-co-ltd-%5B1897%5D-ac-22/> accessed December 23, 2022
  • Gerard MM, “Part I the Industry and Regulatory Context, 1 the Legal and Regulatory Framework” [2014] McMeel and Virgo On Financial Advice and Financial Products
  • Hudson A, “The Salomon Principle” [2017] Understanding Company Law 21
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