Accounting Essay

1131 words - 5 pages

HI5027 Corporate Law

About companies

§ Introduction to companies § The architecture of companies § Historical development § Separate legal personality

Week 1 Introduction to Companies Company Law

HI5027 Corporate Law Holmes Institute 2011

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Introduction to companies

Companies

§ What are companies and why do we have them? § What are the key attributes of a company?

§ The dominant form of business organisation § Over 1.7 million companies in Australia § Created through a process of registration under statute - an artificial legal person § Have the special legal attribute of separate personality

HI5027 Corporate Law Holmes Institute 2011

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HI5027 Corporate ...view middle of the document...

manage the business (in large companies, delegate to CEO and other executives) § Directors are not always members § Members have a right to vote on some issues, but usually not on general management decisions

§ Corporations aggregate as separate legal persons § Joint stock as a means of financial participation § Incorporation as of right from mid 19th century § Limited liability from mid 19th century

HI5027 Corporate Law Holmes Institute 2011

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HI5027 Corporate Law Holmes Institute 2011

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Important developments for small business

Separate legal entity doctrine

§ Distinction between public and proprietary companies § Salomon s case § Sole director/shareholder companies

§ The company is a legal person separate from its participants § This means that:
Ø its obligations and property are its own and not those of its participants Ø its existence continues unchanged even if the identity of the participants changes

HI5027 Corporate Law Holmes Institute 2011

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HI5027 Corporate Law Holmes Institute 2011

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Salomon v Salomon (1897)

Salomon (cont)

shoe business

§ Issue - was Mr Salomon entitled to priority under the debenture over other, unsecured creditors of the company?
Pty Ltd company

Salomon

cash, debenture

20,001 shares

§ Depends on whether the company and its controller are separate legal entities, and not agents or trustees for each other § Court said yes

family

6 shares
HI5027 Corporate Law Holmes Institute 2011 13 HI5027 Corporate Law Holmes Institute 2011 14

Characteristics of companies

Company law

§ Important features of companies arising from their separate legal personality
Ø can incur obligations and hold rights, and sue and be sued, in their own name Ø can contract with their controllers Ø have perpetual succession Ø are separate taxpayers Ø participants (may) have limited liability

§ Scope and operation of company law § Sources of company law § Regulation of companies

HI5027 Corporate Law Holmes Institute 2011

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HI5027 Corporate Law Holmes Institute 2011

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What is company law?

Purpose of company law

§ General term used to describe the legal rules governing:
Ø formation and termination of companies Ø characteristics of companies Ø relationships between participants in companies (such as members and officers) Ø aspects of companies dealings with outsiders

§ Has both facilitative and regulatory functions § Facilitative in that it provides the legal framework for people to deal with each other § Regulatory in that it controls behaviour to achieve social ends

HI5027 Corporate Law Holmes Institute 2011

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HI5027 Corporate Law Holmes Institute 2011

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Purpose (cont)

Operation of company law

§ Aims/purposes include:
Ø investor protection Ø commercial stability and consumer confidence Ø balancing competing interests Ø certainty - standard form rules

§ Operates as a source of private...

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