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Australian

Corporate Law
Corporations Act of 2001 & related laws

Expectations
Understand company law and business
entities
Identify issues relevant to corporations
law
Resolve this issues
Decision making

Materials
Corporations Act of 2001
Corporations Law: In Principle (9th Ed),
Tony Ciro and Christopher Symes (2009),
Thomson Reuters Australia Ltd., NSW
Case law

Method of teaching
Class discussions
Recitations
Lectures

Individual and Group Research paper


Assignments
Class presentation
Quizzes

Your grades
Assignment 30%
Mid-semester test 10%
Final Examination 60%

How to answer essay


questions
State the issue
State the legal principle
Statute
Case law

Apply the law to the facts


**Argument
Draw a conclusion

House Rules
No eating
No sleeping
No
Facebook/instagram/youtube/websurfing
Maximum of two absences
15 minute rule
Always come to class prepared.
Failure to prepare is preparing to fail.

Preliminaries
What is a corporation?
A corporation is an artificial being
created by operation of law, having the
right of succession and the powers,
attributes and properties expressly
authorized by law or incident to its
existence.

Corporate law theories


Concession theory
A corporation is an artificial being created by operation of law.
Contract theory
Incorporation is deemed to involve contracts among the members,
between the members and corporation, and between the
members of the corporation and the State.
Franchise
A corporation is granted by the State the right to exist by virtue of
a primary franchise.
Franchise is a special privilege conferred by governmental
authority, and which does not belong to citizens of a country

Can you trace the origin of


corporations?
Roman Law
Populus romanus
Senatus popolusque romanus
Res public
Sodalitas
Universitas
Collegium
Municipium
Societas

Root word corpus which means body.


A corporation is a body of individuals authorized to act as
an individual.
The cities were the first corporations.
Corporations arose out of necessity in a Roman setup.
The Republic relied heavily on the services of private contractors
to construct temples, build aqueducts, manufacture arms, etc.

Publicani these were associations of contractors who


pool their resources together to bid on contracts.

Tax collection
Futures trading most of these publicani would
buy future taxes and pocketed whatever they
would collect.

Roman Catholic Church

Initially as charitable institutions.


Later it has formed joint ventures.
Monasteries
Universities
Religious and public functions.

1600s challenge of the Dutch and


English merchangs
Ventures from Europe
Merchants needed investments

Rise of the Guilds


Enforce monopoly
Equity subscription in sponsoring a voyage.- joint
stock companies.

Mississippi scheme (French) and South Sea Bubble (English)


Publicly owned government debt (for war expenses of the French
and English Governments) would be exchanged for stock in some
corporation.
They take control and lower down interest expenses.
Effect: to restrict the formation of new corporations

Monopolies with State Fiat - the state would charter a


corporation as it deemed worthy.
Opportunity of buying shell corporations.

Solution: incorporation by registration.


Made easy for businessmen to form corporations and raise capital.

What is the purpose of


corporation law?
In general,
Define the area within which the parties are free to allocate risk,
control and profit
Prescribe the allocation of these elements in the absence of express
agreement.
In particular,
Corporation law provide the rules for the formation and organization of
corporations
Define their powers
Fix the duties of directors and other officers
Declare the right and obligation of shareholders
Prescribe under which corporations may transact business
Regulate the relations between and among stockholders, officers and
creditors.

Why do merchants organize a


corporation? What is their purpose?
Can you cite a legal right that you may
use as basis for organizing a corporation?
Explain.

Australia Corporations Law


Corporations Act of 2001
Australian Securities and Investments
Commission Act of 2001

Pre-1991
Administration of AU Company law has been complicated by
Australias political system.
New South Wales v. Commonwealth (1990)
Whether the commonwealth has the power to prescribe laws for the
formation of corporations.
the corporations power was confined to making laws with respect to
companies that had commenced trading and could not be interpreted so
as to support laws providing for the formation of companies.

Formed
"The Parliament shall, subject to this Constitution, have power to make
laws for the peace, order, and good government of the Commonwealth
with respect to...(xx) foreign corporations, and trading or financial
corporations formed within the limits of the Commonwealth...
the section was meant to apply to already formed companies

Alice Springs Agreement


Each State and the Northern Territory
agreed to adopt the Commonwealth
legislation by passing an Application Act.
Australian Securities and Investments
Commission (ASIC)

Cooperative scheme
The Commonwealth Parliament passed a
package of legislation regulating
companies and securities that directly
applied in the Australian Capital Territory.
Each state then passed statutes applying
the Commonwealth acts as part of the
law of that State.

Pre-2001
The Constitution gives the
Commonwealth government a limited
power to make laws with respect to
formation of corporations and trading or
financial corporations formed within the
limits of the Commonwealth.
The power to legislate for the registration
(formation) of corporations belong to the
States.
Each State passed and administered its
own companies act.

Challenge in terms of raising funds and conduct


of business on a national scale.
Re:Wakim; ex parte McNally; Bond v R; R v
Hughes.
The cross-vesting legislation, under which State
jurisdiction to hear corporate law matters had been
conferred on federal courts, was unconstitutional.
Even though the States had agreed to the scheme,
under the Commonwealth Constitution, the States
had no power to pass the legislation.

Referral of powers to the


Commonwealth July 2001
Each State passed a legislation referring
the following powers to the
Commonwealth parliament:
The power to make laws in respect of
corporations; and
The power to make amendments to those
laws.

Australian Securities and


Investment Commission
Main powers

Enforcements takes civil actions


Surveillance compliance
Investigation
Provision of advise about law reform
Compilation, storage and dissemination of corporate
information
Regulation of companies, and the financial services industry
Education
Monitoring and promoting market integrity and consumer
protection in relation to the Australian financial system, the
provision of financial services and the payments system.