Corporate Law – Week 4 – Workshop Questions

Question 1:

Jess and Daniel, both holding 50% of the company, must now see who is liable for the unpaid contract
that was signed into. Pre-registration contracts allowances are legislated in ss 131-133 of the
Corporations Act 2001 (Cth), where it allows a person to enter into a contract on behalf of a company
before registration. This moves the liability of the contract from the individual to the company, as long
as the contract is ratified either ‘within the time agreed between the parties’, or ‘within a reasonable
time after the contract is entered into’.1

Given that it appears that there has been no agreed time limit on the ratification, this could be a simple
issue of ratifying the contract now. If the paper company is stating that the time delay from registration
and ratification is too long, they may attempt to claim damages from Jess as the signor of the contract.2
In the event the ratification of the contract is able to be done, the damages and fees would be
transferred to the company. 3

Question 2:

The key procedures requirements to amend the constitution come under s 136(2) of the Corporations
Act 2001 (Cth). To make an change to the constitution there must be a special resolution vote, which
involves 75%4 of all shareholders voting in favour of this change.5 Furthermore, before the holding of
this meeting special notice must be given to ensure that all members are aware that this vote is going to
happen.6 As a proprietary company, there will be no need to inform ASIC that a change has been made.7

1
Corporations Act 2001 (Cth) s 131(1)
2
Ibid. s 131(2)
3
Ibid. s 131(4)
4
Ibid. s9
5
Ibid. s 136(2)
6
Ibid. s 249L(1)(c)
7
Ibid. s 136(5)