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LAW 2598 Corporate Law
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LAW 2598 Corporate Law
0 Download6 Pages / 1,425 Words
Course Code: LAW2001
University: University Of The Sunshine Coast
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Country: Australia
Question:
Describe about the Corporate Law For Separate Liability Principle.
Answer:
Participation Activity 1
(a) valuable undertakings helps to increase the work health and safety process and an opportunity to make organisational reform can be achieved in this process. Further, certain communication can be done regarding insecure work practice.
(b) there is certain criticism against this undertaking. It is moderately restorative in nature and proper implementation of this could not be secured all the times.
(c) it can be recommended that the design of the valuable undertakings should be strict and certain regulatory provisions should be imposed. Further, besides the subject of ASIC, such undertaking should be applied on every possible branches of the working criteria.
(d) the main intention of valuable undertaking is to achieve outcome in WHS policies. Further, if any breach has been made regarding any of the policies, it will take all the required actions. Imposition of regulatory action may make the process sloth; therefore, the recommendation may be ineffective.
(e) valuable undertaking is more effective as it promotes the public confidence in the corporate governance and makes the community aware of the acts and result of the business classes in every sphere. Further, the compliance program could be improved in this case.
Both the individual and company could give enforceable undertaking according to the guidelines mentioned therein.
mainly enforceable undertaking deals with finance and company related matters and in case any director of the company breaches to maintain the duty, certain regulatory provisions will be imposed on them.
the company could file a case before the court regarding all the breaching provisions and if the work health and safety provisions have not been maintained, proper obligatory process could be developed against the individual.
an enforceable undertaking could be regarded as supplement to the court order and self-monitored investigation will be made in order to identify the breaching provision.
enforceable undertaking is a regulatory tool and it helps ASIC to take certain positive steps in case of certain allegations made before it.
Participation Activity 2
Issue:
The main issue of this case is to determine whether the strategy taken by Janice can be established or not.
Rule:
The main area under discussion of the case is based on the incorporation rule of the company. Further, certain provisions of the case attract the provision of piercing the corporate veil of the company. According to the common rule of the company, every company is a separate legal entity and it will not be liable for any personal acts of its members. However, there are certain rules for the incorporation of the company and according to the rule; the company should be incorporated in good faith. If the provisions are not being followed, then the separate liability principle of the company could be upheld. This principle is known as piercing corporate veil. There are certain remarkable cases on both the separate liability of the company and piercing corporate veil of the company. It has been observed in Salomon v Salomon and Co Ltd [1897] AC 22 that the intention behind incorporating a company should be fair and no employee of the company could not be held liable for debts of the company. This case supports the separate corporate liability of the company. However, it has been mentioned by the court in Gilford Motor Co Ltd v Horne [1933] Ch 935 that if any company has been formed to defraud others, the veil of separate liability will be lifted. Further, in Jones v Lipman [1962] 1 WLR 832, it has been observed that no company should be incorporated to conceal any true facts or it must not be incorporated with an intention to avoid any pre-existing liability. In Gencor ACP Ltd v Dalby [2000] EWHC 1560 (Ch), the court has observed that if any person corporate a company with a view to diverted his assets to anyone with an intention to avoid any obligation, the doctrine of corporate veil will not be applied in that case.
Application:
In this present case, it has been observed that an agreement to sell certain paintings have been made in between Janice and Tim. However, before the day of payment, the painter has been demised and the cost of the painting becomes high. However, Janice has made certain strategy to avoid her obligation of sell those paintings to Tim. She wanted to incorporate a company so that she could sell all the paintings and get the benefits of separate liability of the company. However, according to the case of Gilford Motor Co Ltd v Horne, it can be stated that the intention of Janice is to avoid the pre-existing obligations and in this case, she could not take the plea of corporate separate liability. Further, according to the facts of Jones v Lipman, it can be stated that Janice wants to conceal the facts of her previous agreement of sale with Tim and therefore, she could not incorporate the company with an intention to avoid all such liabilities. Further, Tim could argue the case in the ground of piercing corporate veil of the company.
Conclusion:
Therefore, it can be stated that Janice could not take the plea of separate legal obligation of the company. Further, if she has made any such claim, her statement will be denied on the ground of lifted corporate veil, as she wants to incorporate the company with an intention to deny the pre-existing obligation made with Tim regarding all the paintings.
Participation Activity 4
According to the case, it has been observed that Infinity has taken loan from the HealthPharm and the nature of the loan is secured one. Further, the company has to pay certain security interest to the insurance company (Johnson et al., 2017). In this matter, it can be stated that if the insurance company has become insolvent, it is their primary duty to pay all the loan amount to the Infinity. The main reason behind the same is that their loan account is secured. According to the provision on the secured loan in Australia, the loan holder will get all the benefits if any mishap done with the insurance company. According to the common law on the secured interest, it helps the creditor to exercise his rights over the property of the debtor if the debtor has done any default. On the other hand, the creditor is under an obligation to pay off the loan amount to the debtor in all cases.
According to the facts of the case, it has been observed that the director and manager of the insurance company have proposed to make certain changes in the share of the company and they have mentioned certain classes. Such kinds of steps could not be valid, as it will fall under the provision of derivative action. According to section 232 of the Corporation Act 2001, if a company does certain things that opposes the interest of its members or if the acts of the company are oppressive in nature or unfairly discriminatory against the interest of the members, the court can prevent the company to make such rules (Coffee, Sale & Henderson, 2015). In this case, the directors have decided to divide the share of the company in class A and class B share. in this case, the associates of the corporation has no profit. Further, in this process, the director of the company is violating the provision of section 181 of the Corporation Act 2001. Therefore, it can be stated that the proposed resolution could not be validated.
According to the rule of Australian Security Exchange, the company should have to disclose all the financial risks attached to any process. Further, the company could disclose how much the investors will be affected by the risks (Duffy, 2018). The value of the entity’s securities will be fall under the provision of disclosed obligation.
Reference:
Coffee Jr, J. C., Sale, H., & Henderson, M. T. (2015). Securities regulation: Cases and materials.
Duffy, M. (2018). Australian Private Securities Class Actions and Public Interest: Assessing the’Private Attorney-General’by Reference to the Rationales of Public Enforcement.
Fowler, A. C., Baker, M., & Geraghty, S. (2017). Is faculty practice valuable? The experience of Western Australian nursing and midwifery academics undertaking faculty clinical practice-A discussion paper. Nurse education in practice, 26, 91-95.
Gencor ACP Ltd v Dalby [2000] EWHC 1560 (Ch)
Gilford Motor Co Ltd v Horne [1933] Ch 935
Holley, G. (2014). Lessons learned from enforceable undertakings (EU). Government News, 34(4), 546.
Johnson, R. A., Wild, K., Inforzato, S. K., & Hinaman, T. (2017). U.S. Patent No. 9,596,077. Washington, DC: U.S. Patent and Trademark Office.
Jones v Lipman [1962] 1 WLR 832
Salomon v Salomon and Co Ltd [1897] AC 22
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