- Business Associations Law Summary Notes!
What's in the Business Associations Law Summary Notes?
Our Business Associations Law Summary Notes will provide you with a clear and complete synthesis of the most important points you need for your Business Associations Law exam. The table of contents of our Business Associations Law Summary Notes is shown below.
Table of Contents for Business Associations Law Summary Notes
1. Introduction. 4
A. How to use Cram Notes. 4
2. Background. 5
A. Types of companies and corporations. 5
i. Proprietary
companies (Pty Ltd) 5
ii. Public
companies (Ltd) 5
iii. Registration
procedures. 6
B. Decision to incorporate. 6
3. Is
there Separate Legal Personality? 6
A. Saloman’s Case. 6
B. Piercing the Corporate Veil 7
i. Corporations
Act 7
ii. Avoidance of
obligations (Fraud, Device or Sham) 7
iii. Agency and Under
capitalisation. 8
1) Agency. 8
2) Undercapitalisation. 9
4. Is
the Corporate Constitution valid? 9
A. Nature and effect of the constitution.. 9
i. Replaceable
Rules. 10
B. Amendments to the constitution.. 10
C. Implications for shareholder’s rights. 10
5. Have
Meetings and Board Powers procedures been implemented correctly? 11
A. General meeting.. 11
i. Requirements
and Notice. 11
ii. Disclosure
obligations (Common Law) 12
iii. Resolution. 13
iv. Special Resolution. 13
v. Residual
control in general meetings (Doctrine of Unanimous consent) 14
1) Where the board is unable
to act 14
2) Ratification of
directors’ acts. 14
3) Informal corporate acts. 14
vi. Irregularities. 15
B. Board of directors. 16
i. Powers
of directors. 16
ii. Appointing
directors. 16
iii. Removal of directors. 16
1) Disqualification. 16
iv. Managing director 16
v. Director’s
meetings. 17
vi. Single
shareholder/director companies. 17
6. Are
Contracts with Outsiders enforceable? 17
A. What authority did the person
supposedly acting on behalf of the company have? 17
i. Actual
authority. 17
ii. Ostensible
authority. 18
iii. Protected under
Indoor management rule or other statutory assumption as to authority 19
1) Statutory assumptions as
to authority. 19
2) Section 128(4) exclusion. 20
7. Did
Director’s breach their duty to the company? 20
A. Duty of Care and Diligence. 20
i. What
was the standard of care required?. 20
ii. Business
Judgment Rule. 22
B. Duty to act in Good Faith in Best
Interests of the Company. 23
C. Duty to act for a Proper Purpose. 24
i. What is
the legal purpose for which the power may be used?. 24
1) Proper purposes. 24
2) Improper purposes. 25
ii. Has the power
been used for proper purpose as a matter of fact?. 25
D. Duty to avoid conflicts. 26
i. Was
there a personal interest?. 26
1) Fettering the exercise of
discretion. 26
ii. Was there
adequate disclosure of a material personal interest?. 26
iii. Were statutory
disclosure obligations satisfied?. 27
E. Duty not to make secret profits. 27
i. Was
there “secret profits”?. 27
ii. Was there a
ratification of the breach?. 28
iii. Businesses started
by former directors. 29
iv. Directors’
personally benefiting from opportunity turned down by the company. 30
v. Statutory
duty. 30
F. Related party transactions. 30
i. Was a
financial benefit given?. 30
ii. Was there an
exception?. 31
iii. Were procedural
requirements for approval followed?. 31
G. Statutory duty to prevent insolvent
trading.. 31
i. Was the
person a director at the time the debt was incurred?. 31
ii. Is there a
debt?. 31
iii. Did the debt that
was incurred cause insolvency?. 31
iv. Are defences
available?. 32
8. Can
the Director rely on an Indemnity? 33
9. Is
there Standing to sue the Director or the Company? 33
A. Suing the directors. 33
i. Shareholders
suing directors for breach of director’s fiduciary duty. 33
1) Directors buying shares
from shareholders. 33
ii. Statutory
derivative suit 34
1) Probability that the
company itself will bring proceedings. 34
2) Good faith. 34
3) In the best interests of
the company. 35
B. Suing the company. 35
i. How to
impute knowledge to the company. 35
ii. Shareholders
suing company as a personal action. 36
iii. Shareholders suing
company for other wrongs committed by company to shareholder in a collateral
capacity 36
iv. Shareholders suing
company for fraud on the minority. 37
1) Ratification. 37
2) Constraints on exercise
of power by special majority in changing constitution. 37
3) Infringement of personal
rights by breach of directors’ duty. 38
v. Statutory
oppression remedy. 38
1) Unfairly prejudicial or
discriminatory. 39
10. Remedies. 40
A. Common Law remedies. 40
i. Rescission
of contract 40
ii. Account of
profits. 40
B. ASIC Declaration of contravention.. 40
C. Statutory oppression.. 41
D. Statutory winding up.. 41
i. Just
and equitable. 42
ii. Directors
have acted in affairs of company in own or others interests (s 461(1)(e)) 42
E. Statutory insolvent trading.. 43
|