it is about three questions. using IRAC Format to answer. each question require about 250 words.
PowerPoint Presentation ACC204 Corporations Law Lesson 3 Module 5-Companies, outsiders and corporations liability Module 5 Companies, outsiders and corporate liability Module overview 1. How companies exercise power 2. Corporate liability in contract 3. An agent’s substantive authority 4. Indoor management rule 5. ss 128 and 129 assumptions 6. Corporate liability in tort and crime How companies exercise power • Organic theory: – The company acts of and by itself. – The company acts directly. – The organs of the company are: • the members’ general meeting • the board of directors • the managing director • the company secretary How companies exercise power • Agency theory: – The company is a principal – The company has agents to act on its behalf – The company acts indirectly How companies exercise power • Comparing the organic theory and agency theory of the company: How companies exercise power • If companies, as an artificial legal creation, can only act through the actions of people, then: – What actions is the company liable for? – Whose actions will bind the company? Is a contract binding? • Authority to bind the company under direct and indirect contracting: Is a contract binding? • A contract entered directly is binding by and against the company if: – it is in writing and is signed in accordance with the Corporations Act by officers of the company who have formal authority, and Is a contract binding? • A contract entered directly is binding by and against the company if: – it is signed by company officers or agents who have the substantive authority to enter contracts as the company itself: • members’ general meeting • board of directors, managing director, company secretary Is a contract binding? • Entering a contract directly: Is a contract binding? • A contract entered indirectly by an agent of the company is binding by and against the company if: – the agent had the actual authority to bind the company, or – the agent had the apparent authority to bind the company. Is a contract binding? • Entering a contract indirectly: Substantive authority of an agent • An agent’s authority to sign a contract on behalf of the company may arise in several ways. • Express actual authority: – The company has given the agent oral or written express authority to sign a particular contract on the company’s behalf. Substantive authority of an agent • Implied actual authority: – The company has implied the agent has authority to sign a contract on behalf of the company by: –company position — the position of the agent in the company (e.g. managing director) implies they have the authority to sign the contract Substantive authority of an agent • Implied actual authority: – The company has implied the agent has authority to sign a contract on behalf of the company by: –acquiescence — the company allows a person who has not been appointed as an officer or agent to act in that capacity over a period of time and communicates its consent in some way Substantive authority of an agent • Apparent authority: – The company has represented that the agent has authority, even though the company has not necessarily given express or implied actual authority. 1. A representation is made that the agent has authority (e.g. use of corporate letterhead). 2. The representation is made by a person with actual authority. Substantive authority of an agent • Apparent authority: – The company has represented that the agent has authority, even though the company has not necessarily given express or implied actual authority. 3. The third party relies on that representation. 4. The company has the capacity to enter the contract. Indoor management rule • Section 125 of the Corporations Act provides that a company that has breached its constitution still has legal capacity to act. • In common law, the indoor management rule provides that third parties can assume the company’s internal procedures have been properly followed, as long as they have no reason to suspect otherwise. Indoor management rule • Section 128(4) of the Corporations Act reflects the indoor management rule. • Exceptions to the indoor management rule can arise if: – the outside party has actual knowledge of an irregularity – the outside party fails to make the enquiries that would usually be made by someone in their position Indoor management rule • Exceptions to the indoor management rule can arise if: – a reasonable person in the outside party’s position would have been put on inquiry about a possible irregularity and be prompted to adequately investigate. • Even in cases of fraud or forgery, the outsider’s assumptions are still valid. Statutory assumptions • Section 128 of the Corporations Act entitles a person dealing with: – a company – an agent of a company – someone having acquired property from or claiming to have acquired property from a company Statutory assumptions • To make a set of assumptions, described in s 129 of the Act • Provided the person does not know or suspect the assumption is wrong. Statutory assumptions • Statutory assumptions by outsiders in dealing with the company: Statutory assumptions • Section 129(1) — the company constitution and replaceable rules have been complied with • Section 129(2) — a person listed as a director or company secretary on ASIC’s records has been duly appointed and has authority to exercise the powers of their position • Section 129(3) — a person held out by the company to be an agent or officer of the company has been duly appointed and has authority to exercise the powers of their position Statutory assumptions • Section 129(4) — officers and agents properly perform their duties to the company • Section 129(5) — a document that appears to have been signed in accordance with s 127(1) has been duly executed • Section 129(6) — a document that appears to have been fixed with the company seal in accordance with s 127(2) and properly witness has been duly executed Statutory assumptions • Section 129(7) — an officer or agent with authority to issue a document (or certified copy) also has authority to warrant the document is genuine • Section 129(8) — the statutory assumptions can be made simultaneously Liability in tort and crime • Company has primary liability for a tort or crime that the company itself has committed. • Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705: Liability in tort and crime • Company has vicarious liability for: – acts committed by employees in the scope of their employment – acts of the company’s agents. Liability in tort and crime • A tort: – a harmful act – other than a breach of contract – the victim has the right to sue for compensation – e.g. trespass, negligence, defamation • In a corporate group, the court may lift the corporate veil to make a parent company liable for a subsidiary’s torts. Liability in tort and crime • A crime: – a harmful act or omission – leads to the state commencing criminal proceedings and seeking to have the offender punished. • Companies are liable to crime in the same way as individuals. • Company guilty of a crime can be fined or deregistered. Liability in tort and crime • Most likely to arise in: – breaches of OHS regulations – breaches of human rights – damage of the natural environment. Liability in tort and crime • Strict liability exists for offences where fault (or intent) does not have to proved. • The company can use the defence of a reasonable ‘mistake of fact’ on the part of its agent, employee of officer. • Absolute liability exists for a limited range of offences, where fault (intent) is not relevant. Liability in tort and crime • Strict offence examples: NEXT Module 6 Membership, members’ powers and dividends Slide Number 1 Module 5��Companies, �outsiders and �corporate liability�� Module overview How companies �exercise power How companies �exercise power How companies�exercise power How companies �exercise power Is a contract binding? Is a contract binding? Is a contract binding? Is a contract binding? Is a contract binding? Is a contract binding? Substantive authority�of an agent Substantive authority �of an agent Substantive authority �of an agent Substantive authority�of an agent Substantive authority�of an agent Indoor management rule Indoor management rule Indoor management rule Statutory assumptions Statutory assumptions Statutory assumptions Statutory assumptions Statutory assumptions Statutory assumptions Liability in tort and crime Liability in tort and crime Liability in tort and crime Liability in tort and crime Liability in tort and crime Liability in tort and crime Liability in tort and crime NEXT Slide Number 36 PowerPoint Presentation ACC204 Corporations Law Lesson / week 4 Module 6- Membership. Module 6 Membership, members’ powers and dividends Module overview 1. Rules, procedures and rights of membership 2. Members’ meetings 3. Dividends Members as owners • The members of a company are its owners or custodians. • In a company limited by shares, members are shareholders. • A share is chose in action: – A set of legal rights – More limited than conventional ownership rights • Members are not entitled to interfere in management decisions. Members as owners • Members’ rights: Becoming a member • Any individual or entity can become a member: – upon registration, if specified in the application for registration – by applying for a being allotted shares – receiving a transfer of shares from another member – exercising options or warrants over shares – receiving shares by transmission upon the death, bankruptcy of incapacity of an existing member Register of members • Companies must maintain a register of members: – Name and address of each member – The date the name was entered on the register – Number of shares held – Class of shares held – Share certificate numbers – Amount outstanding on the shares Register of members • Sample register of members: Register of members • A company or person has the right to apply to the court to have errors in a share register corrected: – amount unpaid on shares – amount of shares owned – whether shares have been transferred • The court has broad powers to order a rectification of the register of members. Share certificate • A share certificate is prima facie evidence of title to a share and must show: – the name of the company – the class of shares – the amount unpaid on the shares. • A company is liable at common law for any loss arising from an error in a share certificate. Share certificate • Sample share certificate: Transferring shares • Shares are relatively easily transferred from a shareholder to another person. • The company constitution of an unlisted company may place restrictions on share transfers.