Assignment on Company Law (Doc)
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Added on 2020-04-07
Assignment on Company Law (Doc)
Added on 2020-04-07
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1Company LawStudent’s NameStudent’s Number
2ContentsAbstract............................................................................................................................................3Introduction......................................................................................................................................3The nature of a company.................................................................................................................4Director’s decision to reduce salaries of employees........................................................................5The formation of PNGair and its Legal Status................................................................................6Lifting the veil of incorporation...................................................................................................7Fraud.........................................................................................................................................7A sham......................................................................................................................................7The options available to the employees and their likelihood of success.........................................8Conclusion.......................................................................................................................................9References......................................................................................................................................10
3AbstractThe management of every company is guided by the company's constitution whichoutlines powers exercisable by the directors, embodies the policies and rules for internalmanagement as well as the relationship that exist between shareholders and the directors of thesaid company.1 in the absence of the constitution of a company (though very rare), the defaultconstitution is the replaceable rules contained in the Corporations Act 2001 (CA). Directors are fiduciaries of a company. There are duties that are imposed on them bothunder a statute and common law. They are required to act in the best interest of the company atall times and should have the stakeholders in mind while making any decision that is likely toaffect them. A company has been regarded in the eyes of the law for a long time as a separatelegal entity with the capacity to contract in its name, sue and be sued and to own property. Thedirectors, however, act as the driving soul and mind of the company and aid in decision-making.At times, the corporate veil is likely to be ignored where a company is a sham or is committingcertain crimes. Directors are supposed to act at all times in good faith and the interest of theshareholders of a company. They should avoid conflict of interest.IntroductionThe facts of this scenario relate to the principles of corporation law and more specificallyto corporate governance.2 In advising the employee associations on the appropriate action totake, this paper shall first examine the actions of the directors in trying to impose a 25% pay cutagreement which the employees rejected and its implications under the corporation's act. Theformation of PNGair and its purpose shall also be examined.1Hadden, Tom. "The regulation of corporate groups in Australia"UNSWLJ15 (1992): 612Anderson, Helen. "Piercing the veil on corporate groups in Australia: the case for reform"Melbourne ULRev.33 (2009): 333.
4The paper shall further discuss the redundancy decision on pilots and senior managers ofAussieair and their subsequent employment at PNGair at the rate that Aussieair had sought toimpose. The options available to the employees will then be examined and a determinationwhether they can enforce the salaries that they were entitled to initially at Aussieair. The papershall conclude by restating the position of the employees and the likelihood of succeeding in theaction. The legal status of PNGair and Aussieair shall also be restated and whether the directorsbreached the provisions stipulated under the Corporations Act 2001. The nature of a companyA company is a legal entity regarded in the eyes of the law as an artificial person withliabilities and rights. The shareholders own the company and are regarded as the real owners ofthe company.3 The company directors are the ones with the power to control and manage thebusiness of the company. Under section 124 of the Corporations Act, a company has powers ofan individual and a legal capacity.4are viewed as separate legal identities. It can be sued or sue on its behalf, can ownproperty, it has separate liabilities, and certain companies have limited liability. WhereCompanies have limited liability, it is either by guarantee or shares. A corporation has perpetualsuccession; the death of a shareholder does not affect its existence and continuity of carrying outits business.5 A company as a separate legal entity was outlined in the famous case of Salomon vSalomon & Co Ltd (1897). Mr. Salomon who had been a sole trade operating a boot business inthe 1890s in London. He sold the boot business to the company to Salomon & Co Ltd for a sum3Anderson, Helen. "Piercing the veil on corporate groups in Australia: the case for reform"Melbourne ULRev.33 (2009): 333.4Corporations Act, 20015Paterson, William Everard, and Howard Heywood EdnieAustralian Company law (Butterworths, 1992)
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