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LAWS2301 Company Law | Assignment

   

Added on  2020-03-07

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COMPANY LAW2ContentsPart A...............................................................................................................................................3(i)..................................................................................................................................................3(ii)................................................................................................................................................4(iii)...............................................................................................................................................5(iv)................................................................................................................................................6Part B...............................................................................................................................................7Part C...............................................................................................................................................8Part D...............................................................................................................................................9Part E.............................................................................................................................................10Bibliography..................................................................................................................................13A.Articles/ Books/ Reports.....................................................................................................13B.Cases...................................................................................................................................13C.Legislations.........................................................................................................................14D.Others..................................................................................................................................14

COMPANY LAW3Part A(i)The key issue in this case is regarding the parties who can be made liable for the unpaid debts of the company, in case of possible winding up of the company. The companies have been given a separate legal entity status, due to which, for their liabilities, the shareholders of the company cannot be made liable. However, the shareholders of a company can be made liable in certain cases. When the company is limited by shares, the members are not required to pay anything other than the outstanding amount, i.e., the unpaid amount of shares, for the debts of the company. Further, the outstanding sum regarding the shares is deemed as the debt of the company1. Based on this section, Eric Sanders, Donald Trump and Inventions Pty Ltd would be liable for the unpaid capital on their respective shareholdings, i.e., for the remaining 0.99 dollar per share.The liability for the obligations is also upon such individuals, who have been named in the shareholder agreement and the constitution of the company2. The directors of the company can also be held liable for the debts of the company, when it can be established that there is a breach of duties held by the directors, pursuant to different sections of the Corporations Act, 20013. So, a director can be held liable in case the directors incurred debts when the company 1 Daniel Moore and Tom McLachlan, UK: Unpaid Share Capital In The Context Of Tax-Avoidance Schemes: Shareholder Liability In Corporate Insolvencies (26 January 2015) <http://www.mondaq.com/uk/x/368922/Insolvency+Bankruptcy/Unpaid+Share+Capital+In+The+Context+Of+TaxAvoidance+Schemes+Shareholder+Liability+In+Corporate+Insolvencies>2 Legal Vision, What are the Rights and Liabilities of a Shareholder in a Company? (18 March 2015) <https://legalvision.com.au/rights-liabilities-shareholder-company/>3 Corporations Act, 2001 (Cth)

COMPANY LAW4was insolvent pursuant to section 588H of this act4. However, such situation is not present here, so, these two clauses would not be applicable here. Hence, in this case, Eric Sanders, Donald Trump and Inventions Pty Ltd can be made liable for the unpaid debts of the company, in case the company is to be wound up.(ii)The key issue in this case revolves around the possibility of removing Hilary as the managing director of the company. When a person is made a director in the company, the process of removing the director has to be given careful consideration. When the company is incorporated under a constitution, the rules for company’s governance are covered under this constitution. Constitution is basically a contract which takes place between the shareholders who regulate the company’s management,along with the responsibilities and roles of the officers and directors of the company. In order to remove a director, there is a need to pass a resolution in the general meeting of the company. A proper notice has to be given for the general meeting, clearly stating that one of the agenda is to remove the director at the meeting. There is a need to obtain 50% of people in control, along with 1 share of company, who have voting rights, to pass the resolution for the removal of the director5. So, for removing Hilary, there is a need to convene a general meeting and get a resolution passed by people having 50% of power plus one share.Hence, by following the procedure laid down here, Hilary can be removed from being themanaging director of the company.4 Corporations Act 2001, s588H5 Streten Masons Lawyers, What is the process for removing a director of a company? (20 September 2015) <https://smslaw.com.au/what-is-the-process-for-removing-a-director-of-a-company/>

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