Bonus Shares Under Corporation act, 2001: Law Assignment
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Added on 2020-01-28
Bonus Shares Under Corporation act, 2001: Law Assignment
Added on 2020-01-28
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Table of ContentsINTRODUCTION...........................................................................................................................3A).....................................................................................................................................................3Power of Board of Waldmart limited to issue bonus shares ......................................................3B)......................................................................................................................................................6Whether Shareholders can stop the shareholders from increasing and payment of dividend....6C.......................................................................................................................................................8Consequence of Waldmart's Ltd and its director in case of voting against in remunerationreport...........................................................................................................................................8CONCLUSION................................................................................................................................9REFERENCES................................................................................................................................9
INTRODUCTIONIn this present era, it has been evaluated that law has its great significance. It can befurther evaluated that law has a great significance. It can also be noted that law has differentparts and types. It can be characterised as business law, corporate law, commercial law etc. inthis report, various concepts of corporate law has been discussed 1. Also, different aspects adterms related to the corporate law and company law will also be demonstrated. In this report, itcan also be assessed that there are different terms and conditions which are need to be followedby companies in order to comply with different provisions of company. Also, various termsrelating to the issue of onus shares and dividend to shareholders is also discussed.A)Power of Board of Waldmart limited to issue bonus shares In accordance with the given scenario, in which there is a company namely WaldmartLimited which is a corporation registered under Corporation act, 2001. It proposes to issue thebonus shares which are been liable to be paid to existing shareholders. Also, a dividend is alsoproposed to be paid its shareholders at the rate of $1.25 cents which is 25% greater than the rateof dividend paid in last year. Also, the shareholders were of the opinion of that the company ispaying the dividend as just for the reason for rejection of the remuneration report presented bydirectors in a AGM. The Constitution of Waldmart Ltd authorises the board to issue the bonusshares in accordance with the decided rate of declaration of dividend 2. The Board of directorshave also issued a letter consisting of importance of shareholders which consist of importance ofshareholders in approving the remuneration report. In addition to this, it has been provided thatJim Smith , the manager of the Better Super Ltd, holds 4% of the shares in the Waldmart Ltd.1Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporatesustainability: Empirical insights into the development, leadership and implementationof responsible business strategy. Journal of Business Ethics. 122(1). pp.145-165.2Galbreath, J., 2010. How does corporate social responsibility benefit firms? Evidencefrom Australia. European Business Review. 22(4). pp.411-431.
Also, there are number of shareholders who are unhappy regarding the proposal. They put up theopinion that the the issue of bonus shares are not considered as the right decision taken by themanagement of the board of directors as it is an unwise decision. In accordance with the provisions of the Corporate law in Australia, it can be held that acompany is an institution which is formed in accordance with the concepts laid down in act.Also, it is the corporation, which has been formed as a separate legal entity which has beencreated by the charter , legislation or prescription. There are two types of companies which canbe characterised as Public company and Proprietary company. It can be further noted that apublic company is the one in which the ownership has been distributed among the public generalin the form of shares or stock which are able to be traded on a stock exchange and in the overcounty market place. In accordance with the provisions laid down under the act, it can beassessed that there are different provision which the company should comply while distributionof the dividend 3. It can be further analysed that there are certain provisions which are liable tobe complied in order to declare the dividend to its shareholders. Bonus shares are those shareswhich are issued by the company to its current shareholders in the context of their currentshareholding.The constitution of a company which can also be named as the memorandum ofassociation, is a document which is consist of all the legal rules and regulations which thecompany is liable to adhere. In addition to this, it is a document which is considered to governthe internal management of the company. It is also treated as a vital written document which hasa control over the internal activities which the companies are liable to perform and also regulatethe internal and external relationship between its members, directors and shareholders. It is thelegal document which is necessary to be formulated by each and every company in accordance tohave their own constitution or to have adopted as per the rules and regulations of the AustralianSecurities and Investment Commission (ASIC).In conformity with the given provisions of the company law a company can distribute itsdividend in accordance with the following provisions :A company can distribute its shares in accordance with the given laws and regulations asspecified under SECT 254T of Corporations Act, 2001.The situations in which the companiescan pay of off the dividend to its shareholders are as :3Du Plessis, J.J., Hargovan, A. and Bagaric, M., 2010. Principles of contemporarycorporate governance. Cambridge University Press.
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