CMS Water Contamination Liability Analysis

This assignment involves analyzing the potential liabilities of members of CMS, a mining company found to have contaminated nearby rivers with unsafe waste. The analysis should consider relevant laws and regulations, focusing on the Corporation Act 2001. Terry, an employee who suffered from cancer due to polluted water, can file a case against the firm for compensation.

CORPORATION LAW
Contents
INTRODUCTION...........................................................................................................................1

QUESTION 1...................................................................................................................................1
ISSUE..............................................................................................................................................1
RELEVANT LAW..........................................................................................................................1
APPLICATION...............................................................................................................................2
CONCLUSION................................................................................................................................4
QUESTION 2...................................................................................................................................4
ISSUE..............................................................................................................................................4
RELEVANT LAW..........................................................................................................................5
APPLICATION...............................................................................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Corporation is the part of company law which is able to define various types of rules and
responsible to for every firm. Corporations Act 2001 has been defined different statutes which
are able to control entire functions of companies 1.
QUESTION 1
ISSUE
In present case Richard is the person who has extensive olive grove in Hunter Valley
region of NSW. He has around 12,000 trees which are established as well as recently purchased
his neighbour’s adjoining property with the view to expansion. David and Liam are sons of him
are recently moved from Sydney in order to expand business and earn better profit. All these
members want to convert their family business into company. They have to follow complete
rules and regulation which are mentioned for incorporation and running business. Various steps
mentioned under law related to incorporation of company.
RELEVANT LAW
Incorporation is the legal process which has been used for the purpose of form company.
It is separate legal entity which is different from its members, directors and other officers.
Company having its own existence which is different from members 2. According to the rule of
Corporation Act 2001 companies have to follow rules, regulation and policies which are
mentioned under law for the purpose of incorporation of business. It can be incorporate either as
public or private companies. Two or more are required form private firm and not more than 50
members can join firm as member. Such type of companies not able to attract people for the
purpose of investment from general public. Unlimited liabilities created on members who are the
part of firm. In which they are responsible to pay liability as imposed on them as per the rules of
law.
1 Gevurtz, Franklin. Gevurtz's Corporation Law, 2d (Hornbook Series). West Academic,
2010.
2 Drexler, David A., Lewis S. Black Jr, and A. Gilchrist Sparks III. Dividends. Vol. 1.
Delaware Corporation Law and Practice, 2016.
1

On the other hand, in case of public organization seven are required to form company and
no limit for maximum number of members. Limited liabilities are imposed on them as they are
only responsible to pay liabilities for which they are responsible. It partial control has managed
by legal authorities.
APPLICATION
There are various types of roles and responsibilities are imposed on companies which
they have to fulfilled in effective manner. incorporation is the formation of new business.
Richard and his sons are responsible to collect relevant information in order run their business in
effective manner and try to comply with rules and regulation which are imposed on them. There
are basic requirements are mentioned for different organizations. they are responsible to obtain
certificate of incorporation which is the basic requirement of every firm. They have to mention
related information or data in such certificate and filled the same to legal authority. It is the legal
written document which is compulsory to be made and prepare. There are various business
requirements needs to be fulfil by Richard and his sons which are as aligned below-
Purpose of firm- Every firm has incorporated for some specific purpose. So that, they are
responsible to mention specific purpose of firm in certificate of incorporate. The aim and
objectives of firm needs to lawful and which are enforceable by law 3.
Corporate name- Members have to select name of the company which is not previously
registered by another firm. Because as per the rule of law two or more companies are not able to
registered with same name. Entity held patent on the name after its registration. So that, no other
firm can use such name without obtaining approval of such firm. Private company must add
word ’Ltd’ at the end of its name. but public company needs to be add word ‘Public Ltd’.
Entities are bound to perform function according to requirement of Article of Association.
Before finalize the name they should be select name which may not be misled consumers and
should be enforceable by law.
In the given case, Richard prefers the name ‘Ridali’ for the firm. On the other side, his
sons prefer the name ‘Rich’s Guaranteed Olives’. But they to register such name in order to
receive interest that no other firm can use such name without approval.
3 Murray, J. "Social Enterprise Innovation: Delaware's Public Benefit Corporation Law."
(2014).
2

Members- Only required number of member are able to form legal organization. In
present case private organization has been formulated by members. So that, for the purpose
incorporate of private two or more members are required to form company as well as maximum
50 members needs to be maintained. This is the compulsory rule of Corporation Act 2001 which
every company needs to follow in order to maintain performance and try to comply with
mentioned laws 4.
Directors- Private company needs to appoint required number of members as directors.
As they are not able to maintained more than limit specified by law. Also they are responsible to
fulfil rules and regulation which are imposed on them and mentioned under law. Needs to
mentioned name and address of directors in certificate of incorporation is the main function of
firm at the initial stage of firm.
Liability- In private sectors unlimited liabilities has been imposed on each and every
member of the firm. As they are bound to fulfil the same in effective manner. It has been
considered as compulsory duties are imposed on them. Members are try to fulfil their target and
try to resolve issuers which are created at the time of their performance.
Share capital- Private companies are not able to attract people through offer their share
capital in market. Entities are not able to raise capital in the form of shares. If any company can
do so then legal authorities are able to take action against them.
Take legal action- After registration companies are able to take legal action against
another firm and able to sue others and be sued by others. Furthermore, after such process
companies and its members are able to receive large number of opportunities and benefits for
them which are beneficial for them.
After preparing legal document, Richard is responsible to submit such documents in legal
department and must imposed their stamp over it. After such process they obtain certificate of
registration. It is the compulsory process for companies to maintain their performance in
international market. Through which no confusion has been create among them. With the help of
registration of firm is easily able to maintain their performance smoothly conduct its transaction.
4 Gorris, Jeffrey M., Lawrence A. Hamermesh, and Leo E. Strine. "Delaware Corporate
Law and the Model Business Corporation Act: A Study in Symbiosis." Law and
Contemporary Problems74.1 (2011): 107-120.
3

Business registration has been considered as legal process of obtaining authorization for the
purpose of conduct business. It is the legal obligation which is imposed on them and through
which it having full control over business. The first stage of this process is prepare written legal
document and have to perform functions accordingly. In such document try to mention all related
information which is important for running business. Through which firms are able to attract
large number of customers and try to attain their target as well. Maintain reputation in front of
customers and smoothly conduct business as well. Entities are able to receive lots of benefits
after registration of firm. Along with registration, members of firm are responsible to obtain
licence which is valid for some specified period. After such period they have to renew such
licence in order to use its services and fulfil legal obligation as well. For the same purpose they
have to fulfil some legal steps. It should be done for the purpose of protection of personal assets.
Through which they easily transfer ownership from one company to another. Also they receive
various tax benefit. This process is able to increase sale of stock and is beneficial for raising
funds. They are bound to perform functions which are enforceable by law. They have to
mentioned further information related to goods and services of company. It is the compulsory
requirement of firm which needs to be fulfil by companies in order to maintain performance.
Members are bound to maintain Article of Association and Memorandum or Association. These
are the compulsory and imporatnt document for the companies.
CONCLUSION
In the above case, it is concluded that Richard and sons are responsible to follow rules,
regulation and policies which are related to incorporation of business. Initially members have to
register firm in order to receive right over firm. Registration is the compulsory process which
firm have to follow them.
QUESTION 2
ISSUE
In present case Terry is the person who worked as employee of Cosmo Mining Services Pty
Ltd (CMS). It is the subsidiary company of Cosmo Mine Ltd. (CM) it owned 120 of the 200
issued shares in CMS. Furthermore. It is the operates lead, Zinc, copper mine at Gun barrel,
Westerned Queensland. After sometime scientists discovered that CMS’s activities related to
mining process has been contaminated into nearby river. Water has been supplies from such
4

river. So that, through which large number of residents of Gunbarrel and various employees
Terry are suffered from cancer due to polluted water or unsafe water. Thus, shareholders of CMS
are call general meeting in order to order to analyse potential liabilities of each members of firm.
Also unanimously they vote in favour selling business to newly formed company called as
Lazarus Pty Ltd and winding up of CMS. So that, in such case members are responsible to
follow rules and regulation which are imposed on them.
RELEVANT LAW
Every company have to comply with rules which are imposed on them as per rule of law.
Production firms are responsible to decompose their extra or useless material at perfect which
may not having health of people ad not able to contribute in increase of pollution 5.
APPLICATION
Organization is responsible to fulfil rules and regulation which are imposed on them as per
the rule of law. Corporation Act 2001 consists policies and procedure and it is not able to harm
health of any person. Terry is the employee of CMS and suffered from cancer due to polluted
water. So that, person is able to file case against firm in order to receive amount of
compensation.
CONCLUSION
In the above case, it is concluded that Terrey is the person who is suffered from cancer due
to dirty water. In that case person having right to file case against firm in order to receive amount
of compensation. Every production firm is responsible to decompose its waste material into
perfect place. Which may not be having impact on its performance.
5 Balotti, R. Franklin, and Megan W. Shaner. "Safe harbor for officer reliance: comparing
the approaches of the Model Business Corporation Act and Delaware's General
Corporation Law." Law and Contemporary Problems 74.1 (2011): 161-174.
5

6