Corporations Act 2001 Analysis

This report analyzes the Corporations Act 2001, focusing on its provisions related to investment disclosure. It discusses the importance of transparency between companies and investors, the legal implications of non-disclosure, and the responsibilities of businesses under the Act. The report highlights various sections of the Act that govern the disclosure of information, the consequences of breaches, and the overall impact on corporate governance in Australia.

Corporations Act 2001

Table of Contents
INTRODUCTION..........................................................................................................................................................3
QUESTION 1..................................................................................................................................................................3
Disclosure of provision of investment in Corporation Act 2001.........................................................................3
CONCLUSION...............................................................................................................................................................7
REFERENCES................................................................................................................................................................8

INTRODUCTION
There are many kind of business entity which has been established in Australia, dealing
with business activities. It is a very well known fact that there are many business organization in
Australia whose main purpose is to carry out business and business related activities all over the
region. Such will ensure a proper regulation of commercial activities for their consumer. In order
to ensure a proper consumer satisfaction, it is very much essential that a work shall be carried out
in a proper manner which is why government had made several kind of initiative like
implementing certain rules and regulation which will make sure that the rights and duties of
stakeholders shall get protected(and Yar, Jewkes, 2013). One of the major law dealing for
business scenario is Corporation act 2001. it is a kind of law which shall be dealing with business
entities in Australia at federal interest level. The following care shall focus on to the different
provision of corporation act 2001. the main aim of the project is to create a better understanding
and knowledge on this act.
QUESTION 1
Disclosure of provision of investment in Corporation Act 2001
What is company constitution?
Nation required constitution since 1998 and so as Australian companies which is why a
set of rules and regulation was established to ensure that a proper constitution will be formed. A
company’s constitution is referred to set of rules and regulation, describe about how a business
entity shall work. A constitution of a company shall include Memorandum of association and
Article of Association which will describe provision related to it. There are many kind of
business activities which has been taking place in region in order to carry out business
environment in the market. There are many kind of organization which has been set to carry out
different types of activities related to sell and buy of the affairs or articles. It has been seen that it
is very important to establish a proper authority first then to start with establishment of a firm.
That is when a new organization of business has been set up in the market then it is very
important management shall be carried out in a proper manner. There are many laws and
regulation which give a guideline to organization regarding setting up management for an
example it has been seen that one of the most efficient act in terms of business activities is
corporation Act 2001 of Australia(Womack, and Jones, 2010). This act have several kinds

provision which shall deal into basic feature of a business entity. For an example when a
company is being established for the very first time, then it is very much essential to register
such company in a authority so that a business organization shall be legally established. The act
shall include what kind of employee is to be hired in a company like there shall an officer and
director of the company who shall look for all the affair in an organization(Bakan,2012). There
are several kinds of rights and duties of an employee and an office, such rights are described
under corporation act 2001. it has all the terms and condition related to the business organization
which can help a company to be legally strong. It is very important for a company to get
recognized by law as there are many legal requirements and if such requirements shall not get
fulfilled then liability will arise on the company regarding any kind of breach in a
provision(Zehr, 2015). The act also discuss about the power which shall be granted to a person or
a particular authority to deal with other members for an example there are several stake holders
in a company and to deal with them, company need power and authority. Such powers are
described under act. There are may kind of provision which has been covered under this act of
which one of the important provision is disclosure provision regarding investors of a company.
The reason behind putting this cat is a serious concern of Global Financial crisis which can be
explained as a worldwide period in which consumer as well as produce shall face economic
difficulty. It is cal;led as difficult economic environment in which consumer tend to reduce their
purchase of goods and services until there is betterment in economic situations. It is in According
to Corporation Act 2001, PART 6D 2 deals in the provision related to the disclosure of investors
about securities. The word disclosure can be explained as an action which will disclose all the
relevant information that is no important information whether it is related to any kid of contract
or any kind of securities shall be kept as a unknown or secrete.Purpose of disclosure is not to
face any kind of crisis for an example Lehman Brothers Went into global Crisis as there was not
disclosure of properly. Another incident was occurred with BP oil in Mexico killing 11 people
because safety concern was cutting down costing 1 million dollar everyday and in order to save
the same incident cost them 100 billion dollars just in shareholder wealth which is considered as
big mistake. by the company Section 704 of Corporation act 2001 explains about when the
disclosure of information to the investors shall be needed. It stated that when an offer of security
is being made to investor then such offer has to be disclosed by the party under this part. There
are certain advertising restriction which has been explained under section 734 of this

act(Spamann, 2010). There are different kind of restriction to be applied on the document,
depending upon what type of document is being lodged. There are different kinds of documents
which need top be disclosed when an offer has been made to investor for an example document
like Prospectus, short From Prospectus, Profile statement, offer information statement. Such
types has been explained under section 709 of the act. Section 7069 of the act explains that any
offer which has been made between the company and the investor related to issue shall be
disclosed. Sub section (1) of section 707 of the act explains that an offer which has been made
between the parties regarding some sale shall be disclosed sub section 2 explains about the offer
of body's control. It is absolutely correct to state that when a disclosure provision is being
maintained between a investor and a company, it shall bring a balance between two. Whenever
an agreement has been made between the company and a investor regarding any offer to sale of
controlling body then it is key principle to disclose all the important documents related to it. As it
shall enable a proper balance between the investor and the company(Avgouleas, Goodhart, and
Schoenmaker, 2013). Whenever all the documents are being informed between the parties which
are important from an agreement then it shall bring up a form of transparency. According to
various laws it is very important to maintain a transparency between the parties so that there shall
be no confusion remain. When all the documents are being disclosed in front of investor that is
when all the information shall be in a knowledge of investor then it shall bring a unit of
transparency(Freeman, Wells, and Wyatt, 2014). It is very essential that all the information must
be produced in a clear manner as it will lead various other consequences for an example it the
information is being clear in the mind of a person or an investor then he will be able to quote an
offer well. One of the major result regard with maintaining a disclosure provision that is
disclosure of documents that there is least chance of rise in legal remedies. If an amount of
transparency shall be maintained between the parties then there shall be least chance for any kind
of liability arising out of breach of offer. It has been seen that while making an offer there are
certain clause which are not clear to the mind of an investor which is why a offer is not able to
form in a perfect manner. Such confusion in the making shall leads to beach and rise in liability
against corporation act. If all relevant information is being clear then a proper balance shall be
made between the company and an investor(Koh, Wong-Foy, and Matzger, 2010). It is an
obvious fact that when all the things are being clear in a mind of investor with the application of
disclosure clause then an adequate balance shall be maintained between both the parties. Another

factor which will lead of maintaining balance between the parties in terms of disclosure of
documents that an amount of accountability shall be maintained between the an investor an a
company. That is the facts related to the offer made shall be accountable to investor first and then
to company. Being investor, it is the prime concern of him to know ever bit detail about
documents so that in future there shall be no misrepresentation by the party. When documents
are not being disclosed between an investor and a company then it may possess to probability of
misrepresentation(Chesbrough, 2010). A misrepresentation is considered as misleading of a party
with the execution of any kind of false statement. If there shall be misrepresentation between a
company and an investor regarding documents of offer, then it will lead to inadequacy and
imbalance. If there shall be no proper balance maintained by a company against investor then no
such investor will come forward to make an investment into a company.
Therefore it is very much necessary to maintain a proper balance between the investor a
company by disclosing all the necessary documents.
When a procedure of disclose take place then there are certain requirement which needs to be
fulfilled. Division 4 of Corporation act 2001 shall reflect about the requirement for disclosure of
any document. section 710 of corporation act explains about the requirement about disclosure of
any document(Alali, and Foote, 2012). It states that all the important information shall be
maintained in the offer which is being made between the parties and such information shall be
critically assessed on matter like to what extent the information is useful for inventors or if the
person finds an information relevant. Section 711 of the cat explains about specific disclosure of
the information. It states about the terms and condition which is being mentioned in a prospectus
or the disclosure of any kind of interest with the involvement of certain people. There are many
other specific information which is required to disclose in front of investors regarding an offer.
Section 712 to section 716 of corporation act explains about the requirement which is being
needed to disclose a document(Baumgartner, 2014). For an example, it states about simple
corporate bonds, base prospectus, information statement etc. as it has been discussed above that
it is very much important for a company which has been dealing with investors to disclose all the
relevant information because if there shall be no disclosure of information then there are many
other consequences which a company has to face. One of the major consequence is regarding
legal liability. If there shall be no disclosure of any kind of document related to an offer then it
may be probability of non-transparency between the parties. When the provision regarding any

kind of transparency is breached then there shall be a probability of misrepresentation in an
agreement. It is very much happened that a false statement has been presented in front of an
investor regarding an offer which has lead towards breach and rise of legal liabilities. Section
726 to 736 of corporation act states about various kinds of liabilities which has been arising out
of breach of an agreement(Ravasi, and Stigliani, 2012). Such legal liabilities shall always arise
when there shall be breach of contract or there shall be inadequacy in information presented in
front of investor. Another consequence regarding the same is no investor will be ready to invest
in a company by which the success of an organization shall come to an end. Investors plays a
very important role for a company as their work 8is to invest and make profits but if there shall
be breach in terms of corporation act 2001 provision which will amount to legal liability, then no
investor shall get ready to invest. The act also describes about the amount of penalty which shall
be imposed on a company, breach the provision of discourse regarding an investor(Bédard, and
Gendron, 2010).
Hence, it ca be said that it is very important for the company who is dealing with investors to
disclose documents related to offer so that there shall be an amount of transparency maintained
between the party and it will not amount to any kind of breach resulting into rise of legal
liabilities(Queen's Printer for Ontario, 2012-17).
CONCLUSION
It shall be concluded from the above project that for the protection of different kind of
rights and duties related to business entity in corporation act 2001. it has been further explained
in the project that it is very important for for a company to disclose all the important documents
related to offer so that a transparency shall be maintained. If there shall be no misrepresentation,
there will be amount of balance maintained between the parties. The projects has described
various sections of act describing about disclosure provision. The report has also described about
the liability arising out of breach of offer by company and related consequences.

REFERENCES
Books and Journals
Alali, F.A. and Foote, P.S., 2012. The value relevance of international financial reporting
standards: Empirical evidence in an emerging market. The international journal of
accounting, 47(1). pp.85-108.
Avgouleas, E., Goodhart, C. and Schoenmaker, D., 2013. Bank Resolution Plans as a catalyst for
global financial reform. Journal of Financial Stability. 9(2). pp.210-218.
Bakan, J., 2012. The corporation: The pathological pursuit of profit and power. Hachette UK.
Baumgartner, R.J., 2014. Managing corporate sustainability and CSR: A conceptual framework
combining values, strategies and instruments contributing to sustainable development.
Corporate Social Responsibility and Environmental Management. 21(5). pp.258-271.
Bédard, J. and Gendron, Y., 2010. Strengthening the financial reporting system: Can audit
committees deliver?. International journal of auditing. 14(2). pp.174-210.
Chesbrough, H., 2010. Business model innovation: opportunities and barriers. Long range
planning. 43(2). pp.354-363.
Freeman, W., Wells, P. and Wyatt, A., 2014. Insights from the failure of the Countrywide
Financial Corporation. International Journal of Managerial Finance. 10(1). pp.115-136.
Jewkes, Y. and Yar, M. eds., 2013. Handbook of Internet crime. Routledge.
Koh, K., Wong-Foy, A.G. and Matzger, A.J., 2010. Coordination copolymerization mediated by
Zn4O (CO2R) 6 metal clusters: a balancing act between statistics and geometry. Journal of
the American Chemical Society. 132(42). pp.15005-15010.

Ravasi, D. and Stigliani, I., 2012. Product design: a review and research agenda for management
studies. International Journal of Management Reviews. 14(4). pp.464-488.
Spamann, H., 2010. The “antidirector rights index” revisited. Review of Financial Studies. 23(2).
pp.467-486.
Womack, J.P. and Jones, D.T., 2010. Lean thinking: banish waste and create wealth in your
corporation. Simon and Schuster.
Zehr, H., 2015. The little book of restorative justice: revised and updated. Skyhorse Publishing,
Inc..
Online
Queen's Printer for Ontario. 2012-17. [Online]. Available through.
<https://www.ontario.ca/laws/statute/01c33>. [Accessed on 11th January 2017].