Company Contract: Constitutions and Director Role

Company Contract Constitutions and Director RoleQuestion 1.Is the contract enforceable against Beanstalk Ltd owing to the fact that Jack did non squander the contentedness to enter into that kind of contract?Employees of a society name a clear mandate on their creators and this ar usually spelt proscribed in the in the articles and memorandum of association of a foundern social club. The corporation act has come in handy to take this scenario. separate 124 dwells on the powers of the friendship and its well-grounded status. Sec 124 (2) appends that a association well-grounded capacity to do a particular thing is not affected by the fact that the confederacy interests are not served by doing it. Section 125 of the CA is to the gear up that a follow constitution whitethorn overhear an express restriction on the itinerary a go with may exercise its powers. Suffice to note that the exercise of a power by the company is not invalid merely because it is distant to an express restriction or prohibition in the companys constitution. Subsection 2 is to the gear up that an act done by the company is not invalid merely because it is contrary to or beyond any objects in the companys constitution.Sec 126 is to the effect that an agent ap stageed by the company and he has the power to coiffe, vary, ratify or discharge a contract. The person may be exercising express or implied authority and on behalf of the company. The power may be exercised without using a common seal. The court incessantly takes the view that the duty to act in good faith in the outstrip interests of the company means that the directors mustiness act in the interests of the shareholders as a collective group as illustrated in the Greenhalgh v Arderne Cinemas Ltd1. In addition to the supra sections, section 128 entitles one to make assumptions in section129 in relation to dealings with a company. The company is not authorise to assert in proceedings in relation to the dealin gs that any of the assumptions are incorrect. Section 130 on the other hand is to the effect that a person is not taken to have training about a company merely because the data is acquirable to the public from ASIC.Section 128(4) is to the effect that a person is not entitled to make an assumption in section129 if at the time of the dealings they knew or suspected that the assumption was incorrect. Section 129(b) details the presumption in section 128. Section 129(2)(b) is to the effect that one may assume that a director has authority to exercise the powers and perform the duties customarily exercised or performed by a director or company secretary of a similar company.In our case scenario Beanstalk is obligated to brook even if Jack surpassed his powers unless they washbasin prove that Giant ltd were aware of the limitations imposed on jack and they disregarded them.The Beanstalk constitution was available in the public record and Giant ltd had an obligation of knowing and co mplying with the con tentsSection 130 of the CA serves to address the issue of notice on the limitations imposed on the directors or agents of the company. It provides that the company fuckingnot escape liability on the premise that the person dealing with the company should have been aware of the limitations. The two Sections just before section 130 are of the following effect Section 128(4) is to the effect that a person is not entitled to make an assumption in section129 if at the time of the dealings they knew or suspected that the assumption was incorrect. Section 129(b) details the presumption in section 128. Section 129(2)(b) is to the effect that one may assume that a director has authority to exercise the powers and perform the duties customarily exercised or performed by a director or company secretary of a similar company.One also occupy to look at the organic theory which states that where the agents of the company acts within the boundary of powers conferred to them b y the company constitution or replaceable rules, then they are deemed as being the company itself as was illustrated in Northside Developments Pty Ltd v Registrar-General2. but this may always turn out not to be true as was espouse in the case of Smorgon v Australia and New Zealand Banking Group Ltd3, where it was observed that such(prenominal) an act requires the attribution of mental states to corporationsCompanys legal capacityAt common law the company could simply enter into legal obligations only if its constitution so authorizes. Any part to the contract was deemed to be aware of any restrictions contained in the constitution of the company. Capacity is catered for under Corporations Act 2001. Section 124 accords the company the same legal capacity as an individual and this encompasses power to make an agreement. S 125is to the effect that performance of an act including entry into an agreement by the company entrust not be invalidated merely on the premise that its beyond the power of the companys constitution. Thus Giant limited will not be stopped from staking it claims of payments merely because Beanstalk limited had make it constitution public as provided for under s125. Section 128 and 129 are to the effect that where one enters into any dealing with the company on the belief that he is dealing with the right person, then the company will have to honor its obligations. Thus despite the constitution being do public, section 129 and 130 states that the company is still bound by the acts of it officers who are duly appointed to carry out such a task. Thus beanstalk will have to prove that despite Giant ltd being aware of the limitations, they violated what was in the public domain.Question TwoPan Ltd is a company without a constitution. At a members meeting five items of transaction were passed as special resolutions and placed in a new constitution of the company. These werethat dividends can only be paid if they have been recommended by the di rectors and declared by the membersDividendsDividends are the payments made out to shareholders when the company is a going concern and if the directors have approved such payments. They can only be paid if the company assets are sufficiently in excess of its liabilities immediately the dividend is declared and if the dividend is fair and reasonable to the company shareholders as a whole and this does not prejudice the company ability to pay its creditors. This is governed by sections 254T and 254U.(b) That the transfer of shares in the company requires the approval of the directorsTransfer of sharesA shareholder in a company who wants to terminate his relationship with the company may decide to offload his shares by way of sale. The shareholder may encounter almost difficulties if he wants to sell the shares to an outsider of the company. near of the difficulties which may arise under the replaceable rules areThe directors have the discretion to refuse to transfer the shares andT here mogul a restriction in the company constitution (if any) on shares transfers. Sections 707. Section cxl(2) stipulates that a member may refuse to be bound by modifications later becoming a member if such a modification imposes or increases restrictions on the right to transfer the shares already held by the member, unless the modification is made or (i) in connection with the companys change from a public company to a proprietary company under Part2B.7 or (ii) to insert comparative takeover approval provisions into the companys constitution.Thus the discretion of shares transfer lies with the directors unless a contrary intention as envisaged in section 140 (2) is adduced.that Wendy Weird be a director of the company for lifeThe CA doesnt set the specific time for retirement of directors. One can only fail to serve as a director under the circumstances contemplated in Part 2D 3 of the CA. this can be removed by members through the annual general meeting, through resignation or incapacity. To this end one can be a director for life.Those directors of the company are to be appointed by Wendy WeirdA director may appoint other director under section 201 H (replaceable rulesee section135). A person can be appointed as a director with a view of the company establishing the requisite quorum for a directors meeting. Section 201J provides that the directors of a company may appoint 1 or more of themselves to the office of managing director of the company for the period, and on the terms (including as to remuneration), as the directors see fit. To this end Wendy can be appointed under the conditions envisaged in the above sections.That the directors may issue the companys shares only with the approval of the members.Directors have the powers to issue new shares as provided for under section 254D. Before issuance of new shares of a given class, the directors of a proprietary company must offer them to the existing shareholders of that class. The directors must give the shareholders a statement setting out the terms of the offer.Question ThreeIn order to obtain the monetary resource necessary to expand its business proceeds Ltd is to make a $M20 share issue. Advise the directors of Growth Ltd over the following matters.REQUIREDCan the bullion be raised from existing members or anyone else without a prospectus? (2 marks)There are some(prenominal) ways of fostering funds by companies in Australia. Public companies (i.e. those with more than 50 non-employee shareholders) can raise funds from the general public by issuing securities. Private companies (ie proprietary limited companies that have no more than 50 non-employee shareholders) on the other hand can raise fundsFrom existing shareholders and employees of the company or a footslogger company, and from the general public if the fundraising does not require a apocalypse document. Section 708 is to the effect that any personal offers of a body of securities do not require disclosur e to the investors. But this doesnt prevail to offers which might amount to indirect issue. life-sustaining documents one is supposed to give potential investors when raising funds? As a general rule of procedure, if a public company is desirous of raising capital or offering securities for sale (for example shares or debentures) a disclosure document must be availed to the potential investors. This is document whose main place is to describe all regulated fundraising documents for the issue of securities (for example shares or debentures).All companies which are allowed to raise funds can use a prospectus. A company also relies on an offer information statement or a profile statement and this is informed by the type of fundraising one intends to carry out and whether the restrictions imposed by virtue of using these documents are satisfied.Offer information statements An offer information statement (OIS) has in it a lower threshold for disclosure but can only be used for fundrais ing up to $10 million. If the company intends to use an OIS then it is required to include a copy of an audited financial report with a balance date within the last six months.Profile statements This is a document which sets out limited key information in relation to the company and the offer. This kind of statements can only be relied upon if ASIC has approved their use. To this end a company can raise funds from without reliance on the prospectus. In summary, a disclosure document is not required whenan offer is a personal offer, and ifoffers or invitations have been made to fewer than 20 persons in the previous 12 months, andthe new offer will not result in more than $2 million being raised in that 12 monthsNote you must not advertise the offer when you rely on this exemptionthe offers are made to specified people who are presumed not to need disclosure because of their financial capacity, experience, or wholesale statusthe offers are made to current holders of the securitiesno money or other form of payment is collectable for the securitiesother disclosure regimes under the Corporations Act apply (i.e. takeovers, schemes of arrangement)The offer is made by certain types of financial institutions.Will the directors be safe from prosecution if they provide to investors in a prospectus everything they know that is relevant about the investment? (2 marks)The Corporations Act does not detail out everything that ought to be included in the prospectus. But section 710 is to the effect that a prospectus must contain all information that the investors (and their professional advisers) would reasonably require, and reasonably expect to find in the prospectus. This information should be availed so that the investors can make an informed assessment of material matters relating to the company and these do include The assets and liabilities, financial position, profits and losses and prospects of the company. The rights attaching to the securities being offered.Some o ther information such as terms and conditions of the offer, disclosure of certain payments made to the directors and advisers in connection with the IPO and the expiry date of the prospectus must be contained in the prospectus.To this end the directors will be immune from prosecution as they will not have breached any requirement surmountowed on them.If the company issues a prospectus and the directors then become aware that there is a false and misleading statement in it, what alternatives are available to them under the CA? (3 marks)Where a company directors have become aware of a false or misleading statement in the prospectus which has already been issued to the public, the can supplication the ASIC to issue block off Orders. Though these are the preserve of the ASIC to issue this can be sought so that the issues can be rectified on time.Stop orders what they are and when we will issue one section 719 A stop order is an administrative mechanism that allows ASIC to prevent off ers being made under a disclosure document where we believe it containsa misleading or deceptive statementan deletion of information required to be provided under the legislation, ora new circumstance has arisen since the disclosure document was lodged.Where a stop order is issued on a disclosure document, then the company is not allowed to offer, issue, sell or transfer its shares while that order is in force. An interim stop order may be sought for up to 21 days during which time the company will be accorded a hearing to put across its views to an independent delegate. Its after the hearing that the interim stop order may be lifted or a final stop order on the disclosure document may issue. .Does the CA provide any protection for directors where funds are raised under a prospectus that contains a misleading statement? (3 marks)The liability for directors under corporation falls under section 1308, which provides inter alia that misleading misstatements amounts to a crime and such an offence, is one of strict liability. The CA offers protection to directors by availing the following defences. There are a range of defences available to potential civil and criminal liability, some of which include The due diligence defence, that is, that the person has made all enquiries which were reasonable in the circumstances and having made these enquiries, they believed on reasonable grounds that a statement was not misleading or deceptive or that there was not a material omission from the prospectus. Where a new circumstance has arisen and it can be established that the person was not aware of the new matter. Establishing that the person reasonably relied on information provided by someone outside the company, such as a professional adviser, for statements contained in the prospectusBut the director should not conceal such information when it comes to his attention.1 1946 1 All ER 512 (CA)2 (1990) 170 CLR 1463 1976 HCA 53Is Globalisation A Threat Or An Opportunity?Is Glo balisation A Threat Or An Opportunity?Is globalization a curse or an opportunity for business? The key objective for any business organisation is to maximise profit, if a manufacturing or service patience in any country is progressive in their field of practice, there maybe a need for them to invest or open other subsidiary operation in other country where there is a rising demand for their goods or services Sloma (2004). Furthermore, (Post et al, 1999146) states that globalization consist of assembling goods from components produced in several nations, buying of raw materials from overseas suppliers or selling finished goods or services to customers in other countries, also (BBC, 2011) defines globalisation as the involvement of the homo becoming highly interconnected as a result of increased cultural and care exchange. Therefore this essay would explain the cause/effect, opportunities and threat of globalisation on businesses.The main causes of globalization may interchange l iberalisation, transportation, and communication (Bhagwati et al, 1983). In trade liberalisation, legislation reducing trade and foreign direct investment have been relaxed. Some giving medications offer tax incentives to persuade overseas companies to invest in their country, this maybe linked to what is known as free trade (BBC, 2011). Transportation is relatively becoming cheaper, fast and easy to access. People travel for holiday, business, migrate and emigrate from one country to another. Businesses organisations can ship goods and raw materials between countries more well making goods and services from all over the world available to consumers. opus communication, the internet, telephony and the television have paved way for free flow of information and ideas. Outsourcing is a example these, and so a businesses organisation in a country can have a call centre in another country answering calls from customers of the main country.One of the main effect of globalization is inequality, this refers to the income disparity that exist between countries across the world. It maybe argued that globalisation contributes in creating more wealth in developed countries, thus it does not help to close the gap between the worlds richest nations and the worlds poorest King King (2005199).The internet can be viewed as an opportunity of globalization for businesses. The internet can also be seen as a gateway to participate in the game of globalization (BBC, 2010). Through the Internet, business organisations have been able to go beyond borders, to reach their end customers with their goods or services, thus this could be referred to e-commerce. Communications can be made quickly and easily to any anywhere in the world, but at the same time businesses are exposed to coarse competition, Holton (1998). There are millions of websites on the Internet, despite the manifestly easy participation, the reality of the Internet can be seen as oligopoly, Sloman (2004). Furthe rmore, with the internet playing a roll in globalization. It may be good for a business organisation to have access to anyone anywhere in the world, but it also exposes the business to competition. In the internet competition, winners are very few, which creates a big gap between the large and scurvy business. However, there are still opportunities for small business in the world of globalization. This could be the variety of cultures, languages, social systems and customs, etceteraTake the differences of language for illustrative example. Your website may not be seen by customers if it is only in English. Actually, many web pages in the Internet are compose in English. However, the business should know there are many languages in the world. If a business website has a page in a different languages, their competitors may be reduced.Another key opportunity for business, is the transfer of technological advancement and knowledge in globalisation. Corsi (2000) points out that this h as led to growth in innovation and rectify techniques of production to business. The main result of this is the growing income and appreciation of the companys economic achievement. Foreign migrants coming to work in multinational companies contribute to the knowledge of developing businesses thus which makes the business more efficient. Economic policies, management techniques and Increased knowledge about production methods present invaluable inputs in small businesses (SME) King King (2005).In globalization there are opportunities of cheap stab for business organisations, thus Jennifer (2005) argues that developing nations are encouraged to open their economies to international trade, with the aim that free trade would bring development and prosperity. Opening its economy to international trade does not translate to economic development and instant prosperity for developing countries, but kinda it signifies the exposure of the developing economy to multi-national corporations and foreign direct investors, many of which seek to expand their operations in developing economies because of the cheap labour available in these economies. Growing portions of these cheap labour sources consist of women and MNCs have been accused of intentionally hiring economically and poor educated deprived women to reduce labour costs. With cheap labour a clothing company in the UK can sell a shirt for 60 that cost less than 10 pence in labour to produce.While globalisation may be seen as an opportunity for big businesses, it can also be argued to be a threat to big and small businesses (SME). carper (2010) argues that energy and transportation costs increases when jobs are outsourced, as big businesses revise their business strategy and produce goods overseas. Customer service often decreases as companies pay for their goods to be transported from a foreign warehouse to their before being dispatched to the customer. Call centers, are also affected by globalization, as its be ing flooded with clerks who do not speak fluent English. As energy use increases, domestic supply costs increase as more businesses compete for natural resources.Intergovernmental relations between two countries can have an influence on multinational corporations. For example, If two countries are are war, there will be no trade between them. Furthermore, business operations may be influenced by the political ties of host and home country governments even when there is no war. The United States and japan have had an important, but difficult, relationship since the end of World War 2. The United States helped rebuild Japans steel, auto industries and shipbuilding , and by the 1970s Japans productivity had increased massively. It used its efficiencies to export steel, automobiles, and semi-conducts to the big U.S. Market. The United States has shifting political relations with Great Britain, China, Russia and Brazil, and many other nations. Economic relations are affected, for better or worse, by political change, and national political priorities shape business relations. The United States, for example, banned U.S. Manufacturing industries from selling military products to countries that government agencies believe may be a threat U.S. Security it restricts high technology exports and it has banned U.S. Companies from doing business dealings in Cuba (Post et al, 1999159).Increased Competition is another main concern, as it is threat to domestic businesses. judicature of developing countries are faced with this problem as they look to export more and import less to increase the countrys GDP. Globalisation threaten domestic companies as domestic businesses have to compete with foreign business organisation, they are forced to raise their customer satisfaction levels and standards in order to survive in the market. In addition, In developing countries, this is disturbing for domestic companies as they are unable to contend with foreign companies as they are too d ependent on the government for funds and therefore lack competitive edge. And also, this is were the government moves in to protect small companies by creating trade barriers and imposing tariffs on imported products. Protectionism does not apply to only developing countries but also developed countries also have the highest trading restrains, Borkakoti (1998).In conclusion, it appears to the author, based on what this essay talks about to point out that globalisation can be an opportunity also a threat to large and small business. Furthermore, globalization has played a big usage in the movement of goods and service, making resources available to consumer, it may be argued that globalisation has created global expansion for big business as it has paved the way for small domestic businesses to export their goods or service. However globalization has its disadvantages as well, because of its vulnerability to intergovernmental relations (in the case of war) and its opens domestic bus inesses to foreign competition.REFERENCESAnup, G (1997) E-commerce security weak links, best defenses. Oxford Wiley.BBC (2010) Globalization. functional at http//www.bbc.co.uk/schools/gcsebitesize/geography/industry/globalisation_rev1.shtml Accessed 14th March, 2011Bhagwati, J. N, Panagariya, A., Srinivasan, T. N. (1983) International Trade. 2nd edn. Massachusetts The MIT Press.Borkakoti, J (1998) International Trade. London Macmillan Press LtdCarper, T (2010) The Threat of Globalization. Online Available at http//www.thaynecarper.com/globalization/ Accessed 20th March, 2011Corsi, C (2000) Innovation and market globalization. Amsterdam IOS Press. pp9Holton, R. J. (1998) Globalization and the nation-state. London Macmillan Press.Jennifer, M. (2005) The Double Edge of Globalization. Available at http//www.allacademic.com//meta/p_mla_apa_research_citation/0/7/0/6/8/pages70681/p70681-1.php Accessed 14th March. 2011King, P King, S (2005) International Economics and International Econ omic Policy. 4th edn. New York Irwin/McGraw-HillPost, J., Lawrence, A., Weber, J. (1999) Business and Society. 9th edn. Boston, MA Irwin/McGraw-Hill.Sloman, J. (2004) Essentials of Economics. third edn. Harlow Financial Times Prentice Hall