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Law-of-Business-Organisations-Notes.docx - Law of Business...

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Law of Business Organisations NotesIntroduction...................................................................................................................3Partnerships..................................................................................................................6Agency........................................................................................................................13Non-Profit Organisations............................................................................................17Unincorporated........................................................................................................17Incorporated............................................................................................................19Companies..................................................................................................................21Background.............................................................................................................21The Legislation........................................................................................................21Corporate Entity......................................................................................................23Advantages..........................................................................................................23Disadvantages.....................................................................................................24Separate Entity (Veil)...........................................................................................24Insolvent Trading.................................................................................................26Fraudulent Trading..............................................................................................30Accounts..............................................................................................................31Auditing...................................................................................................................34Types of Companies...................................................................................................37Company’s Constitutions............................................................................................41Registration.................................................................................................................43Pre-Registration Contracts......................................................................................43Contracts with Promotors........................................................................................43Corporate Fundraising................................................................................................44Debentures..............................................................................................................44Share Capital..........................................................................................................45Capital.................................................................................................................45Shares.................................................................................................................47Buybacks.............................................................................................................48Self-Acquisition/Control.......................................................................................50Financial Assistance............................................................................................51Repealed Ch 2K......................................................................................................51Disclosure...............................................................................................................521
Dividends................................................................................................................54Directors and Officers.................................................................................................57Introductory Issues..................................................................................................57Director’s Duties......................................................................................................61External Liabilities.......................................................................................................68Contracts (Generally)..............................................................................................68Tort..........................................................................................................................69Criminal...................................................................................................................70Membership................................................................................................................71Rights......................................................................................................................71Attaining Membership.............................................................................................71Cessation of Membership.......................................................................................74Register of Members...............................................................................................74Remedies................................................................................................................75Meetings and Procedure............................................................................................80External Administration...............................................................................................85Receivership...........................................................................................................85Voluntary Administration.........................................................................................87Schemes of Arrangement....................................................................................89Liquidation...............................................................................................................90Liquidator.............................................................................................................92Winding Up..........................................................................................................94Voluntary Winding Up..........................................................................................95Creditors Recovering Property............................................................................962
IntroductionForms of OrganisationsoThere are many forms of businesses, which affects the operation etc.of the businessTaxationoSole TraderAll income deemed to be personal income, taxed accordinglyStatus?Tax free threshold is determined by residency status($18200 for AU)Resident for tax purposes meansoAlways lived in AUoCome to AU to liveoHave been in AU for more than half of the incomeyear (unless their usual home is overseas and theydon’t intent to live in AU)ProcessIncome tax = (Taxable income x rate) – OffsetsTaxable income = assessable income – deductionsDifferent amounts per tax bracket (lump sum + cents onthe dollar)oPartnershipsTaxed individually on the share of the partnership incomeoCompaniesDistinct legal entities = different tax regulations‘A body corporate or any other unincorporatedassociation of body of persons’(s 995 ITAA)Separate from their members(Salomon v A Salomon)Regulated by theCorporations Act 2001 (Cth),Competition and Consumer Act 2010 (Cth)Status?Resident companies pay tax on all income, non-residentonly pay on income generated in AustraliaMust appoint a public officer to ensure that the companycomplies with its obligations(Fitzgerad v Deputy FederalCommissioner of Taxation)Process30% taxation rate (see formula above)Losses can be rolled over to later years to reduce taxableincome IF(subdiv 165-B ITAA)oContinuity of business testBusiness continues to operate in the sameways as when the losses were accruedoContinuity of ownership test3
At least 50% of the owners of the sharesmust stay the same for the next yearOther deductions are regulatedoLoans to shareholders will be considereddividends (thus taxable)oOverpayment for services will be consideredtaxableoImputation system (this shit is super confusing wtf)oCo-operative companyDifferent structureShare capitalLimitation on the number of shares held by any oneshareholderProhibition on listing on the stock exchangeSpecific formations objectsDifferent deductions allowed for this special type of companyoOther taxesCapital gains taxA taxation on the value gained by the disposal of an assetProcessoGain – cost base = CGT taxable amountoAmount of money the taxpayer received as a resultof the disposal of the assetoCost base of the asset (within 12 months ofacquisition of the asset) is the sum of the following

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Corporation, partner

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