PP答案.pdf - PP 目录 PP 1 2014 S1 Q1 3 B MEMBERS OF A...

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Unformatted text preview: PP 目录 PP ................................................................................................................................................ 1 2014 S1 Q1 ......................................................................................................................................... 3 B) MEMBERS OF A PARTNERSHIP ……. HOW WOULD YOU ADVICE YOUR CLIENTS WHEN FORMING A PARTNERSHIP. ................................................................................................................................................. 4 C MEI (CEO OF W LTD) WANTS FURTHER EQUITY INVESTMENT IN HER COMPANY WITH DRAFTING & ISSUING PROSPECTUS ................................................................................................................ 5 D) LEGAL NATURE OF A TRUST, INCLUDING THE ESSENTIAL ELEMENTS TO EXPRESSLY FORM A TRUST AND THE LIABILITY OF A TRUSTEE. .................................................................................................... 6 E) TWO INSTANCES WHERE THE CORPORATE VEIL CAN BE LIFTED OR PIERCED. .................................. 7 2014 S1 Q2 ......................................................................................................................................... 8 PART A ................................................................................................................................................ 8 2 TYPES OF LEGAL REMEDIES AVAILABLE TO MEMBERS FOR BREACHES OF THE CORPORATIONS ACT 2001 (CTH) ....................................................................................................................................................... 8 14S1 Q2 ............................................................................................................................................... 9 PART B (DD) TOP LEVEL CONSTRUCTIONS ................................................................... 9 14S1 Q3 PART A ............................................................................................................................ 12 MANY GROUNDS FOR “JUST AND EQUITABLE” WINDING UP, CASES, REASONING ADOPTED BY COURT. ............................................................................................................................................................................ 12 2014 S1 Q3 EXTERNAL ADMINISTRATION ................................................................... 14 PART B .............................................................................................................................................................. 14 VA WESTEROS TRAVEL LTD ................................... 14 1 2014S2 Q1, PA ............................................................................................................................ 17 A) DIRECTORS, ISSUE SHARES ........................................................................................................................ 17 B) 3RD PARTY’S CONTRACTING ....................................................................................................................... 17 ..................................................................................................... 17 C) TRUSTEE D ERICA WHITE 2% PROFIT ............................................................................................... 18 2014S2 Q2 ....................................................................................................................................... 20 PART A = 2014 Q2 PA . 2 TYPES OF LEGAL REMEDIES ........................................................................ 20 PART B STRAIGHT TRAVEL ...................................................................................................................... 20 2014S2 Q3 ....................................................................................................................................... 23 PART A ............................................................................................................................................. 23 RIGHTS OF CREDITORS FOR EACH, EXTERNAL ADMINISTRATION ............................................................ 23 PART B ............................................................................................................................................. 24 A) MOST APPROPRIATE FORM OF EA (RICH, CASHLESS PTY LTD) ................................................. 24 =2007 S1 Q4 EXTERNAL ADMINISTRATION ....................................................................................... 24 2013S1 Q1 ....................................................................................................................................... 27 A) DISCUSS ORIGINS AND APPLICATION OF THE ORGANIC THEORY STEPS TO ENSURE: NOT AVOID LIABILITY FOR TORTS AND CRIMINAL OFFENCES. ...................................................................................... 27 B. LOSS MONEY WHEN FUNDRAISING. .......................................................................................................... 28 (C) FORMING PARTNERSHIP, LONG-­‐TERM GROWTH PLAN ................................................................... 29 =2014S1 Q1 (B) ............................................................................................................................................ 29 (D) TRUST MONEY USED FOR INVESTING CAFÉ ......................................................................................... 29 =2014S2 Q1 (C) ............................................................................................................................................ 29 2013S1 Q2 ....................................................................................................................................... 29 PART A WHICH SHAREHOLDERS, PART OF PURPOSE OF DIRECTORS’ DUTY. GOOD FAITH, BEST INTEREST OF THE COMPANY. ......................................................................................................................... 29 PART B STARLIGHT TRAVEL (DD) ........................................................................................................... 30 =2014S2 Q2 ................................................................................................................................................... 30 2 2013S1 Q3 ....................................................................................................................................... 30 PART A STATUTORY DEMAND: SIGNIFICANCE, CHALLENGE, SET ASIDE ............................................. 30 PART B MAKE THEM BIGGER LTD EA ............................................................................. 31 (A) LEGAL LIABILITIES -­‐-­‐ IF DIRECTOR ACCEPT THE BANK’S OFFER (BANK DIRECTOR PERSONAL GUARANTEE) ................................................................................................................................ 31 (B) POSSIBLE COURSES OF ACTION. EXPLAIN ADVANTAGES AND DISADVANTAGES OF EACH. .......... 32 2013S2 Q1 ....................................................................................................................................... 35 (A) XI AND FRED, PARTNER, PROFITS .......................................................................................................... 35 (B)ISSUE SHARE TO RAISE MONEY ................................................................................................................ 35 =14S2 Q1 A ..................................................................................................................................................... 35 (C) INDOOR MANAGEMENT RULE ................................................................................................................. 36 13S2 Q2 ............................................................................................................................................ 36 PART A DECISION IN ASIC V HEALY (THE CENTRO CASE), SHOULD NON-­‐EXECUTIVE DIRECTORS BEEN HELD LIABLE? IS PENALTY APPROPRIATE? ...................................................................................... 36 PART B DD (ORANA, TOP LEVEL ….) ................................................................................ 37 =2014S1 Q2 PB ............................................................................................................................................. 37 2013S2 Q3 ....................................................................................................................................... 38 PART A =2014 S1 Q3 PA ............................................................................................................................. 38 PART B (MAKE THEM BIGGER)= 13S1 Q3 ............................................................................................ 38 2014 S1 Q1 a) ways -­‐-­‐-­‐ law protect third party contracting with the company. When will a 3rd party not be able to rely on these protections ? 3 Company can directly or indirectly (through agent) contract with outsiders. If it is direct, the situation would be clear that the company will be bond by the contract and be liable for any relevant obligations. However, in the other cases, the “indoor management rule” applies. It can enforce defective contracts made by agents and specifies that an outsider acting in good faith can assume that a company had followed all internal procedures unless they know otherwise ( Turquand case) under S129. It provides some degree of protection for innocent 3rd parties dealing with companies to make sure their contracts are valid and binding. However, if the outsider knew or suspected that the particular assumption was incorrect, it would be an exemption to that rule. Under S128 , 129 follows the common law by allowing outsiders to make a series of assumptions when contracting with a company and also subject to the statutory limitations S128(4) , which are similar to the common law limitation. b) Members of a partnership ……. how would you advice your clients when forming a partnership. The basic rule is that each partner is both a principal and agent of the business as a result of the statutory agency relationship provided for by the partnership act. This means that each partner may incur liabilities on behalf of the business, and each partner will be liable for dents and obligations 4 properly incurred on behalf of the business by other partners. Unlike companies, a partnership is by nature not a separate legal entity. When doing business of the kind carried on by the firm in the usual way (Partnership Act S5). They owe fiduciary duties like those between directors to each other (SS 28-­‐30 ). Unless there is a limit on a partner’s authority, they would be bound the agent relationship and thus they would be jointly liable for contracts, jointly and severally liable for tore and misapplication of money or property (S9-­‐11). As a result, people who want to form a partnership must choose their partners carefully. In addition, a partnership has limited concession if one partner died, went bankrupt or retired. There are limited source of fundraising when it meets financial distress. And if there are only two partners, changing of their relationship may cause difficulty in reaching any agreement about firm’s management. partnership eg: C Mei (CEO of W Ltd) wants further equity investment in her company with drafting & issuing prospectus Since W Ltd is not a proprietary company, it may raise fund from the public or from existing shareholders. There are various exemptions where there is no need to prepare a disclosure document: Under S 708, small scale (not mare than 20 investors, less than $2 million, within 12 5 months); sophisticated investors; professional investors; senior managers; existing holders takeover and schemas; exempt( ) bodies & public authorities are excluded from preparing documents. If it is not an amount below $2 million, the investors are not experienced, there is a need to disclose crucial information to new investors to help them making informed decisions (CA Ch 6 D) Prospectus is something too long or sophisticated, but the company can choose to prepare short-­‐form prospectus and ledge the full prospectus with ASIC. Other two forms of disclosure document-­‐-­‐-­‐ profile statement or offer information statement—is only used when the share issue is valued at less than $10 million In conclusion, whether it is possible for reducing the fuss is depend on the situation and further materials are needed here. d) Legal nature of a trust, including the essential elements to expressly form a trust and the liability of a trustee. Trust is an equitable obligation, binding trustee to deal with trust property over which he has control for the benefit of beneficiaries of whom he may be one (but not sole)_, and any one of whom may enforce the obligation and it is not a legal entity. (Kally V Mina) The five essential elements are: settlor, trust property, trustee, beneficiary, personal obligation attaching to the trust property. 6 ! Settlor: create the trust by donating or transferring property to the trust. ! Trust property: any type of property may be received by the trust ! Trustee: the person is the legal owner and controller of the trust property. ! Beneficiary: benefits from the fiduciary relationship between the trustee and themselves. Liability of a trustee: If there is a breach of trust, trustee can be personally liable for loss suffered in relation to the trust estate unless he acted honestly and reasonably (Trustee Act 1925, S84). Trustee is personally liable for obligations incurred during the use of trust property. However, the trustee can indemnify for proper administration of the trust. e) Two instances where the corporate veil can be lifted or pierced. 1) Under common law, the corporate veil can be lifted when it was used to assist in a director’s breach of fiduciary duties. In Green v Bestabell Industries case, Green, as a manager, competed with the company for his own interest to win a tender, which was in breach of the conflict of interest rule (S183). Bestball’s remedy was based on lifting the corporate veil. 2) Under Statutory law, according to CA 2001 S558G, director is personally liable for insolvent trading if the person is aware or a reasonable person in a like position in the company would be so aware that the company is going to be insolvent because of a statutory duty to avoid insolvent trading that the direct owes to the company. 7 2014 S1 Q2 Part A 2 types of legal remedies available to members for breaches of the Corporations Act 2001 (Cth) Under S232, a member of a company can bring action against a company on grounds of oppressive or unfairly prejudicial conduct. If a minority shareholder is not able to participate in management, he can seek for this remedy and courts has a wide range of powers to redress the oppressive conduct, including specific orders listed in paras (a)—(J), any order fits the situation can be given. (Re Dalkeith Ivestments Pty Ltd) Under S236, statutory derivation action is another remedy that allow a member to take proceedings against the directors on behalf of the company. It requires court approval, however, so the member must prove that he is acting in good faith and in the best interest of the company. (Swanson VRA Pratt Properties Pey Ltd) Consequently, any amount of damages recovered on behalf of the company is to go the company rather than individual member unless he apply to the court for a cost order in his favor: S242 8 14S1 Q2 part B (DD) Top level constructions Orana and Top Level Issue: Did Orana breached any of duties she owned to the company? 1) Law: General and Statutory law identified several similar duties that any 2) directors owns to the company as a whole (Green Halgh) and these can be defined as : Fiduciary Duties. -­‐-­‐-­‐ General Law Fiduciary duties: i. Act in good faith in the best interest of a corporation (Walker v Wimborne) S 181 (1) (a) ii. Exercise their powers for a proper purpose S 181 (1) (b) (Whitehouse v Carlton Hotel pey Ltd ) iii. Use director’s position and information for proper use iv. avoid conflicts of interest between directors and the company S182-­‐183 (Regal Hostings Ltd) -­‐-­‐-­‐ do not take up corporate opportunities S182: Do not make improper use of position to gain an advantage or " cause a detriment to the corporation S183: Not to make improper use of information to gain an advantage as " directors (Regal Hastings) v. Not to make a secret profit (Furs Ltd v Tomkies) 9 statutory duties: i. Duty of care and diligence ii. Duty to prevent insolvent trading ( …. ) Other relevant statutory duties: Chapter 2E of CA: Regulates related party transactions – stops public company from giving financial benefits to directors and related parties (such as families/relatives) unless these are disclosed and approved by a general meeting (SS207-­‐230) related party 3) Apply fact to Law. Orana faced a breach of avoiding conflicts of interest because of taking up the opportunity of reconstruction projects by establishing her personal company Better Built Pty Ltd (Regal Hastings). If this conduct was approved by other shareholders, He will not be guilty. But it was unfortunately not approved. Besides, using his own company to get this opportunity and get profit breached the “non conflict rule”, because it is a diversion ( ) of business opportunity or misappropriate of company property. (Green v bestobell, Qld Mines v Hudson, Regal Hastings). On the other hand, according to S180(2), director can excused from liability for the breach of duty if 4 situations in this rule is all stratified. Orana may argue that he was trying to get the best interest of the corporation; the only reason why he took place this chance was due to the fact that the board of Top Level can not make a replay within a certain time. Top level could argue that the board was not informed about these subject 10 matters, so defense of S180(2) could not be applied. As a director of Top Level , Orana using information gaining from Mei to make a trade, and the information she used is supposed to be delivered to the board of Top Level. 4) Remedies: ! ! Account of profits -­‐-­‐-­‐ As Orana is the sole shareholder and director of the newly formed company, it is reasonable to assume that profits is got by her. As a result, equitable tracing is available. equitable compensation or damages for the company is not available due to Top Level can not reply within 48 hours. Top Level & Better Built 1) Issue: Did Top level has any enforceable right against Better Built? Is there a breach of duty by Better Built ? 2) Law: General law and Corporation law Company is a legal entity (Salmon’s case) from his founder, shareholders and directors. Corporate veil descends on the company when it is incorporated and, ordinarily, prevents outsiders from ! peeping into see who is control of the company. i. There is a distinction between personal and company assets (Macaura’s case) ii. It is possible for a shareholder/director to contract with the company (Lee’s case) ! Lifting the veil In certain circumstances courts may wish to look behind the corporate veil to determine why the company was informed, or to see who is in charge or actually controlling the company. # To assist in a director’s breach of fiduciary duties (Bestobell’s case) 11 3) Application: Orana used her personal company Better Built Pty Ltd (she is the sole shareholder and director) to make substantial profits is assisting herself breach of fiduciary duties for Top Level, as a result, the corporate veil will be pierced. 4) Remedies: Under General law, companies can obtain following remedies for breach of directors’ duties: " injunction courts stop order " " Compensation or damages -­‐-­‐-­‐ to recover loss An account of profits -­‐-­‐-­‐ surrender profits to company (Regal Hastin...
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