Australian Company Law - Essay Example

?Part A Your managing partner has handed you the decision of The Congregation of the Religious Sisters of Charity of Australia & Ors v The Attorney General in and for the State of Queensland [2011] QSC 100. The partner has asked that you provide in short answers to him with respect to the following questions: 1. What were the aims and purposes of the Bedford Trust? - In the case of The Congregation of the Religious Sisters of Charity of Australia & Ors v The Attorney General in and for the State of Queensland [2011] QSC 1001, the Bedford Trust was a gift of land made by Mary Josephine Bedford in February 1952 to the Religious Sisters of Charity of Australia for the purpose of building of a hospice for the “sick and dying who are poor”, to be called Mount Olivet Hospice. It was also to be built to commemorate the life and work of Dr. Lillian Cooper. 2. What terms of the trust were not being fulfilled? - The evidence establishes that the terms of the trust are not presently being fulfilled in two substantial respects. First, the Mount Olivet Hospital now does not only provide palliative care but more general care. Secondly, admission is not restricted to those who are “poor”. Further, the name “Mount Olivet” is no longer given to the entire hospital (it was renamed “St Vincent’s Hospital Brisbane” in 2009). The name “Mount Olivet” is given to the specialist palliative care unit within that hospital. 3. What was the applicant seeking from the Court? - The applicants sought Declarations concerning the purpose and structure of the Bedford Trust, Orders under s 106 of the Trusts Act 1973 and Orders relieving the applicants from liability for breaches of the Bedford Trust. 4. What breaches of the Bedford Trust had occurred? - No funds were transferred when the trust was settled, and the Congregation became responsible for meeting the costs of both building and operating the hospice on the land which had been donated by Miss Bedford. 5. Were the terms of the trust altered? Explain - Section 105 of the Trusts Act provides: “105 Occasions for applying property cy pres (1) Subject to subsection (2), the circumstances in which the original purposes of a charitable trust can be altered to allow the property given or part of it to be applied cy pres shall be as follows— (a) where the original purposes, in whole or in part— (i) have been as far as may be fulfilled; or (ii) can not be carried out; or (iii) can not be carried out according to the directions given and to the spirit of the trust; (b) where the original purposes provide a use for part only of the property available by virtue of the trust; (c) where the property available by virtue of the trust and other property applicable for similar purposes can be more effectively used in conjunction, and to that end can suitably, regard being had to the spirit of the trust, be made applicable to common purposes; (d) where the original purposes were laid down by reference to an area which then was but has since ceased to be a unit for some other purpose, or by reference to a class of persons or to an area which has for any reason since ceased to be suitable, regard being had to the spirit of the trust, or to be practical in administering the trust; (e) where the original purposes, in whole or in part, have, since they were laid down— (i) been adequately provided for by other means; or (ii) ceased, as being useless or harmful to the community or for other reasons, to be in law charitable; or (iii) ceased in any other way to provide a suitable and effective method of using the property available by virtue of the trust, regard being had to the spirit of the trust. (2) Subsection (1) shall not affect the conditions which must be satisfied in order that property given for charitable purposes may be applied cy pres, except in so far as those conditions require a failure of the original purposes. (3) References in subsections (1) and (2) to the original purposes of a trust shall be construed, where the application of the property given has been altered or regulated by a scheme or otherwise, as referring to the purposes for which the property is for the time being applicable. (4) It is hereby declared that a trust for charitable purposes places a trustee under a duty, where the case permits and requires the property or some part of it to be applied cy pres, to secure its effective use for charity by taking steps to enable it to be so applied. (5) Nothing in this section shall affect the application of the provisions of the Charitable Funds Act 1958 to the funds to which that Act applies.” The terms of Trust were altered because the original purposes provide a use for only a part of the property available by virtue of the said trust. However, such property as well as other property applicable for similar purposes can be more effectively used in conjunction. 6. Was a breach of Trust found? Explain. The Court has made the order, to wit: (c) Pursuant to s 76 of the Act the Congregation of the Religious Sisters of Charity of Australia (the Former Trustee) are relieved of any liability arising out of the amalgamation of the original title of the trust property with other adjoining land beneficially owned by the Former Trustee to create a larger title, being Lot 3 in RP 146773, such that the trust property is now that part of Lot 3 in RP 146773 which originally comprised Eastern Suburban Allotment 34, being the whole of the land described in certificate of title 206865 Vol 1221, Folio 105. (d) Pursuant to s 76 of the Act the Former Trustee is relieved of any liability that might arise from the transfer of part of the trust property to the Commonwealth of Australia, being subdivision 1 of Eastern Suburban Allotment 34, which occurred on 13 March 1962 in exchange for the transfer to the Former Trustee from the Commonwealth of Australia of the land described as Re-subdivision 1 of Subdivision 1 shown on plan catalogue number 98491, which occurred on 3 April 1962. (e) Pursuant to s 76 of the Act the Former Trustee is relieved of any liability that might arise from the transfer of the trust property to St Vincent’s Healthcare Limited. (f) Pursuant to s 76 of the Act the Former Trustee is relieved of any liability that might arise from the transfer of part of the trust property to Brisbane City Council, being part of lot 2 on registered plan 151482, which occurred on 12 April 1976 in compliance with the conditions of an approval imposed by Brisbane City Council in respect of registered plan 151482. Part B 1. Which section of the Corporations Act 2001 provides that the acts of a liquidator are valid notwithstanding any defects that might have occurred in their appointment or qualification? - Corporations Act 2001 Section 473 (9)2 provides that subject to this Act, the acts of a liquidator are valid notwithstanding any defects that may afterwards be discovered in his or her appointment or qualification. 2. Do a search of Australian Company Number ACN 005 146 421 a. Is the company registered or deregistered? - The company is registered. b. What is the company’s name and when was it first registered? - The Garden Centre PTY. LTD. It was first registered on 12th of August, 1975. c. Through which regulatory agency did you conduct the search and provide the website address. - The search was conducted through Australian Securities & Investments Commission, with the website address http://www.search.asic.gov.au/cgibin/gns030c?acn=005146421&juris=9&hdtext=ACN&srchsrc=13 3. In which section of the Corporations Act 2001 is “Product Disclosure Statement” defined. How is the term defined? - The term “Product Disclosure Statement” was defined in Section 1013C of the Corporations Act of 20014. It was thus defined that a Product Disclosure Statement: (a) must include the following statements and information required by this Subdivision: (i) the statements and information required by section 1013D; and (ii) the information required by section 1013E; and (iii) the information required by the other provisions of this Subdivision; and (b) may also: (i) include other information; or (ii) refer to other information that is set out in another document. 4. The ASX Listing Rules undergo amendment from time to time. What upcoming rule changes are being considered and where did you find this information on the internet? - The proposed listing rule changes to require the top 300 ASX listed entities to have a remuneration committee that is comprised solely of non-executive directors have not yet been informally lodged with ASIC and there is an opportunity for comment on these proposed amendments. In particular, ASX seeks comments on whether the requirement to have a remuneration committee, but not the requirement that it be comprised solely of nonexecutive directors, should be extended to the top 500 ASX listed entities5. 5. Section 437F of the Corporations Act 2001 provides that a transfer of shares in a company that is made during the administration of a company is void unless certain circumstances are met. What are those circumstances? - Section 437F of the Corporations Act 20016 provides the following circumstances: Transfer of shares (1) A transfer of shares in a company that is made during the administration of the company is void except if: (a) both: (i) the administrator gives written consent to the transfer; and (ii) that consent is unconditional; or (b) all of the following subparagraphs apply: (i) the administrator gives written consent to the transfer; (ii) that consent is subject to one or more specified conditions; (iii) those conditions have been satisfied; or (c) the Court makes an order under subsection (4) authorising the transfer. (2) The administrator may only give consent under paragraph (1)(a) or (b) if he or she is satisfied that the transfer is in the best interests of the company's creditors as a whole. (3) If the administrator refuses to give consent under paragraph (1)(a) or (b) to a transfer of shares in the company: (a) the prospective transferor; or (b) the prospective transferee; or (c) a creditor of the company; may apply to the Court for an order authorising the transfer. (4) If the Court is satisfied, on an application under subsection (3), that the transfer is in the best interests of the company's creditors as a whole, the Court may, by order, authorise the transfer. (5) If the administrator gives consent under paragraph (1)(b) to a transfer of shares in the company: (a) the prospective transferor; or (b) the prospective transferee; or (c) a creditor of the company; may apply to the Court for an order setting aside any or all of the conditions to which the consent is subject. (6) If the Court is satisfied, on an application under subsection (5), that any or all of the conditions covered by the application are not in the best interests of the company's creditors as a whole, the Court may, by order, set aside any or all of the conditions. (7) The administrator is entitled to be heard in a proceeding before the Court in relation to an application under subsection (3) or (5). Alteration in the status of members (8) An alteration in the status of members of a company that is made during the administration of the company is void except if: (a) both: (i) the administrator gives written consent to the alteration; and (ii) that consent is unconditional; or (b) all of the following subparagraphs apply: (i) the administrator gives written consent to the alteration; (ii) that consent is subject to one or more specified conditions; (iii) those conditions have been satisfied; o (c) the Court makes an order under subsection (12) authorising the alteration. (9) The administrator may only give consent under paragraph (8)(a) or (b) if he or she is satisfied that the alteration is in the best interests of the company's creditors as a whole. (10) The administrator must refuse to give consent under paragraph (8)(a) or (b) if the alteration would contravene Part 2F.2. (11) If the administrator refuses to give consent under paragraph (8)(a) or (b) to an alteration in the status of members of a company: (a) a member of the company; or (b) a creditor of the company; may apply to the Court for an order authorising the alteration. (12) If the Court is satisfied, on an application under subsection (11), that: (a) the alteration is in the best interests of the company's creditors as a whole; and (b) the alteration does not contravene Part 2F.2; the Court may, by order, authorise the alteration. (13) If the administrator gives consent under paragraph (8)(b) to an alteration in the status of members of a company: (a) a member of the company; or (b) a creditor of the company; may apply to the Court for an order setting aside any or all of the conditions to which the consent is subject. (14) If the Court is satisfied, on an application under subsection (13), that any or all of the conditions covered by the application are not in the best interests of the company's creditors as a whole, the Court may, by order, set aside any or all of the conditions. (15) The administrator is entitled to be heard in a proceeding before the Court in relation to an application under subsection (11) or (13). 6. The Australia Accounting Standards Board wrote a letter to the IASB, expressing concerns with some of the tentative decisions made by the IASB in the Leases project. a. What does “IASB” refer to? - IASB refers to The International Accounting Standards Board b. What concerns were expressed? - The Australia Accounting Standards Board wrote a letter expressing concerns about the apparent inconsistency between the tentative decision that an entity recognises an asset for incremental costs that are expected to be recovered and are not in the scope of another Standard, and the IASB’s tentative decisions on similar matters in other projects7. c. Provide the website address of where you located this information. - This information was located at http://www.aasb.gov.au/admin/file/content102/c3/July_2011_AP_13.1_Revenue_update.pdf 7. Is section 201K of the Corporations Act 2001 a replaceable rule? What information did you rely on for your answer? - Yes. 201K of the Corporations Act of 2001 is a replaceable rule. This is based on the provision provided for in section 201K of the Corporations Act of 20018. 8. What is the general priority rule in relation to unregistered charges? What section of the Corporations Act 2001 contains the rule? - As provided in Section 281 of the Corporations Act 2001, general priority rule in relation to unregistered charges an unregistered charge on property of a company has priority over: (a) a registered charge on the property that was created after the creation of the unregistered charge and does not have priority over the unregistered charge under subsection 280(1); and (b) another unregistered charge on the property created after the first-mentioned unregistered charge9. 9. Which ASIC form is required to be completed to reserve a company name? Provide the website address of where you located this information. - ASIC form 201 is required to be completed to reserve a company name. this information was gathered through http://www.asic.gov.au/asic/pdflib.nsf/lookupbyfilename/201.pdf/$file/201.pdf 10. Section 250E of the Corporations Act 2001 details how many votes a member has. How many votes does a member have on a show of hands? How many votes does a member have on a poll? - Under Section 250E of the Corporations Act 200110, it is provided that: Company with share capital (1) Subject to any rights or restrictions attached to any class of shares, at a meeting of members of a company with a share capital: (a) on a show of hands, each member has 1 vote; and (b) on a poll, each member has 1 vote for each share they hold. Note: Unless otherwise specified in the appointment, a body corporate representative has all the powers that a body corporate has as a member (including the power to vote on a show of hands). Company without share capital (2) Each member of a company that does not have a share capital has 1 vote, both on a show of hands and a poll. Chair's casting vote (3) The chair has a casting vote, and also, if they are a member, any vote they have in their capacity as a member. Part C It is vital to recognize the differences in the structures of a partnership, trust and company before deciding which business type to select when starting a new business. If a person is starting a business, the he must first choose what business type he will use. One of the choices is Partnership. A partnership is composed of two or more people co-own a business and share in the losses and profits of the business. There are three modern partnership forms: general partnership, limited partnership and LLP or limited liability partnership11 . A partnership is the simplest form of business organization for multiple owners. In a partnership, owners have joint authority. This means that each partner has equal authority in binding business agreements for the organization. The only exception is selling the assets of the partnership. Partners also share joint liability. Any partner of the company may be held legally liable for the debts of the business. Because of the issue of legal liability, you should only enter into a partnership with people you trust. A partnership is not a tax entity. Each partner files business profits and losses on his own tax return. A partnership is required to file an informational tax return to the IRS, Form 106512. The second form of partnership is limited partnership. A limited partnership, as defined, allows each partner to limit his or her personal liability to the amount he or she invested in the business. The person involved or partners in the business should stick, obey and submit the requirements to open and start their business. These include completion of partnership agreement and business registration and licenses. The following should be clearly stated in their agreement: the names of the partners, contribution and investments, ratio of loss and profit and responsibilities13. Another choice which could be taken is a Limited Liability Company. A limited liability company falls somewhere between a partnership and a corporation. If you are the owner of a LLC, you are not personally responsible for its debts. There are some exceptions to this rule, pertaining to fraudulent behaviors of an owner. As in a partnership, the owners of a limited liability company report profits and losses on individual tax returns14. Now, there are major differences between a partnership and a limited liability company. One of which is the legal responsibility. Another difference is the formal paperwork required for organization. In forming a partnership, special paperwork is not required. Any two persons who come into agreement of forming a business can enter into a partnership. On the contrary, forming a legal liability company requires filing articles of organization. Moreover, it requires adhering to other filing requirements of the state. Another difference is that in a partnership, you have no protection from legal liability. In the instance that the business fails, you can be held accountable for debts incurred by the same. This is not the case for people engaged in a limited liability company, where no legal personal liability exists. In deciding what structure to choose, one has to consider several factors which are descriptive of each structure of business. If a person is concerned with protecting his personal assets, a legal liability company would be a better choice for the business. Conversely speaking, a partnership may be the right business structure if the person has a trusted partner and wants to avoid the paperwork required to form a legal liability company. Read More