Company Law

 Company Law

Business law

Some past LAW00004

NB – There are no answers available to these questions, but a forum

Question Giving an example, distinguish between the capacity of a company and the capacity

of its agents. Your answer should highlight why the distinction is important.


In relation to a public company issuing debentures through a prospectus explain the

actual or potential roles of the trustee for debenture holders, the prospectus, the

debenture trust deed, the register of charges and a receiver.


Question “Partners are in a fiduciary relationship with each other”. Explain and illustrate this

concept. Also explain when the fiduciary relationship may begin and when it ends.



Question “In Salomon v Salomon & Co. Ltd [1897] AC22, Mr Salomon was very lucky.

Today, on the same facts, he would be personally liable for the debts of the company,

and the security (debenture) given to him by the company would be invalid as a

priority over the unsecured creditors”. Do you agree? Comments.


Question Explain the following:

(a) Special Resolution

(b) Statutory Demand




Question The Board of Directors of Lackcash ( a proprietary co) are considering the following


(a) To raise capital of $6 million by an issue of shares to its shareholders; or

(b) To utilise any method of obtaining the $6 million without contravening Ch 6D of

the Corporations Act. Advise the Board of Lacklash Pty Ltd of the corporations law




In Gambotto v WCP Ltd (1995) 182 CLR432. the High Court laid down certain tests

which apply to assessing the validity of alterations to a company’s constitution in

relation to minority shareholders interests.


Briefly outline the facts of Gambotto and provide a brief explanation of those tests.



After news of a takeover offer being made for Boon Ltd, its Directors enter into

discussions with Hand Ltd to purchase certain business activities of Hand Ltd. In

consideration, Boon Ltd will issue shares to Hand Ltd. The purchase will increase the





profits of Boon Ltd and enable large dividends to be paid to its shareholders. Millie, a

shareholder in Boon Ltd, learns of the proposed purchase and is strongly opposed to

the transaction. Advise Millie of any legal rights she may have to prevent the



Question Giving examples from both the Partnership Act 1892 (NSW) and the Corporations

Act 2001 (Cth), explain what is meant at law by apparent or ostensible authority.


Question Esanda Finance v Peat Marwick (1997) 188 CLR 241 and Daniels v Anderson (1995)

16 ACSR 607 are important decisions regarding auditor’s liability. Explain why.


Question In relation to a company meeting briefly explain the rights of a member to demand a

poll, appoint a proxy, dismiss a director, and place an item on the agenda of a




Samuel was a promoter of a company called Edmanuals Pty Ltd. Six months before

the company was registered Samuel signed a contract on behalf of Edmanuals Pty Ltd

for $10,000.00 per month for 6 months for the hire of a 2005 CLS500 Mercedes Benz

motor vehicle from Samuel’s Cars Pty Ltd. Samuel is the sole director and sole

shareholder of Samuel’s Cars Pty Ltd. Edmanuals Pty Ltd does not want to honour

the contract. Advise Edmanuals Pty Ltd.



Maree is an experienced accountant and audits the financial report of IOD Ltd.

During the audit she suspects that a contravention of the Corporations Act 2001 (Cth)

has occurred. What contractual duties does Maree owe IOD Ltd under the common

law? What is Maree required to do if she suspects a contravention of the

Corporations Act 2001(Cth)?



With reference to case law and the Corporations Act 2001(Cth) describe what is

meant by the term ‘insolvency’ and identify the link between ‘voluntary

administration’, ‘deeds of company arrangements’ and ‘liquidation’.




“The law recognises a corporation as a distinct legal entity, having a separate

existence and a corporate personality of its own, quite apart from the members who

comprise it.” Discuss this statement with reference to the main legal consequences

both at general law and under the Corporations Act 2001 (Cth).



Bob wants to assist a yet to be formed company to take advantage of lucrative

contracts which need to be signed before the company is incorporated? Citing the

relevant sections in the Corporations Act discuss whether or not Bob could be held

liable if he signs a pre-registration contract.

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