Corporate Governance In Government Corpora -Myassignmenthelp.Com

Question: Discuss About The Corporate Governance In Government Corpora? Answer: Introduction It is to be stated that the Corporations Act 2001 governs the rights of individuals in relation to conducting and operating a business for the purpose of gaining profits. It can be stated that an organization can be incorporated as public or a private company (Legislation.gov.au 2018). Part 2A of the Corporations Act 2001 deals with the provisions of registering a company. It can be said accounting to section 114 of the aforementioned act that private companies are required to have a minimum of 50 members. It is to be mentioned that private companies cannot raise capital by issuing shares to the public. However, in case of public companies there is no limitation on the number of members. Public companies can raise their capital by issuing shares to the public (Tricker and Tricker 2015). It can be stated that registration of public companies requires more documentation. According to section 112 of the Corporations Act 2001 it can be stated that companies can e broadly classified into two categories: Proprietary company Public company It is to be stated that proprietary companies can be further subdivided into companies limited by shares and companies with unlimited share capital (Tricker and Tricker 2015). Public companies can be further subdivided into companies limited by shares, companies limited by guarantee, companies with unlimited share capital and no liability company. It is to be mentioned that part 2A.2 of the aforementioned act deals with how a company in Australia can be registered. It is to be stated according to section 117 of the aforementioned act that the first step of registering a company requires filing of an application to the Australian Securities and Investment Commission (Hudson 2017). However, only the type of companies as mentioned in the section 112 of the act can be registered. According to subsection 117(2) an application for the registration of a company must contain the following information: The type of company proposed to be formed and registered under this act The proposed name of the company Name and address of each of the members of the company The present family name of each of the persons who consents in writing to become directors of the company The present family name of the each of the persons who consents to be the be the company secretary Address of the directors and company secretary The address of the registered office and the principal place of business of the company For a company limited by shares or an unlimited company the number and class of shares each member agrees to take up in writing, the amount that each member of the company is willing to pay for issuance of each share need to be disclosed in the application Prescribed particulars about the issuance of shares needs to be present in the application for the registration of public company limited by shares or an Unlimited company For a company limited by guarantee the proposed amount of guarantee of each member as agreed upon by the members in writing must be present in the application. Section 118 of the act gives the right to the ASIC to give a company ACN and issues certificates for the purpose of registering it upon receiving the application for registration. Section 119 of the Act states that a company comes into existence the day it is registered. According to section 120 it can be stated that a person becomes a secretary of the company or its director upon its registration and if such persons name and details were proposed as a director or a company secretary in the application (Legislation.gov.au, 2018). Application In this given case study, Richard has an extensive olive grove in the Hunter Valley region with over 12000 olive trees. His two sons are proposing to expand the business of their father and for that purpose they are proposing to operate as a company instead of a sole proprietorship. The primary reason for wanting to operate the business as a company is to receive tax benefits. Therefore for the purpose of registering the company they need to follow the procedures as mentioned above. It can be said that firstly they need to decide the type of company intended to be formed by them. After analyzing the details of the case study presented to us, it can be said that forming a proprietary company would be beneficial to the family. As defined by section 45a of the Corporations Act 2001 a proprietary company is privately owned company which has a maximum of 50 shareholders. However, it is to be mentioned that proprietary companies cannot issue shares to the public for the purpose of raising capital. For registration of the company an application has to be made to the Australian Securities and Investment Commission in compliance with the provisions stated in section 117 of the Corporations Act. In the application all the relevant details of the company proposed to be formed by the family has to be present. Firstly it has to be mentioned that choosing the name of the company is of utmost importance. The name of the company has to be unique and no other company can be in existence with the same name. In case of formation of a proprietary company limited by shares, the name of the company must end with Pty Ltd. Section 118 of the aforementioned act gives power to the ASIC to issue ACN registration for the running the business. According to section 119 the company proposed to be formed by Richard and his sons will come into existence the day it is registered. According to section 120, the persons automatically start acting as directors or company secretary upon registration of the co mpany, provided their names were proposed in the application. Thus in conclusion it can be stated that the business of Richard can be given the structure of a Proprietary company limited by registering it with the ASIC. The steps required to be followed to register a company are enumerated in the Corporations Act 2001. The issue which has been identified in the given case study is whether Terry can take any legal action Cosmo Mining Services Pty Ltd or Mine Ltd or Lazarus Pty Ltd? It is to be mentioned that section 124 of the Corporations Act 2001 governs the powers and legal capacity of a company. According to this section it can be stated that a company has the powers and legal capacity of an individual both outside and in its jurisdictions. Therefore, it can be stated that a company has all the powers of a body corporate. However, such powers and authority are separate from the owners of the company. It can be stated that such company can issue and cancel shares in its own name and has complete authority to do so. Every company has a separate legal entity from its owner and can distribute any of the property belonging to the company among the members of the company and can provide security for the capital that is uncalled for. In the remarkable case Salomon V A Salomon And Co Ltd [1897] the concept of separate legal entities of companies has been discussed. It is to be stated that in this case the House of Lords held unanimously that as the company in the question was duly incorporated, it must be treated as a separate legal entity must held responsible solely for the liabilities incurred by it. It was also held that the motive of those who were behind the promotion of the company was irrelevant in discussing the rights and liabilities of the company. Further it can be stated that the concept of corporate veil existing between the members of the company and the company itself was firmly established in this case. Thus according to the finding of the case it can be stated that due to the separate legal entity of the company the liability of the company will not be directly related to the shareholders of the company. The case Lee v Lees Air Farming Ltd (1961) is another landmark case dealing with the principle of corporate veil. In this case it was held by the house of the lords that a company has the right to enter in employment contracts under certain circumstances. However, it can be stated that a company faces all the legal obligations due to its separate legal entity. It was held by the Judicial Committee of the Privy Council that a company will be treated as a separate legal entity and it is possible for a director to have a contract of employment with the company which is owned by him. The case Andar Transport Pty Ltd v Brambles Ltd (2004) is another landmark case dealing with the provision of separate legal of a company. The court highlighted the legal principles in Corporate Law dealing the employees duty of care. It was held by the court that an employer has the duty and must provide his employees with proper and safe working conditions. In this case the High Court has determined that duty if care owed by employer to the employee cannot be co-terminous and co-extensive. It was stated by the court that it is possible to differentiate between the duties owed by an employer to an employee as governed by the common law and those duties which are within the personal capacity of the employers. The case Briggs v James Hardie Co Pty Ltd Co Pty Ltd (1989) is a landmark case dealing with the provisions of corporate veil. In this case it was held by the court that in certain circumstances the corporate veil of a company needs to be pierced to find out who actually holds the duty to the aggrieved party. However lifting of the corporate veil is only permissible in instances where the facts are inconsistent, unpredictable not defined properly (Waqas and Rehman 2016) As per the facts of the case it can be said that Cosmo Mining Ltd in a subsidiary company of Cosmo Mining Services Pty Ltd. Recently Cosmo Mining Ltd has been in the media for contamination of a river nearby due to its mining activities. The river provides water to the residents of Gunbarrel. A few of the residents of the Gunbarrel and an employee of Cosmo Mining Ltd., Terry have contracted cancer because of drinking the contaminated water. When faced with this issue the shareholders of the company Cosmo Mining Ltd. unanimously voted for selling the business of the company to another company, Lazarus Pty. Ltd. According to section 124 of the Corporations Act 2001 it can be said that the company Cosmo Mining Ltd has a separate legal entity from its and therefore it enjoys certain rights and will face certain liabilities (Hudson 2017). Therefore in light of the aforementioned statement it can be said that the company can be held liable for the debts incurred and for all the liabilities. However, in a situation where the company becomes insolvent it will become necessary for the courts to lift the corporate veil of such company. Further section 588G of the Corporations Act 2001 has discussed and defined the personal liability of directors of company for debts incurred by a company in the event of becoming insolvent. Thus it can be said that the Company Cosmo Mining Limited can be held liable for contaminating the river and Terry can take action against such company. Conclusion Thus after analyzing the facts of the case and applying legal principles to the facts it can be stated that Cosmo Mining Limited is responsible for contaminating the river and Terry has the right to take legal action against the same company. Reference List: Andar Transport Pty Ltd v Brambles Ltd (2004) 206 ALR 387; (2004) HCA 28 Briggs v James Hardie Co Pty Ltd Co Pty Ltd (1989) 16 NSWLR 549 Lee v Lees Air Farming Ltd (1961) AC12 Salomon V A Salomon And Co Ltd [1897] AC 22 Legislation.gov.au. (2018).Corporations Act 2001. [online] Available at: https://www.legislation.gov.au/Details/C2018C00031 [Accessed 4 Feb. 2018]. Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, business-law, and practices. Oxford University Press, USA. Waqas, M. and Rehman, Z., 2016. Separate Legal Entity of Corporation: The Corporate Veil. International Journal of Social Sciences and Management, 3(1), pp.1-4. Whincop, M.J., 2017. Corporate governance in government corporations. Routledge. Hudson, A., 2017.Understanding Company Law. Taylor Francis. Asic.gov.au. (2018).ASIC Home | ASIC - Australian Securities and Investments Commission. [online] Available at: https://asic.gov.au/ [Accessed 4 Feb. 2018].