Corporations Law Distinction Exam notes

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W1 Nature of the corporate 3 W2 Company as a separate entity; formation and types of companies ............................. 3 What is Special resolution? ......................................................................................................4 What is ordinary resolution? .................................................................................................... 4 W3 Corporate finance ...................................................................................................... 5 What is share? ......................................................................................................................... 5 When does a company incur a debt? ........................................................................................ 6 W4 Internal governance arrangements (corporate constitution, the replaceable rules, Variation of class rights) .................................................................................................. 8 Corporate Replaceable rules (“RR”) .......................................................................................................... 8 Class of shares ......................................................................................................................... 9 W5 Corporate How does a company enter into contracts? ............................................................................ 11 W6 Company meetings and the division of power between shareholders and the board ..13 Types of directors .................................................................................................................. 13 Board/Directors’ meetings ..................................................................................................... 13 Conflict Between the Directors and the General Meeting ........................................................ 14 Powers of Shareholders ......................................................................................................... 14 W10 Members’ remedies, including the Statutory Derivative Action and actions for oppression ......................................................................................................................15 Oppression 15 Statutory Derivative Action (“SDA”) ....................................................................................... 16 Other court orders ................................................................................................................. 17 Wind up – extreme remedy .................................................................................................... 18 Injunction – 19 W11 External administration; voluntary administration; directors’ duty to avoid insolvent trading ...........................................................................................................................20 Director’s duty to prevent insolvent trading by company - 588G ............................................. 20 When is a company insolvent? ............................................................................................... 21 Standing before the court ...................................................................................................... 21 Consequence of s588G ........................................................................................................... 21 Safe harbour provision – s588GA ............................................................................................ 23 1 Process of 25 W12 Insolvency; voidable W7-9 Director Duties ......................................................................................................29 What kind of company is in question? .............................................................................29 Directors’ duties .............................................................................................................31 A. Has there been a breach of Duty of Care and Diligence (Statutory: s180(1))? ................... 33 B. Has there been a breach of general law Duty of Care Skill and Diligence? ........................ 36 C. Has there been a breach of duty to act bona fide and in the best interests of the company? (Best interest duty - general law)............................................................................................ 37 D. Has there been a breach of duty to act in good faith and in the best interests of the company? (Best interest duty – statutory s181(1)) .................................................................. 39 E. Has there been a breach of fiduciary duties (No conflicts and No profits rule)? ................ 42 F. Has there been a breach of Duty not to improperly use of position? (s182) ..................... 44 G. Has there been a breach of Duty not to improperly use of information? (s183) ................ 47 H. Has there been a breach of duty to disclose material personal interests? (s191) .............. 49 I. Has there been a breach OF the restrictions on voting in relation to material personal interest? (s194 and 195) ......................................................................................................... 51 J Has there been a breach of Director’s duty to prevent insolvent trading by company? - 588G 52 Relevant provisions in Corporations Act 2003 ..................................................................56