Week 7 - Corporate Relations

Question 1

separation in companies?

Answer 1

of ownership and control with SH and directors

Question 2

role of SH in the company

Answer 2

owners and have decision-making powers

Question 3

role of directors in the company

Answer 3

have control and mgmt functions – run the day to day activities of the company

Question 4

how does internal regulation occur?

Answer 4

• Comps Act / regulations
• MOI
• rules of the board
• SH agreements

Question 5

what does the MOI set out?

Answer 5

the rights, duties, resp of SH, directors, those within/in relation to the company

Question 6

unalterable Act provisions?

Answer 6

can differ from the Act but must be more onerous

Question 7

alterable Act provisions?

Answer 7

can choose to include or not

Question 8

who can amend the MOI?

Answer 8

• the board

- SH (who own at least 10% of shares)

Question 9

who must approve MOI amendments?

Answer 9

by special resolution of SH

Question 10

what are MOI alterations?

Answer 10

made to the MOI to correct errors and special resolution is not needed

Question 11

parties to the MOI?

Answer 11

• SH
• directors
• prescribed officers

Question 12

when does the MOI have contractual force?

Answer 12

between the members in so far as they relate to the rights and obl as members – right must be conferred by reason of membership

Question 13

when does MOI not have contractual force?

Answer 13

between the comp and an outsider – including members in their personal capacity

Question 14

what is the purpose of rules made by the board?

Answer 14

• made to supplement the MOI that are incidental to governance. must be consistent with both MOI and the Act

Question 15

how do the board rules come to be?

Answer 15

• published and filed and will be effective and binding within 10 business days
• presented to the SH and become permanent once ratified
• if rejected, rule ceases to apply and board cannot make similar rule for 12 months

Question 16

what is a SH agreement?

Answer 16

the SH of a company may enter into an agreement with one another concerning any matter relating to the company. must be consistent with the Act and the MOI

Question 17

nature of the SH agreement?

Answer 17

• agreement between some/all SH
• only binds those party to it
• if conflicts with MOI, MOI prevails

Question 18

how do the types of directors get authority?

Answer 18

managing directors = implied authority by law

single directors = must be authorized by board to act

Question 19

objects clauses in the MOI?

Answer 19

will show the company’s capacity restrictions and will define the existence of the company. company has no authority to act outside this objects clause

Question 20

what is ultra vires?

Answer 20

anything that is outside the objects clause that is completely void. cannot be ratified nor special resolution.

Question 21

what is constructive notice?

Answer 21

if something is in the MOI, all third parties are deemed to be aware of it and can be held bound to it

Question 22

what is the Turquand rule?

Answer 22

under common law, if there are internal rules, MOI or Act requirements, third parties dealing with the company can assume those requirements have been complied with (unless they reasonably ought to have known the company did not)

Question 23

how may the SH restrict the company’s actions?

Answer 23

• restrict them from acting without authority/capacity
• restrain them from performing illegal acts
• ratify illegal acts by special resolution

Question 24

if a director acts outside the confines of his authority?

Answer 24

company cannot be bound by the agreement

Question 25

if company denies liability due to lack of authority?

Answer 25

third party may seek to enforce the contract on the basis of Turquand rule or estoppel/ostensible authority. company can respond with constructive notice only if ring fenced

Question 26

what are the two requirements for external relations?

Answer 26

• authority

- capacity

Question 27

can an agreement be void simply due to lack of capacity?

Answer 27

no