Fundamentals of Business and Corporations Law

Fundamentals of Business and Corporations Law

Class of Company

The legal matters involving the setting up and future operations of the Co are

Type & class of company to be set-up

Expansion beyond its objects

The legal impact of contracts entered into by its agents

These issues are needed to be addressed here as they give rise to other related and relevant issues like company's constitution and internal rules, adaptation of replaceable rules, effect of corporations act, ultra vies and its abolition, organic theory, statutory provisions and assumptions, legal position of a company when entered into contracts by its agents etc.

Firstly we need to define Co. and state its classes and types (Chapman, 2005).

A Co is an incorporated body which is created by the process of registration called incorporation. A Co is classified in the following ways

According to public status

According to liability of members

Recognised and foreign companies

Group of companies

Trustee companies

Proprietary and public companies are the further classification of a Co according to their public status. Here our area of interest is proprietary company. Some characteristics of proprietary companies are

They must have at least one director

They cannot have more than 50 non-employee shareholders

They cannot raise funds from public directly

A proprietary company can further be sub-divided into small and large Co depending on the features of a particular company. Following are the characteristics of a small proprietary company

Its gross operating revenue is less than 25 million

At the end of financial year its gross consolidated assets are less than 25 million

It has less than 50 employees

If any company satisfies any of these two conditions than it is a small proprietary Co but if it doesn't then it is large proprietary Co.

Classification then further leads to type of the company. According to corporations Act s 112(1) following types of companies (proprietary) can be incorporated

Limited by shares

Unlimited with share capital

Managers Entering Into Contracts over $25,000 Without Approval Of Managing Director

Sec 9 of corporations Act defines that a company limited by shares is a co formed on the principle that the liability of its members is limited as per the shares (unpaid) held by them.

Furthermore a company is a separate legal entity in the eyes of law which means is that it's an artificial person who has same rights and duties as a person. Though it does not act on its own and its operations are controlled and managed by its officers, agents etc. But the most important aspect of this is that being a separate legal person it can sue someone by itself and it can also be sued by anyone affected by it (Harvey, 2010).

The companies are operated by certain rules and regulations. For the companies formed before July 1, 1998 it was called constitution which contained each and every detail of the company's operations and day-today dealings. Since then as under corporations Act the constitution is replaced with three choices. A company can choose to

Use the replaceable rules listed in the Corporations Act (Corporations Act s 141) or

Adopt its own special rules ...