Law of Business Organisations

Question: Discuss about theLaw of Business Organisations. Answer: Constitution of ABC Company Pty Ltd: Definitions and Meanings in the Constitution: The constitution of ABC Pty Ltd shall contain a list of words and the following meaning shall be applicable to the list of words that is contained in the constitution: Act in the constitution of ABC Pty Ltd shall mean the Corporation Act of 2001. ASIC in the constitution of ABC Pty Ltd shall mean the Australian Securities and Investment Commission Company in the constitution of ABC Pty Ltd shall mean the ABC Pty Ltd. Constitution shall mean the constitution of ABC Pty Ltd. Interpretation of the Constitution of ABC Pty Ltd: The words that are used in the constitution of ABC Pty Ltd, if highlighted, are done only with the purpose of expediency. The meanings of the word do not change that are used as part of the constitution of ABC Pty Ltd. Replaceable Rules: The constitution of ABC Pty Ltd contains a list of replaceable rules. The replaceable rules are applicable for all the rules excepting for the rules provided as part of the preference shares. Issue of Shares: The authority of issuance of shares shall be in the hands of the directors of ABC Pty Ltd. The directors also have the power to issue shares over options as they think it is proper for making the division. According to the Corporation Act, the options or shares can be issued by the directors of ABC Pty Ltd having proper special or deferred restrictions or rights either in relation to the dividends or in other contributions such as powers that concerns voting, payments of calls or any such power that the Director may consider it proper. Different Classes of Shares: Preference Shares: Members who hold preference shares as part of ABC Pty Ltd shall exercise powers such as right to attend meetings, right to attend receive notice in relation to attending meetings or any other right as the Directors of the company may consider it appropriate. The members of the company has the authority to hold H, J, I, K, L, M classes of shares. Preference Redeemable Shares: The members of ABC Pty Ltd shall be entitled to hold preference or redeemable shares. The who hold preference or redeemable shares as part of ABC Pty Ltd shall exercise powers such as right to attend meetings, right to attend receive notice in relation to attending meetings or any other right as the Directors of the company may consider it appropriate. However, the redeemable shares can be redeemed by the company to its members at the option of the company. Thus, the redeemable shares gives the authority to the director to share the total number of shares at any time as they may consider it proper. Section 198A: Section 198A of the Corporation Act allows the directors to manage the affairs and business of the company. This section authorises the directors to exercise the powers of the company except those powers that are specified particularly at the meeting of the shareholders. This section allows the directors to engage in a range of activities. The directors, may be given a lot of powers, by the constitution of the company or by the Corporations Act (Miller, 2016). However, restrictions are imposed on the directors to the exercise of their power. Thus, it may be held in this regard that the directors of the company have to act within their scope of powers. The main reason why the lawmakers established this section into the Act was to make the directors liable for their actions and to hold them accountable for their acts. Ordinarily, the constitution of the company gives wide powers to the directors of the company and sometimes it is also seen that the directors of the company take undue a dvantage of their powers and rights. However, the constitution of the company can be amended by 2/3 majority votes. Thus, this section was included in the Act to ensure that the directors have a limitation of their powers and that they do not act beyond their scope of power (Mann Roberts, 2015). Section 191: As per section 191 of the Corporations Act, 2001, it is the duty of the director to notify the other directors of the company in case of any issue that is of personal interest and related to the affairs of the company. This is the fiduciary duty of the director of the company and this section makes the director liable for disclosing material fact to the other directors of the organisation. However, the same section also contains a list wherein the director shall not be held liable for making disclosure to the other directors. Firstly, a director may not make disclosure if the same interest in issue arises out of the common interest of the company or relates to the remuneration of the director. Secondly, a director will not be held liable for infringing section 191 of the Act if the issue in question is concerning to a contract that is its proposal stage. Likewise, a director is not bound to make a disclosure if there is an issue concerning his remuneration. The main reason for includ ing this section in the Act was to ensure that the directors be held liable for their actions if their acts are related to the interest of the company. Therefore, section 191 aims to make the directors accountable for their actions that are fiduciary in nature (Smith, Lawson Painter, 2012). Section 250R (2) (3): The shareholders of the company consider the Annual General Meeting (AGM) as a source wherein they are able to ventilate their grievances and put forward any matter that is related to the management and the Board of the Company. The Corporations Act allows the companys management to be governed by the constitution. The constitution of the company is followed and adopted either on or after the registration of the company. Thus, at the AGM the shareholders of the company discuss about their grievances and issues related to the company. Section 250R (2) and (3) deals with the matters that may be taken up for consideration at the annual general meeting. Therefore, the main reason why this section was incorporated in the Act was to limit the powers of the Board and allow the Board members to settle their grievances against each other (Marson Ferris, 2016). References: Kopel, S. (2012).Guide to business law. Oxford University Press Southern Africa. Mann, R. A., Roberts, B. S. (2015).Business law and the regulation of business. Nelson Education. Marson, J., Ferris, K. (2016).Business Law Concentrate: Law Revision and Study Guide. Oxford University Press. Miller, R. L. (2016).Business Law Today, Comprehensive. Cengage learning. Smith, D., Lawson, R. D., Painter, A. A. (2012).Business law. Routledge.