C Law

Problem solving 1

* What is meant by the term “corporate veil” and what advantages does it provide?

“Corporate veil” recognizes that a company is a separate legal entity distinct from its shareholders. S124 states that a company is a separate legal entity with the capacity and powers of natural persons. Effectively, this imposes a veil of incorporation between the owners and managers of the company and the company itself. Common law [Salomon v A Salomon& Co Ltd]

The advantage is that when the company is formed, the courts usually do not look behind the “veil” to inquire why the company was formed or who really controls it. Further, when the separate entity concept is coupled with limited liability, the corporate veil ensures that shareholders are not personally liable to creditors for their company’s debts. To some extent, the veil legally separates the company from its members/shareholders and officers. (需不需要加入lifting the veil of incorporation的情况说明?)

* The role of a constitution or replaceable rules on how the company operates and who is bound by the constitution/replaceable rules?

A company’s internal management may be governed by provisions of the Corporations Act that apply to the company as replaceable rules, by a constitution, or by a combination of both (S.134).

S.140 A company’s constitution and any replaceable rules that apply to the company have effect as a contract:

a. between the company and each member；and

b. between the company and each director and company secretary; and

c. between a member and each other member;

under which each person agrees to observe and perform the constitution and rules so far as they apply to that person.

Problem solving 2

* legal and other benefits of registering a company

A company has the legal capacity and power of an individual: S.124 (1). It is able to engage in any business or activity and may acquire and exercise rights in the same way as a natural person. S124 gives a company...