Preface viii

About the authors ix

MODULE 1

Business organisations 1

Introduction 3

1.1 Choosing a business structure 4

1.2 Sole traders 7

1.3 Partnerships 10

1.4 Joint ventures 18

1.5 Trusts 20

1.6 Companies 28

1.7 Incorporated association 32

1.8 Business names 34

MODULE 2

Companies and incorporation 40

Introduction 42

2.1 Company regulation in Australia 43

2.2 Classes of companies 44

2.3 Starting a company 51

2.4 Separate legal entity 57

2.5 Corporate groups 58

2.6 The corporate veil 59

2.7 Limited liability 65

MODULE 3

Company constitution 70

Introduction 71

3.1 Rules and procedures 72

3.2 Replaceable rules 74

3.3 The company constitution 77

3.4 Objects clause 80

3.5 Who is bound by the replaceable rules and constitution? 82

3.6 Changing the rules of a company 86

MODULE 4

Promoters and pre]registration contracts 90

Introduction 91

4.1 Promoters 92

4.2 Duties and liabilities of promoters 95

4.3 Remedies for breach 100

4.4 Pre]registration contracts 101

MODULE 5

Companies, outsiders and corporate liability 107

Introduction 109

5.1 How companies exercise their legal capacity and powers 109

5.2 Determining whether a contract is binding on the company 111

5.3 Determining whether an agent has substantive authority 115

5.4 The indoor management rule 119

5.5 Statutory assumptions by outsiders in dealings with the company 123

5.6 Liability in tort and in crime 127

MODULE 6

Membership, members’ powers and dividends 134

Introduction 135

6.1 Members as owners 136

6.2 Members’ meetings 146

6.3 Dividends 157

MODULE 7

Corporate governance and company management 162

Introduction 163

7.1 Corporate governance 164

7.2 Officers 167

7.3 Roles and powers of directors and members 171

7.4 Appointment, remuneration, resignation, removal 178

MODULE 8

Directors’ and officers’ duties A 186

Introduction 188

8.1 Officers’ duties 188

8.2 The duty of care and diligence 193

8.3 The standard of care 195

8.4 Diligence 199

8.5 Defences against a breach of duty of care and diligence 201

8.6 The duty to prevent insolvent trading 204

MODULE 9

Directors’ and officers’ duties B 212

Introduction 213

9.1 Good faith 213

9.2 Best interests of the company 215

9.3 Proper purpose 219

9.4 Conflict of interest under general law 221

9.5 Statutory provisions relating to conflict of interest 227

9.6 Remedies and penalties for breach of duty 231

MODULE 10

Financing a company via equity or debt 235

Introduction 236

10.1 Choosing between equity and debt 237

10.2 Issuing shares 238

10.3 Different types of shares 241

10.4 Debt financing 244

10.5 Debentures 245

10.6 Security for debts 248

10.7 Disclosure documents 252

MODULE 11

Members’ remedies 261

Introduction 263

11.1 Members’ rights and remedies 263

11.2 The oppression remedy — s 232 266

11.3 The winding up remedy — s 461 271

11.4 The statutory injunction — s 1324 273

11.5 The statutory derivative action — Part 2F.1A 274

11.6 Common law remedies for breach of personal membership rights 277

MODULE 12

Receivership and administration 281

Introduction 282

12.1 Receivership 283

12.2 Voluntary administration 288

MODULE 13

Insolvency 296

Introduction 297

13.1 Liquidation or winding up 298

13.2 Insolvency 301

13.3 The liquidator 303

13.4 The assets and compensation a liquidator can recover 305

13.5 Final distributions and deregistration 311