Business Company Law Shareholder and Employees

Question: Discuss about theBusiness Company Lawfor Shareholder and Employees. Answer: Before contemplating registration of propriety limited company in Australia, a number of key considerations must be brought to bear. For instance, the company considering registration must identify director(s) to facilitate the general administration. A company seeking to be registered must avail an address with is traceable within the Australian boundaries. It is mandatory that parties interested in registration supply a list containing the shareholder and employees. To qualify for registration under the Australian laws, the company must one or more shareholders and a list of up to fifty employees. The parties that are registering a company are expected to complete a registration form according to the provisions envisaged in section 117 of the corporative act. In addition to adhering to the policies and acts governing registration, the company must comply with Australian Securities and Investment Commission (Vickery, Pendleton, 2006). In the process of registering a propriety limited company, a corporate register is to be completed in line with the Corporative act of 2001. Once compliance is confirmed, the Australian Securities and Investment Commission issue a registration certificate. It is required that once registration is granted, the internal management of the company governed by both rules and constitution that are replaceable must be must be followed to the latter (Tomasic, 2002). Section134 and Section 135 In addition to the preceding discourse, NB sections of 134 and 135 vividly give the rules that are embedded in the constitution. Here, the powers given to the directors and those for appointment of officials are unequivocally outlined. The regulations governing meetings among directors and between membership and directors are laid down. It is also important to note that it is in this section where shares classes are enlisted. A clear understanding of why leadership of the propriety limited company must be guided by both replaceable rules and constitution is in no doubt (Ford, 1999). Section 254A (2) and Section 254A (3) This section requires that a propriety limited company must possess ordinary and a class of redeemable preference shares to qualify for registration. According to these two sections, 254A (2) and (3), of the value on preference share, is appreciated during registration process since it gives some level of empowerment. The shares are majorly premised on the constitutional concept and the rules outlined under NB section 134 and 135 that purely handles matters to do with both cumulative and noncumulative dividends and raising of capital. This section is therefore pivotal the same way as those stipulated under the NB section of 134 and 135 and must be thoroughly considered at the time one is contemplating registration of a company (Farrar, 2008). In section cap 3 of 254A, the preference shares that can be redeemed at a certain time are listed. It is therefore necessary to put this into perspective since at the time of registration a propriety limited company will be given a chance to adhere to the rule that allows redeeming of shares at only fixed or under very rare or special circumstances. The events alluded to are confined and must be executed with fidelity to companys guidelines or shareholders joint advice. The section also stipulates policies and guidelines that a registered company can redeem its preference shares. Besides the outlined policies and rules, other corporate rules must be given premium consideration to ensure that the need for having redeemable shares is granted without many obstacles (Farrar, 2001). Section198A In the past, many reports were issued to the effect that company directors were making sole decisions that affected progress. Reports showed that directors took the opportunity to misappropriate funds and put personal and financial interests above the companys. The Australian parliamentarians therefore introduced this section to ensure that the overall decision making rested on the entire membership of the company. It is in this section where the duties of the directors are outlined with great exactness. The extent to which the directors exercise their functions is clearly laid down. It is within the province of members to make certain fundamental decisions through a vote during a companys annual general/special meeting. This section prevents the director from running the company as if it were a personal enterprise. It demands that consultations among directors and with general membership be enhanced. Directors are clearly gagged against misusing office or companys funds. They cannot make sole or joint decisions that can harm the companys image. The general membership has an impeccable trust on the running of the company under this provision. Members can freely support the company by remitting their subscriptions because they know the companys directors only exercise prescribed quantity powers (Farrar, 2008). Section 191 Many directors registered companies that could derive benefits from the companies they head. It was demonstrated that a clear issue of competing interest engulfed the companies. The companies affected suffered image crisis and many people became uninterested in joining the membership. The conflict of interest attracted many court battles that marred meaning growth of the companies in question. This section mandates the potential directors to disclose material or personal interests they could be harbouring. The directors personal interest should clash with that of the company he/she is steering. When a director fails to state his personal interest beforehand he/she may derive some undue advantage. This may include awarding tenders to his/her side business venture, over pay money to his company. Sometimes it is the directors relatives who may bid and win tenders. The company is thus accused of nepotism and favouritism of the highest proportion. This section was pinned to control such a nd makes the company to be viewed as fair and unbiased (Smyth, 2005). Section 250R (2) and (3) In the past, companies directors were given little powers to decide on the companys remunerations. The decision making was left at the mercy of members who barely had expertise on economics. Worse still was the fact that a decision had to be followed till the following annual general meeting. The companies registered disproportionate instability due to unpredictable Australian economic trends. Wisdom demanded that this section be included to allow members decide on remunerations while allowing directors an opportunity to introduce some changes based on prevailing economic situations. In the sections members decide on the remuneration report in an AGM to which directors are not mandated to implement blindly. This section makes it possible for entire membership to contribute to remuneration which is very dear to them and prevent directors from misappropriating funds through remunerations. In addition, the directors are allowed a chance to assess the prevailing financial environment and hitherto decide on appropriate amendments based on their economic prowess before or between general meetings. This ensures the company is not disadvantaged by a rigid resolution made in a general meeting which may be rendered obsolete by unpredictable economic situations in Australia (Tomasic, Bottomley, McQueen, 2002). References Farrar, J. (2008). Corporate governance : theories, principles and practice (SJ100 FAR). Farrar, J. (2001). Corporate governance in Australia and New Zealand (KU956 F24). Ford, H. (1999). Ford and Austin's principles of corporation law (KD956 F69) (9th ed.). Smyth, J. E. (2005). Australian business law.Sydney, Prentice-Hall of Australia. Tomasic, R. (2002). Corporations law in Australia (SJ100 TOM). Tomasic, R., Bottomley, S., McQueen, R. (2002). Corporations law in Australia. Sydney, Federation Press. Vickery, R., Pendleton, W. (2006). Australian business law: principles and applications. Frenchs Forest, N.S.W., Prentice Hall/Pearson Education Australia.