Question 1 1. The principle or rule known as the maintenance of share capital is based on the need to protect shareholders and creditors. Share capital is the contribution made by shareholders by subscribing shares of the company. A company’s creditors can only look to the share capital for the payment in the event of a winding up. To protect creditors, a general rule known as the rule in Trevor v Whitworth was developed to prohibit a company from reducing its share capital because a reduction in capital would prejudice the rights of creditors. Moreover, the reduction would in effect diminish the pool of funds available to the company to pay its creditors. The rule in Trevor v Whitworth has been incorporated into Ch 2J of the Corporations Ordinary shares have the right to share pro rata in any surplus assets on a winding up too. On the other hand, a preference share is a 'hybrid' security, meaning it has features of both debt and equity. The term 'preference' indicates that it is rank ahead of the company's ordinary shareholders for the payment of dividends, and has a prior claim on the company's assets if the company is wound up. A preference share pays income in the form of dividends, and generally converts into ordinary shares at some future point. Section 254B of the Corporations Act 2001 stated the rights attaching to the shares. Preference share usually have the right to receive a fixed dividend (10 cents per share per year), provided there are profits available for distribution and a dividend is declared by the company. Moreover, preference share have the right to be repaid the principle on a winding up in priority to ordinary shareholders. However, preference share have no voting rights unless dividends are in arrears, except on resolutions to reduce the company’s capital or wind up the company, or at class meetings on matters. Lastly preference share have no right to share in surplus assets on winding up. One of the advantages of equity finance over debt finance is tax deductibility. The distributions paid on the debt finance (that is, interest payments) are generally tax deductible for the company,
Corporations Law Tutorial Questions Week 2 – T2 2012 1. What is the difference between incorporated entities and unincorporated entities? (p51 of textbook) Unincorporated associations are clubs and societies which are formed to carry on various activities but where the members do not aim to make a profit and distribute it to themselves. Unincorporated associations are not a separate legal entity. This means that it can not hold property in its own name ( property must be held in the names…
landmark case in UK company law, the judgments to the Salomon case1 gives effects on upholding the principle of corporate personality. As a result, company’s shareholders would not be liable for the debts of an insolvent company. Seeing the decision in Salomon v Salomon Ltd, a company is formed if it has separated legal personality and limited liability. Furthermore, shareholders, directors are divorced with the company itself. They are independent entity under the law. II. The ‘Salomon’ principle…
My advice for Golden Motors is to go into voluntary administration since Golden Motors is now in financial difficulties-ongoing losses. (The directors can rely on s95A and cash flow test to determine the solvency of the company) THE REASONS FOR CHOOSING VOLUNTARY ADMINISTRATION This can protect the directors from insolvent trading under s588G. Contravening the insolvent trading can result in civil penalties including pecuniary of up to $200,000 or criminal charges (a fine up to $220,000 or imprisonment…
products that are authorized by franchisor Protections for franchisees (state and federal law) Common Contract terms Territorial rights Quality control Pricing arrangements Industry specific protections Disclosure rules Wrongful termination Is franchisor liable for acts of the franchisee?? Yes, since they dictate how they’re supposed to act. Partnership Applicable law Uniform Partnership act Law that will control settlement if no partnership agreement is made Absent a partnership agreement…
SINGAPORE POLYTECHNIC DIPLOMA IN MARITIME BUSINESS MARITIME LAW (MA0123) ASSIGNMENT 2 Group Assignment Article III Rule 1 of the Hague-Visby Rules deals with the shipowner’s obligation to make the vessel seaworthy. The common law also requires the shipowner to make the vessel seaworthy. How do they differ? Discuss the two with suitable case laws. Lim Jia Yan 1137136 DMB/FT/3B/21 Guo ShanShan…
Other Concepts 2 B.) Agency and Partnership Law 2 II.) INTRODUCTION TO THE CORPORATE FORM 16 A.) Formation and Structure 16 B.) Debt, Equity, and Valuation 22 III.) CONTROL OF CORPORATE DECISIONS 32 A.) The Role of the Shareholder 32 B.) Management Obligations 50 1.) Duty of Care 51 2.) Duty of Loyalty 56 3.) Duty of Fairness: Parent-Subsidiary Relationships 63 4.) Duty of Good Faith 64 5.) Management Obligations Under Federal Securities Laws 67 C.) Shareholder Litigation 76 IV.)…
Study Guide to accompany Canadian Business and the Law, 5th edition Chapter 15 CHAPTER 15 THE CORPORATE FORM: ORGANIZATIONAL MATTERS Objectives After studying this chapter, you should have an understanding of • a corporation as a legal person • the distinction between federal and provincial incorporation • the share structure of a corporation • the selection of a corporation’s name • how a corporation is created • how the corporation is financed • how securities are regulated Learning Outcomes…
As a result, the corporation was able to hold a claim under the District Court by asserting that under the Religious Freedom Restoration Act of 1993 (RFRA). i The case presented manifold challenges to the Court. One of these challenges dealt with determining whether a for-profit corporation was to be considered a person, which is only vaguely phrased under the Religious Freedom Restoration Act of 1993.ii If so, the next challenge to be considered was whether these corporations, which are considered…
pros and cons of each entity including the legal and ethical factors to help assure successful business decisions. A business entity is formed and administered by commercial law. A business entity can be sole proprietorship, partnerships- general and limited, limited liability companies, corporations, small business corporations and cooperative. The purpose of this formation is to engage in business activities usually for the sale of a product or service. The regulations governing particular types…
BIS/221 2015 Professor Preventing Security Breaches: Collaborative Summary I have learned that the laws require an entity that has been subjected to a data breach, to notify their customers and other parties about the breach, should take other steps to correct the injuries cause by the breach. The first law was erected in 2002 and became law on July 1st 2003, As related in the bill statement, law requires "a state agency, or a person or business that conducts business in California, that owns or…
