Australian Guide to Legal Citation Footnotes

Question: Discuss about the Australian Guide to Legal Citation Footnotes. Answer: Items: As the company is short of working capital, Matt's uncle Daryl Mason makes an offer to invest $10,000 in the company. But the band is not sure if the amount should be taken as a loan or if they can offer shares in the company to Daryl. However, as a company is tainted by the law as a distinct legal entity, it is possible for Shakespeares Pty. Ltd, and Daryl to form a partnership. In this way, after the incorporation of Shakespeares Pty. Ltd, the partnership that was present between the members of the band has come to an end and a new entity named Shakespeares Pty. Ltd has been created. This new entity has all the rights and liabilities that are enjoyed by a natural person. Hence, this entity can also enter into a contract or a partnership with Daryl. Legal Aspects: The law provides that the private company, also known as a proprietary company, that does not have more than 50 non-employee shareholders, can raise funds from the existing shareholders of the company and also from the general public if fund-raising does not need a disclosure document.[1] Commercial Aspects: Therefore in the present case, the amount of $10,000 taken from Daryl can be considered as a loan taken by Shakespeares Pty. Ltd or the company can also enter partnership with him. If still partnership: A partnership can be created between Shakespeares Pty. Ltd and Deryl. Items: The law provides that after its incorporation, a company has to be treated as a distinct legal entity. The result of this legal fiction is that a company can own property in its own name. In the same way, a company can also enter contracts under its own name. Therefore, the copyright over the future work created by Romeo will be held in the name of Shakespeares Pty. Ltd. As a shareholder and a director of the company, it will be a breach of the duties of directors or part of Romeo if he retains the copyright over the work created by him. Legal Aspects: Certain duties have been imposed on the directors of corporations. According to these duties, the directors, should the bona fide and should not make an improper use of the position held by them in the company. Similarly, these duties prohibit the directors from meeting in secret profit at the expense of the company.[2] The result is that all the work created by the employees of the company has to be treated as the work of the company and therefore the copyright over such work will be retained by the company itself. Commercial Aspects: Hence, in view of this legal position, Romeo cannot be allowed to personally hold the copyright over all the future compositions created by him. And similarly he cannot receive a royalty from the company regarding such work. This work has been created by Romeo for the company and therefore the copyright over such work will be held by the company. If still partnership: A partnership is not present in this case. Items: According to the third issue, Linda wants to personally insure her voice. Therefore the issue arises as to who owns the voice and what are the duties of Linda towards the Corporation. In this case, Linda is a member of the band and at the same time, she is also a shareholder of Shakespeares Pty. Ltd. Legal Aspects: It has already been mentioned that according to the Corporations Act, a company is treated by the law as having its own distinct identity. Therefore, a company can own assets in its own name.[3] However, in this case it needs to be seen who owns the voice of Linda. While incorporating the company, all the band members have decided to join their hands and work for a common goal. According to the Partnership Act, this in itself amounts to a partnership. However, later on, they were advised by their accountant friend Melissa that they should think of incorporating a company. Section 124 of the Corporations Act provides that a company has all the powers enjoyed by a natural person. Commercial Aspects: Mellissa told them that a number of benefits will be available to them after they have incorporated the business in the form of a corporation. If still Partnership: A partnership arises when two or more persons or legal entities have decided to work together for a common goal in business. Items: In this case, the van owned by the band is subject to a chattel mortgage and an amount of $10,000 is owed on the van to EZ Ltd. Therefore, it has to be seen, what will be the legal implications of this. Legal Aspects: A chattel mortgage is a commercial car finance product. In case of a chattel mortgage, the finance company lends money to the customer. This money is given to the customer for purchasing a car or some other motor vehicle, which is known as the chattel and in return, the customer makes regular repayments. In this case, the ownership of its taken by the customer at the time of the purchase, however, the finance company takes out a mortgage on the vehicle through an ASIC registered fixed and floating charge for the purpose of providing security for the loan. After the completion of the term of the loan and when any residual value has been paid, the charge is removed by the finance company and a clear title to the vehicle is given to the customer. It is also available to the customer to trade in the vehicle or it may refinance the vehicle for its residual value. Commercial Aspects: There are certain major benefits that are available in case of a chattel mortgage for financing a motor vehicle. These advantages include the choice of the term of the loan, which could be 2 to 5 years. Similarly, there are wide options regarding the residual value, generally ranging from 0% to 60% of the original value, depending on the age and the type of the vehicle. Optionally in this case, a deposit can be used for reducing the size of the loan. In this case, the chattel mortgage over the van can be made in the name of Shakespeares Pty. Ltd. As a corporation is distinct legal entity, it is separate from its members (shareholders) and controllers (directors). Therefore, a company can own assets in its own name. At the same time, a company can also enter into contracts under its own name. The liabilities of the company can also be imposed only against the company itself and not raise directors or the shareholders of the corporation. The effect of this legal position is that the liabilities of the company towards the parties can only be enforced against the assets owned by the company and are these the assets of the shareholders. If still partnership: In this case, no partnership is present. Items: The issue in this case is that Michael is a shareholder, as well as a director of Shakespeares Pty. Ltd., on the other hand, Shakespeares Pty. Ltd has signed a contract with Squeezem records Ltd for three albums. Now this company wants that Shakespeares Pty. Ltd should remove Michael and another drummer, Jim should be appointed in his place. In this regard, it is worth mentioning that a shareholder cannot decide. Even if Michael leaves the band, he will still remain a shareholder of Shakespeares Pty. Ltd. in such a case, one option is to buy the shares owned by Michael and Dean can be invited to become a shareholder. On the other hand, it needs to be noted that Michael is also a director of Shakespeares Pty. Ltd. There is a certain procedure to change the director of the company. Legal Aspects: Section 203C of the Corporations Act which is a replaceable rule is applicable in case of the proprietary limited companies. No procedures or statutory restrictions have been placed on the removal of a directive in case of such company. A replaceable rule is the section of the Corporations Act that can be displaced by the constitution of the company. In case section 203C of the Act has not been displaced by the constitution of the company, then a director can be removed by passing a resolution of the company or by a majority of the board of directors, keeping in view the terms of the constitution of the company. Commercial Aspects: In Australia, most of the big companies are the big banks, mining companies and other public companies that are listed on the Australian Stock exchange. Generally, in case of such companies there are a considerable number of shareholders. At the same time, there is also the vast majority of companies that are the proprietary limited companies. In case of these companies, there can be less than 15 on employee shareholders. Therefore, most of the small and medium-sized enterprises in Australia have adopted this form of company. There are certain rules which allow the company to remove a director. These rules have been mentioned in the Corporations Act, 2001 and/or the constitution of the company. In this regard, a distinction has been made between the public companies and the proprietary limited companies. Is still Partnership: In this case, a partnership is not present Bibliography Graw, Parker, Whitford, Sangkuhl and Do, Understanding Business Law 7th ed LexisNexis Butterworths, 2015. Latimer, P, Australian Business Law CC, 2016 Edition Stephen Graw, 2011, An Introduction to the Law of Contract, 7th Ed., Thomson Reuters. Sweeney, OReilly Coleman, 2013, Law in Commerce, 5th Ed., LexisNexis. Vermeesch,R B, Lindgren, K E, Business Law of Australia Butterworths, 12th Edition, 2011. Stephen Graw, 2011, An Introduction to the Law of Contract, 7th Ed., Thomson Reuters. Sweeney, OReilly Coleman, 2013, Law in Commerce, 5th Ed., LexisNexis. Latimer, P, Australian Business Law CC, 2016 Edition