Separate Legal Entity of Corporation System †MyAssignmenthelp.com

Question: Discuss about the Separate Legal Entity of Corporation System. Answer: Introduction: According to the Corporation Act 2001 organization has right to conduct or operator business for gaining profit anywhere in Australia. The organization can incorporate their business as a public or private company. It is necessary for running a private company must note have at least more than 50 members where they not able to investment from the general public but the public companies has no limitation on restriction for having any members of shareholders. These companies are more stringent disclosure and reporting requirements as a property company and Corporation Act 2001 (Tricker and Tricker 2015). There are four kinds of Companies are incorporated under the Corporation Act 2011 which are public no liability company where only the no liability company can use the legislation for meaning purposes. The unlimited company which share capital fair the share capital only be used as public or property under this company investment only used for the members who want to withdraw their investment capital from this organization. They also faced with the disadvantages where they became personally liable for the debts of the company. The company limited by shares which also applicable for the public or property organization and it only able to use for the business purposes (Whincop 2017). Under this company the members become personally liable for any unpaid subscription price where they owned their shares in those organizations. The public company limited by guarantee is defined the corporation which should be a public company and they must be subject to the stringent disclosure and report ing requirements under the Corporation Act 2001. According to this act the companies limited by guarantee never have rights to issue shares. The public company limited by guarantee only profitable for the fluctuating membership where the members do not need to buy shares in the company it and it only structured limits liability of members. This organization only offers the amount payable for share issued liability is limited where it agree to the amount in a guarantee which only contributed by the members of the company. Therefore when a company incorporates they must use the Limited or Ltd along with the name of the corporation. When a public company limited by guarantee has been incorporated they are required to open the registered office for at least 3 hours in each business days and the arrangements of the business should be found by a professional business organization (Whincop 2017). According to the section 117 has define the legislation of the application for registration of any company. The section 118 has given the rights to the ASIC to keeps the company or organizations where the company can register under this act and after the registration it will issue the certificate for incorporate the business. The section 119A has legislates the jurisdiction of incorporation and jurisdiction of registration organization. According to the section the organization or the company only has right to incorporate under a particular of Jurisdiction where the company can be registered under the specified state or Territory of the Australia. The section 120 has registered for the members, directors and a company secretary of the newly registered organization where under the registration process a person can become a member director for company secretary with specified applications (Tricker and Tricker 2015). According to the case fact Richard has an extensive olive grove in the Hunter Valley region of NSW where he has establishes 12000 trees and recently purchased his neighbors adjoining property with a view to expansion. Now his 2 sons has joined him for expand the business and they are looking for opportunities for the business opening in the markets. Also planning to make the business as a family business which will be easier for them to raise the capital and it will get also tax benefits in operating a business through a company structure rather than as a sole trader or partnership. Richard wants to give the name of his company Ridali where his sons prefer the name Richs Guaranteed Olives. Now for the incorporation under the Corporation Act 2001 the family business which they are planning to incorporate should be the private company where they can invest their capital amount for the business purposes (Whincop 2017). According to the section 117 they can apply for the registration for their property company under section 118 the ASIC gives company ACN registration for running the business where they can issue the certificates. When the certificate has been issued it provide the company's name, companies CAN, companies type, company is registered as a company under the Corporation Act 2001. Under the state or Territory of the jurisdiction where the company is taken to be registered and the date of registration of the company has been mentioned. Under section 119 of Corporation Act has legislates the existence of registration where the corporation can be exist as a body of corporation at the beginning of the day when it will be registered under the section 117 and 118 and the name of the company also specified in the certificate of registration. The section 120 will decide the members, directors and company secretary of the new register organization and the section 121 will specified the registered office where the address has been mentioned in the application for the registration for the organization proposed registered office and it will become the official registered address for the organization where they incorporate their business (Tricker and Tricker 2015). According to the Corporation Act 2001 Richard and his sons can incorporate their business as a property company where they are required to register under this act. They will apply for the registration and get the date, prediction number and name and the address of registered office for running the business. It is necessary for every Corporation to register their business before day incorporate the organization and with a proper name along with a registered office is also necessary for the registration of the business (Tricker and Tricker 2015). The issue has been arises whether Terry can take any legal action against Lazarus Private Limited and CMS or CM for the problems he has faced due to the employment under CMS? According to the Section 124 of the Corporation Act 2001 has legislated the legal capacity and powers and individual both in and outside of the jurisdiction where a business can separate from and another business or individually with value to the accountability. According to their legal entity a corporation or a limited liability company is exist as a separate legal body because they have bound to do the activities separately according to the entity from those of the individual or the other company and they has powers to include issues or cancel shares from the company. Under the separate legal entity a company can distribute any of the companys property among the members and provide security for uncalled capital and also helps to register the new company under the jurisdiction and according to the law of registration (Waqas and Rehman 2016). Salomon V A Salomon And Co Ltd [1897] is one of the famous case of English law where the concept of separate legal entity has arises for the companies. This case has been established according to the Companies Act 1862 but later according to the Corporation Act Section 124 which has been described about the legal capacity of the separate entity of the business. In this case the court has been described the principles of separate legal personality where it helps to cover the initial commercial law of regime. The doctrine of separate legal entity has been described on the basis of company law and the corporate theory (Tricker and Tricker 2015). Under the separate legal entity that there should be control and taken under the companys name and it must belong to the company but sometimes it mean not found to be related directly with the shareholders of directors of the company. A separate legal entity has been established there for the debts and liabilities has automatically make the legal rights for the company under some circumstances (Whincop 2017). Lee v Lees Air Farming Ltd (1961) is another famous case of separate legal entity where the house of Lords has establishes the facts for the company has right to make a relationship and enter in a employment contract under some circumstances. When a company has provided with the separate legal entity then all the obligations has formed to establish a contractual relation with the shareholders the directors and others member who are related in the companies controlling member (Waqas and Rehman 2016). Andar Transport Pty Ltd v Brambles Ltd (2004) as another example of separate legal entity case where the court has been illustrated where terms of introduction has been found between the legal principles in the Corporate law and the employers duty of care. It is the duty of the corporation that they must provide proper safe system of work for the every members of the company. It is necessary that employee of company who on the position of the separate legal entity must bound to do their duties where it is necessary to provide a safe work system where any employees must not be injured (Tricker and Tricker 2015). The terms of the piercing of the corporate veil it helps to establish the facts in the Corporation where the separate legal entity principles has found and fair with the Corporation under these principles. It is necessary for the court to found the actual person who holds the duty of legal separate entity behind the veil and must establish the facts of the actual true nature of the company. It only applicable in the area of law where it has been ill defined, inconsistent and quite unpredictable. Briggs v James Hardie Co Pty Ltd Co Pty Ltd (1989) is one of the famous cases of Corporate veil where the court has mentioned to lift the veil due to the establishment of ill defined, inconsistent and unpredictable situation (Waqas and Rehman 2016). The Cosmo Mining Services Pty Ltd (CMS) has a subsidiary as Cosmo Mine Ltd (CM) as CM and it owes 120 of the 200 issued shares of CMS. Recently CMS has better attracted considerable media attention as scientist discovered that CMS mining activities have contaminated a nearby river which supplies the water of the mine and Gunbarrel. However a number of Gunbarrel resident and former employees including Terry have contracted cancer because they drank the terminated water. It is the CMS potentials liability to their employees and the resident of Gunbarrel. The CMS shareholders have vote in favor of selling CMS business to an newly formed company Lazarus Private Limited and winding up the CMS (Whincop 2017). According to the Section 124 a company can Incorporated with the separate legal entity due to the failure of veil of the corporation. Therefore the company can be liable for the debts incurred by the corporation in itself unable to pay those debts and due to the fall. Therefore it is completely insolvent if it cannot pay the debts when they become due. In this situation it is the duty of the company that they must look for the cash flow of the company where the anticipated current and future cash can be sufficient to unable to pay the debts and the financial position of the company will be establish whether the company is liable to pay the debts to the shareholders or any other issues related to the company. The section 588G has defined the personal liability of the directors for debts incurred by the company when it is become insolvent. Therefore it is only applicable when the directors have found personally liable for the debts on to creditors for trading for the insolvent (Tricker and Tricker 2015). Conclusion According to the case facts Terry has right to take legal action against CMS or CM for the issues have suffered due to the drinking of the contaminated water which has been supplied into the mine and Gunbarrel. Though company has sell their business to another company it is the duty of the CMS that they hold a potential liability and safe workplace for the employees in the Corporation (Waqas and Rehman 2016). Therefore they are liable to pay the compensation to Terry as because he has contacted with cancer due to the contaminated water which he has drunk. Reference Andar Transport Pty Ltd v Brambles Ltd (2004) 206 ALR 387; (2004) HCA 28 Briggs v James Hardie Co Pty Ltd Co Pty Ltd (1989) 16 NSWLR 549 Lee v Lees Air Farming Ltd (1961) AC12 Salomon V A Salomon And Co Ltd [1897] AC 22 Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and practices. Oxford University Press, USA. Waqas, M. and Rehman, Z., 2016. Separate Legal Entity of Corporation: The Corporate Veil. International Journal of Social Sciences and Management, 3(1), pp.1-4. Whincop, M.J., 2017. Corporate governance in government corporations. Routledge.