What is an Incorporated Joint Venture?

An incorporated joint venture, also commonly referred to as a corporate joint venture, an equity joint venture or a joint venture company (Incorporated Joint Venture) is a type of joint venture where the participants (Joint Venturers) arrange for the incorporation of a separate legal entity to pursue an agreed business objective.  The Incorporated Joint Venture may acquire assets of the Joint Venturers in exchange for the issuance of securities. [Read more…]

Value shifting in commercial transactions

It seems that everywhere you turn when structuring commercial transactions or when raising capital in Australia, tax issues need to be considered.  “Value shifting” is one such issue. [Read more…]

Can a third party be made to account for a breach of director’s duties?

It is an unfortunate reality that some directors of companies of all sizes engage in conduct that breaches their legal responsibilities.  In circumstances where a Court finds that the conduct of the director breached the standard of care that they owed, the Court has the power to award damages.  What happens, however, where a third party has received a benefit (knowingly or unknowingly) as a result of the director’s breach – can that third party be held accountable? [Read more…]

Holding company liability for debts of subsidiary

When advising on the suitability of corporate structures, we are commonly asked whether a holding company can be liable for the debts of a subsidiary.  The answer (of course) depends on a number of factors. [Read more…]

ASIC v Macdonald – have the lessons been forgotten?

The case of Australian Securities and Investments Commission v Macdonald (No 11) [2009] NSWSC 287 (ASIC v Macdonald) decided in the New South Wales Supreme Court, highlights the importance of strict adherence to the requirements of the Corporations Act 2001 (Cth) (Act) when preparing minutes of Directors’ meetings (Board Meetings) for them to be relied upon as evidence in a proceeding. [Read more…]

Shadow directors and de facto directors

The definition of “director” in section 9 of the Corporations Act 2001 (Cth) (Act), goes beyond directors validly appointed, and includes de facto directors and shadow directors.  This article explores the level of involvement in the affairs of a company that a person must have to be deemed a de facto director or a shadow director. [Read more…]

“Approved by ASIC” – a $20,000 problem…

Whilst the financial services sector seems to have embraced the innovation economy, a recent case shows just how important it is for Australian Financial Services Licence, (AFS) holders to take care when advertising their products.

A recent case brought by the Australian Securities and Investments Commission, (ASIC) is a reminder that when advertising investment schemes precise language needs to be used.

[Read more…]

What is a Share Subscription Agreement?

A share subscription agreement (Share Subscription Agreement) is a promise by a potential shareholder, also known as a subscriber, to make payment of funds to a company (Company) in an agreed number of “tranches”, in return for the Company issuing and allotting a certain number of shares at a certain price, such that the subscriber becomes a shareholder (Shareholder).  A Share Subscription Agreement must include the number of shares that will be issued to the Shareholder, and the order and timing by which funds will be advanced.  Sometimes it seems that a Share Subscription Agreement merely sets out the provisions of a term sheet (Term Sheet) in a fuller and more precise manner.  [Read more…]

What is a Preference Share?

Preference shares (Preference Shares) are a class of share that gives the holders some right or preference over another class of shares.  A Preference Share is often thought of as a ‘hybrid’ security, as it has features of both debt and equity.  Like ordinary shares, Preference Shares are issued by a company at the time of issue, or may be capable of being purchased on the market.  Pursuant to section 254A(2) of the Corporations Act 2001 (Cth), a company can only issue Preference Shares if the rights which attach to such shares are set out in the company’s constitution, or have been approved by a special resolution of the company.  A company does not have to be listed on a stock exchange to issue preference shares. [Read more…]

What is a Shareholders Agreement?

A shareholders agreement (Shareholders Agreement) is a contract that attempts to regulate the rights and obligations of Shareholders or Members (used interchangeably) in the context of their ownership of securities in a company.  The company itself may also be a party to the Shareholders Agreement.

Shareholders Agreements are not compulsory like the Replaceable Rules or a Constitution as required by the Corporations Act 2001 (Cth) (Act).  On incorporation, or on obtaining an investor, many companies choose to regulate the rights and obligations of Members in addition to regulating various aspects of the management of the Company by preparing and executing such an Agreement. [Read more…]

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