Company Law Essay Example | Topics and Well Written Essays - 1250 words - 1

Company Law - Essay Example AoA) or Memorandum of Association (MoA) (Tomasic, Bottomley and McQueen, 2002). The key legal issue identified is in the case scenario concentrates on whether the actions of Anna and Susanna were focused on yielding personal benefits or the company’s interest. Step 2: The Relevant Law A company’s management is generally administered by the provisions of Corporations Law under Section 134 which applies to companies as ‘replaceable laws’ by constitution. However, it is the sole discretion of the company’s management to decide on the number of replaceable laws to be applied which are mentioned in the Corporations Act 2001. Furthermore, Section 140(1)(b) of the Corporations Act 2001 states that replaceable and constitution laws are obliged to a contract engaging the company and its directors under which every director agrees to adhere to the rules and constitutions mentioned as per the organisational interests (PricewaterhouseCoopers, 2011). In relation to Section 198 of Corporations Act 2001 (Cth) the directors of the companies possess the authority to exercise all the discretionary powers except for those which require additional approvals in accordance to the constitution. With reference to Section 198C, the directors of a company may assign a managing director and bestow the personnel with responsibilities according to their convenience and requirements. Furthermore, the management also enjoys the authority to cancel or reassign powers of the managing director, who have been assigned with the discretion of all the directors (Tomasic, Bottomley and McQueen, 2002). Under the act, if a company or its entitled directors aim to appoint a managing director it must ensure that the formalities comply with the Corporations Act 2001 as mentioned under Section 198C. The law specifies that the directors of the company should adhere to certain rules that have been decided and assigned to the managing director, irrespective of their discreti onary powers. Breaching of contracts or agreements within the directors or shareholders of a company may lead to violation of the law as stated in Section 180(1) by the Corporate Law Reform Act 1992. A similar situation have been identified in the case of Vines v ASIC (2007) 73 NSWLR 451, where the director breached the common law or contract, and consequentially, the court agreed that the judgement could amount to sue the director for the damages caused by negligence of law (Pitt and Luxton, 2011). However, statutory defences are available under Sections 180(3) of the Business Judgement Rule which states that breach of contract can be defended if the director can prove that the decision and action taken was in relevant to the business operations of the corporation (Nadeau, 2006). Step 3: Apply the Law to the Problem Leaping Lizard Coffee Emporium Pty Ltd specialises in coffee and other coffee-related accessories. It operates as a private company formed by Joan, Anna, Prafula and Su sanna who were further designated as the directors of the company with equal share capital. In addition, the company consists of three members each owning 1000 ordinary class shares. The company has been registered under the Corporations Act 2001 in the year 2012 and adopted replaceable rules under Sections 6, 33A to 39, 198A and 198C. Besides, the company has appointed a managing direct