Company Law assignment


 The assignment will be approximately 2,000 words (with a 10% margin either way).


  • Must use a 12-size font, double-spacing and default Microsoft Word margins.


  • You must use the IRAC approach for problem based legal questions. If the assignment contains a theory question, the IRAC approach is not Your work will be marked on the basis that you have followed the instructions above.


  • All references are to be cited in Chicago format.


  • Assignment must be put through Turnitin!


  • Question 1 – (5 Marks) – 500 words.


  • Question 2 – (10 Marks) – 1000 words.


  • Question 3 – (5 Marks) – 500 words.


  • Compulsory Txt book – Lipton, Herzberg and Welsh, Understanding Company Law, 17th Edition – Thomson Law Book Co, 2014 ISBN 9780455232164


  • Compulsory Legislation – Australian Corporations & Securities Legislation, published by CCH only, 2015 edition, Vol 1 only, ISBN 2014 edition is also acceptable.


Question One- this question requires the IRAC approach for answering


Brainy Pty Ltd does not have a constitution. The company manufactures DVD drives for computers and has three directors: Ursula the Chairman, Sam the Managing Director and Bob a non-executive director. Directors hold 75% of the shares.


Morris, a small shareholder in Brainy Pty Ltd, is aware that the company is losing market share as consumers are using the Internet to download data. He wants the company to manufacture USB ports. The directors reject his suggestion but Morris considers this is motivated by the fact that the USB market is dominated by USB Pty Ltd, a company owned by Ursula, Sam and Bob. Morris also learns that when Brainy Pty Ltd customers inquire about USB components they are directed to USB Pty Ltd.


Morris wants to take action but is concerned the directors will call a members’ meeting and create a constitution that empowers the directors to take his shares from him.





Can the directors of Brainy Pty Ltd create a constitution? Assuming that a constitution is created with the clause empowering the directors to take shares from him, advise Morris whether he will have to sell his shares. [Provide references to the Corporations Act and cases where relevant]


[5 Marks]

Question Two- this question requires the IRAC approach for answering


Rebecca owns some fully paid shares and some partly paid shares in Narrow Pty Ltd. She also has the same shareholding in Wide Ltd (a non-listed company). Neither company has a constitution.


Rebecca decides to sell her various shares in each company to Jess and she submits the correct documentation. Rebecca receives advice from the directors of Narrow Pty Ltd informing her that they will not permit the transfer of the fully paid shares but the partly paid ones have now been transferred to Jess’s ownership. The directors of Wide Ltd advise that they have rejected the transfer of both the fully paid shares and partly paid shares.


Assess the conduct of the directors of both companies. If you do not consider they have acted correctly, is there any way they could acquire the power necessary to block all Rebecca’s transfers?


[Note: “Transfer” is the term used to describe the sale or purchase of a share from one shareholder to another.]

[10 marks]


Question Three- this question does not require the IRAC approach to answering


Larry is instructed by his employer Huge Ltd, to register a company which is to sell educational assistance to commerce students. Larry is to become Managing Director of the new company. Before the new company (Lifesaver Pty Ltd) is registered, Larry signs a purchase agreement on behalf of the proposed company to buy educational equipment.


Lifesaver Pty Ltd is later registered and at its first directors’ meeting the ratification of Larry’s purchase is considered. The other directors consider the equipment Larry purchased is unsuitable and refuse to approve the transaction.




  • How does corporate law classify the role undertaken by Larry leading up to the registration of Lifesaver Pty Ltd? What are the duties that such a person owes and to whom are they owed?


  • What is the effect on Larry, and on Lifesaver Pty Ltd, if the directors decide not to ratify Larry’s lease.


  • Describe the sources from which a company of Lifesaver’s type can raise funds. In your answer include any limitations that the Corporations Act imposes on proprietary company fundraising.


  • What additional fundraising opportunities would be available if the company was “Lifesaver Ltd”?

[5 marks]

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