Companies formed after 1 July 1998 can have a simple set of rules known as “a Constitution” in place of what was previously called “Memorandum and Articles of Association”.
If a proprietary company does not adopt a Constitution, they will be automatically governed by the Replaceable Rules as outlined in the Corporations Act 2001.
Most companies have a Constitution which is drawn up prior to the registration of the company. The Constitution has the effect of a contract between:
the company and each shareholder;
the company and each director;
the company and the company’s secretary;
a shareholder and each other shareholder.
A company adopts a Constitution on registration of the company provided each person who agrees to become a shareholder agrees in writing to the terms of the Constitution.
A company may modify or repeal its Constitution, or a provision of its Constitution by passing a special resolution. A special resolution requires at least 21 days notice and the agreement of a 75% majority of votes cast.
Special purpose companies such as a superannuation trustee are required to have a Constitution designed for that company.
A corporation can however take advantage of the Replaceable Rules set out in the Corporations Act to govern its internal management, however in our view a company should have a modern constitution that takes account of changes in the law and our changing world. It is not difficult to update a company’s constitution.
It is important to note however that the Replaceable Rules do not apply where the same person is the sole director and shareholder. These companies must use a Constitution.
If you have any enquiries regarding the operation of corporations, then please contact our business law team at Everingham Solomons where Helping You is Our Business.
In a recent full Federal Court decision, a New South Wales property developer purchased a single story house, intending to develop it into units for use other than for residential accommodation. At the time of settlement the home was occupied by a tenant. The developer adopted the view that the sale was a taxable supply because it was his intention to develop the land into commercial units and consequently claimed a tax credit from the ATO.
The ATO took a different view.
The GST legislation provides that the supply of property is not subject to GST if the premises are to be used predominantly for residential accommodation. The issue was whether the property was to be used predominantly for residential accommodation.
The developer contended that the question as to whether the premises were to be used predominantly for residential accommodation is to be determined by reference to the subjective intentions of the developer. The developer asserted that it intended to develop the property at the end of the tenancy period for uses which were not predominantly for residential accommodation.
The full Federal Court dismissed the developer’s submissions and determined that the test as to whether residential premises are to be used predominantly for residential accommodation should be determined objectively by reference to the physical characteristics of the property as at the date of acquisition and that the intentions of the future owner are irrelevant.
The implications of GST must be considered in every property transaction. It is still an area which is fraught with uncertainty.
At Everingham Solomons we have the expertise to assist you with all of your property and development matters because Helping You is Our Business.
In previous articles we looked at Business Name and Trade Mark registration.
With online business becoming more important everyday, more and more businesses are looking to also register domain names that are capable of being easily identified with their business.
A domain name is simply a textual address for a location on the internet. An internet address with “.au” at the end, indicates that it is registered in Australia and part of the .au domain space regulated by the Australian Domain Name Administrator (commonly referred to as the “auDA”).
Once you’ve chosen the domain name you want to use, registration is through one of the organisations accredited by auDA for that purpose. These organisations (called “Registrars”) are authorised by auDA to provide services to people who want to register a new domain name, renew their existing domain name or make changes to their domain name record.
Similarly to business and company names, there are no proprietary rights in the domain name system. A registrant does not own a domain name but holds a licence to use it for a specified period of time.
Domain name licences are allocated on a first come first serve basis. Provided the relevant eligibility rules are satisfied, the first registrant to apply for a particular domain name will be permitted to licence it. There is also no hierarchy of rights in the domain name system. For example a registered trade mark does not confer any better entitlement to a domain name than a registered business name.
To sum up, the branding of your business will often require a combination of a business name, a trade mark and a domain name registration. The actual mix will vary from business to business and at Everingham Solomons we have the expertise to advise you on the right choices for you business because Helping You is Our Business.
Companies formed after 1 July 1998 can have a simple set of rules known as “a Constitution” in place of what was previously called “Memorandum and Articles of Association”.
