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Preview: Company and Securities Law Journal

Company and Securities Law Journal



Volume 25, Number 1, February 2007



Published: Mon, 29 Jan 2007 14:50:31 EST

 



EDITORIAL

Mon, 29 Jan 2007 14:50:31 EST

Volume 25, Number 1, February 2007 p.5



ARTICLES

Mon, 29 Jan 2007 14:50:31 EST

Volume 25, Number 1, February 2007



Sons of Gwalia: Navigating the line between membership and creditor rights in corporate insolvencies

Mon, 29 Jan 2007 14:50:31 EST

Volume 25, Number 1, February 2007 p.7
Purchasing shares in a company is an inherently risky proposition which leaves the investor at the mercy of the vagaries of the market. However, one of the founding principles of modern capitalism is the ability of members to limit their liability to the unpaid value of their shares. The benefits of limited liability are well understood by market participants, but limited liability also has significant consequences for members. It could be said that the quid pro quo for the statutory protection of limited liability conferred on members is the deferral of their rights to claim a proportion of the company's assets in liquidation, which, in the case of an insolvent company, results in members receiving no return on their investment. The boundaries of the rule that membership interests are deferred until after the creditors are paid in full (known as the rule in Houldsworth) have recently been tested by the Federal Court, where members have sought declarations that they were misled by the company into purchasing their shares on the market and therefore they are contingent creditors with an unliquidated damages claim. This article examines, with reference to the recent Full Federal Court decisions in Sons of Gwalia and Cadence Asset Management, whether it is appropriate for members to be classed as creditors where the claim arises out of the circumstances that led to the purchase of their shares. The significant practical implications of such a classification for the efficient regulation of insolvency administration are discussed, together with the need for law reform.



The politics of corporate social responsibility: Reflections on the United Nations Human Rights Norms for Corporations

Mon, 29 Jan 2007 14:50:31 EST

Volume 25, Number 1, February 2007 p.30
Corporate Social Responsibility (CSR) has become a fixture on the agendas of corporate boards in much the same way as environmental issues did a decade or so ago. To what extent social responsibilities should be made legally enforceable remains a matter of some fierce debate. There are already many laws in Australia that bind corporations in respect of such "social" issues as occupational health and safety, labour standards, privacy, non-discrimination and environmental protection. But should there be more specific human rights coverage, especially in respect of off-shore corporate activities in developing countries where there are well-documented examples of corporate abuse -- or corporate complicity in host-state abuses -- of rights to life, protection from physical harm, trade union membership, labour standards and workplace conditions, and others? The United Nation's Draft Human Rights Norms for Corporations seeks to impose obligations on states to ensure that corporations within their jurisdiction (including extra-territorial) abide by certain minimum human rights standards. Many (but not all) corporations are opposed to the idea and modus operandi of the Norms, as are many (but not all) governments, including Australia's. In response to these concerns, the United Nations Secretary-General has appointed a Special Representative to review the Norms, which review is currently underway. This article analyses the debate over the Norms, focusing on the various reasons advanced by both sides, their legal implications, and the likely future of the Norms within the context of the developing notion of CSR, internationally and in Australia.



The legal aspects of venture capital agreements: Part I

Mon, 29 Jan 2007 14:50:31 EST

Volume 25, Number 1, February 2007 p.43
This two-part article analyses venture capital investments in the context of the Australian corporate and commercial law environment. Part I provides an overview of the venture capital process. It offers a definition of venture capital applicable to Australia and describes how venture capital contracts allocate and distinguish between various corporate rights. The factors that influence the choice of legal structure and investment vehicle within the portfolio firm are examined. The proprietary company is identified as the preferred choice of corporate vehicle for the portfolio firm. A comprehensive examination of the securities that a venture capitalist (VC) may use is provided. The shares held by the VC will be influenced by the mode of exit and what stage in the venture capital cycle the investment takes place. Finally, there is a substantive analysis of the provisions and covenants which the VC will bargain for in the venture capital agreement. These covenants are designed to protect the VC's investment and to facilitate the VC's mode of exit. Part II of this article, to publish in the March 2007 issue of this journal, will examine the key corporate governance issues that may arise under a venture capital agreement and the legal aspects of venture capital exits.



COMPANY LAW - Robert Baxt, AO

Mon, 29 Jan 2007 14:50:31 EST

Volume 25, Number 1, February 2007






OVERSEAS NOTES - HONG KONG, SINGAPORE AND MALAYSIA - Say Goo

Mon, 29 Jan 2007 14:50:31 EST

Volume 25, Number 1, February 2007



The amalgamation procedure in Singapore

Mon, 29 Jan 2007 14:50:31 EST

Volume 25, Number 1, February 2007 p.62



OVERSEAS NOTES - NEW ZEALAND - Giora Shapira

Mon, 29 Jan 2007 14:50:31 EST

Volume 25, Number 1, February 2007



Corporations Amendment (NZ Closer Economic Relations) Bill 2006

Mon, 29 Jan 2007 14:50:31 EST

Volume 25, Number 1, February 2007 p.69