Question 1.

IntroductionPiercing the corporate veil is basically a legal decision which treat the duties or rights of any particular corporation as the liabilities or right of the shareholders. Moreover, a corporation is found to be a separate legal person that has the obligation for the debt that it incurs emulated by the only beneficiary of the owed credit (Gelb, 2011). The countries having a common law mainly upload the notion of separate personhood but in other situations that are exceptional, it may lift or pierce the corporate veil(Anderson, 2011). The Australian case law demonstrates that the courts are mainly not willing to pierce the corporate veil. However, the limits for the courts’ occasional decision to lift the corporate veil cannot be concluded (Yeoh, 2014). It is therefore quite troublesome to make a prediction of such situations where the courts can pierce or lift the corporate veil. If the court pierces the corporate veil, then the owners, investors, and corporation members can be held liable for the corporate debts which clearly indicates that the creditors can reach the owners home, investments, bank account and other several assets so as to satisfy the corporate debt. However, the courts will definitely impose a personal liability for those individuals who are responsible for the corporation and other fraudulent actions that are connected to the parent companies and in this case, the subsidiaries (Yeoh, 2014).

Case IssueIn this particular case, the decision is to be concluded as to in what circumstances the court can be willing to lift or pierce the corporate veil or make the parent company responsible for the mistake committed by the employee of Red Mine Pty Ltd. In accordance with the Corporations act Sec 50AA, it can be said that a holding company can only be liable for the subsidiary debts incurred if the subsidiary is found to be insolvent and in this case, Red Mine Pty Ltd has few assets of its own which indicates that the subsidiary is close to being insolvent. This is the case when the amount for loss can be recovered by the liquidator from the holding or parent company. A subsidiary is considered as an expansion of the parent company and is not treated as an individual company (Anderson, 2012). It is the parent company that would appoint the employers being the subsidiary directors. The directors for a subsidiary can definitely adopt a comfortable approach while performing their duties on the fact that the sole shareholder of the subsidiary is parent company (Anderson, 2012).

Sec 50AA states ‘’ For the purposes of this Act, an entity controls a second entity if the first entity has the capacity to determine the outcome of decisions about the second entity's financial and operating policies.

Case Discussion under Australian LawIn accordance with the Australian Law Corporations Act 2001, Sec 9, a subsidiary has a shadow director in the form of a parent company when it appoints executives within the board of subsidiary and hence, expects such executives to exercise powers that are totally based on the wishes and instructions of the parent company. It can be legally said that there is definitely no general duty to protect the 3 rd party from causing a damage to the other and that is why, a parent company would owe a duty of care for the subsidiary employers if it retains or controls the overall responsibility for the appropriate matters in relation to the employers (Nyombi, 2014).

The court would acknowledge that the rare fact that Red Mine Pty Ltd is a subsidiary of GM Limited would not mean that GM Limited owed to the subsidiary’s employer’s duty of care. Therefore, the existence of the duty of care between the employer and a subsidiary cannot prevent another individual while being fixed with a duty of care. There is no evidence from the Australian law that the Red Mine Pty Ltd acted being an agent for GML or that the Red Mine Pty Ltd should not be considered a separate legal entity from the parent company (Anderson, 2011). In order to make a determination of the fact that whether or not the GM Limited had a duty of care to the subsidiary employers, the court can adopt an implementation of the 3 staged test that developed basically in Caparo Industries v Dickman which is also applicable in Australia. It entails the following:

1. Owing such a duty would be just, fair and reasonable.2. The relationship between the defendant and claimant was one of the proximity.3. The damages were foreseeable and reasonable.

EvidenceIt is also found to be quite evident in the Corp Act 2001 s 588v which would make the parent corporation liable for the debts of a subsidiary and in this particular case it can be said that after the damage caused by the employer of subsidiary, the subsidiary owes debts to the creditors for the damages caused. Therefore, it is quite clear from the Australian Corporation act2001 and one of the UK Case Law which is also applied in Australia that is already mentioned earlier named as Caparo Industries v Dickman. In this case, Cape Plc was aware of the knowledge of the employees of subsidiaries and their working conditions and hence, they accepted that they are solely responsible for the health issues of the employees working in their subsidiaries since Mr. Chandler was also injured while being an employee in the subsidiary.

ConclusionTherefore, keeping in view the above principles of the corporations act 2001 and their respective sections and the argument related to group enterprises, it entails that there can be certain circumstances in which a corporate group will operate in a way that would make an individual entity quite different and therefore, it would be proper to lift the corporate veil so that the parent company can be made responsible for the damages done subsidiary. Piercing a corporate veil would be the effective way to make sure that a parent company which attains the benefits of being a limited liability could also accept the responsible that are corresponding (Nyombi, 2014). It can also be argued that when there could be overlapping, officers, employees, or directors or when there is an association of partnership between companies within a group. Hence, it is found from all such evidences that the subsidiary companies are basically the creation of the parent companies and that they would never be treated as separate legal entities with all the right and the liabilities would normally be attached to the separate legal entities that is a parent company GM Limited as per the Corporations Act 2001, Sec50A. The bottom line is, the parent company GM Limited is liable for the damages caused by the employers of subsidiary whose act resulted in the damage a valuable experimental flock of Dorper sheep escaped from the adjacent land and were therefore lost.

Question 2

IntroductionIt is quite clear that the constitution is independently draft by every organization and hence, it is quite appropriate and relevant to develop a discussion on the constitution in regulation context under the Corporations Act. This is due to the fact that the Act incorporates several essential provisions that relates to the constitutions of the company. At the point when application is made to structure a new public company, any Constitution must be lodged with ASIC. This unique Constitution must be marked by all the first individuals from the organization (Behrendt, 2011). Additionally, any resulting (part affirmed) adjustment to, then again [repealing and] substitution of, the Constitution must be upheld up as well. Taking after the Gambotto choice, expropriation is allowable where the minority's shareholding would be inconvenient to an organization, a minority shareholder is contending with an organization, it is important to guarantee an organization could keep on consenting to regulations representing the essential business which it carries on, or is important to secure or advance the hobbies of an organization. Seizure is totally not permissible where the majority of it is only looking to keep it quite secure for them in order to have the profit of another business advantage or corporate structure.

The most important fact is that the section 140 indicates that the constitution of the company has an influence as a contract that is between the following:

1. The member and company2. A member and every other member3. The company and every member.

The consitition of the company has the status for a contract that is statutory which indicates that it includes several features that mainly depart from the general principles of the law of contract. In accordance with the ordinary contract, the initial parties are bound by the contract (Duffy, 2010).

Case IssueNick Galli has a real passion for organic wine and would like Family Organic Wine Pty Ltd (FOW) to adopt a constitution that includes a provision guaranteeing his position as head winemaker at FOW. The case will be discussed in accordance with the section 140 of the Corporations Act. Therefore, the case is discussed in accordance with the following question:

Having regard to s.140 of the Corporations Act and the relevant case law, would Nick be able to enforce such a provision against FOW?

Case DiscussionAn organization may exploit the replaceable guidelines in the Act to represent its internal administration - it doesn't have to have a composed constitution of its own. This implies that organizations deciding to be represented by the replaceable principles won't cause the cost of staying up with up to date law - even in case the replaceable tenets are corrected. An organization may repeal or modify its constitution, or a provision of its constitution, by passing an extraordinary resolution. This entails that a special resolution requires no less than a notice of 21 days (28 days for public listed company) and the general agreement of a 75% majority shares of the votes cast. An organization constitution may not be corrected

compliant with the power as in section 136(2) of the Corporations Act if the constitution indicates extra prerequisites that must be followed before any change is powerful. This may incorporate a necessity that an extra condition be satisfied, the assent of a specific individual acquired or the determination be passed collectively by the shareholders. Where any such extra necessity is determined in an organization's constitution the extra prerequisite itself should first be consented to before it can be corrected. In spite of the fact that the opportunity for minority shareholders to arrange such extra necessities may give some security to minority shareholders against choices by the larger part that may have antagonistic monetary results for them and make it more troublesome for an organization constitution to be altered, an organization can't limit its statutory power to adjust its constitution and the constitution can't express that it can't be corrected, as any such confinement or procurement would be invalid. Care needs to be taken to guarantee that any extra necessities don't confine this force. This all indicates that the company FOW can alter its constitution if that can favor the interest administration and success for the company since Nick Galli will be provided a status and that would definitely enhance the company’s productivity (Duffy, 2010). However, The minority shareholders' interests of nearly held privately owned businesses are secured against amendments to a constitution as they are not bound by corrections made after the date on which they turned into a shareholder and obliges a shareholder to take up extra shares, builds a shareholder's obligation to add to the offer capital of an organization, or forces or expands confinements on the privilege to exchange imparts effectively that the shareholder hold and unless the shareholder agrees to the correction. In accordance with the Sec 140 of the Corporation Act 2001, this further raises the issues and the amendment of the constitution is dependent on the shareholders of the company.

ConclusionAn organization may change or annulment the constitution by unique shareholders determination, being a determination went by no less than 75 percent of votes. This is as opposed to different types of agreement, which oblige all parties to consent to any correction. With respect to section 9, 136, 137, 140, 249H and 249L of the Corporation Act 2001, a 75% greater part might hence revise a constitution and those alterations would tie the minority, despite the fact that the minority can have voted against the corrections, unless there are extra necessities in the constitution or normal law or the statutory protections. An exclusive organization does not have to lodge a duplicate copy of its constitution. On the off chance that an exceptional determination is passed influencing the organization's name, offer capital or sort, then the suitable record for that change ought to be lodged inside the needed period of lodgement (Anderson, 2011).

ReferencesAnderson, H., 2011. PIERCING THE VEIL ON CORPORATE GROUPS IN AUSTRALIA, s.l.: Melbourne University Law Review .

Anderson, H., 2012. Challenging the Limited Liability of Parent Companies: A Reform Agenda for Piercing the Corporate Veil. Australian Accounting Review, 22(2), pp. 129-141.

Behrendt, L., 2011. Australian Constitutional reform to recognise Aboriginal and Torres Strait Islander, s.l.: Australian Indigenous Law Review.

Duffy, M. J., 2010. Shareholders Agreements and Shareholders Remedies Contract Versus Statute?, s.l.: Bond Law Review.

Gelb, H., 2011. Piercing the Corporate Veil - The Undercapitalization Factor, s.l.: Chicago-Kent Law Review.

Nyombi, C., 2014. Lifting the veil of incorporation under common law and statute. International Journal of Law and Management, 56(1), pp. 66-81.

Yeoh, P., 2014. Whistleblowing: motivations, corporate self-regulation, and the law. International Journal of Law and Management, 56(6), pp. 459-474.