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Business Decisions

Depending on the structure of your business, business decisions are ordinarily governed by your company’s constitution, owner agreements such as a shareholders agreement, unitholders agreement or partnership agreement and, where relevant, statute and common corporations law.

Where your business is owned and operated as a corporate structure, the key decision makers will be the directors and shareholders of the company.

  • The Directors

The Directors are responsible for the overall strategy, direction, management and control of the company and the business.

Directors make a number of decisions. Unless there is agreement otherwise, they are ordinarily responsible for and able to make decisions about:

  • Dividend policies
  • Directors’ remuneration
  • Day-to-day operations and management of the business
  • Changing accountant or auditor
  • Establishing the strategy, business plan and financial budget
  • Creating or granting any security interests
  • Donations
  • Entering into, terminating or varying contracts in the ordinary course of business

Where a multi-director company, directors will often make decisions by calling board meetings or otherwise making resolutions (say, via a circular email). Once decisions are approved, the decisions can then be implemented through management of the business for example, a general manager may have delegated authority of the board of directors to implement decisions made by the directors.

  • The Shareholders

The Shareholders are the owners of the company. An owner’s interest may be held as a natural person, through another corporate entity or trust structure. There may be one shareholder in a company, or multiple.

You become a shareholder where the company issues shares to you or where there is a transfer of shares from an existing shareholder in the company.

As a shareholder, you generally have the right to attend shareholder meetings and vote on certain issues (depending on the nature of the shares held by you and assuming that you have voting rights).

Unless there is agreement otherwise, shareholder decisions often include the following:

  • Issuing of further shares or a change in the share capital of the company
  • A material change in the nature of the business activities
  • Winding up the company
  • The acquisition of any shares or securities in any other entity, or the business and assets of any other entity
  • Selling, transferring, leasing or otherwise dealing with a material part of the undertaking, property or assets of the business, other than in the ordinary course of business
  • Incurring debt over a specified threshold
  • Selling the business or acquiring another business
  • Amending the company’s constitution
  • Providing capital to the company

The system and set of rules by which companies operate and are directed and controlled is often referred to as corporate governance. This is a structural framework that defines key relationships and decision making powers as between the board of directors, shareholders and management.

Corporate governance is important to ensure efficient processes, risk mitigation, smooth running of operations, regulatory compliance and achieving a business’ strategic goals.

Whether a director or shareholder, it is important to understand the corporate governance framework and your role, rights and obligations within it. At Burke & Associates Lawyers we empower our clients so that the choices we create with our clients are informed, and successful outcomes are achieved. Every time.

Contact one of our experienced Commercial Lawyers today for assistance.

Insight written by Kristy Muhlhan

Contacts

Meghan Warren

Principal

Meghan Warren

Principal
LL.B GAICD B.Bus (FinPlan)
Meghan is one of the few lawyers in Australia admitted in the State (Victoria) and Federal jurisdictions of Australia, and as an Attorney at Law to the New York State Bar in the United States.

Kristy Muhlhan

Principal

Kristy Muhlhan

Principal
LL.B (Hons) GRAD DIP. L.P., GAICD.
Since 2014, she has been an owner and Principal of the firm and has mastered a broad range of essential commercial and business skills which go hand in hand with the work she does for...

Rosy Roberts

Principal

Rosy Roberts

Principal
LL.B (Hons) B.A GAICD
Rosy has extensive experience in Litigation & Alternative Dispute Resolution having represented clients in all Victorian State Courts and the High Court of Australia. She is also a VCAT appointed Administrator.

Elizabeth Ong

Special Counsel

Elizabeth Ong

Special Counsel
LL.B.(Hons) CLP GDLP
Elizabeth is committed to providing world class, comprehensive commercial solutions and corporate advice tailored to the best interests of her clients. She is fluent in written and verbal English, Mandarin, Cantonese, Hokkien and Malaysian languages.

George Hanger

Associate

George Hanger

Associate
LL.B BA
George was admitted to legal practice in May 2015 after completing a Bachelor of Arts at the University of Melbourne and a Bachelor of Laws at Monash University.

Stewart Davis

Associate

Stewart Davis

Associate
LL.B (Hons) B.Com
As well as property law, Stewart has had exposure to VCAT administration matters and commercial law, particularly servicing developer clients.

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