Question

1. ) Each year the ASX releases the top 10 charitable ASX companies. It is often argued that companies have a social obligation to donate to charity.
   Discuss the above statement with reference to case law and statutory law (7.5 marks); and

2. (b) Directors owe statutory and general law duties to the company. Shareholders however do not owe any duties to the company. Therefore are majority shareholders allowed to vote however they wish at a general meeting without considering the effect on the company or minority shareholders? Discuss with reference to the general law and the Corporations Act 2001 (Cth) (7.5 marks)

Answer 1

company has the power of a natural person to make donations, does not mean that the power can be exercised without restriction. Numerous limitations exist in the way that companies can exercise their powers. In summary, the exercise by directors of the power of a company to make charitable donations can be limited by:

• the constitution of the company;
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• the duties of directors under statute, common law and equity;
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• contractual obligations; and
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• any other applicable legislation (eg taxation laws prohibiting a company reducing its assets in a way which may adversely affect its capacity to pay tax and employee entitlements).