About this section
Corporations and Companies
In Australia a national body of law governs the conduct and operation of companies. Company law regulates all aspects of company management, including the creation of companies, their ongoing operation and management and the most importantly, the conduct of the directors which run them. Companies in Australia are guided and regulated by a national body called the Australian Securities and Investment Commission (ASIC). ASIC also provides important services to small business owners and individuals on their rights and obligations with respect of any company they have dealings with.
It is important to understand that companies have 'separate legal personality'. This means that like a person, a company has its own legal rights and obligations, and is treated under the law as a natural person. This means that companies can sue and be sued like a person (although they can not go to jail). The purpose for this is to allow business to be carried out more effectively.
The directors of a company are subject to special obligations to ensure the company is managed properly. Directors must make decisions in the best interest of the company. These obligations are strict and carry large penalties if they are contravened. In addition to this, issuing of shares and public reporting on company finances is closely regulated. If you are a director of a company, or own shares in a company, it is important you understand your legal rights and obligations in respect of that company.