Glossary

Beneficiary

A beneficial owner of property who does not hold the legal title, but for whose benefit the legal title is held by a trustee under a trust arrangement. There may be one or more beneficiaries holding the beneficial interest in the trust property. A beneficiary holds an equitable interest in the property and can deal with this beneficial interest as an owner.

Buyout

Court-ordered purchase by a company or a member of shares in
the company.

Chose in action

An intangible personal property right that is incapable of physical possession and can only be claimed or enforced by a legal or equitable action.

Company

An association of a number of persons with a common object or objects; usually a business or professional association, registered under the Corporations Act 2001 (Cth). Used interchangeably in this paper with ‘corporation’.

Constitution

Documents by which a corporation is formed and governed.

Corporation

A legal entity created by charter, prescription, or legislation. The fundamental difference between a corporation and other business entities is that the law treats a corporation as a separate legal person: Corporations Act 2001 (Cth), section 124.

Creditor

A person to whom money or property is owed.

Derivative action

A suit brought by a person who relies, not on a cause of action belonging to him or her personally, but on one belonging to another person. It is an exception to the principle that one person cannot sue to obtain relief on behalf of another person who has been injured by a wrongdoer.

Director

A person employed as an officer of a company and having an obligation to perform the duties of management of the business of the company, acting as a member of the board of directors.

Discretionary trust

A trust in which the trust fund is held, not in fixed proportions for listed beneficiaries, but subject to a discretion conferred on the trustee, usually with respect to both capital and income, to pay or distribute the fund among the potential beneficiaries. The trustee’s discretion usually extends to deciding in what proportions and on what occasions payments are to be made, including whether the whole of the income or capital is to be paid to one potential beneficiary to the exclusion of all others.

Equitable relief or remedy

A remedy granted to a plaintiff by a court in exercise of its equitable jurisdiction. Equitable remedies are sought where common law remedies, such as damages, are inadequate to right the wrong done to the plaintiff. Examples of equitable remedies are specific performance, rectification, injunctions, set-off, and tracing. Equitable remedies are discretionary and, unlike common law damages, are not available as of right on proof of breach and loss.

Equity

The separate body of law, developed in the Court of Chancery, which supplements, corrects, and controls the rules of common law.

Estoppel

The doctrine designed to protect a person (A), who has acted
on an assumption or expectation induced by another person (B), from the detriment which would flow from A’s change of position if B were allowed to withdraw the assumption or expectation that led to the change.

Express trust

A trust created by express language evincing an intention to create a trust. An express trust may be created inter vivos or by will.

Fiduciary duty

An equitable duty to act in good faith for the benefit of another. Persons subject to a fiduciary duty are not permitted to profit from their positions (other than where expressly permitted) or to put themselves in a position where the fiduciary duty and personal interest may conflict.

Inter vivos

Between living persons; during life. In relation to a deed or other instrument, one that is executed between living persons.

Member

A person registered in a company’s register of members as the holder of shares. Used interchangeably in this paper with ‘shareholder’.

Oppression

Actions by a company amounting to an unjust detriment to the interests of a member or members of a company or a beneficiary of a trust, but not merely prejudicial or discriminatory.

Partner

A person carrying on a business in common with one or more persons with a view to profit.

Proprietary interest

Ownership.

Remedy

The means available at law or in equity by which a right is
enforced or the infringement of a right is prevented, redressed,
or compensated.

Resolution

A decision made by the members, directors, creditors, or contributories of a company at a meeting, usually by means
of a vote.

Settlor

A person who creates a trust by manifesting a sufficiently certain intention that a trust was intended in favour of one or more beneficiaries or purposes recognised as valid objects of a trust.
The terms of the trust deed, which is executed by both the settlor and the trustee, usually spell out the terms of the trust.

Shareholder

A person registered in a company’s register of members as the holder of shares. Used interchangeably with ‘member’.

Shares

Any one of the portions into which the capital stock of a
company is divided. A share represents the interest of a
shareholder in a company.

Trust

A device by which one person holds property for the benefit of another person. A trust imposes a personal equitable obligation upon a person (‘trustee’) to deal with property for the benefit of another person or class of persons (‘beneficiary’) or for the advancement of certain purposes, private or charitable. There must be sufficient certainty of intention, object, and subject matter.

Trust deed

A deed in which the provisions of a trust are set out. Most trusts created in Australia are created by the execution of a deed of trust, the parties to which are a settlor and a trustee. The settlor will ‘settle’ some property, usually a sum of money, on the trustee to hold (together with any accretions) as the trust fund on the terms
of the trust as set out in the trust deed.

Trustee

A person to whom property is conveyed, devised, or bequeathed for the benefit of another. The trustee owes a fiduciary duty to the beneficiaries under the trust. A person can be appointed or constituted trustee by an act of the parties concerned, by order or declaration of a court, or by operation of law. A trustee may be a natural person or, under the trustee legislation, a body corporate. Duties are imposed on a trustee, either by statute or by common law, to ensure that the terms of the trust are carried out, and that the trustee acts prudently with regard to trust property and makes proper distribution to those entitled.

Unit trust

A trust in which the beneficial interest in the trust property is divided in the trust instrument into fractions and each beneficiary has a fixed entitlement depending upon the number of units held by that beneficiary.

Unitholder

A beneficiary under a unit trust.

Units

The fractions by which the beneficial interest in unit trust property
is measured.

Vesting

The transfer to a trustee of the property subject to the trust.

Winding up

A form of external administration under which a person called
a ‘liquidator’ assumes control of a company’s affairs in order
to discharge its liabilities in preparation for its dissolution.
The liquidator ascertains the liabilities of the company, converts
its assets into money, terminates its contracts, disposes of its business, distributes the net assets to creditors and any surplus
to the proprietors, and extinguishes the company as a legal entity by formal dissolution.

 

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