Corporations Amendment (Improving Accountability on Director
and Executive Remuneration) Act 2011
No. 42, 2011
An Act to amend the law relating to corporations, and for
related purposes
[Assented to 27 June 2011]
The Parliament of Australia enacts:
1
Short title
This Act may be cited as the Corporations
Amendment (Improving Accountability on Director and Executive Remuneration) Act
2011.
2
Commencement
This Act commences on 1 July 2011.
3
Schedule(s)
Each Act that is specified in a Schedule
to this Act is amended or repealed as set out in the applicable items in the
Schedule concerned, and any other item in a Schedule to this Act has effect
according to its terms.
Schedule 1—Amendment of the Corporations Act 2001
Part 1—Remuneration
1 Section 9
Insert:
closely related party of a member of the key
management personnel for an entity means:
(a) a spouse or child of the member;
or
(b) a child of the member’s spouse; or
(c) a dependant of the member or of
the member’s spouse; or
(d) anyone else who is one of the
member’s family and may be expected to influence the member, or be influenced
by the member, in the member’s dealings with the entity; or
(e) a company the member controls; or
(f) a person prescribed by the
regulations for the purposes of this paragraph.
2 Section 9
Insert:
key management personnel for an entity has
the same meaning as in the accounting standards.
3 Section 9
Insert:
remuneration committee has the meaning given
by paragraph 206K(2)(b).
4 Section 9
Insert:
remuneration consultant means a person:
(a) who makes a remuneration
recommendation under a contract for services with the company to whose key
management personnel the recommendation relates; and
(b) who is not an officer or employee
of the company.
5 Section 9
Insert:
remuneration recommendation has the meaning
given by section 9B.
6 At the end of Division 1 of Part 1.2 of Chapter 1
Add:
9B
Meaning of remuneration recommendation
(1) A remuneration recommendation is:
(a) a recommendation about either or
both of the following:
(i) how much the
remuneration should be;
(ii) what elements the
remuneration should have;
for one or more members of the
key management personnel for a company; or
(b) a recommendation or advice about a
matter or of a kind prescribed by the regulations.
(2) None of the following is a remuneration
recommendation (even if it would otherwise be covered by subsection (1)):
(a) advice about the operation of the
law (including tax law);
(b) advice about the operation of
accounting principles (for example, about how options should be valued);
(c) advice about the operation of
actuarial principles and practice;
(d) the provision of facts;
(e) the provision of information of a
general nature relevant to all employees of the company;
(f) a recommendation, or advice or
information, of a kind prescribed by the regulations.
(3) Subsection (2) does not limit the
things that are not remuneration recommendations, nor does it mean that something
specified in that subsection would otherwise be a remuneration recommendation
within the meaning of subsection (1).
(4) ASIC may by writing declare that subsection (1)
does not apply to a specified recommendation or specified advice, but may do so
only if ASIC is satisfied that it would be unreasonable in the circumstances
for the advice or recommendation to be a remuneration recommendation. The
declaration has effect accordingly. The declaration is not a legislative
instrument.
7 After section 111AN
Insert:
111ANA
Requirements relating to remuneration recommendations in relation to key
management personnel
There are special requirements in Part 2D.8
for remuneration recommendations in relation to key management personnel for disclosing
entities that are companies.
8 At the end of Chapter 2D
Add:
Part 2D.7—Ban on hedging remuneration of key management personnel
206J No
hedging of remuneration of key management personnel
(1) A member of the key management personnel
for a company that is a disclosing entity, or a closely related party of such a
member, must not enter into an arrangement (with anyone) if the arrangement would
have the effect of limiting the exposure of the member to risk relating to an
element of the member’s remuneration that:
(a) has not vested in the member; or
(b) has vested in the member but
remains subject to a holding lock.
(2) Without limiting paragraph (1)(a),
remuneration that is not payable to a member until a particular day is, until
that day, remuneration that has not vested in the member.
(3) In determining whether an arrangement has
the effect described in subsection (1) in relation to an element of
remuneration described in that subsection, regard is to be had to the
regulations (if any) made for the purposes of this subsection.
(4) A member of the key management personnel
for a company who contravenes subsection (1) commits an offence.
(5) An offence against subsection (4) is
an offence of strict liability.
Note: For strict liability, see section 6.1 of
the Criminal Code.
(6) A person commits an offence if:
(a) the person is a member of the key
management personnel for a company; and
(b) a closely related party of the member
contravenes subsection (1) in relation to the member; and
(c) the person is reckless as to the
contravention.
(7) A closely related party of a member of
the key management personnel for a company commits an offence if the party
intentionally contravenes subsection (1) in relation to the member.
(8) ASIC may by writing declare that subsection (1)
does not apply to a specified arrangement, but may do so only if ASIC is
satisfied that the operation of that subsection would be unreasonable in the
circumstances. The declaration has effect accordingly. The declaration is not a
legislative instrument.
Note: A defendant bears an evidential burden in
relation to the matter in subsection (8): see subsection 13.3(3) of the Criminal
Code.
Part 2D.8—Remuneration recommendations in relation to key management
personnel for disclosing entities
206K Board
to approve remuneration consultants
(1) This section applies to a contract (a remuneration
consultancy contract):
(a) that is for services that include
making a remuneration recommendation in relation to one or more members of the key
management personnel for a company that is a disclosing entity; and
(b) that is between the company and a person
(the proposed consultant) who, by making the recommendation under
the contract, will be a remuneration consultant.
(2) Before a company enters into a
remuneration consultancy contract, the proposed consultant must be approved by:
(a) the directors of the company; or
(b) the members of a committee (the remuneration
committee) that:
(i) is a committee of the
board of directors of the company; and
(ii) has functions relating
to the remuneration of key management personnel for the company.
(3) A contravention of subsection (2):
(a) is not an offence except as
provided by subsection (4); and
(b) does not affect the validity of
the contract.
(4) The company commits an offence if, at the
time the company enters into the contract, the proposed consultant has not been
approved in accordance with subsection (2).
(5) An offence against subsection (4) is
an offence of strict liability.
Note: For strict liability, see section 6.1 of
the Criminal Code.
206L
Remuneration recommendation by remuneration consultants
(1) This section applies to a remuneration recommendation
made by a remuneration consultant in relation to one or more members of the key
management personnel for a company that is a disclosing entity.
(2) The remuneration consultant must provide
the recommendation directly to either or both of the following:
(a) the directors of the company;
(b) the members of the remuneration committee
(if any).
(3) However, the remuneration consultant must
not provide the recommendation to a person who is an executive director of the
company unless all the directors of the company are executive directors of the
company.
(4) The remuneration consultant must not provide
the recommendation to a person who is neither a director of the company nor a
member of the remuneration committee.
(5) If the remuneration consultant
contravenes subsection (2) the remuneration consultant is not guilty of an
offence. This does not prevent the remuneration consultant from being guilty of
an offence for contravening subsection (3) or (4).
Note: Subsection 1311(1) makes it an offence for the
remuneration consultant to contravene subsection (3) or (4).
(6) This section does not prevent someone
other than the remuneration consultant from providing the recommendation to a
person who is neither a director of the company nor a member of the
remuneration committee.
206M Declaration
by remuneration consultant
(1) This section applies to a remuneration
consultant who makes a remuneration recommendation in relation to one or more
members of the key management personnel for a company that is a disclosing
entity.
(2) The remuneration consultant must include
with the recommendation a declaration about whether the consultant’s
recommendation is made free from undue influence by the member or members of
the key management personnel to whom the recommendation relates.
Note: Failure to comply with this subsection is an
offence: see subsection 1311(1).
(3) An offence based on subsection (2)
is an offence of strict liability.
Note: For strict liability, see section 6.1 of
the Criminal Code.
9 Subsection 249L(2)
Repeal the subsection, substitute:
(2) The notice of the AGM of a listed company
must also:
(a) inform members that the resolution
referred to in subsection 250R(2) (resolution on remuneration report) will be
put at the AGM; and
(b) if at the previous AGM at least
25% of the votes cast on a resolution that the remuneration report be adopted
were against adoption of the report (but the same was not the case at the AGM
before that):
(i) explain the
circumstances in which subsection 250V(1) would apply; and
(ii) inform members that
the resolution described in subsection 250V(1) as the spill resolution will be
put at the AGM if that subsection applies.
Note: Subsection 250R(2) requires a resolution to
adopt a remuneration report for a listed company to be put to the vote at the
company’s AGM.
10 Before section 250C
Insert:
250BD
Proxy voting by key management personnel or closely related parties
(1) A person appointed as a proxy must not
vote, on the basis of that appointment, on a resolution connected directly or
indirectly with the remuneration of a member of the key management personnel
for the company or, if the company is part of a consolidated entity, for the
entity if:
(a) the person is either:
(i) a member of the key
management personnel for the company or, if the company is part of a
consolidated entity, for the entity; or
(ii) a closely related
party of a member of the key management personnel for the company or, if the
company is part of a consolidated entity, for the entity; and
(b) the appointment does not specify
the way the proxy is to vote on the resolution.
Note 1: Examples of resolutions connected directly or
indirectly with the remuneration of a member of the key management personnel
for the company or entity include:
(a) resolutions that must be put to the vote under
subsection 250R(2) (about a resolution that the remuneration report for a
listed company be adopted); and
(b) resolutions that must be put to the vote under
subsection 250V(1) (about fresh elections for directors at meetings arising
from concerns about remuneration reports); and
(c) resolutions determining directors’ remuneration as
mentioned in section 202A; and
(d) resolutions for the purposes of Chapter 2E (about
public companies and entities they control giving financial benefits to related
parties of public companies) affecting directors’ remuneration.
Note 2: Subsections 250R(4) and 250V(2) also prevent
the person from voting on the resolution if it is a resolution that must be put
to the vote under subsection 250R(2) or 250V(1).
Note 3: Section 224 may also prohibit the person
from voting on the resolution if it is a resolution for the purposes of Chapter 2E.
Note 4: Failure to comply with this subsection is an
offence: see subsection 1311(1).
(2) Subsection (1) does not apply if:
(a) the person is the chair of the
meeting at which the resolution is voted on; and
(b) the appointment expressly authorises
the chair to exercise the proxy even if the resolution is connected directly or
indirectly with the remuneration of a member of the key management personnel
for the company or, if the company is part of a consolidated entity, for the
entity.
Note: A defendant bears an evidential burden in
relation to the matter in subsection (2): see subsection 13.3(3) of the Criminal
Code.
(3) ASIC may by writing declare that:
(a) subsection (1) does not apply
to a specified resolution; or
(b) subsection (1) does not
prevent the casting of a vote, on a specified resolution, by or on behalf of a
specified entity;
but may do so only if satisfied that the declaration will
not cause unfair prejudice to the interests of any member of the company. The declaration
has effect accordingly. The declaration is not a legislative instrument.
Note: A defendant bears an evidential burden in
relation to the matter in subsection (3): see subsection 13.3(3) of the Criminal
Code.
(4) A vote cast in contravention of subsection (1)
is taken not to have been cast. This subsection has effect for the purposes of
this Act except subsection (1) and subsections 250R(4) and (7), and
section 1311 and Schedule 3 so far as they relate to any of those
subsections.
Note: This means the vote is not counted in working
out a percentage of votes cast or whether the resolution is passed, and does
not affect the validity of the resolution.
11 Subsection 250R(2) (note)
Omit “subsection 249L(2)”, substitute “paragraph 249L(2)(a)”.
Note: The following heading to subsection 250R(2) is
inserted “Advisory resolution for adoption of remuneration report”.
12 At the end of section 250R
Add:
Voting on advisory resolution by key management
personnel or closely related parties
(4) A vote on the resolution must not be cast
(in any capacity) by or on behalf of either of the following persons:
(a) a member of the key management
personnel details of whose remuneration are included in the remuneration report;
(b) a closely related party of such a
member.
(5) However, a person described in subsection (4)
may cast a vote on the resolution if:
(a) the person does so as a proxy
appointed by writing that specifies how the proxy is to vote on the proposed
resolution; and
(b) the vote is not cast on behalf of a
person described in subsection (4).
(6) ASIC may by writing declare that:
(a) subsection (4) does not apply
to a specified resolution; or
(b) subsection (4) does not
prevent the casting of a vote, on a specified resolution, by or on behalf of a
specified entity;
but may do so only if satisfied that the declaration will
not cause unfair prejudice to the interests of any member of the listed
company. The declaration has effect accordingly. The declaration is not a
legislative instrument.
(7) A person described in subsection (4)
contravenes this subsection if a vote on the resolution is cast by or on behalf
of the person in contravention of that subsection (whether or not the
resolution is passed).
Note: A contravention of this subsection is an
offence: see subsection 1311(1).
(8) A vote cast in contravention of subsection (4)
is taken not to have been cast. This subsection has effect for the purposes of
this Act except subsections (4) and (7) and subsection 250BD(1), and
section 1311 and Schedule 3 so far as they relate to any of those subsections.
Note: This means the vote is not counted in working
out a percentage of votes cast or whether the resolution is passed, and does
not affect the validity of the resolution.
(9) For the purposes of this section, a vote
is cast on behalf of a person if, and only if, it is cast:
(a) as proxy for the person; or
(b) otherwise on behalf of the person;
or
(c) in respect of a share in respect
of which the person has:
(i) power to vote; or
(ii) power to exercise, or
control the exercise of, a right to vote.
(10) Subject to Part 1.1A, subsections (4),
(5), (6), (7), (8) and (9) have effect despite:
(a) anything else in:
(i) this Act; or
(ii) any other law
(including the general law) of a State or Territory; and
(b) anything in the company’s
constitution.
13 At the end of Part 2G.2
Add:
Division 9—Meetings arising from concerns about remuneration reports
250U
Application
This Division applies in relation to a
listed company if:
(a) at an AGM (the later AGM)
of the company, at least 25% of the votes cast on a resolution that the
remuneration report be adopted were against adoption of the report; and
(b) at the immediately preceding AGM
(the earlier AGM) of the company, at least 25% of the votes cast
on a resolution that the remuneration report be adopted were against adoption
of the report; and
(c) a resolution was not put to the
vote at the earlier AGM under an earlier application of section 250V.
Note: Subsection 250R(2) requires a resolution to
adopt a remuneration report for a listed company to be put to the vote at the
company’s AGM.
250V Resolution
to hold fresh elections for directors at special meeting to be put to vote at
AGM
(1) At the later AGM, there must be put to
the vote a resolution (the spill resolution) that:
(a) another meeting (the spill
meeting) of the company’s members be held within 90 days; and
(b) all the company’s directors who:
(i) were directors of the
company when the resolution to make the directors’ report considered at the
later AGM was passed; and
(ii) are not a managing
director of the company who may, in accordance with the listing rules for a
prescribed financial market in whose official list the company is included,
continue to hold office indefinitely without being re‑elected to the office;
cease to hold office immediately
before the end of the spill meeting; and
(c) resolutions to appoint persons to
offices that will be vacated immediately before the end of the spill meeting be
put to the vote at the spill meeting.
(2) Subsections 250R(4), (5), (6), (7), (8),
(9) and (10), and other provisions of this Act so far as they relate to any of
those subsections, apply in relation to the spill resolution in the same way as
they apply in relation to a resolution that a remuneration report be adopted.
(3) To avoid doubt, section 203D does
not apply in relation to the spill resolution.
250W
Consequences of spill resolution being passed
(1) This section applies if the spill
resolution is passed.
Deadline for holding spill meeting
(2) The company must hold the spill meeting within
90 days after the spill resolution was passed.
(3) Nothing in subsection (2) authorises
any person to disregard:
(a) section 249HA (Amount of
notice of meetings of listed company); or
(b) if a person intends to move a
resolution relating to the appointment of a director of the company—any
provision of the company’s constitution that requires a minimum period of
notice for such a resolution.
Note: Division 3 (which includes section 249HA)
deals with giving notice of the spill meeting. Division 5 contains rules
relevant to holding the spill meeting.
If relevant directors cease to hold office before
deadline
(4) The company need not hold the spill
meeting within 90 days after the spill resolution was passed if, before the end
of that period, none of the company’s directors described in paragraph
250V(1)(b) remain as directors of the company.
Consequences of failure to hold spill meeting in time
(5) If the company does not hold the spill
meeting within 90 days after the spill resolution was passed, each person who
is a director of the company at the end of those 90 days commits an offence.
Note: A person who is a director at the end of those
90 days may commit an offence even if he or she was not a director when the
spill resolution was passed.
(6) An offence against subsection (5) is
an offence of strict liability.
Note: For strict liability, see section 6.1 of
the Criminal Code.
(7) Subsection (5) does not apply if the
company need not hold the spill meeting because of subsection (4).
Note: A defendant bears an evidential burden in
relation to the matter in subsection (7): see subsection 13.3(3) of the Criminal
Code.
(8) Subsection (5) does not apply to a
person who was not a director of the company at any time during the period:
(a) starting when the spill resolution
was passed; and
(b) ending at the last time notice of
the spill meeting could have been given to hold the spill meeting within 90
days after the spill resolution was passed and comply with section 249HA
(Amount of notice of meetings of listed company).
Note: A defendant bears an evidential burden in
relation to the matter in subsection (8): see subsection 13.3(3) of the Criminal
Code.
Cessation of relevant directors and commencement of
newly‑appointed directors
(9) All the company’s directors described in
paragraph 250V(1)(b) cease to hold office immediately before the end of the spill
meeting and the directors appointed by the meeting commence to hold office at
the end of that meeting. This subsection has effect despite anything else in
this Act and the company’s constitution.
250X
Ensuring there are at least 3 directors after spill meeting
(1) This section applies if there would be
fewer than 3 directors of the company immediately after the spill meeting apart
from this section.
Note: Subsection 201A(2) requires the company to
have at least 3 directors.
(2) Enough directors to ensure that the
company has 3 directors immediately after the spill meeting are taken to have
been appointed, by resolution passed at the spill meeting, from the persons
who:
(a) gave the company signed consents
to act as directors of the company in anticipation of being appointed by such a
resolution; and
(b) were not appointed as directors by
such a resolution apart from this section.
Note: The number of directors taken under subsection (2)
to have been appointed is the difference between 3 and the number of directors
holding office immediately after the spill meeting apart from this section.
(3) The persons taken to have been appointed
are those with the highest percentages of votes favouring their appointment
cast at the spill meeting on the resolution for their appointment (even if less
than half the votes cast on the resolution were in favour of their appointment).
Example: Suppose that, under subsection (2), 2
directors are taken to have been appointed, and the percentages of votes favouring
appointment were 50% for Jean, 40% for Karl and 30% for Lionel. Jean and Karl
would both be taken to have been appointed directors, but Lionel would not.
(4) For the purposes of this section, if 2 or
more persons have the same percentage of votes favouring their appointment, the
one of those persons chosen by the director or directors who hold office apart
from this subsection is taken to have a higher percentage than the rest of
those persons.
Note: A director who holds office apart from subsection (4)
could make a series of choices if 3 or more persons all have the same percentage
of votes favouring their appointment and it is necessary to work out which 2 of
those persons are taken to be appointed as directors.
(5) If a person is taken to have been
appointed because of a choice under subsection (4), the company must
confirm the appointment by resolution at the company’s next AGM. If the
appointment is not confirmed, the person ceases to be a director of the company
at the end of the AGM.
(6) This section has effect despite anything
else in this Act and the company’s constitution.
250Y Term
of office of director reappointed at spill meeting
If a director who ceased to hold office
immediately before the end of the spill meeting is appointed as director by
resolution passed at the spill meeting, his or her term of office runs as if
the cessation and appointment had not happened.
Note: This section is subject to subsection 250X(5).
14 Paragraph 300A(1)(a)
Repeal the paragraph, substitute:
(a) discussion of board policy for
determining, or in relation to, the nature and amount (or value, as
appropriate) of remuneration of the key management personnel for:
(i) the company, if
consolidated financial statements are not required; or
(ii) the consolidated
entity, if consolidated financial statements are required; and
15 Subparagraph 300A(1)(c)(i)
Omit “and”, substitute “or”.
16 Subparagraphs 300A(1)(c)(iii) and (iv)
Repeal the subparagraphs.
17 Paragraph 300A(1)(da)
Repeal the paragraph.
18 Paragraph 300A(1)(f)
Omit “regulations.”, substitute “regulations; and”.
19 After paragraph 300A(1)(f)
Insert:
(g) if:
(i) at the company’s most
recent AGM, comments were made on the remuneration report that was considered
at that AGM; and
(ii) when a resolution that
the remuneration report for the last financial year be adopted was put to the
vote at the company’s most recent AGM, at least 25% of the votes cast were
against adoption of that report;
an explanation of the board’s
proposed action in response or, if the board does not propose any action, the
board’s reasons for inaction; and
(h) if a remuneration consultant made
a remuneration recommendation in relation to any of the key management
personnel for the company or, if consolidated financial statements are
required, for the consolidated entity, for the financial year:
(i) the name of the
consultant; and
(ii) a statement that the
consultant made such a recommendation; and
(iii) if the consultant
provided any other kind of advice to the company or entity for the financial
year—a statement that the consultant provided that other kind or those other
kinds of advice; and
(iv) the amount and nature
of the consideration payable for the remuneration recommendation; and
(v) the amount and nature
of the consideration payable for any other kind of advice referred to in subparagraph (iii);
and
(vi) information about the
arrangements the company made to ensure that the making of the remuneration
recommendation would be free from undue influence by the member or members of
the key management personnel to whom the recommendation relates; and
(vii) a statement about
whether the board is satisfied that the remuneration recommendation was made
free from undue influence by the member or members of the key management
personnel to whom the recommendation relates; and
(viii) if the board is
satisfied that the remuneration recommendation was made free from undue
influence by the member or members of the key management personnel to whom the
recommendation relates—the board’s reasons for being satisfied of this.
20 Subsection 300A(1)
Omit the second sentence.
21 Subsections 300A(1AAA) and (1B)
Repeal the subsections.
22 Schedule 3 (after table item 49)
Insert:
|
49A
|
Subsections 206J(4), (6) and (7)
|
60 penalty units.
|
|
49B
|
Subsection 206K(4)
|
60 penalty units.
|
|
49C
|
Subsections 206L(3) and (4)
|
60 penalty units.
|
|
49D
|
Subsection 206M(2)
|
60 penalty units.
|
23 Schedule 3 (after table item 66)
Insert:
|
66A
|
Subsection 250BD(1)
|
200 penalty units or imprisonment for 5 years, or both.
|
24 Schedule 3 (table item 68A) (the table item 68A
inserted by item 16 of Schedule 5 to the Corporate Law Economic Reform
Program (Audit Reform and Corporate Disclosure) Act 2004)
Repeal the item.
25 Schedule 3 (before table item 68B)
Insert:
|
68AA
|
Subsection 250R(2)
|
5 penalty units.
|
|
68AB
|
Subsection 250R(7)
|
200 penalty units or imprisonment for 5 years, or both.
|
26 Schedule 3 (after table item 70)
Insert:
|
70A
|
Subsection 250W(5)
|
10 penalty units.
|
Part 2—Limits on number of directors
27 Section 9
Insert:
board limit means a limit described in
section 201N.
28 Section 9
Insert:
board limit resolution means a resolution
described in paragraph 201P(1)(a).
29 Before section 201A
Insert:
Subdivision A—General rules
30 At the end of Division 1 of Part 2D.3
Add:
Subdivision B—Limits on numbers of directors of public companies
201N
Application of Subdivision
(1) This Subdivision applies in relation to a
public company if its constitution allows its directors to set a limit (a board
limit) whose effect is to restrict the number of directors of the
company to a number less than the maximum number of directors specified in the
constitution.
Note: This Subdivision applies however the
constitution or board limit is expressed.
(2) If a company’s constitution provides that
the maximum number of directors is either a specified number or another number
determined by the directors:
(a) any number determined by the
directors that is lower than the specified number is a board limit;
and
(b) any lowering by the directors of
that lower number is also a board limit.
(3) Subsection (2) does not limit, and
is not limited by, subsection (1).
201P
Directors must not set board limit unless proposed limit has been approved by
general meeting
(1) The directors must not set a board limit
unless:
(a) a resolution (a board limit
resolution) approving the proposal to set the limit specified in the
resolution has been passed by a general meeting of the company; and
(b) the notice of the meeting set out
an intention to propose the board limit resolution and stated the resolution;
and
(c) the notice was accompanied by a
statement explaining the resolution and meeting the requirements in section 201Q.
Note 1: Subsection 249L(3) requires information in the
notice of meeting to be presented clearly, concisely and effectively.
Note 2: Section 201U specifies the consequences of
a contravention of subsection (1) of this section. Also, section 1324
provides for injunctions to enforce subsection (1) of this section.
(2) A board limit resolution has effect until
immediately before the start of the first AGM of the company after the general
meeting by which the resolution was passed.
(3) A board limit resolution does not prevent
the appointment of a person as a director of the company by the other directors
of the company between general meetings of the company.
(4) However, if a person is appointed by the
other directors as a director of the company while a board limit resolution has
effect, the company must confirm the appointment by resolution at the company’s
next AGM. If the appointment is not confirmed, the person ceases to be a
director of the company at the end of the AGM.
(5) Subsections (1), (2) and (4) have
effect despite the company’s constitution.
Note: Although subsection (4) is like
subsection 201H(3) in many ways, it is not a replaceable rule like subsection
201H(3).
201Q
Requirements for explanatory statement to members
The statement accompanying the notice of
a general meeting stating an intention to propose the board limit resolution
must be in writing and set out clearly, concisely and effectively:
(a) the directors’ reasons for proposing
the board limit resolution; and
(b) all other information that:
(i) is reasonably required
by members in order to decide whether or not it is in the company’s interests
to pass the proposed board limit resolution; and
(ii) is known to the company
or to any of its directors.
Note: Section 1309 creates offences where false
and misleading material relating to a corporation’s affairs is made available
or furnished to members.
201R
Records of voting on board limit resolution if poll demanded
(1) This section applies if a poll is duly
demanded on the question that the board limit resolution be passed.
(2) For each member of the company who votes
on the poll in person, the company must record in writing:
(a) the member’s name; and
(b) how many votes the member casts
for the resolution and how many against.
Note: Failure to comply with this subsection is an
offence: see subsection 1311(1).
(3) For each member of the company who votes
on the poll by proxy, or by a representative authorised under section 250D,
the company must record in writing:
(a) the member’s name; and
(b) in relation to each person who
votes as proxy, or as such a representative, for the member:
(i) the person’s name; and
(ii) how many votes the
person casts on the resolution as proxy, or as such a representative, for the
member; and
(iii) how many of those
votes the person casts for the resolution and how many against.
Note: Failure to comply with this subsection is an
offence: see subsection 1311(1).
201S
Notice of resolution to be lodged
The company must lodge a notice setting
out the text of the board limit resolution within 14 days after the resolution
is passed.
201T
Declaration by court of substantial compliance
(1) The Court may declare that a requirement
set by section 201Q, 201R or 201S has been satisfied if the Court finds
that it has been substantially satisfied.
(2) A declaration may be made only on the
application of an interested person.
201U
Consequences of setting board limit in breach of section 201P
Application
(1) This section applies if the directors of
the company set a board limit in contravention of subsection 201P(1).
Board limit etc. ineffective
(2) The board limit and anything done in
reliance on it have no effect for the purposes of:
(a) the company’s constitution; or
(b) this Act, except this section.
Note: If a board limit resolution is not passed, the
number of directors of a company that can be appointed (for example by a
general meeting) depends on the maximum number of directors specified by the
company’s constitution. This is so even if the directors purport to set a board
limit despite the fact the board limit resolution was not passed.
(3) If:
(a) one or more directors are
appointed by one or more resolutions passed at a particular general meeting of
the company; and
(b) because of the board limit, the
general meeting was not given the opportunity to pass one or more resolutions
appointing a number of directors such that the number of directors of the
company would (if those resolutions had been passed) have exceeded the board
limit;
every appointment of director made by a resolution passed
at the general meeting is invalid.
Note: This subsection does not apply if a shortage
of persons consenting to be appointed director was the reason the general
meeting was not given the opportunity to pass one or more resolutions
appointing a number of directors such that the number of directors of the
company would (if those resolutions had been passed) have exceeded the board
limit.
(4) Subsections (2) and (3) have effect
despite anything else in the company’s constitution or in this Act, except
sections 128, 129 and 201M.
Note: Sections 128 and 129 deal with
assumptions a person dealing with the company may make, including assumptions
about the due appointment of directors. Section 201M deals with
effectiveness of acts by a director in circumstances where the director’s
appointment is invalid for certain reasons.
Company and candidates for directors may seek
compensation
(5) Subsection (6) applies if either of
the following (the suffering party) suffers loss or damage
because of the setting of the board limit in contravention of subsection 201P(1):
(a) the company;
(b) a person for whom both the
following conditions are met:
(i) the person had given
the company a written indication that he or she would be a candidate to be
appointed director at a general meeting;
(ii) because of the board
limit, the general meeting was not given the opportunity to consider passing a
resolution to appoint the person as director.
(6) The suffering party may institute a
proceeding in the Court for the contravention.
Note: Section 1325 deals with the orders the
Court may make to compensate the suffering party for the loss.
Contravention does not give rise to an offence
(7) A person is not guilty of an offence
because of the contravention.
31 Subsections 1325(1), (2) and (3)
Before “Chapter” (wherever occurring), insert “subsection 201P(1),”.
32 Schedule 3 (after table item 39)
Insert:
|
39A
|
Subsections 201R(2) and (3)
|
5 penalty units.
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Part 3—Voting by proxies as directed
33 Subsections 250A(4), (5) and (5A)
Repeal the subsections.
34 After section 250BA
Insert:
250BB
Proxy vote if appointment specifies way to vote
(1) An appointment of a proxy may specify the
way the proxy is to vote on a particular resolution. If it does:
(a) the proxy need not vote on a show
of hands, but if the proxy does so, the proxy must vote that way; and
(b) if the proxy has 2 or more
appointments that specify different ways to vote on the resolution—the proxy
must not vote on a show of hands; and
(c) if the proxy is the chair of the
meeting at which the resolution is voted on—the proxy must vote on a poll, and
must vote that way; and
(d) if the proxy is not the chair—the
proxy need not vote on the poll, but if the proxy does so, the proxy must vote
that way.
If a proxy is also a member, this subsection does not
affect the way that the person can cast any votes they hold as a member.
Note: A company’s constitution may provide that a
proxy is not entitled to vote on a show of hands (see subsection 249Y(2)).
(2) If the chair contravenes subsection (1),
the chair commits an offence if the appointment as a proxy resulted from:
(a) the company sending to members:
(i) a list of persons willing
to act as proxies; or
(ii) a proxy appointment
form holding the chair out as being willing to act as a proxy; or
(b) the operation of section 250BC.
(3) If a person other than the chair
contravenes paragraph (1)(a) or (d), the person commits an offence if the
person:
(a) agreed to the appointment; or
(b) held himself or herself out, or
caused another person to hold him or her out, as being willing to act as a
proxy in relation to the appointment.
(4) If a person other than the chair
contravenes paragraph (1)(b), the person commits an offence if, in
relation to at least 2 of the different ways of voting specified by the
appointments, the person:
(a) agreed to at least one of the
appointments specifying that way of voting; or
(b) held himself or herself out, or
caused another person to hold him or her out, as being willing to act as a
proxy in relation to at least one of the appointments specifying that way of
voting.
(5) An offence against subsection (2),
(3) or (4) is an offence of strict liability.
Note: For strict liability, see section 6.1 of
the Criminal Code.
250BC Transfer
of non‑chair proxy to chair in certain circumstances
If:
(a) an appointment of a proxy specifies
the way the proxy is to vote on a particular resolution at a meeting of the
company’s members; and
(b) the appointed proxy is not the
chair of the meeting; and
(c) at the meeting, a poll is duly
demanded on the question that the resolution be passed; and
(d) either of the following apply:
(i) if a record of
attendance is made for the meeting—the proxy is not recorded as attending;
(ii) the proxy does not
vote on the resolution;
the chair of the meeting is taken, before voting on the
resolution closes, to have been appointed as the proxy for the purposes of
voting on the resolution at that meeting.
35 Section 250H (note)
Omit “250A(4)”, substitute “250BB(1)”.
36 Schedule 3 (table item 66)
Omit “Subsection 250A(5)”, substitute “Subsections 250BB(2), (3)
and (4)”.
Part 4—Application provisions
37 At the end of Chapter 10
Add:
Part 10.17—Transitional
provisions relating to the Corporations Amendment (Improving Accountability on
Director and Executive Remuneration) Act 2011
1517
Application of Subdivision B of Division 1 of Part 2D.3
Subdivision B of Division 1 of Part 2D.3
applies in relation to the setting of board limits on or after 1 July 2011.
1518
Application of sections 206J, 206K, 206L and 206M
(1) Section 206J applies to entry into
arrangements on or after 1 July 2011, whether the remuneration was for services
rendered before, on or after that day.
(2) Section 206K applies to contracts entered
into on or after 1 July 2011.
(3) Sections 206L and 206M apply to recommendations
made under contracts entered into on or after 1 July 2011.
1519
Application of subsection 249L(2)
Subsection 249L(2) as substituted by the
Corporations Amendment (Improving Accountability on Director and Executive
Remuneration) Act 2011 applies in relation to AGMs held on or after 1 July
2011.
1520
Application of section 250BB
Section 250BB applies to voting on
or after 1 August 2011, whether the proxy was appointed before, on or
after that day.
1521
Application of section 250BC
Section 250BC applies to appointments
of proxies made on or after 1 August 2011.
1522
Application of section 250BD
Section 250BD applies in relation
to voting on or after 1 August 2011, whether the matter that is the
subject of the resolution relates to a time before, on or after that day.
1523
Application of subsections 250R(4) to (10)
Subsections 250R(4), (5), (6), (7), (8),
(9) and (10) apply in relation to voting on or after 1 August 2011, whether
the remuneration report concerned relates to a financial year starting before,
on or after that day.
1524
Application of Division 9 of Part 2G.2
Division 9 of Part 2G.2
applies in relation to AGMs held on or after 1 July 2011.
Note: This has the effect that the Division can
apply in relation to a company only if both of its 2 most recent AGMs have been
held on or after 1 July 2011.
1525
Application of amendments of section 300A
(1) The amendments of section 300A made
by the Corporations Amendment (Improving Accountability on Director and
Executive Remuneration) Act 2011 apply in relation to remuneration reports
for financial years starting on or after 1 July 2011.
(2) Subsection (1) does not apply to the
repeal of subsection 300A(1AAA).
Saving of regulations made for paragraph 300A(1)(f)
(3) The amendment of paragraph 300A(1)(f)
made by the Corporations Amendment (Improving Accountability on Director and
Executive Remuneration) Act 2011 does not affect the validity of any
regulations in force for the purposes of that paragraph immediately before that
amendment.
[Minister’s second reading speech made in—
House of Representatives on 23 February 2011
Senate on 14 June 2011]
(22/11)