An Act to make provision in relation to corporations and
financial products and services, and for other purposes
Chapter 1—Introductory
Part 1.1—Preliminary
1
Short title [see
Note 1]
This Act may be cited as the Corporations
Act 2001.
2
Commencement [see
Note 1]
This Act commences on a day to be fixed
by Proclamation.
3
Constitutional basis for this Act
(1) The operation of this Act in the
referring States is based on:
(a) the legislative powers that the Commonwealth
Parliament has under section 51 of the Constitution (other than paragraph
51(xxxvii)); and
(b) the legislative powers that the
Commonwealth Parliament has in respect of matters to which this Act relates
because those matters are referred to it by the Parliaments of the referring
States under paragraph 51(xxxvii) of the Constitution.
Note: The State referrals fully supplement the
Commonwealth Parliament’s other powers by referring the matters to the
Commonwealth Parliament to the extent to which they are not otherwise included
in the legislative powers of the Commonwealth Parliament.
(2) The operation of this Act in the Northern Territory and the Capital Territory is based on:
(a) the legislative powers that the
Commonwealth Parliament has under section 122 of the Constitution to make
laws for the government of those Territories; and
(b) the legislative powers that the
Commonwealth Parliament has under section 51 of the Constitution.
Despite subsection 22(3) of the Acts Interpretation Act
1901, this Act as applying in those territories is a law of the
Commonwealth.
(3) The operation of this Act outside Australia is based on:
(a) the legislative power the
Commonwealth Parliament has under paragraph 51(xxix) of the Constitution; and
(b) the other legislative powers that
the Commonwealth Parliament has under section 51 of the Constitution; and
(c) the legislative powers that the
Commonwealth Parliament has under section 122 of the Constitution to make
laws for the government of those Territories.
(4) The operation of this Act in a State that
is not a referring State is based on:
(a) the legislative powers that the
Commonwealth Parliament has under section 51 (other than paragraph
51(xxxvii)) and section 122 of the Constitution; and
(b) the legislative powers that the
Commonwealth Parliament has in respect of matters to which this Act relates
because those matters are referred to it by the Parliaments of the referring
States under paragraph 51(xxxvii) of the Constitution.
4
Referring States
Reference of matters by State Parliament to
Commonwealth Parliament
(1) A State is a referring State
if the Parliament of the State has referred the matters covered by subsections (4)
and (5) to the Parliament of the Commonwealth for the purposes of paragraph
51(xxxvii) of the Constitution:
(a) if and to the extent that the
matters are not otherwise included in the legislative powers of the Parliament
of the Commonwealth (otherwise than by a reference under paragraph 51(xxxvii)
of the Constitution); and
(b) if and to the extent to which the
matters are included in the legislative powers of the Parliament of the State.
This subsection has effect subject to subsections (6)
and (7).
(2) A State is
a referring State even if the State reference Act includes a provision
to the effect that nothing in the State reference Act is intended to enable the
making of laws pursuant to the amendment reference with the sole or main
underlying purpose or object of regulating industrial relations matters even
if, but for that provision in the State reference Act, the law would be a law
with respect to a matter referred to the Parliament of the Commonwealth by the
amendment reference.
(3) A State is a referring State
even if a law of the State provides that the reference to the Commonwealth
Parliament of either or both of the matters covered by subsections (4) and
(5) is to terminate in particular circumstances.
Reference covering initial Corporations Act and ASIC
Act
(4) This subsection covers the matters to
which the referred provisions relate to the extent of making laws with respect
to those matters by including the referred provisions in the initial
Corporations Act and the initial ASIC Act.
Reference covering amendments of this Act and ASIC Act
(5) This subsection covers the matters of the
formation of corporations, corporate regulation and the regulation of financial
products and services to the extent of the making of laws with respect to those
matters by making express amendments of this Act or the ASIC Act.
Effect of termination of reference
(6) A State ceases to be a referring
State if the State’s initial reference terminates.
(7) A State ceases to be a referring
State if:
(a) the State’s amendment reference
terminates; and
(b) subsection (8) does not apply
to the termination.
(8) A State does not cease to be a referring
State because of the termination of its amendment reference if:
(a) the termination is effected by the
Governor of that State fixing a day by proclamation as the day on which the
reference terminates; and
(b) the day fixed is no earlier than
the first day after the end of the period of 6 months beginning on the day on
which the proclamation is published; and
(c) that State’s amendment reference,
and the amendment reference of every other State, terminates on the same day.
Definitions
(9) In this section:
amendment reference of a State means the
reference by the Parliament of the State to the Parliament of the Commonwealth
of the matters covered by subsection (5).
express amendment of this Act or the ASIC Act
means the direct amendment of the text of this Act or the ASIC Act (whether by
the insertion, omission, repeal, substitution or relocation of words or matter)
by Commonwealth Acts, but does not include the enactment by a Commonwealth Act
of a provision that has, or will have, substantive effect otherwise than as
part of the text of this Act or the ASIC Act.
initial ASIC Act means the ASIC Act as
originally enacted.
initial Corporations Act means this Act as
originally enacted.
initial reference of a State means the
reference by the Parliament of the State to the Parliament of the Commonwealth
of the matters covered by subsection (4).
referred provisions means:
(a) the initial Corporations Act; and
(b) the initial ASIC Act;
to the extent to which they deal with matters that are
included in the legislative powers of the Parliaments of the States.
State reference Act for a State is the law
under which the initial reference and the amendment reference are given.
5
General territorial application of Act
Geographical coverage of “this jurisdiction”
(1) Section 9 defines this
jurisdiction as the area that includes:
(a) each referring State (including
its coastal sea); and
(b) the Capital Territory (including
the coastal sea of the Jervis Bay Territory); and
(c) the Northern Territory (including
its coastal sea); and
(d) also, for the purposes of the
application of a provision of Chapter 7 or an associated provision (see subsection (10))—any
external Territory in which the provision applies because of subsection (9)
(but only to the extent provided for in that subsection).
(2) Throughout this Act, this
jurisdiction therefore consists of:
(a) either:
(i) the whole of Australia (if all the States are referring States); or
(ii) Australia (other than any State that is not a referring State) if one or more States are
not referring States; and
(b) also, when used in or in
relation to a provision of Chapter 7 or an associated provision (see subsection (10))—any
external Territory in which the provision applies because of subsection (9)
(but only to the extent provided for in that subsection).
Operation in this jurisdiction
(3) Each provision of this Act applies in
this jurisdiction.
Operation outside this jurisdiction
(4) Subject to subsection (8), each
provision of this Act also applies, according to its tenor, in relation to acts
and omissions outside this jurisdiction.
Residence, place of formation etc.
(7) Each provision of this Act applies
according to its tenor to:
(a) natural persons whether:
(i) resident in this
jurisdiction or not; and
(ii) resident in Australia or not; and
(iii) Australian citizens or
not; and
(b) all
bodies corporate and unincorporated bodies whether:
(i) formed or carrying on
business in this jurisdiction or not; and
(ii) formed or carrying on
business in Australia or not.
Note: Paragraph (b)—many of the provisions in
this Act apply only in relation to companies (that is, to companies that are
registered under this Act).
Operation in non‑referring States
(8) This Act does not apply to an act or
omission in a State that is not a referring State to the extent to which that
application would be beyond the legislative powers of the Parliament (including
powers it has under paragraphs 51(xxxvii) and (xxxix) of the Constitution).
Expanded application of provisions of Chapter 7
and associated provisions
(9) The regulations may provide that, in
specified circumstances, a specified external Territory is included in this
jurisdiction for the purposes of a specified provision of Chapter 7
(the applicable provision). If the regulations do so:
(a) the applicable provision applies
in that external Territory in those circumstances; and
(b) the associated provisions (see subsection (10))
in relation to the applicable provision apply in that external Territory in
relation to the applicable provision as so applying.
Meaning of associated provisions
(10) For the purposes of this section, the associated
provisions in relation to a provision of Chapter 7 are:
(a) the provisions of Chapters 1,
9 (including the provisions of Division 2 of Part 9.4 that create
offences and of Part 9.4B that allow for pecuniary penalty orders) and 10
as they apply or have effect in relation to, or for the purposes of, the
provision; and
(b) any regulations or other
instruments (including any that create offences or allow for pecuniary penalty
orders) made under this Act for the purposes of any of the provisions covered
by paragraph (a); and
(c) if regulations made for the
purposes of subsection (9) have been made in relation to the provision—any
other provisions of this Act, or any regulations or other instruments made
under this Act (including any that create offences or allow for pecuniary
penalty orders), specified in those regulations.
5A
Application to the Crown
(1) To avoid doubt, a reference in this
section to the Crown in a particular right includes a reference to an
instrumentality or agency (whether a body corporate or not) of the Crown in
that right.
(2) Chapter 5 (except Part 5.8)
binds the Crown in right of the Commonwealth, of each of the States, of the Capital Territory, of the Northern Territory and of Norfolk Island.
(3) Chapters 6, 6A, 6B, 6C and 6D:
(a) bind the Crown in right of the
Commonwealth; and
(b) do not bind the Crown in right of
any State, of the Capital Territory, of the Northern Territory or of Norfolk Island.
(4) A provision of Chapter 5D, 6CA or 7
only binds the Crown in a particular capacity in circumstances (if any)
specified in the regulations.
(5) Nothing in this Act makes the Crown in
any right liable to a pecuniary penalty or to be prosecuted for an offence.
5B
ASIC has general administration of this Act
Subject to the ASIC Act, ASIC has the
general administration of this Act.
5C
Application of the Acts Interpretation Act 1901
(1) Until the date of commencement of section 4
of the Legislative Instruments (Transitional and Consequential Amendments)
Act 2003 (the Legislative Instruments commencement day), the Acts
Interpretation Act 1901 as in force on 1 November 2000 applies to this Act.
(2) On and after the Legislative Instruments
commencement day, the Acts Interpretation Act 1901 as in force on that
day applies to this Act.
(3) Amendments of the Acts Interpretation
Act 1901 made after the Legislative Instruments commencement day do not
apply to this Act.
Part 1.1A—Interaction between Corporations legislation and State and
Territory laws
5D
Coverage of Part
(1) This Part applies only to laws of a State
or Territory that is in this jurisdiction.
(2) This Part applies only to the following
Corporations legislation:
(a) this Act (including the
regulations made under this Act); and
(b) Part 3 of the ASIC Act; and
(c) regulations made under the ASIC
Act for the purposes of Part 3 of that Act.
Note: This Part does not apply in relation to the
trustee company provisions: see section 601RAE.
(3) This Part does not apply to Part 3
of the ASIC Act, or regulations made under that Act for the purposes of Part 3
of that Act, to the extent to which they operate in relation to a contravention
of Division 2 of Part 2 of that Act.
5E
Concurrent operation intended
(1) The Corporations legislation is not
intended to exclude or limit the concurrent operation of any law of a State or
Territory.
(2) Without limiting subsection (1), the
Corporations legislation is not intended to exclude or limit the concurrent
operation of a law of a State or Territory that:
(a) imposes additional obligations or
liabilities (whether criminal or civil) on:
(i) a director or other
officer of a company or other corporation; or
(ii) a company or other
body; or
(b) confers additional powers on:
(i) a director or other
officer of a company or other corporation; or
(ii) a company or other
body; or
(c) provides for the formation of a
body corporate; or
(d) imposes additional limits on the
interests a person may hold or acquire in a company or other body; or
(e) prevents a person from:
(i) being a director of;
or
(ii) being involved in the
management or control of;
a company or other body; or
(f) requires a company:
(i) to have a
constitution; or
(ii) to have particular
rules in its constitution.
Note: Paragraph (a)—this includes imposing
additional reporting obligations on a company or other body.
(3) Without limiting subsection (2), a
reference in that subsection to a law of a State or Territory imposing
obligations or liabilities, or conferring powers, includes a reference to a law
of a State or Territory imposing obligations or liabilities, or conferring
powers, by reference to the State or Territory in which a company is taken to
be registered.
(4) This section does not apply to the law of
the State or Territory if there is a direct inconsistency between the
Corporations legislation and that law.
Note: Section 5G prevents direct inconsistencies
arising in some cases by limiting the operation of the Corporations
legislation.
(5) If:
(a) an act or omission of a person is
both an offence against the Corporations legislation and an offence under the
law of a State or Territory; and
(b) the person is convicted of either
of those offences;
the person is not liable to be convicted of the other of
those offences.
5F
Corporations legislation does not apply to matters declared by State or
Territory law to be an excluded matter
(1) Subsection (2) applies if a
provision of a law of a State or Territory declares a matter to be an excluded
matter for the purposes of this section in relation to:
(a) the whole of the Corporations
legislation; or
(b) a specified provision of the
Corporations legislation; or
(c) the Corporations legislation other
than a specified provision; or
(d) the Corporations legislation
otherwise than to a specified extent.
(2) By force of this subsection:
(a) none of the provisions of the
Corporations legislation (other than this section) applies in the State or
Territory in relation to the matter if the declaration is one to which paragraph (1)(a)
applies; and
(b) the specified provision of the
Corporations legislation does not apply in the State or Territory in relation
to the matter if the declaration is one to which paragraph (1)(b) applies;
and
(c) the provisions of the Corporations
legislation (other than this section and the specified provisions) do not apply
in the State or Territory in relation to the matter if the declaration is one
to which paragraph (1)(c) applies; and
(d) the provisions of the Corporations
legislation (other than this section and otherwise than to the specified
extent) do not apply in the State or Territory in relation to the matter if the
declaration is one to which paragraph (1)(d) applies.
(3) Subsection (2) does not apply to the
declaration to the extent to which the regulations provide that that subsection
does not apply to that declaration.
(4) By force of this subsection, if:
(a) the Corporations Law, ASC Law or
ASIC Law of a State or Territory; or
(b) a provision of that Law;
did not apply to a matter immediately before this Act
commenced because a provision of a law of the State or Territory provided that
that Law, or that provision, did not apply to the matter, the Corporations
legislation, or the provision of the Corporations legislation that corresponds
to that provision of that Law, does not apply in the State or Territory to the
matter until that law of the State or Territory is omitted or repealed.
(5) Subsection (4) does not apply to the
application of the provisions of the Corporations legislation to the matter to
the extent to which the regulations provide that that subsection does not apply
to the matter.
(6) In this section:
matter includes act, omission, body, person
or thing.
5G
Avoiding direct inconsistency arising between the Corporations legislation and
State and Territory laws
Section overrides other provisions of the Corporations
legislation
(1) This section has effect despite anything
else in the Corporations legislation.
Section does not deal with provisions capable of
concurrent operation
(2) This section does not apply to a
provision of a law of a State or Territory that is capable of concurrent
operation with the Corporations legislation.
Note: This kind of provision is dealt with by
section 5E.
When this section applies to a provision of a State or
Territory law
(3) This section applies to the interaction
between:
(a) a provision of a law of a State or
Territory (the State provision); and
(b) a provision of the Corporations
legislation (the Commonwealth provision);
only if the State provision meets the conditions set out
in the following table:
|
Conditions to be met
before section applies
|
[operative]
|
|
Item
|
Kind of provision
|
Conditions to be met
|
|
1
|
a pre‑commencement (commenced) provision
|
(a) the State provision operated, immediately before this Act
commenced, despite the provision of:
(i) the Corporations Law of the State or Territory (as in
force at that time); or
(ii) the ASC or ASIC Law of the State or Territory (as in
force at that time);
that corresponds to the Commonwealth provision; and
(b) the State provision is not declared to be one that this
section does not apply to (either generally or specifically in relation to
the Commonwealth provision) by:
(i) regulations made under this Act; or
(ii) a law of the State or Territory.
|
|
2
|
a pre‑commencement (enacted) provision
|
(a) the State provision would have operated, immediately
before this Act commenced, despite the provision of:
(i) the Corporations Law of the State or Territory (as in
force at that time); or
(ii) the ASC or ASIC Law of the State or Territory (as in
force at that time);
that corresponds to the Commonwealth provision if the
State provision had commenced before the commencement of this Act; and
(b) the State provision is not declared to be one that this
section does not apply to (either generally or specifically in relation to
the Commonwealth provision) by:
(i) regulations made under this Act; or
(ii) a law of the State or Territory.
|
|
3
|
a post‑commencement provision
|
the State provision is declared by a law of the State or
Territory to be a Corporations legislation displacement provision for the
purposes of this section (either generally or specifically in relation to the
Commonwealth provision)
|
|
4
|
a provision that is materially amended on or after this
Act commenced if the amendment was enacted before this Act commenced
|
(a) the State provision as amended would have operated,
immediately before this Act commenced, despite the provision of:
(i) the Corporations Law of the State or Territory (as in
force at that time); or
(ii) the ASC or ASIC Law of the State or Territory (as in
force at that time);
that corresponds to the Commonwealth provision if the
amendment had commenced before the commencement of this Act; and
(b) the State provision is not declared to be one that this
section does not apply to (either generally or specifically in relation to
the Commonwealth provision) by:
(i) regulations made under this Act; or
(ii) a law of the State or Territory.
|
|
5
|
a provision that is materially amended on or after this
Act commenced if the amendment is enacted on or after this Act commenced
|
the State provision as amended is declared by a law of the
State or Territory to be a Corporations legislation displacement provision
for the purposes of this section (either generally or specifically in
relation to the Commonwealth provision)
|
|
|
|
|
Note 1: Item 1—subsection (12) tells you when
a provision is a pre‑commencement (commenced) provision.
Note 2: Item 1 paragraph (a)—For example, a
State or Territory provision enacted after the commencement of the Corporations
Law might not have operated despite the Corporations Law if it was not
expressly provided that the provision was to operate despite a specified
provision, or despite any provision, of the Corporations Law (see, for example,
section 5 of the Corporations (New South Wales) Act 1990).
Note 3: Item 2—subsection (13) tells you when
a provision is a pre‑commencement (enacted) provision.
Note 4: Item 3—subsection (14) tells you when
a provision is a post‑commencement provision.
Note 5: Subsections (15) to (17) tell you when a
provision is materially amended after commencement.
State and Territory laws specifically authorising or
requiring act or thing to be done
(4) A provision of the Corporations
legislation does not:
(a) prohibit the doing of an act; or
(b) impose a liability (whether civil
or criminal) for doing an act;
if a provision of a law of a State or Territory
specifically authorises or requires the doing of that act.
Instructions given to directors under State and
Territory laws
(5) If a provision of a law of a State or
Territory specifically:
(a) authorises a person to give
instructions to the directors or other officers of a company or body; or
(b) requires the directors of a
company or body to:
(i) comply with
instructions given by a person; or
(ii) have regard to matters
communicated to the company or body by a person; or
(c) provides that a company or body is
subject to the control or direction of a person;
a provision of the Corporations legislation does not:
(d) prevent the person from giving an
instruction to the directors or exercising control or direction over the
company or body; or
(e) without limiting subsection (4):
(i) prohibit a director
from complying with the instruction or direction; or
(ii) impose a liability
(whether civil or criminal) on a director for complying with the instruction or
direction.
The person is not taken to be a director of a company or
body for the purposes of the Corporations legislation merely because the
directors of the company or body are accustomed to act in accordance with the
person’s instructions.
Use of names authorised by State and Territory laws
(6) The provisions of Part 2B.6 and Part 5B.3
of this Act do not:
(a) prohibit a company or other body
from using a name if the use of the name is expressly provided for, or
authorised by, a provision of a law of a State or Territory; or
(b) require a company or other body to
use a word as part of its name if the company or body is expressly authorised
not to use that word by a provision of a law of a State or Territory.
Meetings held in accordance with requirements of State
and Territory laws
(7) The provisions of Chapter 2G of this
Act do not apply to the calling or conduct of a meeting of a company to the
extent to which the meeting is called or conducted in accordance with a
provision of a law of a State or Territory. Any resolutions passed at the
meeting are as valid as if the meeting had been called and conducted in
accordance with this Act.
External administration under State and Territory laws
(8) The provisions of Chapter 5 of this
Act do not apply to a scheme of arrangement, receivership, winding up or other
external administration of a company to the extent to which the scheme,
receivership, winding up or administration is carried out in accordance with a
provision of a law of a State or Territory.
State and Territory laws dealing with company
constitutions
(9) If a provision of a law of a State or
Territory provides that a provision is included, or taken to be included, in a
company’s constitution, the provision is included in the company’s constitution
even though the procedures and other requirements of this Act are not complied
with in relation to the provision.
(10) If a provision of a law of a State or
Territory provides that additional requirements must be met for an alteration
of a company’s constitution to take effect, the alteration does not take effect
unless those requirements are met.
Other cases
(11) A provision of the Corporations
legislation does not operate in a State or Territory to the extent necessary to
ensure that no inconsistency arises between:
(a) the provision of the Corporations
legislation; and
(b) a provision of a law of the State
or Territory that would, but for this subsection, be inconsistent with the
provision of the Corporations legislation.
Note 1: A provision of the State or Territory law is
not covered by this subsection if one of the earlier subsections in this
section applies to the provision: if one of those subsections applies there
would be no potential inconsistency to be dealt with by this subsection.
Note 2: The operation of the provision of the State or
Territory law will be supported by section 5E to the extent to which it
can operate concurrently with the provision of the Corporations legislation.
Pre‑commencement (commenced) provision
(12) A provision of a law of a State or
Territory is a pre‑commencement (commenced) provision if it:
(a) is enacted, and comes into force,
before the commencement of this Act; and
(b) is not a provision that has been
materially amended after commencement (see subsections (15) to (17)).
Pre‑commencement (enacted) provision
(13) A provision of a law of a State or
Territory is a pre‑commencement (enacted) provision if it:
(a) is enacted before, but comes into
force on or after, the commencement of this Act; and
(b) is not a provision that has been
materially amended after commencement (see subsections (15) to (17)).
Post‑commencement provision
(14) A provision of a law of a State or
Territory is a post‑commencement provision if it:
(a) is enacted, and comes into force,
on or after the commencement of this Act; and
(b) is not a provision that has been
materially amended after commencement (see subsections (15) to (17)).
Provision materially amended after commencement
(15) A provision
of a law of a State or Territory is materially amended after commencement
if:
(a) an amendment of the provision
commences on or after the commencement of this Act; and
(b) neither subsection (16) nor subsection (17)
applies to the amendment.
(16) A provision of a law of a State or
Territory is not materially amended after commencement under subsection (15)
if the amendment merely:
(a) changes:
(i) a reference to the
Corporations Law or the ASC or ASIC Law, or the Corporations Law or the ASC or
ASIC Law of a State or Territory, to a reference to the Corporations Act or the
ASIC Act; or
(ii) a reference to a
provision of the Corporations Law or the ASC or ASIC Law, or the Corporations
Law or ASC or ASIC Law of a State or Territory, to a reference to a provision
of the Corporations Act or the ASIC Act; or
(iii) a penalty for a contravention
of a provision of a law of a State or Territory; or
(iv) a reference to a
particular person or body to a reference to another person or body; or
(b) adds a condition that must be met
before a right is conferred, an obligation imposed or a power conferred; or
(c) adds criteria to be taken into
account before a power is exercised; or
(d) amends the provision in way
declared by the regulations to not constitute a material amendment for the
purposes of this subsection.
(17) A provision of a law of a State or
Territory is not materially amended after commencement under subsection (15)
if:
(a) the provision as amended would be
inconsistent with a provision of the Corporations legislation but for this
section; and
(b) the amendment would not materially
reduce the range of persons, acts and circumstances to which the provision of
the Corporations legislation applies if this section applied to the provision
of the State or Territory law as amended.
5H
Registration of body as company on basis of State or Territory law
(1) A body is taken to be registered under
this Act as a company of a particular type under section 118 if a law of a
State or Territory in this jurisdiction:
(a) provides that the body is a deemed
registration company for the purposes of this section; and
(b) specifies:
(i) the day on which the
body is to be taken to be registered (the registration day) or
the manner in which that day is to be fixed; and
(ii) the type of company
the body is to be registered as under this Act;
(iii) the company’s proposed
name (unless the ACN is to be used in its name);
and subsections (2) and (3) are satisfied.
(2) A notice setting out the following
details must be lodged before the registration day:
(a) the name and address of each
person who is to be a member on registration;
(b) the present given and family name,
all former given and family names and the date and place of birth of each
person who is to be a director on registration;
(c) the present given and family name,
all former given and family names and the date and place of birth of each
person who consents in writing to become a company secretary;
(d) the address of each person who is
to be a director or company secretary on registration;
(e) the address of the company’s
proposed registered office;
(f) for a public company—the proposed
opening hours of its registered office (if they are not the standard opening
hours);
(g) the address of the company’s
proposed principal place of business (if it is not the address of the proposed
registered office);
(h) for a company limited by shares or
an unlimited company—the following:
(i) the number and class
of shares each member agrees in writing to take up;
(ii) the amount (if any)
each member agrees in writing to pay for each share;
(iii) if that amount is not
to be paid in full on registration—the amount (if any) each member agrees in
writing to be unpaid on each share;
(i) for a public company that is
limited by shares or is an unlimited company, if shares will be issued for non‑cash
consideration—the prescribed particulars about the issue of the shares, unless
the shares will be issued under a written contract and a copy of the contract
is lodged with the application;
(j) for a company limited by
guarantee—the proposed amount of the guarantee that each member agrees to in
writing.
(3) If the company:
(a) is to be a public company; and
(b) is to have a constitution on
registration;
a copy of the constitution must be lodged before the
registration day.
(4) On the registration day, the body is
taken:
(a) to be registered as a company
under this Act; and
(b) to be registered in the State or
Territory referred to in subsection (1).
(5) The regulations may modify the operation
of this Act to facilitate the registration of the company.
(6) Without limiting subsection (5), the
regulations may make provision in relation to:
(a) the share capital of the company
on registration; and
(b) the issue of a certificate of
registration on the basis of the company’s registration.
5I
Regulations may modify operation of the Corporations legislation to deal with
interaction between that legislation and State and Territory laws
(1) The regulations may modify the operation
of the Corporations legislation so that:
(a) provisions of the Corporations legislation
do not apply to a matter that is dealt with by a law of a State or Territory
specified in the regulations; or
(b) no inconsistency arises between
the operation of a provision of the Corporations legislation and the operation
of a provision of a State or Territory law specified in the regulations.
(2) Without limiting subsection (1),
regulations made for the purposes of that subsection may provide that the
provision of the Corporations legislation:
(a) does not apply to:
(i) a person specified in
the regulations; or
(ii) a body specified in
the regulations; or
(iii) circumstances
specified in the regulations; or
(iv) a person or body
specified in the regulations in the circumstances specified in the regulations;
or
(b) does not prohibit an act to the
extent to which the prohibition would otherwise give rise to an inconsistency
with the State or Territory law; or
(c) does not require a person to do an
act to the extent to which the requirement would otherwise give rise to an
inconsistency with the State or Territory law; or
(d) does not authorise a person to do
an act to the extent to which the conferral of that authority on the person
would otherwise give rise to an inconsistency with the State or Territory law;
or
(e) does not impose an obligation on a
person to the extent to which complying with that obligation would require the
person to not comply with an obligation imposed on the person under the State
or Territory law; or
(f) authorises a person to do
something for the purposes of the Corporations legislation that the person:
(i) is authorised to do
under the State or Territory law; and
(ii) would not otherwise be
authorised to do under the Corporations legislation; or
(g) will be taken to be satisfied if
the State or Territory law is satisfied.
(3) In this
section:
matter includes act, omission, body, person
or thing.
Part 1.2—Interpretation
Division 1—General
6
Effect of this Part
(1) The provisions of this Part have effect
for the purposes of this Act, except so far as the contrary intention appears
in this Act.
(2) This Part applies for the purposes of:
(a) Part 5.7; and
(b) Chapter 5 as applying by
virtue of Part 5.7; and
(c) Part 9.2;
as if a reference in this Part to a person or to a body
corporate included a reference to a Part 5.7 body.
(4) Where, because of Part 11.2,
provisions of this Act, as in force at a particular time, continue to apply:
(a) in relation to someone or
something; or
(b) for
particular purposes;
then, for the purposes of those provisions as so applying:
(c) this Part as in force at that time
continues to have effect; and
(d) this Part as in force at a later
time does not have effect.
7
Location of other interpretation provisions
(1) Most of the interpretation provisions for
this Act are in this Part.
(2) However, interpretation provisions
relevant only to Chapter 7 are to be found at the beginning of that
Chapter.
(3) Also, interpretation provisions relevant
to a particular Part, Division or Subdivision may be found at the beginning of
that Part, Division or Subdivision.
(4) Occasionally, an individual section
contains its own interpretation provisions, not necessarily at the beginning.
9
Dictionary
Unless the contrary intention appears:
AASB means the Australian Accounting
Standards Board.
ABN (short for “Australian Business Number”)
has the meaning given by section 41 of the A New Tax System (Australian
Business Number) Act 1999.
Aboriginal and Torres Strait Islander corporation
means a corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006.
accounting standard means:
(a) an instrument in force under
section 334; or
(b) a provision of such an instrument
as it so has effect.
ACN (short for “Australian Company Number”)
is the number given by ASIC to a company on registration (see sections 118
and 601BD).
acquire, in relation to financial products,
when used in a provision outside Chapter 7, has the same meaning as it has
in Chapter 7.
act includes thing.
administration, in relation to a company, has
the meaning given by section 435C.
administrator:
(a) in relation to a body corporate
but not in relation to a deed of company arrangement:
(i) means an administrator
of the body or entity appointed under Part 5.3A; and
(iii) if 2 or more persons
are appointed under that Part as administrators of the body or entity—has a
meaning affected by paragraph 451A(2)(b); or
(b) in relation to a deed of company
arrangement:
(i) means an administrator
of the deed appointed under Part 5.3A; and
(ii) if 2 or more persons
are appointed under that Part as administrators of the deed—has a meaning
affected by paragraph 451B(2)(b).
admit to quotation: financial products are admitted
to quotation on a market if the market operator has given unconditional
permission for quotation of the financial products on the market.
affairs, in relation to a body corporate,
has, in the provisions referred to in section 53, a meaning affected by
that section.
affidavit includes affirmation.
agency means an agency, authority, body or
person.
AGM means an annual general meeting of a
company that section 250N requires to be held.
agreement, in Chapter 6 or 7, means a
relevant agreement.
amount includes a nil amount and zero.
ancillary offence, in relation to another
offence, means an offence against:
(a) section 5, 6, 7 or 7A of the Crimes
Act 1914; or
(b) subsection 86(1) of that Act by
virtue of paragraph 86(1)(a) of that Act;
being an offence that is related to that other offence.
APRA means the Australian Prudential
Regulation Authority.
arbitrage transaction means a purchase or
sale of financial products effected in the ordinary course of trading on a
financial market together with an offsetting sale or purchase of those
financial products effected at the same time, or at as nearly the same time as
practicable, in the ordinary course of trading on another financial market for
the purpose of obtaining a profit from the difference between the prices of
those financial products in the 2 financial markets.
ARBN (short for “Australian Registered Body
Number”) is the number given by ASIC to a registrable body on registration
under Part 5B.2.
arrangement, in Part 5.1, includes a
reorganisation of the share capital of a body corporate by the consolidation of
shares of different classes, by the division of shares into shares of different
classes, or by both of those methods.
ARSN (short for “Australian Registered Scheme
Number”) is the number given by ASIC to a registered scheme on registration
(see section 601EB).
ASIC means the Australian Securities and
Investments Commission.
ASIC Act means the Australian Securities
and Investments Commission Act 2001 and includes the regulations made under
that Act.
ASIC database means so much of the national
companies database kept by ASIC as consists of:
(a) some or all of a register kept by
ASIC under this Act; or
(b) information set out in a document
lodged under this Act;
but does not include ASIC’s document imaging system.
assets, in relation to a financial services
licensee, means all the licensee’s assets (whether or not used in connection
with the licensee’s Australian financial services licence).
associate has the meaning given by sections 10
to 17.
associated entity has the meaning given by
section 50AAA.
AUASB means the Auditing and Assurance Standards
Board.
audit means an audit conducted for the
purposes of this Act and includes a review of a financial report for a
financial year or a half‑year conducted for the purposes of this Act.
audit activity: see the definition of engage
in audit activity.
audit company means a company that consents
to be appointed, or is appointed, as auditor of a company or registered scheme.
audit‑critical employee, in relation to a
company, or the responsible entity for a registered scheme, that is the audited
body for an audit, means a person who:
(a) is an employee of the company or
of the responsible entity for the registered scheme; and
(b) is able, because of the position
in which the person is employed, to exercise significant influence over:
(i) a material aspect of
the contents of the financial report being audited; or
(ii) the conduct or
efficacy of the audit.
audited body, in relation to an audit of a
company or registered scheme, means the company or registered scheme in
relation to which the audit is, or is to be, conducted.
audit firm means a firm that consents to be
appointed, or is appointed, as auditor of a company or registered scheme.
auditing standard means:
(a) a standard in force under section 336;
or
(b) a provision of such a standard as
it so has effect.
auditor independence requirements of this Act
means the requirements of Divisions 3, 4 and 5 of Part 2M.4.
Australia, when used in a geographical sense,
does not include an external Territory.
Note: Paragraph 17(a) of the Acts Interpretation
Act 1901 would otherwise provide that Australia included the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands.
Australian ADI means:
(a) an ADI (authorised deposit‑taking
institution) within the meaning of the Banking Act 1959; and
(b) a person who carries on State
banking within the meaning of paragraph 51(xiii) of the Constitution.
Australian bank means an Australian ADI that
is permitted under section 66 of the Banking Act 1959 to assume or
use:
(a) the word bank, banker or banking;
or
(b) any other word (whether or not in
English) that is of like import to a word referred to in paragraph (a).
Australian court means a federal court or a
court of a State or Territory.
Australian CS facility licence, when used in
a provision outside Chapter 7, has the same meaning as it has in Chapter 7.
Australian financial services licence, when
used in a provision outside Chapter 7, has the same meaning as it has in
Chapter 7.
Australian law means a law of the
Commonwealth or of a State or Territory.
Australian market licence, when used in a
provision outside Chapter 7, has the same meaning as it has in Chapter 7.
Australian register of a foreign company
means a branch register of members kept under section 601CM.
authorised audit company means a company
registered under Part 9.2A.
bank or banker includes, but is
not limited to, a body corporate that is an ADI (authorised deposit‑taking
institution) for the purposes of the Banking Act 1959.
banking corporation means a body corporate
that carries on, as its sole or principal business, the business of banking
(other than State banking not extending beyond the limits of the State
concerned).
base salary has the meaning specified in
regulations made for the purposes of this definition.
begin, in relation to a winding up, has the
meaning given by Division 1A of Part 5.6.
benefit:
(a) means any benefit, whether by way
of payment of cash or otherwise; and
(b) when used in Division 2 of
Part 2D.2 (sections 200 to 200J)—has the meaning given by
section 200AB.
bid class of securities for a takeover bid is
the class of securities to which the securities being bid for belong.
bidder for a takeover bid means the person
who makes or proposes to make, or each of the people who make or propose to
make, the offers under the bid (whether personally or by an agent or nominee).
Note: A person who announces a bid on behalf of
another person is not making the bid, the other person is making the bid.
bidder’s statement means a bidder’s statement
under sections 636 and 637 as supplemented.
bid period:
(a) for an off‑market bid—starts when
the bidder’s statement is given to the target and ends:
(i) 1 month later if no
offers are made under the bid; or
(ii) at the end of the
offer period; and
(b) for a market bid—starts when the
bid is announced to the relevant financial market and ends at the end of the
offer period.
Board, when used in Part 9.2, means the
Companies Auditors and Liquidators Disciplinary Board.
board limit means a limit described in
section 201N.
board limit resolution means a resolution
described in paragraph 201P(1)(a).
body means a body corporate or an
unincorporated body and includes, for example, a society or association.
body corporate:
(a) includes a body corporate that is
being wound up or has been dissolved; and
(b) in this Chapter (except section 66A)
and section 206E includes an unincorporated registrable body.
body regulated by APRA has the meaning given
by subsection 3(2) of the Australian Prudential Regulation Authority Act
1998.
books includes:
(a) a register; and
(b) any other record of information;
and
(c) financial reports or financial
records, however compiled, recorded or stored; and
(d) a document;
but does not include an index or recording made under
Subdivision D of Division 5 of Part 6.5.
borrower, in relation to a
debenture, means the body that is or will be liable to repay money under the
debenture.
business affairs, in relation to an entity,
has a meaning affected by sections 53AA, 53AB, 53AC and 53AD.
business day means a day that is not a
Saturday, a Sunday or a public holiday or bank holiday in the place concerned.
buy‑back by a company means the acquisition
by the company of shares in itself.
buy‑back agreement by a company means an
agreement by the company to buy back its own shares (whether the agreement is
conditional or not).
Capital Territory means the Australian Capital Territory and the Jervis Bay Territory.
carry on has a meaning affected by Division 3.
cash management trust interest means an
interest that:
(a) is an interest in a registered
scheme; and
(b) relates to an undertaking of the
kind commonly known as a cash management trust.
cause includes procure.
certified means:
(a) in relation to a copy of, or
extract from, a document—certified by a statement in writing to be a true copy
of, or extract from, the document; or
(b) in relation to a translation of a
document—certified by a statement in writing to be a correct translation of the
document into English.
charge means a charge created in any way and
includes a mortgage and an agreement to give or execute a charge or mortgage,
whether on demand or otherwise.
chargeable matter has the same meaning as in
the Corporations (Fees) Act 2001.
chargee means the holder of a charge and
includes a person in whose favour a charge is to be given or executed, whether
on demand or otherwise, under an agreement.
child: without limiting who is a child of a
person for the purposes of this Act, someone is the child of a
person if he or she is a child of the person within the meaning of the Family
Law Act 1975.
civil matter means a matter other than a
criminal matter.
civil penalty disqualification has the
meaning given by subsection 91(4A).
civil penalty order
means any of the following:
(a) a
declaration of contravention under section 1317E;
(b) a
pecuniary penalty order under section 1317G;
(c) a compensation order under section 1317H,
1317HA or 1317HB;
(d) an order under section 206C
disqualifying a person from managing corporations.
civil penalty provision has the meaning given
in subsection 1317E(1).
class has:
(b) in relation to shares or interests
in a managed investment scheme—a meaning affected by section 57; and
(c) when used in relation to
securities for the purposes of Chapter 6, 6A or 6C—a meaning affected by
subsection 605(2).
clearing and settlement facility, when used
in a provision outside Chapter 7, has the same meaning as it has in
Chapter 7.
close associate of a director means:
(a) a relative of the director; or
(b) a relative of a spouse of the
director.
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.
coastal sea:
(a) in relation to Australia—means:
(i) the territorial sea of
Australia; and
(ii) the
sea on the landward side of the territorial sea of Australia and not within the
limits of a State or internal Territory;
and includes the airspace over,
and the sea‑bed and subsoil beneath, any such sea; and
(b) in relation to a State or
Territory—means so much of the coastal sea of Australia as is within the area
described in Schedule 1 to the Offshore Petroleum and Greenhouse Gas
Storage Act 2006 under the heading that refers to that State or Territory.
commence, in relation to a winding up, has
the meaning given by Division 1A of Part 5.6.
commencement, in relation to an accounting
standard, means:
(a) in the case of an accounting
standard as originally in effect—the time when the accounting standard took
effect; or
(b) in the case of an accounting
standard as varied by a particular provision of an instrument made under
section 334—the time when that provision took effect.
Commission delegate has the same meaning as
in the ASIC Act.
committee of creditors, in relation to a
company under administration, means a committee of creditors of the company
appointed at a meeting convened under section 436E.
Commonwealth authority means an authority or
other body (whether incorporated or not) that is established or continued in
existence by or under an Act.
Companies and Unclaimed Moneys Special Account
means the Account established under section 133 of the Australian
Securities and Investments Commission Act 2001.
company means
a company registered under this Act and:
(a) in Chapter 2K (other than
sections 273A to 273E), includes a registrable body that is registered
under Division 1 or 2 of Part 5B.2 of this Act; and
(b) in sections 273A to 273E,
includes a registered body that carries on business outside its place of
origin; and
(c) in Parts 5.7B and 5.8 (except
sections 595 and 596), includes a Part 5.7 body; and
(d) in Part 5B.1, includes an
unincorporated registrable body.
company limited by guarantee means a company
formed on the principle of having the liability of its members limited to the
respective amounts that the members undertake to contribute to the property of
the company if it is wound up.
company limited by shares means a company
formed on the principle of having the liability of its members limited to the
amount (if any) unpaid on the shares respectively held by them.
compliance period for an infringement notice
has the meaning given by section 1317DAA.
condition, in relation to a licence, means a
condition or restriction to which the licence is subject, or will be subject,
as the case requires.
connected entity, in relation to a
corporation, means:
(a) a body corporate that is, or has
been, related to the corporation; or
(b) an entity that is, or has been,
connected (as defined by section 64B) with the corporation.
consolidated entity means a company,
registered managed investment scheme or disclosing entity together with all the
entities it is required by the accounting standards to include in consolidated
financial statements.
constitution means (depending on the
context):
(a) a company’s constitution, which
(where relevant) includes rules and consequential amendments that are part of
the company’s constitution because of the Life Insurance Act 1995; or
(b) a
managed investment scheme’s constitution; or
(c) in relation to any other kind of
body:
(i) the body’s charter or
memorandum; or
(ii) any instrument or law
(other than this Act) constituting, or defining the constitution of, the body
or governing the activities of the body or its members.
Note: The Life Insurance Act 1995 has rules
about how benefit fund rules become part of a company’s constitution. They
override this Act. See Subdivision 2 of Division 4 of Part 2A of
that Act.
continuous disclosure
notice means:
(a) a document used to notify a market
operator of information relating to a body under provisions of the
market’s listing rules referred to in subsection 674(1); or
(b) a document under section 675
lodged in relation to the body.
continuously quoted securities are securities
that:
(a) are in a class of securities that
were quoted ED securities at all times in the 3 months before the date of the
prospectus or Product Disclosure Statement; and
(b) are securities of an entity in
relation to which the following subparagraphs are satisfied during the shorter
of the period during which the class of securities were quoted, and the period
of 12 months before the date of the prospectus or Product Disclosure Statement:
(i) no exemption under
section 111AS or 111AT, or modification under section 111AV, covered
the entity, or any person as director or auditor of the entity;
(ii) no exemption under
paragraph 741(1)(a), or declaration under paragraph 741(1)(b), relating to a provision
that is a disclosing entity provision for the purposes of Division 4 of
Part 1.2A covered the entity, or any person as director or auditor of the
entity;
(iii) no order under
section 340 or 341 covered the entity, or any person as director or auditor
of the entity;
and, for these purposes, securities are not in different
classes merely because of a temporary difference in the dividend, or
distribution rights, attaching to the securities or because different amounts
have been paid up on the securities.
contribution plan means a plan in respect of
which the following conditions are met:
(a) regular deductions are made from
the wages or salary of an employee or director (the contributor)
to acquire financial products that are offered for issue or sale to the
contributor under an eligible employee share scheme;
(b) the deductions are authorised by
the contributor in a form which is included in, or accompanies, the disclosure
document or the Product Disclosure Statement for the scheme;
(c) before acquiring the financial
products under the scheme, the deductions are held on trust in an account with
an Australian ADI that is kept solely for that purpose;
(d) the contributor may elect to
discontinue the deductions at any time;
(e) if the contributor so elects, the
amount of the deductions standing, at that time, to the credit of the account
for the contributor, and any interest on that amount, is repaid to the
contributor;
(f) the scheme does not involve the
offer to the contributor of a loan or similar financial assistance for the
purpose of, or in connection with, the acquisition of the financial products
that are offered under the scheme.
contributory means:
(a) in relation to a company (other
than a no liability company):
(i) a person liable as a
member or past member to contribute to the property of the company if it is
wound up; and
(ii) for a company with
share capital—a holder of fully paid shares in the company; and
(iii) before the final
determination of the persons who are contributories because of subparagraphs (i)
and (ii)—a person alleged to be such a contributory; and
(b) in relation to a Part 5.7
body:
(i) a person who is a
contributory by virtue of section 586; and
(ii) before the final
determination of the persons who are contributories by virtue of that section—a
person alleged to be such a contributory; and
(c) in relation to a no liability
company—subject to subsection 254M(2), a member of the company.
control has the meaning given by section 50AA.
control day, in relation to a controller of
property of a corporation, means:
(a) unless paragraph (b) applies:
(i) in the case of a
receiver, or receiver and manager, of that property—the day when the receiver,
or receiver and manager, was appointed; or
(ii) in the case of any
other person who is in possession, or has control, of that property for the
purpose of enforcing a charge—the day when the person entered into possession,
or took control, of property of the corporation for the purpose of enforcing
that charge; or
(b) if the controller became a
controller of property of the corporation:
(i) to act with an
existing controller of such property; or
(ii) in
place of a controller of such property who has died or ceased to be a
controller of such property;
the day that is, because of any
other application or applications of this definition, the control day in
relation to the controller referred to in subparagraph (i) or (ii).
controller, in relation to property of a
corporation, means:
(a) a receiver, or receiver and
manager, of that property; or
(b) anyone else who (whether or not as
agent for the corporation) is in possession, or has control, of that property
for the purpose of enforcing a charge;
and has a meaning affected by paragraph 434F(b) (which
deals with 2 or more persons appointed as controllers).
convertible note has the same meaning as in
Division 3A of Part III of the Income Tax Assessment Act 1936.
convertible securities: securities are
convertible into another class of securities if the holder may have the other
class of securities issued to them by the exercise of rights attached to those
securities. An option may be a convertible security even if it is non‑renounceable.
corporation has the meaning given by section 57A.
corporation/scheme civil penalty provision has
the meaning given by section 1317DA.
Corporations legislation means:
(a) this Act; and
(b) the ASIC Act; and
(c) rules of court made by the Federal
Court, the Supreme Court of the Capital Territory, or the Family Court, because
of a provision of this Act; and
(d) rules of court applied by the
Supreme Court, or a State Family Court, of a State, or by the Supreme Court of
the Northern Territory when exercising jurisdiction conferred by Division 1
of Part 9.6A (including jurisdiction conferred by virtue of any previous
application or applications of this paragraph).
court has the meaning given by section 58AA.
Court has the meaning given by section 58AA.
court of summary jurisdiction means any
justice or justices of the peace or other magistrate sitting as a court for the
making of summary orders or the summary punishment of offences:
(a) under a law of the Commonwealth or
of a State or Territory; or
(b) by virtue of his or her commission
or their commissions.
creditors’ voluntary winding up means a winding
up under Part 5.5, other than a members’ voluntary winding up.
current market bid price for securities
covered by a market bid is the price specified in the announcement of the bid
as increased or decreased during the offer period.
daily newspaper means a newspaper that is
ordinarily published on each day that is a business day in the place where the
newspaper is published, whether or not the newspaper is ordinarily published on
other days.
date of a
takeover bid is:
(a) for an off‑market bid—the date on
which offers are first made under the bid; or
(b) for a market bid—the date on which
the bid is announced to the relevant financial market.
deal:
(a) in relation to a futures
contract—has the meaning given by Division 4; and
(b) in relation to securities—subject
to subsection 93(4), means (whether as principal or agent) acquire, dispose of,
subscribe for or underwrite the securities, or make or offer to make, or induce
or attempt to induce a person to make or to offer to make, an agreement:
(i) for or with respect to
acquiring, disposing of, subscribing for or underwriting the securities; or
(ii) the purpose or
purported purpose of which is to secure a profit or gain to a person who
acquires, disposes of, subscribes for or underwrites the securities or to any
of the parties to the agreement in relation to the securities.
dealing, in relation to financial products,
when used in a provision outside Chapter 7, has the same meaning as it has
in Chapter 7.
debenture of a body means a chose in action
that includes an undertaking by the body to repay as a debt money deposited
with or lent to the body. The chose in action may (but need not) include a
charge over property of the body to secure repayment of the money. However, a
debenture does not include:
(a) an undertaking to repay money
deposited with or lent to the body by a person if:
(i) the person deposits or
lends the money in the ordinary course of a business carried on by the person;
and
(ii) the body receives the
money in the ordinary course of carrying on a business that neither comprises
nor forms part of a business of borrowing money and providing finance; or
(b) an undertaking by an Australian
ADI to repay money deposited with it, or lent to it, in the ordinary course of
its banking business; or
Note: This paragraph has an extended meaning in
relation to Chapter 8 (see subsection 1200A(2)).
(c) an undertaking to pay money under:
(i) a cheque; or
(ii) an order for the
payment of money; or
(iii) a bill of exchange; or
(e) an undertaking by a body corporate
to pay money to a related body corporate; or
(f) an undertaking to repay money
that is prescribed by the regulations.
For the purposes of this definition, if a chose in action
that includes an undertaking by a body to pay money as a debt is offered as
consideration for the acquisition of securities under an off‑market takeover
bid, or is issued under a compromise or arrangement under Part 5.1, the
undertaking is taken to be an undertaking to repay as a debt money deposited
with or lent to the body.
decision period, in relation to a chargee in
relation to a charge on property of a company under administration, means the
period beginning on the day when:
(a) if notice of the appointment of
the administrator must be given to the chargee under subsection 450A(3)—such
notice is so given; or
(b) otherwise—the
administration begins;
and ending at the end of the thirteenth business day after
that day.
declaration of indemnities, in relation to an
administrator of a company under administration, means a written declaration:
(a) stating whether the administrator
has, to any extent, been indemnified (otherwise than under section 443D),
in relation to that administration, for:
(i) any debts for which
the administrator is, or may become, liable under Subdivision A of
Division 9 of Part 5.3A; or
(ii) any debts for which
the administrator is, or may become, liable under a remittance provision as
defined in section 443BA; or
(iii) his or her
remuneration as determined under section 449E; and
(b) if so, stating:
(i) the identity of each
indemnifier; and
(ii) the extent and nature
of each indemnity.
declaration of relevant relationships has the
meaning given by section 60.
deductible gift recipient has the same
meaning as in the Income Tax Assessment Act 1997.
deed includes a document having the effect of
a deed.
deed of company arrangement means a deed of
company arrangement executed under Part 5.3A or such a deed as varied and
in force from time to time.
defeating condition
for a takeover bid means a condition that:
(a) will, in circumstances referred to
in the condition, result in the rescission of, or entitle the bidder to
rescind, a takeover contract; or
(b) prevents a binding takeover
contract from resulting from an acceptance of the offer unless or until the
condition is fulfilled.
defect, in relation to a statutory demand,
includes:
(a) an irregularity; and
(b) a misstatement of an amount or
total; and
(c) a misdescription of a debt or
other matter; and
(d) a misdescription of a person or
entity.
deregistered means:
(a) in relation to a
company—deregistered under Chapter 5A; and
(b) in relation to any other body
corporate—deregistered in a way that results in the body corporate ceasing to
exist.
derivative, when used in a provision outside
Chapter 7, has the same meaning as it has in Chapter 7.
director of a company or other body means:
(a) a person who:
(i) is appointed to the
position of a director; or
(ii) is appointed to the
position of an alternate director and is acting in that capacity;
regardless of the name that is
given to their position; and
(b) unless the contrary intention
appears, a person who is not validly appointed as a director if:
(i) they act in the
position of a director; or
(ii) the directors of the
company or body are accustomed to act in accordance with the person’s
instructions or wishes.
Subparagraph (b)(ii) does not apply merely because
the directors act on advice given by the person in the proper performance of
functions attaching to the person’s professional capacity, or the person’s
business relationship with the directors or the company or body.
Note: Paragraph (b)—Contrary intention—Examples
of provisions for which a person referred to in paragraph (b) would not be
included in the term “director” are:
·
section 249C (power to call meetings of a company’s members)
·
subsection 251A(3) (signing minutes of meetings)
·
section 205B (notice to ASIC of change of address).
disclosing entity has the meaning given by
section 111AC.
disclosure document for an offer of securities
means:
(a) a prospectus for the offer; or
(b) a profile statement for the offer;
or
(c) an offer information statement for
the offer.
dispose has a
meaning affected by the following paragraphs:
(a) when used in relation to financial
products in a provision outside Chapter 7, otherwise than in a situation
to which paragraph (b) applies, dispose has the same meaning
as it has in Chapter 7;
(b) for the purposes of Chapter 6,
a person who has a relevant interest in securities disposes of
the securities if, and only if, they cease to have a relevant interest in the
securities.
domestic corporation means a corporation that
is incorporated or formed in Australia or an external Territory.
ED securities has the meaning given by
section 111AD.
eligible applicant, in relation to a
corporation, means:
(a) ASIC; or
(b) a liquidator or provisional
liquidator of the corporation; or
(c) an administrator of the
corporation; or
(d) an administrator of a deed of
company arrangement executed by the corporation; or
(e) a person authorised in writing by
ASIC to make:
(i) applications under the
Division of Part 5.9 in which the expression occurs; or
(ii) such an application in
relation to the corporation.
eligible employee creditor, in relation to a
company, means a creditor whose debt or claim would, in a winding up of the
company, be payable in priority to other unsecured debts and claims in
accordance with paragraph 556(1)(e), (g) or (h) or section 560 or 561.
eligible employee share scheme means an
employee share scheme for a body corporate in respect of which the following
conditions are met:
(a) the scheme is offered only to
employees or directors mentioned in paragraph (a) of the definition of employee
share scheme;
(b) the financial products that are
offered under the scheme are offered:
(i) under a disclosure
document or Product Disclosure Statement; or
(ii) without disclosure
under Part 6D.2 in accordance with subsection 708(12);
(c) the financial products which may
be acquired under the scheme are the following:
(i) fully paid ordinary
shares;
(ii) options, offered for
no more than nominal consideration, for the issue or transfer of fully paid
ordinary shares;
(iii) units in fully paid
ordinary shares.
eligible money market dealer means a body
corporate in respect of which a declaration is in force under section 65.
emoluments means the amount or value of any
money, consideration or benefit given, directly or indirectly, to a director of
a body corporate in connection with the management of affairs of the body or of
any holding company or subsidiary of the body, whether as a director or
otherwise, but does not include amounts in payment or reimbursement of out‑of‑pocket
expenses incurred for the benefit of the body.
employee share scheme for a company means a
scheme under which shares (or units in shares or options to acquire unissued
shares) in the company or a holding company may be acquired:
(a) by, or for the benefit of:
(i) employees of the
company, or of a related body corporate; or
(ii) directors of the
company, or of a related body corporate, who hold a salaried employment or
office in the company or in a related body corporate; or
(b) by a corporation all of whose
members are:
(i) employees of the
company, or of a related body corporate; or
(ii) directors of the
company, or of a related body corporate, who hold a salaried employment or
office in the company or in a related body corporate.
employee share scheme
buy‑back means a buy‑back under a scheme that:
(a) has as its purpose the acquisition
of shares in a company by, or on behalf of:
(i) employees of the
company, or of a related body corporate; or
(ii) directors of the
company, or a related body corporate, who hold a salaried employment or office
in the company or in a related body corporate; and
(b) has been approved by the company
in general meeting.
enforce, in relation to a charge on property
of a company under administration, includes:
(a) appoint a receiver of property of
the company under a power contained in an instrument relating to the charge; or
(b) obtain an order for the
appointment of a receiver of such property for the purpose of enforcing the
charge; or
(c) enter into possession, or assume
control, of such property for that purpose; or
(d) appoint a person so to enter into
possession or assume control (whether as agent for the chargee or for the
company); or
(e) exercise, as chargee or as a
receiver or person so appointed, a right, power or remedy existing because of
the charge, whether arising under an instrument relating to the charge, under a
written or unwritten law, or otherwise.
enforcement process, in relation to property,
means:
(a) execution against that property;
or
(b) any other enforcement process in
relation to that property that involves a court or a sheriff.
engage in audit activity: an individual
auditor, audit firm or audit company engages in audit activity in
relation to an audited body for an audit if the individual auditor, audit firm
or audit company:
(a) consents to be appointed as
auditor of the audited body for a financial year; or
(b) acts as the auditor of the audited
body for a financial year; or
(c) prepares a report in relation to
the audited body that is required by this Act to be prepared by:
(i) a registered company
auditor; or
(ii) an auditor of the
audited body in relation to a financial year or half‑year.
engage in conduct means:
(a) do an act; or
(b) omit to perform an act.
enter into: a person who:
(a) enters into, or becomes a party
to, a relevant agreement in relation to voting shares or other securities; or
(b) exercises an option to have voting
shares or other securities issued or granted;
is taken to enter into a transaction in relation to the
shares or securities.
entitlements of an employee of a company has
the meaning given by subsections 596AA(2) and (3).
entity: for
the purposes of Chapter 2E an entity is any of the
following:
(a) a body corporate;
(b) a partnership;
(c) an unincorporated body;
(d) an individual;
(e) for a trust that has only 1
trustee—the trustee;
(f) for a trust that has more than 1
trustee—the trustees together.
Otherwise, entity has the meaning given by
section 64A.
equal access scheme has the meaning given by
subsections 257B(2) and (3).
event includes any happening, circumstance or
state of affairs.
examinable affairs, in relation to a
corporation means:
(a) the promotion, formation,
management, administration or winding up of the corporation; or
(b) any other affairs of the
corporation (including anything that is included in the corporation’s affairs
because of section 53); or
(c) the business affairs of a
connected entity of the corporation, in so far as they are, or appear to be,
relevant to the corporation or to anything that is included in the
corporation’s examinable affairs because of paragraph (a) or (b).
examinable assets and liabilities, in
relation to an entity, means all of the following:
(a) the entity’s property and assets:
(i) whether present or
future; and
(ii) whether held alone or
jointly with any other person or persons; and
(iii) whether or not held as
agent, bailee or trustee;
(b) the entity’s liabilities:
(i) whether present or
future; and
(ii) whether actual or
contingent; and
(iii) whether owed alone or
jointly with any other person or persons; and
(iv) whether or not owed as
trustee.
examinable operations, in relation to an
entity, means all of the following:
(a) the entity’s business, trading,
transactions and dealings:
(i) whether alone or
jointly with any other entity or entities; and
(ii) whether or not as
agent, bailee or trustee;
(b) the entity’s profits, income and
receipts;
(c) the entity’s losses, outgoings and
expenditure.
excluded security means:
(a) where:
(i) there is attached to a
share or debenture a right to participate in a retirement village scheme; and
(ii) each
of the other rights, and each interest (if any), attached to the share or
debenture is a right or interest that is merely incidental to the right
referred to in subparagraph (i);
the share or debenture or a unit
in the share or debenture; or
(b) an interest in a managed
investment scheme constituted by a right to participate in a retirement village
scheme.
exempt body has the meaning given by section 66A.
exempt foreign company means a foreign
company of a kind referred to in subsection 601CK(8), whether or not Division 2
of Part 5B.2 applies to it.
exempt public authority means a body
corporate that is incorporated within Australia or an external Territory and
is:
(a) a public authority; or
(b) an instrumentality or agency of
the Crown in right of the Commonwealth, in right of a State or in right of a
Territory.
expert, in relation to a matter, means a
person whose profession or reputation gives authority to a statement made by
him or her in relation to that matter.
extend, in relation to a period:
(a) includes further extend; and
(b) has a meaning affected by section 70.
externally‑administered
body corporate means a body corporate:
(a) that is being wound up; or
(b) in respect of property of which a
receiver, or a receiver and manager, has been appointed (whether or not by a
court) and is acting; or
(c) that is under administration; or
(ca) that has executed a deed of
company arrangement that has not yet terminated; or
(d) that has entered into a compromise
or arrangement with another person the administration of which has not been
concluded.
extract of particulars for a company or a
registered scheme means a statement given by ASIC that contains either or both
of the following:
(a) some or all of the particulars in
relation to the company or scheme that are recorded in the register or
registers maintained by ASIC under subsection 1274(1);
(b) a requirement to provide a
particular under section 346B.
extraordinary resolution, in relation to a
registered scheme, means a resolution:
(a) of which notice as set out in
paragraph 252J(c) has been given; and
(b) that has been passed by at least
50% of the total votes that may be cast by members entitled to vote on the
resolution (including members who are not present in person or by proxy).
Family Court means the Family Court of
Australia.
Federal Court means the Federal Court of
Australia.
FHSA product when used in a provision outside
Chapter 7, has the same meaning as it has in Chapter 7.
financial benefit (when used in Chapter 2E)
has a meaning that is affected by section 229.
financial corporation means a financial
corporation within the meaning of paragraph 51(20) of the Constitution.
financial market, when used in a provision
outside Chapter 7, has the same meaning as it has in Chapter 7.
financial product, when used in a provision
outside Chapter 7, has the same meaning as it has in Chapter 7.
financial records includes:
(a) invoices, receipts, orders for the
payment of money, bills of exchange, cheques, promissory notes and vouchers;
and
(b) documents of prime entry; and
(c) working papers and other documents
needed to explain:
(i) the methods by which
financial statements are made up; and
(ii) adjustments to be made
in preparing financial statements.
financial report means an annual financial
report or a half‑year financial report prepared under Chapter 2M.
Note: Section 295 deals with the contents of
annual financial reports and section 302 deals with the contents of half‑year
financial reports.
financial reporting requirements for a
financial report means the requirements imposed under:
(a) section 296 or 297 if the
financial report is an annual financial report; or
(b) section 304 or 305 if the
financial report is a half‑year financial report.
financial service, when used in a provision
outside Chapter 7, has the same meaning as it has in Chapter 7.
financial services business, when used in a
provision outside Chapter 7, has the same meaning as it has in Chapter 7.
financial services civil penalty provision has
the meaning given by section 1317DA.
financial services licensee, when used in a
provision outside Chapter 7, has the same meaning as it has in Chapter 7.
financial statements means annual financial
statements under section 295 or half‑year financial statements under
section 303.
financial year has the meaning given by
section 323D.
find, in the case of a reference to a court
finding a person guilty of an offence, has a meaning affected by section 73A.
firm, in relation to an administrator or
liquidator, means:
(a) if the administrator or liquidator
is a partner or employee of a partnership (the partnership firm)
that provides advice or other services in relation to externally‑administered
bodies corporate—the partnership firm; or
(b) if the administrator or liquidator
is an officer or employee of a body corporate (the body corporate
firm) that provides advice or other services in relation to
externally‑administered bodies corporate—the body corporate firm.
floating charge includes a charge that
conferred a floating security at the time of its creation but has since become
a fixed or specific charge.
for, in relation to a fee or tax, includes in
respect of.
foreign company means:
(a) a body corporate that is
incorporated in an external Territory, or outside Australia and the external
Territories, and is not:
(i) a corporation sole; or
(ii) an exempt public
authority; or
(b) an unincorporated body that:
(i) is formed in an
external Territory or outside Australia and the external Territories; and
(ii) under the law of its
place of formation, may sue or be sued, or may hold property in the name of its
secretary or of an officer of the body duly appointed for that purpose; and
(iii) does not have its head
office or principal place of business in Australia.
foreign holder of securities means a holder
of the securities whose address, as shown in the register in which details of
their holding is recorded, is a place outside Australia and the external
Territories.
franchise means an arrangement under which a
person earns profits or income by exploiting a right, conferred by the owner of
the right, to use a trade mark or design or other intellectual property or the
goodwill attached to it in connection with the supply of goods or services. An
arrangement is not a franchise if the person engages the owner of the right, or
an associate of the owner, to exploit the right on the person’s behalf.
Full Court, in relation to a Supreme Court of
a State or Territory, includes any court of the State or Territory to which appeals
lie from a single judge of that Supreme Court.
fully paid share means a share on which no
amount remains unpaid.
function includes a duty.
Gazette notice means a notice published in
the Gazette.
general law means the principles and rules of
the common law and equity.
group executives for a consolidated entity
means:
(a) the directors of the companies or
bodies within the consolidated entity; and
(b) the secretaries of the companies
or bodies within the consolidated entity; and
(c) the senior managers of any
corporation within the consolidated entity; and
(d) the partners, and senior managers,
of any partnership within the consolidated entity; and
(e) the trustees, and senior managers,
of any trusts within the consolidated entity; and
(f) the senior managers of any joint
venture within the consolidated entity.
guarantor, in relation to a debenture, means
a body that has guaranteed, or has agreed to guarantee, the repayment of any
money deposited or lent to the borrower under the debenture.
guilty, in the case of a reference to a court
finding a person guilty of an offence, has a meaning affected by section 73A.
half‑year has the meaning given by subsection
323D(5).
have, in relation to information, includes be
in possession of the information.
highest outside purchase price for a takeover
bid is the highest amount paid or payable by the bidder for a security in the
bid class under a purchase made outside the bid and during the bid period.
hold, in relation to a person, in relation to
a document that is, or purports to be, a copy of a licence, means have in the
person’s possession.
holding company, in relation to a body
corporate, means a body corporate of which the first body corporate is a
subsidiary.
immediate family member for a person means:
(a) the person’s spouse; or
(b) a person who is wholly or partly
dependent on the person for financial support.
in Australia has the meaning given by section 102C.
included, in relation to an official list,
has the meaning given by section 75.
incorporated in Australia, in relation to a
body corporate, includes incorporated by or under a law of:
(a) the Commonwealth; or
(b) a State; or
(c) an internal Territory.
incorporation:
(a) of
a company—means the company’s first registration under this Act; and
(b) of any other incorporated
body—means the body’s incorporation by or under a law (other than this Act).
individual auditor means an individual who
consents to be appointed, or is appointed, as auditor of a company or
registered scheme.
industrial instrument means:
(a) a contract of employment; or
(b) a law, award, determination or
agreement relating to terms or conditions of employment.
information includes complaint.
infringement notice has the meaning given by
section 1317DAA.
injury compensation means compensation
payable under any law relating to workers compensation.
insolvent has the meaning given by subsection
95A(2).
insolvent transaction has the meaning given
by section 588FC.
insolvent under administration means a person
who:
(a) under the Bankruptcy Act 1966 or
the law of an external Territory, is a bankrupt in respect of a bankruptcy from
which the person has not been discharged; or
(b) under the law of an external
Territory or the law of a foreign country, has the status of an undischarged bankrupt;
and includes:
(c) a person any of whose property is
subject to control under:
(i) section 50 or
Division 2 of Part X of the Bankruptcy Act 1966; or
(ii) a corresponding
provision of the law of an external Territory or the law of a foreign country;
or
(d) a person who has executed a
personal insolvency agreement under:
(i) Part X of the Bankruptcy
Act 1966; or
(ii) the corresponding
provisions of the law of an external Territory or the law of a foreign country;
where the terms of the agreement
have not been fully complied with.
interest in a managed investment scheme means
a right to benefits produced by the scheme (whether the right is actual,
prospective or contingent and whether it is enforceable or not).
investment in a company, disclosing entity or
other body means:
(a) a share in the company, disclosing
entity or body; or
(b) a debenture of the company,
disclosing entity or body; or
(c) a legal or equitable interest in:
(i) a share in the
company, disclosing entity or body; or
(ii) a debenture of the
company, disclosing entity or body; or
(d) an option to acquire (whether by
way of issue or transfer) an investment in the company, disclosing entity or
body covered by paragraph (a), (b) or (c); or
(e) an option to dispose of an investment
in the company, disclosing entity or body covered by paragraph (a), (b) or
(c); or
(f) an interest a person holds under
an arrangement that is a derivative if:
(i) the consideration to
be provided under the arrangement; or
(ii) the value of the arrangement;
is ultimately determined,
derived from or varies by reference to an investment in the company, disclosing
entity or body covered by paragraph (a), (b), (c), (d) or (e).
To avoid doubt, the consideration to be provided under, or
the value of, an arrangement in relation to an index is not ultimately
determined, derived from or varies by reference to an investment in the company
merely because the investment is taken into account in determining the value of
the index.
investment in a registered scheme means:
(a) an interest in the scheme; or
(b) a legal or equitable interest in
an interest in the scheme; or
(c) an option to acquire (whether by
way of issue or transfer) an investment in the scheme covered by paragraph (a)
or (b); or
(d) an option to dispose of an
investment in the scheme covered by paragraph (a) or (b); or
(e) an interest a person holds under
an arrangement that is a derivative if:
(i) the consideration to
be provided under the arrangement; or
(ii) the value of the
arrangement;
is ultimately determined,
derived from or varies by reference to an investment in the scheme covered by paragraph (a),
(b), (c) or (d); or
(f) an investment in the responsible
entity of the scheme.
To avoid doubt, the consideration to be provided under, or
the value of, an arrangement in relation to an index is taken not to be
ultimately determined, derived from or vary by reference to an investment in
the scheme merely because the investment is taken into account in determining
the value of the index.
investment contract means any contract,
scheme or arrangement that, in substance and irrespective of its form, involves
the investment of money in or under such circumstances that the investor
acquires or may acquire an interest in, or right in respect of, property,
whether in this jurisdiction or elsewhere, that, under, or in accordance with,
the terms of investment will, or may at the option of the investor, be used or
employed in common with any other interest in, or right in respect of,
property, whether in this jurisdiction or elsewhere, acquired in or under like
circumstances.
involved, in relation to a contravention, has
the meaning given by section 79.
issue includes:
(a) in relation to interests in a
managed investment scheme—make available; and
(b) otherwise—circulate, distribute
and disseminate.
Note: When issue is used in Chapter 7
in relation to a financial product it has a meaning affected by section 761E.
Judge means a judge of the Court.
judgment means a judgment, decree or order,
whether final or interlocutory.
key management personnel for an entity has
the same meaning as in the accounting standards.
large proprietary company has the meaning
given by subsection 45A(3).
law of a State or Territory means a law of,
or in force in, the State or Territory.
Note: This definition does not affect the meaning of
law when used otherwise than in a phrase such as “law of a State
or Territory”. Examples of such a use is in the phrase “any provision of any
law” in section 100A and the phrase “law of the Commonwealth” in section 156.
lawyer means a duly qualified legal
practitioner and, in relation to a person, means such a practitioner acting for
the person.
lead auditor has the meaning given by section 324AF.
leave of absence means long service leave, extended
leave, recreation leave, annual leave, sick leave or any other form of leave of
absence from employment.
limited company means:
(a) a company limited by shares; or
(b) a company limited by guarantee; or
(c) a company limited both by shares
and guarantee;
but does not include a no liability company.
linked: the incurring of a debt and a
contravention of section 596AB are linked if they are linked
under subsection 596AB(4).
liquidator:
(a) has a meaning affected by
paragraph 530(b) (which deals with 2 or more persons appointed as liquidators);
and
(b) in Chapter 7, includes a
provisional liquidator.
listed: a company, managed investment scheme
or other body is listed if it is included in the official list of
a prescribed financial market operated in this jurisdiction.
listed corporation means a body corporate
that is included in an official list of a prescribed financial market.
listed disclosing entity has the meaning
given by subsection 111AL(1).
listing market, in relation to a listed
disclosing entity, has the meaning given by subsection 111AE(1) or (1A).
listing rules of a financial market, when
used in a provision outside Chapter 7, has the same meaning as it has in
Chapter 7.
local agent, in relation to a foreign
company, means a person who is a local agent of the foreign company by virtue
of subsection 601CG(5).
lodge means lodge with ASIC in this
jurisdiction.
lodging entity has the meaning given by
subsection 323EA(2).
lower court means a court of a State or
Territory that is not a superior court.
machine‑copy, in relation to a document,
means a copy made of the document by any machine in which, or process by which,
an image of the contents of the document is reproduced.
managed investment product, when used in a
provision outside Chapter 7, has the same meaning as it has in Chapter 7.
managed investment scheme means:
(a) a scheme that has the following
features:
(i) people contribute
money or money’s worth as consideration to acquire rights (interests)
to benefits produced by the scheme (whether the rights are actual,
prospective or contingent and whether they are enforceable or not);
(ii) any of the
contributions are to be pooled, or used in a common enterprise, to produce
financial benefits, or benefits consisting of rights or interests in property,
for the people (the members) who hold interests in the scheme
(whether as contributors to the scheme or as people who have acquired interests
from holders);
(iii) the members do not
have day‑to‑day control over the operation of the scheme (whether or not they
have the right to be consulted or to give directions); or
(b) a time‑sharing scheme;
but does not include the following:
(c) a partnership that has more than
20 members but does not need to be incorporated or formed under an Australian law
because of regulations made for the purposes of subsection 115(2);
Note: This paragraph has an extended meaning in
relation to Chapter 8 (see subsection 1200A(3)).
(d) a body corporate (other than a
body corporate that operates as a time sharing scheme);
(e) a scheme in which all the members
are bodies corporate that are related to each other and to the body corporate
that promotes the scheme;
(f) a franchise;
(g) a statutory fund maintained under
the Life Insurance Act 1995;
(h) a regulated superannuation fund,
an approved deposit fund, a pooled superannuation trust, or a public sector
superannuation scheme, within the meaning of the Superannuation Industry
(Supervision) Act 1993;
(ha) an FHSA trust, within the meaning
of the First Home Saver Accounts Act 2008;
(i) a scheme operated by an
Australian ADI in the ordinary course of its banking business;
Note: This paragraph has an extended meaning in
relation to Chapter 8 (see subsection 1200A(3)).
(j) the issue of debentures or
convertible notes by a body corporate;
(k) a barter scheme under which each
participant may obtain goods or services from another participant for
consideration that is wholly or substantially in kind rather than in cash;
(l) a retirement village scheme
operating within or outside Australia:
(i) under which the
participants, or a majority of them, are provided, or are to be provided, with
residential accommodation within a retirement village (whether or not the
entitlement of a participant to be provided with accommodation derives from a
proprietary interest held by the participant in the premises where the
accommodation is, or is to be, provided); and
(ii) which is not a time‑sharing
scheme;
(m) a scheme that is operated by a co‑operative
company registered under Part VI of the Companies (Co‑operative) Act
1943 of Western Australia or under a previous law of Western Australia that
corresponds to that Part;
(ma) a contribution plan;
(n) a scheme of a kind declared by the
regulations not to be a managed investment scheme.
Note: Paragraph (c)—A partnership with less
than 20 members will usually not require registration because of paragraph
601ED(1)(a) and under section 115 a partnership with more than 20 members
can only operate if covered by regulations made for the purposes of subsection
115(2).
manager has a meaning affected by section 90.
managerial or executive office has the
meaning given by section 200AA.
managing controller, in relation to property
of a corporation, means:
(a) a receiver and manager of that
property; or
(b) any other controller of that
property who has functions or powers in connection with managing the corporation;
and has a meaning affected by paragraph 434G(b) (which
deals with 2 or more persons appointed as managing controllers).
marketable securities means debentures,
stocks, shares or bonds of any Government, of any local government authority or
of any body corporate, association or society, and includes any right or option
in respect of shares in any body corporate and any interest in a managed investment
scheme.
market bid means a takeover bid made under
Chapter 6 as a market bid (see section 616).
market integrity rules, when used in a
provision outside Chapter 7, has the same meaning as it has in
Chapter 7.
market traded option means an option declared
by an operator of a prescribed financial market to be a market traded option.
member:
(a) in relation to a managed
investment scheme¾means a person who
holds an interest in the scheme; or
(e) in relation to a company—a person
who is a member under section 231.
members’ voluntary winding up means a winding
up under Part 5.5 where a declaration has been made and lodged pursuant to
section 494.
minerals means minerals in any form, whether
solid, liquefied or gaseous and whether organic or inorganic.
minimum holding buy‑back means a buy‑back of
all of a holder’s shares in a listed corporation if the shares are less than a
marketable parcel within the meaning of the rules of the relevant financial
market.
mining purposes means any or all of the
following purposes:
(a) prospecting for ores, metals or
minerals;
(b) obtaining, by any mode or method,
ores, metals or minerals;
(c) the sale or other disposal of
ores, metals, minerals or other products of mining;
(d) the
carrying on of any business or activity necessary for, or incidental to, any of
the foregoing purposes;
whether in Australia or elsewhere, but does not include
quarrying operations for the sole purpose of obtaining stone for building,
roadmaking or similar purposes.
misconduct includes fraud, negligence,
default, breach of trust and breach of duty.
modifications includes additions, omissions
and substitutions.
money includes a payment order.
national business names register means the
record or records of information identified by the Minister in a notice under
subsection 147(5).
national newspaper means a daily newspaper
that circulates generally in each State and each internal Territory.
NCSC means the National Companies and
Securities Commission.
necessary transfer documents for the transfer
of securities to a person means the documents that are sufficient to enable the
person to become the holder of the securities.
negative, in relation to a document, means a
transparent negative photograph used, or intended to be used, as a medium for
reproducing the contents of the document, and includes a transparent photograph
made from surface contact with the original negative photograph.
negative solvency resolution means a
resolution by the directors of a company that, in their opinion, there are not
reasonable grounds to believe that the company will be able to pay its debts as
and when they become due and payable.
negotiable instrument,
in relation to a body corporate, means:
(a) a bill of exchange, promissory
note, cheque or other negotiable instrument; or
(b) an indorsement on, or order in, a
bill of exchange, promissory note, cheque or other negotiable instrument; or
(c) a
letter of credit;
of, or purporting to be issued or signed by or on behalf
of, the body.
no liability company means a company that is
registered as, or converts to, a no liability company under this Act.
Note 1: A no liability
company can be registered under section 118 or 601BD. A company can
convert to a no liability company under Part 2B.7.
Note 2: A no liability
company must have solely mining purposes and have no contractual right to
recover unpaid calls (see subsection 112(2)).
non‑audit services
provider for an auditor conducting an audit means a person who:
(a) is
not a professional member of the audit team conducting the audit of the audited
body; and
(b) is
either:
(i) if the auditor is an
individual auditor—an employee of the individual auditor (or of an entity
acting for, or on behalf of, the individual auditor); or
(ii) if the auditor is an
audit firm—a member of the audit firm or senior manager of the audit firm (or
of an entity acting for, or on behalf of, the audit firm); or
(iii) if the auditor is an
audit company—a director of the audit company or a senior manager of the audit
company (or of an entity acting for, or on behalf of, the audit company); and
(c) provides, or has provided,
services (other than services related to the conduct of an audit) to the
audited body.
non‑voting share, in relation to a body
corporate, means an issued share in the body that is not a voting share in the
body.
notice includes a circular and an
advertisement.
of, in relation to financial products, means,
in the case of interests in a managed investment scheme, made available by.
offence means an offence against a law of the
Commonwealth or a State or Territory.
offence based on a particular provision of
this Act means, unless a contrary intention appears:
(a) if that provision creates an
offence—an offence against that provision, or an offence against section 1314
that relates to that provision; or
(b) if section 1311 creates an
offence relating to that provision—an offence against section 1311 or 1314
that relates to that provision.
offer information statement means an offer
information statement that is lodged with ASIC.
offer period for a takeover bid is the period
for which offers under the bid remain open.
officer of a corporation means:
(a) a director or secretary of the
corporation; or
(b) a
person:
(i) who makes, or
participates in making, decisions that affect the whole, or a substantial part,
of the business of the corporation; or
(ii) who has the capacity
to affect significantly the corporation’s financial standing; or
(iii) in accordance with
whose instructions or wishes the directors of the corporation are accustomed to
act (excluding advice given by the person in the proper performance of
functions attaching to the person’s professional capacity or their business
relationship with the directors or the corporation); or
(c) a receiver, or receiver and
manager, of the property of the corporation; or
(d) an administrator of the
corporation; or
(e) an administrator of a deed of
company arrangement executed by the corporation; or
(f) a liquidator of the corporation;
or
(g) a trustee or other person
administering a compromise or arrangement made between the corporation and
someone else.
Note: Section 201B contains rules about who is
a director of a corporation.
officer of an entity that is neither an
individual nor a corporation means:
(a) a partner in the partnership if
the entity is a partnership; or
(b) an office holder of the
unincorporated association if the entity is an unincorporated association; or
(c) a person:
(i) who makes, or
participates in making, decisions that affect the whole, or a substantial part,
of the business of the entity; or
(ii) who has the capacity
to affect significantly the entity’s financial standing.
officer of the Commonwealth has the same
meaning as in paragraph 75(v) of the Constitution.
official liquidator means a person registered
as an official liquidator under section 1283.
off‑market bid means a takeover bid made
under Chapter 6 as an off‑market bid (see section 616).
old Corporations Law, in relation to a State
or Territory, has the same meaning as it has in Part 10.1.
old Division 11 of Part 11.2 transitionals means
the following:
(a) the provisions of Division 11
of Part 11.2 of the old Corporations Law of each State or Territory in
this jurisdiction, to the extent they continue to have effect because of
section 1408 of this Act; and
(b) if regulations for the purposes of
subsection 1408(3) deal with a matter or matters dealt with in those
provisions—the regulations that so deal with the matter or matters.
old Division 12
of Part 11.2 transitionals means the following:
(a) the provisions of Division 12
of Part 11.2 of the old Corporations Law of each State or Territory in
this jurisdiction, to the extent they continue to have effect because of
section 1408 of this Act; and
(b) if regulations for the purposes of
subsection 1408(3) deal with a matter or matters dealt with in those
provisions—the regulations that so deal with the matter or matters.
on, in
relation to a financial market, includes at or by means of.
on behalf of includes on the instructions of.
on‑market: a transaction of any kind is an on‑market
transaction if it is effected on a prescribed financial market and is:
(a) an on‑market transaction as defined
in the rules governing the operation of the market; or
(b) if those rules do not define on‑market
transactions—effected in the ordinary course of trading on the market.
on‑market buy‑back means a buy‑back by a
listed corporation on a prescribed financial market in the ordinary course of
trading on that market.
operated in this jurisdiction, when used in a
provision outside Chapter 7, has the same meaning as it has in Chapter 7.
operating rules, when used in a provision
outside Chapter 7, has the same meaning as it has in Chapter 7.
outside this jurisdiction has a meaning
affected by subsection 102B(2).
outstanding property, in relation to a body
corporate that has been dissolved or deregistered, means outstanding property
(other than unpaid capital, whether called or uncalled) that was vested in the
body, to which it was entitled, or over which it had a disposing power, when it
was dissolved or deregistered, but that neither the body nor its liquidator got
in, realised on or otherwise disposed of or dealt with.
Panel means the Takeovers Panel.
parent: without limiting who is a parent of a
person for the purposes of this Act, someone is the parent of a
person if the person is his or her child because of the definition of child
in this section.
Part 5.1 body means:
(a) a company; or
(b) a registrable body that is
registered under Division 1 or 2 of Part 5B.2.
Part 5.7 body
means:
(a) a registrable body that is a
registrable Australian body and:
(i) is registered under
Division 1 of Part 5B.2; or
(ii) is not registered
under that Division but carries on business in this jurisdiction and outside
its place of origin; or
(b) a registrable body that is a
foreign company and:
(i) is registered under
Division 2 of Part 5B.2; or
(ii) is not registered under
that Division but carries on business in Australia; or
(c) a partnership, association or
other body (whether a body corporate or not) that consists of more than 5
members and that is not a registrable body;
but does not include an Aboriginal and Torres Strait
Islander corporation.
Note: The winding up of Aboriginal and Torres Strait
Islander corporations is dealt with in Part 11‑5 of the Corporations
(Aboriginal and Torres Strait Islander) Act 2006.
Part 10.1 transitionals means the
provisions of Part 10.1 and of regulations for the purposes of those
provisions.
participant, when used in a provision (the relevant
provision) outside Chapter 7 in relation to a clearing and
settlement facility or a financial market, has the same meaning as it has in
Chapter 7 in relation to a clearing and settlement facility or a financial
market, except that it does not include a reference to a recognised affiliate
(within the meaning of that Chapter) in relation to such a facility or market
unless regulations for the purposes of this definition provide that, in the
relevant provision, it does include a recognised affiliate.
party, in relation to a transaction that has
been completed, given effect to, or terminated, includes a person who was a
party to the transaction.
payment (when used in Division 2 of Part 2D.2
(sections 200 to 200J) includes a payment by way of damages for breach of
contract.
payment order means a cheque (including a
cheque that a bank or other institution draws on itself), bank draft, money
order or postal order.
person, when used in Division 2 of Part 2D.2
(sections 200 to 200J), includes a superannuation fund.
place of origin:
(a) in
relation to a body corporate at a particular time, means:
(i) in the case of a body
incorporated at that time in a State or Territory—that State or Territory; or
(ii) otherwise—the place of
the body’s incorporation at that time; or
(b) in relation to an unincorporated
body—the State or Territory, or other place, in which the body is formed.
play a significant role: a person plays
a significant role in the audit of a company or a registered scheme for
a financial year if:
(a) the person is appointed as an
individual auditor of the company or scheme for that financial year and:
(i) acts as an auditor for
the company or scheme for that financial year; or
(ii) prepares an audit
report for the company or the scheme in relation to a financial report of the
company or scheme for that financial year or for a half‑year falling within
that financial year; or
(b) a firm or company is appointed as
an auditor of the company or scheme for that financial year and the person:
(i) is a registered
company auditor; and
(ii) acts, on behalf of the
firm or company, as a lead auditor, or review auditor, in relation to an audit
of the company or scheme for that financial year or for a half‑year falling
within that financial year.
pooling determination means a determination
under subsection 571(1).
pooling order means an order under subsection
579E(1).
positive solvency resolution means a resolution
by the directors of a company that, in their opinion, there are reasonable
grounds to believe that the company will be able to pay its debts as and when
they become due and payable.
possession has a meaning affected by section 86.
power includes an authority.
premises
includes:
(a) a structure, building, aircraft,
vehicle or vessel; and
(b) any land or place (whether
enclosed or built on or not); and
(c) a part of a structure, building,
aircraft, vehicle or vessel or of such a place.
prescribed financial market means a financial
market that is prescribed by regulations made for the purposes of this
definition.
printed includes type‑written, lithographed
or reproduced by any mechanical means.
procure includes cause.
Product Disclosure Statement, when used in a
provision outside Chapter 7, has the same meaning as it has in Chapter 7.
Note: For the effect of the lodgment of a
Replacement Product Disclosure Statement, see section 1014J.
professional accounting body has the same
meaning as in the ASIC Act.
professional employee of an individual
auditor, audit firm or audit company means an employee of the auditor, firm or
company who participates in the conduct of the audits on behalf of the auditor,
firm or company and, in the course of doing so, exercises professional judgment
in relation to the application of or compliance with:
(a) accounting standards; or
(b) auditing standards; or
(c) the provisions of this Act dealing
with financial reporting and the conduct of audits.
professional investor means a person in
relation to whom one or more of the following paragraphs apply:
(a) the person is a financial services
licensee;
(b) the person is a body regulated by
APRA, other than a trustee of any of the following (within the meaning of the Superannuation
Industry (Supervision) Act 1993):
(i) a superannuation fund;
(ii) an approved deposit
fund;
(iii) a pooled
superannuation trust;
(iv) a public sector
superannuation scheme;
(c) the person is a body registered
under the Financial Corporations Act 1974;
(d) the person is the trustee of:
(i) a
superannuation fund; or
(ii) an approved deposit
fund; or
(iii) a pooled
superannuation trust; or
(iv) a public sector
superannuation scheme;
within the meaning of the Superannuation
Industry (Supervision) Act 1993 and the fund, trust or scheme has net
assets of at least $10 million;
(e) the person controls at least $10
million (including any amount held by an associate or under a trust that the
person manages);
(f) the person is a listed entity, or
a related body corporate of a listed entity;
(g) the person is an exempt public
authority;
(h) the
person is a body corporate, or an unincorporated body, that:
(i) carries on a business
of investment in financial products, interests in land or other investments;
and
(ii) for those purposes,
invests funds received (directly or indirectly) following an offer or
invitation to the public, within the meaning of section 82, the terms of
which provided for the funds subscribed to be invested for those purposes;
(i) the person is a foreign entity
that, if established or incorporated in Australia, would be covered by
one of the preceding paragraphs.
professional member of an audit team has the
meaning given by section 324AE.
profile statement means a profile statement
that is lodged with ASIC.
property means any legal or equitable estate
or interest (whether present or future and whether vested or contingent) in
real or personal property of any description and includes a thing in action.
proportional takeover approval provisions, in
relation to a company, means provisions of the kind referred to in subsection
648D(1) that are contained in, or that it is proposed to insert in, the
constitution of the company.
proportional takeover bid means an off‑market
bid for a specified proportion of the securities in the bid class (see
paragraph 618(1)(b)).
proprietary company has the meaning given by
subsection 45A(1).
prospectus means a prospectus that is lodged
with ASIC.
prove includes establish in any way (for
example, but without limitation, through the operation of a presumption for
which this Act or a law of a State or Territory provides).
providing finance means:
(a) lending money; or
(b) giving guarantees or security for
loans made by someone else; or
(c) drawing, accepting, indorsing,
negotiating or discounting a bill of exchange, cheque, payment order or
promissory note so that someone can obtain funds.
provision of a law includes:
(a) a subsection, section,
Subdivision, Division, Part or Chapter of the law; and
(b) a Schedule, or an item in a
Schedule, to the law.
provisional liquidator has a meaning affected
by paragraph 530AA(b) (which deals with 2 or more persons appointed as
provisional liquidators).
public company
means a company other than a proprietary company and:
(a) in section 195 and Chapter 2E,
includes a body corporate (other than a prescribed body corporate) that:
(i) is incorporated in a
State or an internal Territory, but not under this Act; and
(ii) is included in the
official list of a prescribed financial market; and
(b) in Chapter 2E does not
include a company that does not have “Limited” in its name because of section 150
or 151.
public document, in relation to a body
corporate, has the meaning given by section 88A.
publish:
(a) in relation to a notice—means, in
Chapter 7, publish by any means, including in a newspaper or periodical,
on the internet, by broadcasting or televising or in a cinematograph film; and
(b) in any case—includes issue.
qualified accountant has the meaning given by
section 88B.
qualified privilege has the meaning given by
section 89.
quarter day means 31 March, 30 June,
30 September or 31 December.
quotation, in relation to financial products
or in relation to a financial market, includes the displaying or providing, on
a financial market, of information concerning:
(a) if offers to dispose of, purchase
or exchange the financial product at particular prices, or for particular
consideration, are made or accepted on that financial market—those prices or
that consideration; or
(b) if offers or invitations are made
on that financial market, being offers or invitations that are intended, or may
reasonably be expected, to result in the making or acceptance of offers to
dispose of, purchase or exchange the financial products at particular prices,
or for particular consideration—those prices or that consideration; or
(c) in any case—the price at which, or
the consideration for which, particular persons, or particular classes of
persons, propose, or may reasonably be expected, to dispose of, purchase or
exchange the financial products.
quoted ED securities has the meaning given by
section 111AM.
quoted security means a security that is
quoted on a prescribed financial market.
receiver has a meaning affected by paragraph
434D(b) (which deals with 2 or more persons appointed as receivers).
receiver and manager has a meaning affected
by section 90 and has a meaning affected by paragraph 434E(b) (which deals
with 2 or more persons appointed as receivers and managers).
recognised offer has the meaning given by
section 1200B.
redeemable preference share means a
preference share in a body corporate that is, or at the body’s option is to be,
liable to be redeemed.
referring State has the meaning given by
section 4.
register means register under this Act.
registered Australian body means a
registrable Australian body that is registered under Division 1 of Part 5B.2.
registered body mean a registered Australian
body or a registered foreign company.
registered company auditor:
(a) means a person registered as an
auditor under Part 9.2; and
(b) in relation to a body corporate
that is not a company—includes a person qualified to act as the body’s auditor
under the law of the body’s incorporation.
registered foreign company means a foreign
company that is registered under Division 2 of Part 5B.2.
registered liquidator means a person
registered as a liquidator under subsection 1282(2).
registered office, in relation to a body
corporate, means the body’s registered office under section 142 or 601CT,
as the case requires.
registered scheme means a managed investment
scheme that is registered under section 601EB.
registrable Australian
body means:
(a) a
body corporate, not being:
(i) a company; or
(ii) an exempt public
authority; or
(iii) a corporation sole; or
(b) an
unincorporated body that, under the law of its place of formation:
(i) may sue or be sued; or
(ii) may hold property;
in the name of its secretary or
of an officer of the body duly appointed for that purpose;
but does not include a foreign company.
registrable body means a registrable
Australian body or a foreign company.
related body corporate, in relation to a body
corporate, means a body corporate that is related to the first‑mentioned body
by virtue of section 50.
related entity, in relation to a body
corporate, means any of the following:
(a) a promoter of the body;
(b) a relative of such a promoter;
(c) a relative of a spouse of such a
promoter;
(d) a director or member of the body
or of a related body corporate;
(e) a relative of such a director or
member;
(f) a relative of a spouse of such a
director or member;
(g) a body corporate that is related
to the first‑mentioned body;
(h) a beneficiary under a trust of
which the first‑mentioned body is or has at any time been a trustee;
(i) a relative of such a beneficiary;
(j) a relative of a spouse of such a
beneficiary;
(k) a body corporate one of whose
directors is also a director of the first‑mentioned body;
(l) a trustee of a trust under which
a person is a beneficiary, where the person is a related entity of the first‑mentioned
body because of any other application or applications of this definition.
related party (when used in Chapter 2E)
has the meaning given by section 228.
relation‑back day, in relation to a winding
up of a company or Part 5.7 body, means:
(a) if, because of Division 1A of
Part 5.6, the winding up is taken to have begun on the day when an order
that the company or body be wound up was made—the day on which the application
for the order was filed; or
(b) otherwise—the day on which the
winding up is taken because of Division 1A of Part 5.6 to have begun.
relative, in relation to a person, means the
spouse, parent or remoter lineal ancestor, child or remoter issue, or brother
or sister of the person.
relevant agreement
means an agreement, arrangement or understanding:
(a) whether formal or informal or
partly formal and partly informal; and
(b) whether written or oral or partly
written and partly oral; and
(c) whether or not having legal or
equitable force and whether or not based on legal or equitable rights.
relevant date, in relation to a winding up,
means the day on which the winding up is taken because of Division 1A of
Part 5.6 to have begun.
Note: Subsection 553(1B) modifies the operation of
this definition for debts and claims that arise while a company is under a deed
of company arrangement if the deed terminates immediately before the winding
up.
relevant financial market, for a listed
company, or listed registered scheme, means:
(a) the prescribed financial market on
which the company or scheme is listed; or
(b) if the company or scheme is listed
on 2 or more prescribed financial markets—each of those markets.
relevant interest, in relation to securities,
has a meaning given by sections 608 and 609.
relevant market operator, for a listed
company, or listed registered scheme, means:
(a) if there is only one relevant
financial market for the company or scheme—the operator of that relevant
financial market; or
(b) if there is 2 or more relevant
financial markets for the company or scheme—each of the operators of each of
those relevant financial markets.
remedial order means an order that:
(a) restrains a person from exercising
any voting or other rights attached to securities; or
(b) directs a body corporate not to
make or to defer payment of an amount due from the body corporate in respect of
securities; or
(c) restrains a person from acquiring
securities or an interest in securities; or
(d) directs a person to dispose of, or
not to dispose of, securities or interests in securities; or
(e) directs the disposal referred to
in paragraph (d):
(i) to be made within a
specified time; or
(ii) to be made subject to
specified conditions; or
(iii) not to be made to a
specified person or persons or to a specified class or classes of persons;
(f) directs a specified person to pay
to the body corporate an amount equal to any profit or benefit that the person
obtains because of the disposal referred to in paragraph (d); or
(g) vests securities, or an interest
in securities, in ASIC; or
(h) directs a body corporate not to
register the transfer or transmission of securities; or
(i) cancels securities issued as
consideration for offers under a takeover bid; or
(j) declares that an exercise of the
voting or other rights attached to securities be disregarded; or
(k) cancels
or declares voidable:
(i) an agreement or offer
relating to a takeover bid, or a proposed takeover bid; or
(ii) any other agreement or
offer in connection with the acquisition of securities or relevant interests in
securities;
(l) directs a person to give
specified information to the holders of securities of a body corporate; or
(m) directs a body corporate not to
issue securities to a person; or
(n) if an order of a kind referred to
in paragraphs (a) to (m) is in force in respect of securities—directs the
registered holder of the securities to give written notice of the order to any
person whom the holder knows to be entitled to exercise a right to vote
attached to those securities; or
(o) directs a body corporate to repeal
or modify its existing constitution or adopt a particular constitution; or
(p) if a person has failed to comply
with a requirement of Chapter 6, 6A, 6B or 6C—directs that person
to comply with that requirement.
remuneration of an officer or employee of a
corporation. A benefit given to an officer or employee of a corporation is remuneration
if and only if the benefit, were it received by a director of the corporation,
would be remuneration of the director for the purposes of an accounting
standard that deals with disclosure in companies’ financial reports of
information about directors’ remuneration. For the purposes of this definition,
the following are not officers of a corporation:
(a) a receiver, or receiver and
manager, of the property of the corporation;
(b) an administrator of the
corporation;
(c) an administrator of a deed of
company arrangement executed by the corporation;
(d) a liquidator of the corporation;
(e) a trustee or other person administering
a compromise or arrangement made between the corporation and someone else.
remuneration committee has the meaning given
by paragraph 206K(2)(b).
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.
remuneration recommendation has the meaning
given by section 9B.
remuneration report means the section of the
directors’ report for a financial year for a listed public company that is
included under subsection 300A(1).
renounceable option means an assignable
option to have an allotment of shares in a body corporate made to the holder of
the option.
Replacement Product Disclosure Statement,
when used in a provision outside Chapter 7, has the same meaning it has in
Chapter 7.
reproduction, in relation to a document,
means a machine‑copy of the document or a print made from a negative of the
document.
resolution, in relation to
creditors or contributories, means a resolution passed at a meeting of the
creditors or contributories.
resolution for voluntary winding up means the
special resolution referred to in section 491.
responsible entity of a registered scheme means
the company named in ASIC’s record of the scheme’s registration as the
responsible entity or temporary responsible entity of the scheme.
responsible officer, in relation to a body
corporate that applies for an Australian financial services licence, means an
officer of the body who would perform duties in connection with the holding of
the licence.
result includes:
(a) when used as a verb—result
indirectly; and
(b) when used as a noun—an indirect
result.
retention of title
clause: if:
(a) a contract for the sale of
property contains a provision the effect of which is that the seller retains
title in the property until the purchase price, or other amount, has been paid
in full; and
(b) the purchase price, or the other
amount, as the case may be, has not been paid in full;
the property is subject to a retention of title
clause under that contract.
retirement village scheme means a scheme,
undertaking or enterprise (in this definition called the relevant scheme),
whether in Australia or elsewhere, that is being, or is proposed to be, carried
out or undertaken with the intention that the participants, or a majority of
the participants, in the relevant scheme be provided, in connection with the
relevant scheme, with residential accommodation within a retirement community,
whether or not the entitlement of a participant to be provided with such
accommodation derives from a proprietary interest held by the participant in
the premises where the accommodation is provided, but does not include a time‑sharing
scheme.
return of particulars for a company or a
registered scheme means a statement given by ASIC that contains any or all of
the following:
(a) some or all of the particulars in
relation to the company or scheme that are recorded in the register or
registers maintained by ASIC under subsection 1274(1);
(b) a requirement to provide a
particular under section 348B;
(c) a requirement to comply with a
subsection of section 348C (and, if applicable, pass a resolution).
review auditor has the meaning given by section 324AF.
review date has the meaning given by section 345A.
review fee has the meaning given by section 5
of the Corporations (Review Fees) Act 2003.
revoke, in relation to an accounting
standard, means, in the case of a provision of an accounting standard, vary the
last‑mentioned accounting standard by omitting the provision.
rights issue has the meaning given by
subsections 9A(1) and (2).
rules means:
(a) rules of the Federal Court; or
(b) rules
of the Supreme Court of a State or internal Territory;
as the case requires.
scheme property of a registered scheme means:
(a) contributions of money or money’s
worth to the scheme; and
(b) money that forms part of the
scheme property under provisions of this Act or the ASIC Act; and
(c) money borrowed or raised by the
responsible entity for the purposes of the scheme; and
(d) property acquired, directly or
indirectly, with, or with the proceeds of, contributions or money referred to
in paragraph (a), (b) or (c); and
(e) income and property derived,
directly or indirectly, from contributions, money or property referred to in paragraph (a),
(b), (c) or (d).
Note 1: Paragraph (a)—if
what a member contributes to a scheme is rights over property, the rights in
the property that the member retains do not form part of the scheme property.
Note 2: For provisions that
are relevant to paragraph (b), see subsections 177(4), 1317HA(1A),
1317HB(3) and 1317HD(3) of this Act and
subsection 93A(5) of the ASIC Act.
scrip means documents that are, or are
documents of title to, securities.
section 513C day, in relation to the
administration of a company, has the meaning given by section 513C.
securities has the meaning given by section 92.
selective buy‑back
means a buy‑back that is none of the following:
(a) a
buy‑back under an equal access scheme within the meaning of subsections 257B(2)
and (3);
(b) a minimum holding buy‑back;
(c) an on‑market buy‑back;
(d) an employee share scheme buy‑back.
senior manager:
(a) in relation to a corporation—means
a person (other than a director or secretary of the corporation) who:
(i) makes, or participates
in making, decisions that affect the whole, or a substantial part, of the
business of the corporation; or
(ii) has the capacity to
affect significantly the corporation’s financial standing; and
(b) in relation to a partnership—means
a person (other than a partner) who:
(i) makes, or participates
in making, decisions that affect the whole, or a substantial part, of the
business of the partnership; or
(ii) has the capacity to
affect significantly the partnership’s financial standing; and
(c) in
relation to a trust—means a person (other than a trustee) who:
(i) makes, or participates
in making, decisions that affect the whole, or a substantial part, of the
business or affairs of the trust; or
(ii) has the capacity to
affect significantly the financial standing of the trust; and
(d) in relation to a joint
venture—means a person (other than a director or secretary of a corporation
participating in the joint venture) who:
(i) makes, or participates
in making, decisions that affect the whole, or a substantial part, of the
business of the joint venture; or
(ii) has the capacity to
affect significantly the financial standing of the joint venture.
serious fraud
means an offence involving fraud or dishonesty, being an offence:
(a) against an Australian law or any
other law; and
(b) punishable by imprisonment for
life or for a period, or maximum period, of at least 3 months.
sheriff includes a person charged with the
execution of a writ or other process.
small company limited by guarantee has the
meaning given by section 45B.
small proprietary company has the meaning
given by subsection 45A(2).
solvency resolution means a resolution by the
directors of a company as to whether or not, in their opinion, there are
reasonable grounds to believe that the company will be able to pay its debts as
and when they become due and payable.
solvent has the meaning given by subsection
95A(1).
special resolution means:
(a) in relation to a company, a resolution:
(i) of which notice as set
out in paragraph 249L(1)(c) has been given; and
(ii) that has been passed
by at least 75% of the votes cast by members entitled to vote on the
resolution; or
(b) in
relation to a registered scheme, a resolution:
(i) of which notice as set
out in paragraph 252J(c) has been given; and
(ii) that has been passed
by at least 75% of the votes cast by members entitled to vote on the
resolution.
spouse of a person includes a de facto
partner of the person within the meaning of the Acts Interpretation Act 1901.
staff member, in relation to ASIC, means a
person who is a staff member for the purposes of the ASIC Act.
standard opening hours means 10 am to 12 noon and 2 pm to 4 pm each business day.
State, when used in a geographical sense,
includes the coastal sea of the State.
State Fair Trading Act means the following
Acts for each State and Territory:
|
State Fair Trading Acts
|
|
|
State or Territory
|
Act
|
|
1
|
New South Wales
|
Fair Trading Act 1987
|
|
2
|
Victoria
|
Fair Trading Act 1999
|
|
3
|
Queensland
|
Fair Trading Act 1989
|
|
4
|
South Australia
|
Fair Trading Act 1987
|
|
5
|
Western Australia
|
Fair Trading Act 1987
|
|
6
|
Tasmania
|
Fair Trading Act 1990
|
|
7
|
Northern Territory
|
Consumer Affairs and Fair Trading Act 1990
|
|
8
|
Australian Capital Territory
|
Fair Trading Act 1992
|
State Family Court, in relation to a State,
means a court of that State to which section 41 of the Family Law Act
1975 applies because of a Proclamation made under subsection 41(2) of that
Act.
statement, in Chapter 7, includes matter
that is not written but conveys a message.
State or Territory court means a court of a
State, the Capital Territory or the Northern Territory.
State or Territory Supreme Court means the
Supreme Court of:
(a) a State; or
(b) the Capital Territory; or
(c) the Northern Territory.
statutory demand
means:
(a) a document that is, or purports to
be, a demand served under section 459E; or
(b) such a document as varied by an
order under subsection 459H(4).
statutory minimum
means:
(a) if an amount greater than $2,000 is
prescribed—the prescribed amount; or
(b) otherwise—$2,000.
subsection 1337B(3) proceeding means a
proceeding with respect to a matter referred to in subsection 1337B(3).
subsidiary, in relation to a body corporate,
means a body corporate that is a subsidiary of the first‑mentioned body by
virtue of Division 6.
substantial holding: A person has a
substantial holding in a body corporate, or listed registered managed
investment scheme, if:
(a) the total votes attached to voting
shares in the body, or voting interests in the scheme, in which they or their
associates:
(i) have relevant
interests; and
(ii) would have a relevant
interest but for subsection 609(6) (market traded options) or 609(7)
(conditional agreements);
is 5% or more of the total
number of votes attached to voting shares in the body, or interests in the
scheme; or
(b) the person has made a takeover bid
for voting shares in the body, or voting interests in the scheme, and the bid
period has started and not yet ended.
Note: For relevant interest, see
section 608.
substantial interest has a meaning affected
by section 602A.
substantial part, in relation to activities,
includes the whole of those activities.
superannuation guarantee charge has the same
meaning as in the Superannuation Guarantee (Administration) Act 1992.
superannuation guarantee shortfall has the
same meaning as in the Superannuation Guarantee (Administration) Act 1992.
superior court means the Federal Court of
Australia, the Supreme Court of a State or Territory, the Family Court or a
State Family Court.
superior court matter means a civil matter
that this Act clearly intends (for example, by use of the expression the
Court) to be dealt with only by a superior court.
Supplementary Product Disclosure Statement,
when used in a provision outside Chapter 7, has the same meaning as it has
in Chapter 7.
takeover bid means an off‑market bid or
market bid made under Chapter 6.
takeover contract means a contract that
results from the acceptance of an offer made under a takeover bid.
target for a takeover bid means the company,
listed body or managed investment scheme whose securities are to be acquired
under the bid.
target’s statement means a target’s statement
under sections 638 to 640 as supplemented.
territorial sea has the same meaning as in
the Seas and Submerged Lands Act 1973.
Territory means:
(a) the Capital Territory; or
(b) the Northern Territory; or
(c) an external Territory;
and, when used in a geographical sense, includes the
coastal sea of the Territory.
this Act includes the regulations.
this jurisdiction means the geographical area
that consists of:
(a) each referring State (including
its coastal sea); and
(b) the Capital Territory (including
the coastal sea of the Jervis Bay Territory); and
(c) the Northern Territory (including
its coastal sea); and
(d) also, for the purposes of the
application of a provision of Chapter 7 or an associated provision (as
defined in section 5)—any external Territory in which the provision
applies because of subsection 5(9) (but only to the extent provided for
in that subsection).
time‑sharing scheme
means a scheme, undertaking or enterprise, whether in Australia or elsewhere:
(a) participants in which are, or may
become, entitled to use, occupy or possess, for 2 or more periods during the
period for which the scheme, undertaking or enterprise is to operate, property
to which the scheme, undertaking or enterprise relates; and
(b) that is to operate for a period of
not less than 3 years.
trade, in
relation to financial products, in relation to a financial market, includes:
(a) make or accept on that financial
market an offer to dispose of, acquire or exchange the financial products; and
(b) make on that financial market an
offer or invitation that is intended, or may reasonably be expected, to result
in the making or acceptance of an offer to dispose of, acquire or exchange the
financial products.
trading day of a financial market means a day
on which the market is open for trading in financial products.
transaction, in Part 5.7B, in relation
to a body corporate or Part 5.7 body, means a transaction to which the
body is a party, for example (but without limitation):
(a) a conveyance, transfer or other
disposition by the body of property of the body; and
(b) a charge created by the body on
property of the body; and
(c) a guarantee given by the body; and
(d) a payment made by the body; and
(e) an obligation incurred by the
body; and
(f) a release or waiver by the body;
and
(g) a
loan to the body;
and includes such a transaction that has been completed or
given effect to, or that has terminated.
transmission
means a transmission, by means of electric or electromagnetic energy, of:
(a) sounds, including speech and
music; or
(b) visual images; or
(c) signals
for the communication, whether as between persons and persons, persons and
things or things and things, of any matter otherwise than in the form of sounds
or visual images; or
(d) signals for the actuation or
control of machinery or apparatus.
transparency, in relation to a document,
means:
(a) a developed negative or positive
photograph of that document (in this definition called an original
photograph) made, on a transparent base, by means of light reflected
from, or transmitted through, the document; or
(b) a copy of an original photograph
made by the use of photo‑sensitive material (being photo‑sensitive material on
a transparent base) placed in surface contact with the original photograph; or
(c) any one of a series of copies of
an original photograph, the first of the series being made by the use of photo‑sensitive
material (being photo‑sensitive material on a transparent base) placed in
surface contact with a copy referred to in paragraph (b), and each
succeeding copy in the series being made, in the same manner, from any preceding
copy in the series.
Tribunal means the Administrative Appeals
Tribunal.
ultimate holding company, in relation to a
body corporate, means a body corporate that:
(a) is a holding company of the first‑mentioned
body; and
(b) is itself a subsidiary of no body
corporate.
unclaimed property means:
(a) property paid or transferred to
ASIC under a provision of this Act that provides for property to be
transferred, or for the Court to direct that property be transferred, to ASIC
to be dealt with under Part 9.7; or
(b) any other property that a
provision of this Act provides for ASIC to deal with under Part 9.7; or
(c) property that vests in ASIC under
section 1404; or
(d) an accretion to, or substitution
for, property that is unclaimed property because of any other application or
applications of this definition; or
(e) without limiting
paragraph (d), amounts credited to the Companies and Unclaimed Moneys
Special Account under paragraph 1339(2)(b).
uncommercial transaction has the meaning
given by section 588FB.
underlying securities means:
(a) in relation to an option over
securities—those securities; and
(b) in relation to scrip that is
constituted by documents that are, or are documents of title to,
securities—those securities.
undertaking, in relation to a managed
investment scheme, means the undertaking, scheme, enterprise, contract or
arrangement to which the scheme relates.
underwrite includes sub‑underwrite.
unfair loan has the meaning given by section 588FD.
unfair preference has the meaning given by
section 588FA.
unit, in relation to a share, debenture or
other interest, means a right or interest, whether legal or equitable, in the
share, debenture or other interest, by whatever term called, and includes an
option to acquire such a right or interest in the share, debenture or other
interest.
unlimited company means a company whose
members have no limit placed on their liability.
unlisted disclosing entity has the meaning
given by subsection 111AL(2).
unreasonable director‑related transaction has
the meaning given by section 588FDA.
unsecured, in relation to a debt, has in Part 5.7B
a meaning affected by section 588D.
value, in relation to an asset, includes
amount.
voting interest,
in relation to a managed investment scheme, means an issued interest in the
scheme that confers a right to vote, not being a right to vote that is
exercisable only in one or more of the following circumstances:
(a) on a proposal that affects rights
attached to the interests;
(b) on a proposal to wind up the
scheme;
(c) on a proposal for the disposal of
the whole of the scheme property, business and undertaking;
(d) during the winding up of the
scheme.
voting power in a body or managed investment
scheme has the meaning given by section 610.
voting share in a body corporate means an
issued share in the body that carries any voting rights beyond the following:
(a) a right to vote while a dividend
(or part of a dividend) in respect of the share is unpaid;
(b) a right to vote on a proposal to
reduce the body’s share capital;
(c) a right to vote on a resolution to
approve the terms of a buy‑back agreement;
(d) a right to vote on a proposal that
affects the rights attached to the share;
(e) a right to vote on a proposal to
wind the body up;
(f) a right to vote on a proposal for
the disposal of the whole of the body’s property, business and undertaking;
(g) a right to vote during the body’s
winding up.
wages, in relation to a company, means
amounts payable to or in respect of an employee of the company (whether the
employee is remunerated by salary, wages, commission or otherwise) under an
industrial instrument, including amounts payable by way of allowance or
reimbursement but excluding amounts payable in respect of leave of absence.
wholly‑owned
subsidiary, in relation to a body corporate, means a body corporate
none of whose members is a person other than:
(a) the first‑mentioned body; or
(b) a nominee of the first‑mentioned
body; or
(c) a
subsidiary of the first‑mentioned body, being a subsidiary none of whose members
is a person other than:
(i) the first‑mentioned
body; or
(ii) a nominee of the first‑mentioned
body; or
(d) a nominee of such a subsidiary.
winding up by the Court includes winding up
in insolvency.
wound up by the Court includes wound up in
insolvency.
9AA
Certain family relationships
For the purposes of this Act,
relationships (including the relationship of being family) are taken to
include:
(a) relationships between
de facto partners (within the meaning of the Acts Interpretation Act
1901); and
(b) relationships of child and parent
that arise:
(i) if someone is an
exnuptial or adoptive child of a person; or
(ii) if someone is the
child of a person because of the definition of child in this Act;
and
(c) relationships traced through
relationships referred to in paragraphs (a) and (b).
9A
Meaning of rights issue
(1) A rights issue is an offer
of a body’s securities for issue in respect of which the following conditions
are met:
(a) the securities being offered for
issue are in a particular class;
(b) either:
(i) the offer is made to
every person who holds securities in that class to issue them, or their
assignee, with the percentage of the securities to be issued that is the same
as the percentage of the securities in that class that they hold before the
offer; or
(ii) if the conditions in
subsection (3) are met—such an offer is made to every person with a
registered address in Australia or New Zealand who holds securities in that
class;
(c) the terms of each offer are the
same.
(2) A rights issue is an offer
of interests in a managed investment scheme for issue in respect of which the
following conditions are met:
(a) the interests being offered for
issue are in a particular class;
(b) either:
(i) the offer is made to
every person who holds interests in that class to issue them, or their
assignee, with the percentage of the interests to be issued that is the same as
the percentage of the interests in that class that they hold before the offer;
or
(ii) if the conditions in
subsection (3) are met—such an offer is made to every person with a
registered address in Australia or New Zealand who holds interests in that
class;
(c) the terms of each offer are the
same.
(3) The
conditions in this subsection are met if:
(a) the body or responsible entity (as
the case requires) decides that it is unreasonable to offer securities or
interests (as the case requires) for issue to persons (the non‑residents)
with a registered address in a place outside Australia or New Zealand,
after taking into account the following matters:
(i) the number of non‑residents,
in that place, to whom offers would otherwise be made;
(ii) the number and value
of the securities or interests that would otherwise be offered for issue;
(iii) the cost of complying
with the laws, and any requirements of any regulatory authority, of the place
where the securities or interests would otherwise be offered for issue; and
(b) the
body or responsible entity:
(i) sends details of the
offer to each non‑resident in that place; and
(ii) advises each non‑resident
in that place that the non‑resident will not be offered the securities or
interests; and
(c) if
the invitation to apply for, or the right to be issued with, the securities or
interests is able to be assigned—the body or responsible entity:
(i) advises each non‑resident
in that place that a nominee will be appointed to sell the invitation or right
that would otherwise have been offered to the non‑resident; and
(ii) advises each non‑resident
that the nominee will send the non‑resident any net proceeds from the sale of
that invitation or those rights; and
(iii) appoints a nominee in Australia to carry out the obligations referred to in subparagraphs (i) and (ii).
(4) For the purposes of this section, a
reference to an offer of securities includes a reference to an invitation to
apply for the issue of securities.
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.
Division 2—Associates
10
Effect of Division
(1) This Division has effect for the purposes
of interpreting a reference (in this Division called the associate
reference), in relation to a person (in this Division called the primary
person), to an associate.
(2) A person is not an associate of the
primary person except as provided in this Division.
(3) Nothing in this Division limits the
generality of anything else in it.
11
Associates of bodies corporate
If the primary person is a body
corporate, the associate reference includes a reference to:
(a) a director or secretary of the
body; and
(b) a related body corporate; and
(c) a director or secretary of a
related body corporate.
12
References in Chapters 6 to 6C, and other references relating to voting
power and takeovers etc.
(1) Subject to subsection 16(1), but despite
anything else in this Part, this section applies for the purposes of
interpreting a reference to an associate (the associate reference),
in relation to a designated body, if:
(a) the reference occurs in a
provision of Chapter 6, 6A, 6B or 6C; or
(b) the reference occurs in a
provision outside those Chapters that relates to any of the following matters:
(i) the extent, or
restriction, of a power to exercise, or to control the exercise of, the votes
attached to voting shares in the designated body;
(ii) the primary person’s
voting power in the designated body;
(iii) relevant interests in
securities in the designated body;
(iv) a substantial holding
in the designated body;
(v) a takeover bid for
securities in the designated body;
(vi) the compulsory
acquisition, or compulsory buy‑out, of securities in the designated body.
(2) For the purposes of the application of
the associate reference in relation to the designated body, a person (the second
person) is an associate of the primary person if, and only if, one or
more of the following paragraphs applies:
(a) the primary person is a body
corporate and the second person is:
(i) a body corporate the
primary person controls; or
(ii) a body corporate that
controls the primary person; or
(iii) a body corporate that
is controlled by an entity that controls the primary person;
(b) the second person is a person with
whom the primary person has, or proposes to enter into, a relevant agreement
for the purpose of controlling or influencing the composition of the designated
body’s board or the conduct of the designated body’s affairs;
(c) the second person is a person with
whom the primary person is acting, or proposing to act, in concert in relation
to the designated body’s affairs.
(3) For the purposes of the application of
this section in relation to a designated body that is a managed investment
scheme:
(a) a reference to controlling or
influencing the composition of the designated body’s board is taken to be a
reference to controlling or influencing:
(i) if the scheme is a
registered scheme—whether a particular company becomes or remains the scheme’s
responsible entity; or
(ii) if the scheme is not a
registered scheme—whether a particular person is appointed, or remains
appointed, to the office (by whatever name it is known) in relation to the
scheme that corresponds most closely to the office of responsible entity of a
registered scheme; and
(b) a reference to voting shares in
the designated body is taken to be a reference to voting interests in the
managed investment scheme.
(4) In relation to a matter relating to
securities in a designated body, a person may be an associate of the body and
the body may be an associate of the person.
(5) In this section:
designated body means:
(a) a body; or
(b) a managed investment scheme.
13
References in Chapter 7
If the associate reference occurs in
Chapter 7, it includes a reference to:
(a) a person in partnership with whom
the primary person carries on a financial services business; and
(b) subject to subsection 16(2), a
person who is a partner of the primary person otherwise than because of
carrying on a financial services business in partnership with the primary
person; and
(c) a trustee of a trust in relation
to which the primary person benefits, or is capable of benefiting, otherwise
than because of transactions entered into in the ordinary course of business in
connection with the lending of money; and
(d) a director of a body corporate of
which the primary person is also a director and that carries on a financial
services business; and
(e) subject to subsection 16(2), a
director of a body corporate of which the primary person is also a director and
that does not carry on a financial services business.
15
General
(1) The associate reference includes a
reference to:
(a) a person in concert with whom the
primary person is acting, or proposes to act; and
(b) a person who, under the
regulations, is, for the purposes of the provision in which the associate
reference occurs, an associate of the primary person; and
(c) a
person with whom the primary person is, or proposes to become, associated,
whether formally or informally, in any other way;
in respect of the matter to
which the associate reference relates.
(2) If the primary person has entered, or
proposes to enter, into a transaction, or has done, or proposes to do, any act
or thing, in order to become associated with another person as mentioned in an
applicable provision of this Division, the associate reference includes a
reference to that other person.
16
Exclusions
(1) A person is not an associate of another
person by virtue of section 12 or subsection 15(1), or by virtue of
subsection 15(2) as it applies in relation to section 12 or subsection
15(1), merely because of one or more of the following:
(a) one gives advice to the other, or
acts on the other’s behalf, in the proper performance of the functions
attaching to a professional capacity or a business relationship;
(b) one, a client, gives specific
instructions to the other, whose ordinary business includes dealing in
financial products, to acquire financial products on the client’s behalf in the
ordinary course of that business;
(c) one had sent, or proposes to send,
to the other an offer under a takeover bid for shares held by the other;
(d) one has appointed the other,
otherwise than for valuable consideration given by the other or by an associate
of the other, to vote as a proxy or representative at a meeting of members, or
of a class of members, of a body corporate.
(2) For the purposes of proceedings under
this Act in which it is alleged that a person was an associate of another
person by virtue of paragraph 13(b) or (e), the first‑mentioned person is not
taken to have been an associate of the other person in relation to a matter by
virtue of that paragraph unless it is proved that the first‑mentioned person
knew, or ought to have known, at that time, the material particulars of that
matter.
17
Associates of composite person that carries on a financial services business
A reference to an associate, in relation
to an entity (other than a body corporate) that carries on a financial services
business, is, if 2 or more persons constitute the entity, a reference to an
associate of any of those persons.
Division 3—Carrying on business
18
Carrying on business: otherwise than for profit
A reference to a person carrying on
business, carrying on a business, or carrying on a business of a particular
kind, includes a reference to the person carrying on business, carrying on a
business, or carrying on a business of that kind, as the case may be:
(a) in any case—otherwise than for
profit; or
(b) in the case of a body
corporate—otherwise than for the profit of the members or corporators of the
body.
19
Businesses of a particular kind
A reference to a business of a
particular kind includes a reference to a business of that kind that is part
of, or is carried on in conjunction with, any other business.
20
Carrying on a business: alone or together with others
A reference in this Act to a person
carrying on a business, or a business of a particular kind, is a reference to
the person carrying on a business, or a business of that kind, whether alone or
together with any other person or persons.
21
Carrying on business in Australia or a State or Territory
(1) A body corporate that has a place of
business in Australia, or in a State or Territory, carries on business in Australia, or in that State or Territory, as the case may be.
(2) A reference to a body corporate carrying
on business in Australia, or in a State or Territory, includes a reference to
the body:
(a) establishing or using a share
transfer office or share registration office in Australia, or in the State or
Territory, as the case may be; or
(b) administering,
managing, or otherwise dealing with, property situated in Australia, or in the
State or Territory, as the case may be, as an agent, legal personal
representative or trustee, whether by employees or agents or otherwise.
(3) Despite subsection (2), a body
corporate does not carry on business in Australia, or in a State or Territory,
merely because, in Australia, or in the State or Territory, as the case may be,
the body:
(a) is or becomes a party to a
proceeding or effects settlement of a proceeding or of a claim or dispute; or
(b) holds meetings of its directors or
shareholders or carries on other activities concerning its internal affairs; or
(c) maintains a bank account; or
(d) effects a sale through an
independent contractor; or
(e) solicits or procures an order that
becomes a binding contract only if the order is accepted outside Australia, or the State or Territory, as the case may be; or
(f) creates evidence of a debt, or
creates a charge on property; or
(g) secures or collects any of its
debts or enforces its rights in regard to any securities relating to such debts;
or
(h) conducts an isolated transaction
that is completed within a period of 31 days, not being one of a number of
similar transactions repeated from time to time; or
(j) invests any of its funds or holds
any property.
Division 5A—Types of company
45A
Proprietary companies
(1) A proprietary company is a company that
is registered as, or converts to, a proprietary company under this Act.
Note 1: A proprietary company can be registered under
section 118 or 601BD. A company can convert to a proprietary company under
Part 2B.7.
Note 2: A proprietary company must:
·
be limited by shares or be an unlimited company with a share
capital
·
have no more than 50 non‑employee shareholders
·
not do anything that would require disclosure to investors under
Chapter 6D (except in limited circumstances).
(see section 113).
Small proprietary company
(2) A proprietary company is a small
proprietary company for a financial year if it satisfies at least 2 of the
following paragraphs:
(a) the consolidated revenue for the
financial year of the company and the entities it controls (if any) is less
than $25 million, or any other amount prescribed by the regulations for the
purposes of this paragraph;
(b) the value of the consolidated
gross assets at the end of the financial year of the company and the entities
it controls (if any) is less than $12.5 million, or any other amount prescribed
by the regulations for the purposes of this paragraph;
(c) the company and the entities it
controls (if any) have fewer than 50, or any other number prescribed by the
regulations for the purposes of this paragraph, employees at the end of the
financial year.
Note: A small proprietary company generally has
reduced financial reporting requirements (see subsection 292(2)).
Large proprietary company
(3) A
proprietary company is a large proprietary company for a financial year if it
satisfies at least 2 of the following paragraphs:
(a) the consolidated revenue for the
financial year of the company and the entities it controls (if any) is $25
million, or any other amount prescribed by the regulations for the purposes of
paragraph (2)(a), or more;
(b) the value of the consolidated
gross assets at the end of the financial year of the company and the entities
it controls (if any) is $12.5 million, or any other amount prescribed by the
regulations for the purposes of paragraph (2)(b), or more;
(c) the company and the entities it
controls (if any) have 50, or any other number prescribed by the regulations
for the purposes of paragraph (2)(c), or more employees at the end of the
financial year.
When a company controls an entity
(4) For the purposes of this section, the
question whether a proprietary company controls an entity is to be decided in
accordance with the accounting standards made for the purposes of paragraph
295(2)(b) (even if the standards do not otherwise apply to the company).
Counting employees
(5) In counting employees for the purposes of
subsections (2) and (3), take part‑time employees into account as an
appropriate fraction of a full‑time equivalent.
Accounting standards
(6) Consolidated revenue and the value of
consolidated gross assets are to be calculated for the purposes of this section
in accordance with accounting standards in force at the relevant time (even if
the standard does not otherwise apply to the financial year of some or all of
the companies concerned).
45B
Small companies limited by guarantee
(1) A company is a small company
limited by guarantee in a particular financial year if:
(a) it is a company limited by guarantee
for the whole of the financial year; and
(b) it is not a deductible gift
recipient at any time during the financial year; and
(c) either:
(i) where the company is
not required by the accounting standards to be included in consolidated
financial statements—the revenue of the company for the financial year is less
than the threshold amount; or
(ii) where the company is
required by the accounting standards to be included in consolidated financial
statements—the consolidated revenue of the consolidated entity for the
financial year is less than the threshold amount; and
(d) it is not one of the following:
(i) a
Commonwealth company for the purposes of the Commonwealth Authorities and
Companies Act 1997;
(ii) a
subsidiary of a Commonwealth company for the purposes of that Act;
(iii) a
subsidiary of a Commonwealth authority for the purposes of that Act; and
(e) it has not been a transferring
financial institution of a State or Territory within the meaning of
clause 1 of Schedule 4 to this Act; and
(f) it is not a company that is
permitted to use the expression building society, credit
society or credit union under section 66 of the Banking
Act 1959 at any time during the financial year.
(2) The threshold amount, for
the purposes of subparagraphs (1)(c)(i) and (ii), is $250,000, or any
other amount prescribed by the regulations for the purposes of this subsection.
(3) Revenue and consolidated revenue are to
be calculated for the purposes of this section in accordance with accounting
standards in force at the relevant time (even if the standard does not
otherwise apply to the financial year of some or all of the companies
concerned).
Division 6—Subsidiaries and related bodies corporate
46
What is a subsidiary
A body corporate (in this section called
the first body) is a subsidiary of another body corporate if, and
only if:
(a) the other body:
(i) controls the
composition of the first body’s board; or
(ii) is in a position to
cast, or control the casting of, more than one‑half of the maximum number of
votes that might be cast at a general meeting of the first body; or
(iii) holds more than one‑half
of the issued share capital of the first body (excluding any part of that
issued share capital that carries no right to participate beyond a specified amount
in a distribution of either profits or capital); or
(b) the first body is a subsidiary of
a subsidiary of the other body.
47
Control of a body corporate’s board
Without limiting by implication the
circumstances in which the composition of a body corporate’s board is taken to
be controlled by another body corporate, the composition of the board is taken
to be so controlled if the other body, by exercising a power exercisable
(whether with or without the consent or concurrence of any other person) by it,
can appoint or remove all, or the majority, of the directors of the first‑mentioned
body, and, for the purposes of this Division, the other body is taken to have
power to make such an appointment if:
(a) a person cannot be appointed as a
director of the first‑mentioned body without the exercise by the other body of
such a power in the person’s favour; or
(b) a person’s appointment as a
director of the first‑mentioned body follows necessarily from the person being
a director or other officer of the other body.
48
Matters to be disregarded
(1) This section applies for the purposes of
determining whether a body corporate (in this section called the first
body) is a subsidiary of another body corporate.
(2) Any shares held, or power exercisable, by
the other body in a fiduciary capacity are treated as not held or exercisable
by it.
(3) Subject to subsections (4) and (5),
any shares held, or power exercisable:
(a) by a person as a nominee for the
other body (except where the other body is concerned only in a fiduciary
capacity); or
(b) by,
or by a nominee for, a subsidiary of the other body (not being a subsidiary
that is concerned only in a fiduciary capacity);
are treated as held or exercisable by the other body.
(4) Any shares held, or power exercisable, by
a person by virtue of the provisions of debentures of the first body, or of a
trust deed for securing an issue of such debentures, are to be disregarded.
(5) Any shares held, or power exercisable,
otherwise than as mentioned in subsection (4), by, or by a nominee for,
the other body or a subsidiary of it are to be treated as not held or
exercisable by the other body if:
(a) the ordinary business of the other
body or that subsidiary, as the case may be, includes lending money; and
(b) the shares are held, or the power
is exercisable, only by way of security given for the purposes of a transaction
entered into in the ordinary course of business in connection with lending
money, not being a transaction entered into with an associate of the other body,
or of that subsidiary, as the case may be.
49
References in this Division to a subsidiary
A reference in paragraph 46(b) or
48(3)(b) or subsection 48(5) to being a subsidiary, or to a subsidiary, of a
body corporate includes a reference to being a subsidiary, or to a body
corporate that is a subsidiary, as the case may be, of the first‑mentioned body
by virtue of any other application or applications of this Division.
50
Related bodies corporate
Where a body corporate is:
(a) a holding company of another body
corporate; or
(b) a subsidiary of another body
corporate; or
(c) a
subsidiary of a holding company of another body corporate;
the first‑mentioned body and the other body are related to
each other.
50AAA
Associated entities
(1) One entity (the associate)
is an associated entity of another entity (the principal) if subsection (2),
(3), (4), (5), (6) or (7) is satisfied.
(2) This subsection is satisfied if the
associate and the principal are related bodies corporate.
(3) This subsection is satisfied if the
principal controls the associate.
(4) This subsection is satisfied if:
(a) the associate controls the
principal; and
(b) the operations, resources or
affairs of the principal are material to the associate.
(5) This subsection is satisfied if:
(a) the associate has a qualifying
investment (see subsection (8)) in the principal; and
(b) the associate has significant
influence over the principal; and
(c) the interest is material to the
associate.
(6) This subsection is satisfied if:
(a) the principal has a qualifying
investment (see subsection (8)) in the associate; and
(b) the principal has significant
influence over the associate; and
(c) the interest is material to the
principal.
(7) This subsection is satisfied if:
(a) an entity (the third entity)
controls both the principal and the associate; and
(b) the operations, resources or
affairs of the principal and the associate are both material to the third
entity.
(8) For the purposes of this section, one
entity (the first entity) has a qualifying investment
in another entity (the second entity) if the first entity:
(a) has an asset that is an investment
in the second entity; or
(b) has an asset that is the
beneficial interest in an investment in the second entity and has control over
that asset.
50AA
Control
(1) For the purposes of this Act, an entity
controls a second entity if the first entity has the capacity to determine the
outcome of decisions about the second entity’s financial and operating
policies.
(2) In determining whether the first entity
has this capacity:
(a) the practical influence the first
entity can exert (rather than the rights it can enforce) is the issue to be
considered; and
(b) any practice or pattern of
behaviour affecting the second entity’s financial or operating policies is to
be taken into account (even if it involves a breach of an agreement or a breach
of trust).
(3) The first entity does not control the
second entity merely because the first entity and a third entity jointly have
the capacity to determine the outcome of decisions about the second entity’s
financial and operating policies.
(4) If the first entity:
(a) has the capacity to influence
decisions about the second entity’s financial and operating policies; and
(b) is under a legal obligation to
exercise that capacity for the benefit of someone other than the first entity’s
members;
the first entity is taken not to control the second
entity.
Division 7—Interpretation of other expressions
52
Doing acts
A reference to doing an act or thing
includes a reference to causing or authorising the act or thing to be done.
52A
Signing
Without affecting the law on agency, if
this Act requires that something be signed, it can be signed by an individual
using a power of attorney from the person required to sign.
53
Affairs of a body corporate
For the purposes of the definition of examinable
affairs in section 9, section 53AA, 232, 233 or 234,
paragraph 461(1)(e), section 487, subsection 1307(1) or section 1309,
or of a prescribed provision of this Act, the affairs of a body corporate
include:
(a) the promotion, formation,
membership, control, business, trading, transactions and dealings (whether
alone or jointly with any other person or persons and including transactions
and dealings as agent, bailee or trustee), property (whether held alone or
jointly with any other person or persons and including property held as agent,
bailee or trustee), liabilities (including liabilities owed jointly with any
other person or persons and liabilities as trustee), profits and other income,
receipts, losses, outgoings and expenditure of the body; and
(b) in the case of a body corporate
(not being a licensed trustee company within the meaning of Chapter 5D or
the Public Trustee of a State or Territory) that is a trustee (but without
limiting the generality of paragraph (a))—matters concerned with the
ascertainment of the identity of the persons who are beneficiaries under the
trust, their rights under the trust and any payments that they have received,
or are entitled to receive, under the terms of the trust; and
(c) the
internal management and proceedings of the body; and
(d) any act or thing done (including
any contract made and any transaction entered into) by or on behalf of the
body, or to or in relation to the body or its business or property, at a time
when:
(i) a receiver, or a
receiver and manager, is in possession of, or has control over, property of the
body; or
(ii) the body is under
administration; or
(iia) a deed of company
arrangement executed by the body has not yet terminated; or
(iii) a compromise or
arrangement made between the body and any other person or persons is being
administered; or
(iv) the
body is being wound up;
and, without limiting the
generality of the foregoing, any conduct of such a receiver or such a receiver
and manager, of an administrator of the body, of an administrator of such a
deed of company arrangement, of a person administering such a compromise or
arrangement or of a liquidator or provisional liquidator of the body; and
(e) the ownership of shares in,
debentures of, and interests in a managed investment scheme made available by,
the body; and
(f) the power of persons to exercise,
or to control the exercise of, the rights to vote attached to shares in the body
or to dispose of, or to exercise control over the disposal of, such shares; and
(g) matters concerned with the
ascertainment of the persons who are or have been financially interested in the
success or failure, or apparent success or failure, of the body or are or have
been able to control or materially to influence the policy of the body; and
(h) the circumstances under which a
person acquired or disposed of, or became entitled to acquire or dispose of,
shares in, debentures of, or interests in a managed investment scheme made
available by, the body; and
(j) where the body has made available
interests in a managed investment scheme—any matters concerning the financial
or business undertaking, scheme, common enterprise or investment contract to
which the interests relate; and
(k) matters relating to or arising out
of the audit of, or working papers or reports of an auditor concerning, any
matters referred to in a preceding paragraph.
53AA
Business affairs of a body corporate
A body corporate’s business affairs
include (without limitation):
(a) any of the body’s affairs
(including anything that is included in the body’s affairs because of section 53);
and
(b) matters concerned with
ascertaining the corporations with which the body is or has been connected.
53AB
Business affairs of a natural person
A natural person’s business affairs
include (without limitation):
(a) the person’s examinable operations
and examinable assets and liabilities; and
(b) any act done (including any
contract made and any transaction entered into) by or on behalf of the person,
or to or in relation to the person or his or her business or property, at a
time when:
(i) the person was, under
the Bankruptcy Act 1966 or the law of an external Territory, a bankrupt
in respect of a bankruptcy from which the person had not been discharged; or
(ii) the person had, under
a law of an external Territory or of a foreign country, the status of an
undischarged bankrupt; or
(iii) the person’s property
was subject to control under Division 2 of Part X of the Bankruptcy
Act 1966 because of an authority given by the person under section 188
of that Act; or
(iv) a personal insolvency
agreement under Part X of the Bankruptcy Act 1966 or under the
corresponding provisions of the law of an external Territory or of a foreign
country was in effect in relation to the person or the person’s property; and
(c) without limiting the generality of
paragraph (b), any conduct of the trustee of such a bankrupt estate or of
such a personal insolvency agreement or a person acting under such an
authority; and
(d) matters concerned with
ascertaining the corporations with which the person is or has been connected.
53AC
Business affairs of a partnership
A partnership’s business affairs include
(without limitation):
(a) the partnership’s promotion,
formation, membership, control, examinable operations and examinable assets and
liabilities; and
(b) the partnership’s management and
proceedings; and
(c) any act done (including any
contract made and any transaction entered into) by or on behalf of the
partnership, or to or in relation to the partnership, at a time when the
partnership is being wound up; and
(d) matters concerned with
ascertaining the corporations with which the partnership is or has been connected.
53AD
Business affairs of a trust
A trust’s business affairs include
(without limitation):
(a) the creation of the trust; and
(b) matters arising under, or
otherwise relating to, the terms of the trust; and
(c) the appointment and removal of a
trustee of the trust; and
(d) the business, trading,
transactions and dealings of the trustee of the trust; and
(e) the profits, income and receipts
of the trustee of the trust; and
(f) the losses, outgoings and
expenditure of the trustee of the trust; and
(g) the trust property, including
transactions and dealings in, and the income arising from, the trust property;
and
(h) the liabilities of the trustee of
the trust; and
(j) the management of the trust; and
(k) any act done (including any
contract made and any transaction entered into) by or on behalf of the trustee
of the trust, or to or in relation to the trust, at a time when the trust is
being wound up; and
(l) matters concerned with
ascertaining the corporations with which the trust is or has been connected.
57
Classes of shares or interests in managed investment schemes
(1) The shares in a body corporate, if not
divided into 2 or more classes, constitute a class.
(2) If the interests in a managed investment
scheme to which an undertaking relates are not divided into 2 or more classes,
they constitute a class.
57A
Meaning of corporation
(1) Subject to this section, in this Act, corporation
includes:
(a) a company; and
(b) any body corporate (whether
incorporated in this jurisdiction or elsewhere); and
(c) an unincorporated body that under
the law of its place of origin, may sue or be sued, or may hold property in the
name of its secretary or of an office holder of the body duly appointed for
that purpose.
(2) Neither of the following is a corporation:
(a) an exempt public authority;
(b) a corporation sole.
(3) To avoid doubt, an Aboriginal and Torres
Strait Islander corporation is taken to be a corporation for the
purposes of this Act.
Note: Various provisions of this Act that generally apply
to corporations do not apply to Aboriginal and Torres Strait Islander
corporations because of express provisions to that effect: see
section 190B, subsection 197(5), section 206HB and subsections
1309(6), 1318(5), 1321(2) and 1335(3).
58AA
Meaning of court and Court
(1) Subject to subsection (2), in this
Act:
court means any court.
Court means any of the following courts:
(a) the Federal Court;
(b) the Supreme Court of a State or
Territory;
(c) the Family Court of Australia;
(d) a court to which section 41
of the Family Law Act 1975 applies because of a Proclamation made under
subsection 41(2) of that Act.
(2) Except where there is a clear expression
of a contrary intention (for example, by use of the expression “the
Court”), proceedings in relation to a matter under this Act may, subject to Part 9.6A,
be brought in any court.
Note: The matters dealt with in Part 9.6A
include the applicability of limits on the jurisdictional competence of courts.
58B
Discharge of obligations under this Act
(2) Subject to subsection (3), an act
required to be done under this Act may, for the purposes of this Act, be done
anywhere in Australia, whether in or outside this jurisdiction.
(3) Nothing in subsection (2) affects
the operation of any provision of this Act that:
(a) expressly requires a particular
act to be done in this jurisdiction; or
(b) expressly or by implication
permits a particular act to be done outside Australia.
59
Debentures as consideration for acquisition of shares
A reference to a body corporate that
offers debentures as consideration for the acquisition of shares in a body
corporate includes a reference to a body corporate that offers a cash sum as
consideration for the acquisition of shares where it is to be a term of the
contract for the acquisition of those shares that the offeree makes, or that
the sum is applied in whole or in part in making, a payment by way of deposit
with, or loan to, the body corporate that offers the sum.
60
Declaration of relevant relationships
Administrator
(1) In this Act, a declaration of
relevant relationships, in relation to an administrator of a company
under administration, means a written declaration:
(a) stating whether any of the
following:
(i) the administrator;
(ii) if the administrator’s
firm (if any) is a partnership—a partner in that partnership;
(iii) if the administrator’s
firm (if any) is a body corporate—that body corporate or an associate of that
body corporate;
has, or has had within the
preceding 24 months, a relationship with:
(iv) the company; or
(v) an associate of the
company; or
(vi) a former liquidator, or
former provisional liquidator, of the company; or
(vii) a person who is
entitled to enforce a charge on the whole, or substantially the whole, of the
company’s property; and
(b) if so, stating the administrator’s
reasons for believing that none of the relevant relationships result in the
administrator having a conflict of interest or duty.
Liquidator
(2) In this Act, a declaration of
relevant relationships, in relation to a liquidator of a company, means
a written declaration:
(a) stating whether any of the
following:
(i) the liquidator;
(ii) if the liquidator’s
firm (if any) is a partnership—a partner in that partnership;
(iii) if the liquidator’s
firm (if any) is a body corporate—that body corporate or an associate of that
body corporate;
has, or has had within the
preceding 24 months, a relationship with:
(iv) the company; or
(v) an associate of the
company; or
(vi) a former liquidator, or
former provisional liquidator, of the company; or
(vii) a former administrator
of the company; or
(viii) a former administrator
of a deed of company arrangement executed by the company; and
(b) if so, stating the liquidator’s
reasons for believing that none of the relevant relationships result in the
liquidator having a conflict of interest or duty.
64
Entering into a transaction in relation to shares or securities
A reference in Chapter 6 to
entering into a transaction in relation to shares or securities includes a
reference to:
(a) entering into, or becoming a party
to, a relevant agreement in relation to the shares or securities; and
(b) exercising an option to have the
shares or securities allotted.
64A
Entities
Except in Chapter 2E, a reference
to an entity:
(a) is a reference to a natural
person, a body corporate (other than an exempt public authority), a partnership
or a trust; and
(b) includes, in the case of a trust,
a reference to the trustee of the trust.
64B
Entities connected with a corporation
Body corporate
(1) A body corporate is connected with a
corporation if, and only if, the corporation:
(a) can control, or influence
materially, the body’s activities or internal affairs; or
(b) is a member of the body; or
(c) is in a position to cast, or to
control the casting of, a vote at a general meeting of the body; or
(d) has power to dispose of, or to
exercise control over the disposal of, a share in the body; or
(e) is financially interested in the
body’s success or failure or apparent success or failure; or
(f) is owed a debt by the body; or
(g) is engaged by the body under a
contract for services; or
(h) acts as agent for the body in any
transaction or dealing.
Natural person
(2) A natural person is connected with a
corporation if, and only if, the corporation:
(a) is a trustee of a trust under
which the person is capable of benefiting; or
(b) is engaged by the person under a
contract for services; or
(c) acts as agent for the person in
any transaction or dealing; or
(d) is an attorney of the person under
a power of attorney; or
(e) has appointed the person as the
corporation’s attorney under a power of attorney; or
(f) is given financial, business or
legal advice by the person in the performance of the functions attaching to the
person’s professional capacity.
Partnership
(3) A
partnership is connected with a corporation if, and only if, the corporation:
(a) is a partner in the partnership;
or
(b) can control, or influence
materially, the partnership’s activities or internal affairs; or
(c) is financially interested in the
partnership’s success or failure or apparent success or failure; or
(d) is a creditor of the partnership;
or
(e) is engaged by the partnership
under a contract for services; or
(f) acts as agent for the partnership
in any transaction or dealing.
Trust
(4) A trust is connected with a corporation
if, and only if, the corporation:
(a) is the settlor, or one of the
settlors, of the trust; or
(b) has power under the terms of the
trust to appoint or remove a trustee of the trust or to vary, or cause to be
varied, any of the terms of the trust; or
(c) is a trustee of the trust; or
(d) can control, or influence
materially, the activities of the trust; or
(e) is capable of benefiting under the
trust; or
(f) is a creditor of the trustee of
the trust; or
(g) is engaged by the trustee of the
trust under a contract for services; or
(h) acts as agent for the trustee of
the trust in any transaction or dealing.
65
Eligible money market dealer
ASIC may declare a body corporate to be
an authorised dealer in the short term money market by notice published in the Gazette.
66A
Exempt bodies
A body corporate is an exempt body of a
State or Territory if, and only if, it:
(a) is not a company; and
(b) is incorporated by or under a law
of the State or Territory.
70
Extension of period for doing an act
Where this Act confers power to extend
the period for doing an act, an application for the exercise of the power may
be made, and the power may be exercised, even if the period, or the period as
last extended, as the case requires, has ended.
73A
When a court is taken to find a person guilty of an offence
An Australian court finds a person
guilty of an offence if, and only if:
(a) the court convicts the person of
the offence; or
(b) the person is charged before the
court with the offence and is found in the court to have committed the offence,
but the court does not proceed to convict the person of the offence.
75
Inclusion in official list
A reference to a body corporate or other
person included in an official list of a body corporate is a reference to:
(a) a body corporate or other person
whose name is included in that official list; or
(b) a body corporate or other person
whose name has been changed but whose previous name was included in that
official list immediately before the change and is still so included.
79
Involvement in contraventions
A person is involved in a contravention
if, and only if, the person:
(a) has aided, abetted, counselled or
procured the contravention; or
(b) has induced, whether by threats or
promises or otherwise, the contravention; or
(c) has been in any way, by act or
omission, directly or indirectly, knowingly concerned in, or party to, the
contravention; or
(d) has conspired with others to
effect the contravention.
80 Jervis Bay Territory taken to be part of the Australian Capital Territory
The Jervis Bay Territory is taken to be
part of the Australian Capital Territory.
82
Offers and invitations to the public
A reference in this Act to, or to the
making of, an offer to the public or to, or to the issuing of, an invitation to
the public is, unless the contrary intention appears, to be construed as
including a reference to, or to the making of, an offer to any section of the
public or to, or to the issuing of, an invitation to any section of the public,
as the case may be, whether selected as clients of the person making the offer
or issuing the invitation or in any other manner and notwithstanding that the
offer is capable of acceptance only by each person to whom it is made or that
an offer or application may be made pursuant to the invitation only by a person
to whom the invitation is issued, but a bona fide offer or invitation is not
taken to be an offer or invitation to the public if it:
(a) is an offer or invitation to enter
into an underwriting agreement; or
(b) is made or issued to a person
whose ordinary business is to buy or sell shares, debentures or interests in
managed investment schemes, whether as principal or agent; or
(c) is made or issued to existing
members or debenture holders of a corporation and relates to shares in, or
debentures of, that corporation; or
(d) is made or issued to existing
members of a company in connection with a proposal referred to in section 507
and relates to shares in that company.
83
Officers, and other persons, in default
A reference, in relation to a
contravention, to an officer of a body corporate, or to a person, who is in
default is a reference to an officer of the body (including a person who later
ceases to be such an officer), or to a person, as the case may be, who is
involved in the contravention.
86
Possession
A thing that is in a person’s custody or
under a person’s control is in the person’s possession.
88A
Public document of a body corporate
(1) Subject to this section, public
document, in relation to a body, means:
(a) an instrument of, or purporting to
be signed, issued or published by or on behalf of, the body that:
(i) when signed, issued or
published, is intended to be lodged or is required by or under this Act or the
ASIC Act to be lodged; or
(ii) is signed, issued or
published under or for the purposes of this Act, the ASIC Act or any other
Australian law; or
(b) an instrument of, or purporting to
be signed or issued by or on behalf of, the body that is signed or issued in
the course of, or for the purposes of, a particular transaction or dealing; or
(c) without
limiting paragraph (a) or (b), a business letter, statement of account,
invoice, receipt, order for goods, order for services or official notice of, or
purporting to be signed or issued by or on behalf of, the body.
(2) A thing is not a public document of a
body if it:
(a) is applied, or is intended or
required to be applied:
(i) to goods; or
(ii) to a package, label,
reel or thing in or with which goods are, or are to be, supplied; and
(b) is so applied, or is intended or
required to be so applied, for a purpose connected with the supply of the
goods.
(3) In subsection (2):
apply to includes print on, weave in, impress
on, work into, or annex, affix or attach to.
label includes a band or ticket.
package includes:
(a) a covering, stopper, glass,
bottle, vessel, box, capsule, case, frame or wrapper; or
(b) any other container or thing in
which goods are, or are to be, packed.
88B
Qualified accountants
(1) For the purposes of this Act, a qualified
accountant is a person covered by a declaration in force under subsection (2).
(2) ASIC may, in writing, declare that all
members of a specified professional body, or all persons in a specified class
of members of a specified professional body, are qualified accountants for the
purposes of this Act.
(3) ASIC may, in writing, vary or revoke a
declaration made under subsection (2).
89
Qualified privilege
(1) Where this
Act provides that a person has qualified privilege in respect of an act, matter
or thing, the person:
(a) has qualified privilege in
proceedings for defamation; or
(b) is
not, in the absence of malice on the person’s part, liable to an action for
defamation at the suit of a person;
as the case requires, in respect of that act, matter or
thing.
(2) In subsection (1):
malice includes ill will to the person
concerned or any other improper motive.
(3) Neither this section nor a provision of this
Act that provides as mentioned in subsection (1) limits or affects any
right, privilege or immunity that a person has, apart from this section or such
a provision, as defendant in proceedings, or an action, for defamation.
90
Receivers and managers
A receiver of property of a body
corporate is also a manager if the receiver manages, or has under the terms of
the receiver’s appointment power to manage, affairs of the body.
92
Securities
(1) Subject to this section, securities
means:
(a) debentures, stocks or bonds issued
or proposed to be issued by a government; or
(b) shares in, or debentures of, a
body; or
(c) interests in a managed investment
scheme; or
(d) units of such shares;
but does not include:
(f) a derivative (as defined in
Chapter 7), other than an option to acquire by way of transfer a security
covered by paragraph (a), (b), (c) or (d); or
(g) an excluded security.
Note: A derivative does not include an option to
acquire a security by way of issue (see the combined effect of paragraph
761D(3)(c), paragraph 764A(1)(a) and paragraph (d) of the definition of security
in section 761A).
(2) The expression securities,
when used in relation to a body, means:
(a) shares in the body; or
(b) debentures of the body; or
(c) interests in a managed investment
scheme made available by the body; or
(d) units
of such shares;
but does not include:
(e) a derivative (as defined in
Chapter 7), other than an option to acquire by way of transfer a security
covered by paragraph (a), (b), (c) or (d); or
(f) an excluded security.
Note: A derivative does not include an option to
acquire a security by way of issue (see the note to subsection (1)).
(3) In
Chapters 6 to 6CA (inclusive) and Part 1.2A:
securities
means:
(a) shares in a body; or
(b) debentures of a body; or
(c) interests in a registered managed
investment scheme; or
(d) legal or equitable rights or
interests in:
(i) shares; or
(ii) debentures; or
(iii) interests in a
registered managed investment scheme;
(e) options to acquire (whether by way
of issue or transfer) a security covered by paragraph (a), (b), (c) or
(d).
It does not cover:
(f) a derivative (as defined in
Chapter 7), other than an option to acquire by way of transfer a security
covered by paragraph (a), (b), (c) or (d); or
(g) a market traded option.
Note: A derivative does not include an option to
acquire a security by way of issue (see the note to subsection (1)).
Note: Section 9 defines body.
(4) In Chapter 6D
securities has the meaning given by section 700 and in
Chapter 7 security has the meaning given by section 761A.
95A
Solvency and insolvency
(1) A person is solvent if, and only if, the
person is able to pay all the person’s debts, as and when they become due and
payable.
(2) A person who is not solvent is insolvent.
Division 8—Miscellaneous interpretation rules
100
Address of registered office etc.
(1) Where a provision of this Act requires a
notice to be lodged of, or information in an application to specify:
(a) the address of an office, or of a
proposed office, of a body corporate or other person; or
(b) a
change in the situation of an office of a body corporate or other person;
the notice:
(c) must specify the full address, or
the full new address, as the case requires, of the relevant office including,
where applicable, the number of the room and of the floor or level of the
building on which the office is situated; and
(d) where the notice or application
relates to the address or situation of an office of a body corporate and the
address specified in accordance with paragraph (a) is the address of
premises that are not to be occupied by the body corporate—must include a
written statement to the effect that the person who occupies those premises has
consented in writing to the address being specified in the notice or
application and has not withdrawn that consent.
(2) ASIC may require a person who has lodged
a notice or application that includes a statement under paragraph (1)(d)
to produce to ASIC the consent referred to in the statement.
100A
Operation of certain laws relating to instruments on which stamp duty has not
been paid
Nothing in this Act affects the
operation of any provision of any law:
(a) relating to the admissibility in
evidence, or any other use, in any proceedings, of a document in respect of
which any applicable stamp duty has not been paid; or
(b) prohibiting the registration by a
company of a transfer of securities if any stamp duty applicable in respect of
the transfer has not been paid.
101
Amount of stock representing a number of shares
In relation to a body corporate the
whole or a portion of whose share capital consists of stock, a reference to a
number of shares (including a number expressed as a percentage) is, in relation
to an amount of stock, a reference to the amount of stock that represents that
number of shares.
102
Applications to be in writing
An application to ASIC for the issuing
of a document or the doing of any other act or thing by ASIC under this Act
must be in writing.
Note: For electronic lodgment of documents with
ASIC, see section 352.
102B In
Australia or elsewhere, in this jurisdiction or elsewhere etc.
(1) The expression in Australia or elsewhere, or a similar expression, does not limit the generality of
the expression in this jurisdiction or elsewhere or a similar
expression.
(2) The expression outside this
jurisdiction includes places outside Australia.
102C
In Australia
In Australia means in Australia (whether in this jurisdiction or not).
Note: This definition is needed if there is a State
that is not a referring State. If all the States are referring States, every
place in Australia will also be in this jurisdiction.
103
Effect of certain contraventions of this Act
(1) This section has effect except so far as
this Act otherwise provides.
(2) An act, transaction, agreement,
instrument, matter or thing is not invalid merely because of:
(a) a contravention of section 115,
208, 209, 601CA or 601CD; or
(b) a failure to comply with a
requirement of this Act that a person cause a notice, or a copy of a document,
to be published in the Gazette or in a newspaper.
Note: Section 1101H provides that a failure to
comply with requirements of Chapter 7 generally does not affect the
validity or enforceability of any transaction, contract or other arrangement.
(4) In this section:
invalid includes void, voidable and
unenforceable.
(5) Nothing in this section limits the
generality of anything else in it.
104
Effect of provisions empowering a person to require or prohibit conduct
Where, in accordance with a provision of
this Act other than the replaceable rules, a person requires another person to
do, or prohibits another person from doing, a particular act, that provision is
taken to require the other person to comply with the requirement or prohibition,
as the case may be.
105
Calculation of time
Without limiting subsection 36(1) of the
Acts Interpretation Act 1901, in calculating how many days a particular
day, act or event is before or after another day, act or event, the first‑mentioned
day, or the day of the first‑mentioned act or event, is to be counted but not
the other day, or the day of the other act or event.
106
Performance of functions by Commission delegate
For the purpose of the performance of a
function, or the exercise of a power, under this Act by a Commission delegate,
a reference to ASIC in a provision of this Act relating to the performance of
the function, or the exercise of the power, includes a reference to the
Commission delegate.
107
Notice in relation to top 20 members of a class
For the purposes of subsection 163(3B),
section 178B and paragraph 601BC(2)(lc), if 2 or more members in the top
20 members of a class of shares each hold the same number of shares, details of
each of those members must be included in any notice given in relation to those
provisions.
108
Parts of dollar to be disregarded in determining majority in value of creditors
etc.
In determining whether a majority in
value of creditors, or a particular proportion in value of creditors, has
passed a resolution or done any other act or thing, if a creditor’s debt
consists of a number of whole dollars and a part of a dollar, the part of the
dollar is to be disregarded.
109
References to persons, things and matters
(1) Except so far as the contrary intention
appears, a provision of this Act is to be interpreted in such a manner that any
2 or more references in the provision are capable of having the same referent
or referents, or of having a referent or referents in common, as the case
requires.
(2) In subsection (1), referent,
in relation to a reference in a provision, means:
(a) in so far as the reference is
interpreted as being in the singular number—a person to whom, or a thing or
matter to which; or
(b) in
so far as the reference is interpreted as being in the plural number—any one or
2 or more persons to whom, or of 2 or more things or matters to which;
the reference is taken, in the application of the
provision, to refer.
109X
Service of documents
(1) For the
purposes of any law, a document may be served on a company by:
(a) leaving
it at, or posting it to, the company’s registered office; or
(b) delivering
a copy of the document personally to a director of the company who resides in Australia or in an external Territory; or
(c) if a liquidator of the company has
been appointed—leaving it at, or posting it to, the address of the liquidator’s
office in the most recent notice of that address lodged with ASIC; or
(d) if an administrator of the company
has been appointed—leaving it at, or posting it to, the address of the
administrator in the most recent notice of that address lodged with ASIC.
(2) For the purposes of any law, a document
may be served on a director or company secretary by leaving it at, or posting
it to, the alternative address notified to ASIC under subsection 5H(2), 117(2),
205B(1) or (4) or 601BC(2). However, this only applies to service on the
director or company secretary:
(a) in their capacity as a director or
company secretary; or
(b) for the purposes of a proceeding
in respect of conduct they engaged in as a director or company secretary.
(3) Subsections (1) and (2) do not apply
to a process, order or document that may be served under section 9 of the Service
and Execution of Process Act 1992.
(6) This section does not affect:
(a) any other provision of this Act,
or any provision of another law, that permits; or
(b) the power of a court to authorise;
a document to be served in a different way.
(7) This section applies to provisions of a
law dealing with service whether it uses the expression “serve” or uses any
other similar expression such as “give” or “send”.
Part 1.2A—Disclosing entities
Division 1—Object of Part
111AA
Object of Part
The object of this Part is:
(a) to define disclosing entity
and other key terms relevant to disclosing entities (this is done in Division 2);
and
(b) to outline the significance for
this Act of being a disclosing entity (this is done in Division 3); and
(c) to provide for exemptions from,
and modifications of, the special requirements imposed by this Act in relation
to disclosing entities (this is done in Division 4).
Division 2—Definitions
111AB
Terms defined in Division
This Division contains definitions of
the following terms:
(a) disclosing entity (section 111AC);
(b) ED securities (section 111AD);
(c) ED securities of a disclosing
entity (section 111AK);
(d) listed disclosing entity
(subsection 111AL(1));
(e) quoted ED securities (section 111AM);
(f) unlisted disclosing entity
(subsection 111AL(2)).
111AC
Disclosing entity
(1) If any securities of a body (except
interests in a managed investment scheme) are ED securities, the body is a disclosing
entity for the purposes of this Act.
(2) If any interests in a managed investment
scheme are ED securities, the undertaking to which the interests relate is a disclosing
entity for the purposes of this Act.
111AD
ED securities
(1) Securities of a body are ED
securities (short for “enhanced disclosure securities”) for the
purposes of this Act if, and only if:
(a) they are ED securities under
section 111AE, 111AF, 111AFA, 111AG or 111AI; and
(b) they are not declared under
section 111AJ not to be ED securities.
(2) For the purposes of sections 111AE,
111AF, 111AG and 111AI, a class of shares or debentures is taken to include
units of shares or debentures in that class.
111AE
Securities of body or undertaking that is included in a licensed market’s
official list
(1) If:
(a) a body corporate is, with its
agreement, consent or acquiescence, included in the official list of a
prescribed financial market; and
(b) the market’s listing rules
(according to their terms) apply to the body in relation to a class (which may
be some or all) of securities issued by the body;
securities issued by the body in that class are ED
securities, and that market is a listing market in
relation to that body.
(1A) If:
(a) an undertaking to which interests
in a registered scheme relates is, with the agreement, consent or acquiescence
of the responsible entity, included in the official list of a prescribed
financial market; and
(b) the market’s listing rules
(according to their terms) apply to the undertaking in relation to a class
(which may be some or all) of managed investment products that relate to the
scheme;
managed investment products in that class that relate to
the scheme are ED securities, and that market is a listing
market in relation to the undertaking.
(2) Subsections (1) and (1A) do not
apply to securities of a body if:
(a) the body is a public authority of
the Commonwealth or an instrumentality or agency of the Crown in right of the
Commonwealth; and
(b) the only securities issued by the
body that would otherwise be ED securities because of subsection (1) or
(1A) are debentures; and
(c) both the repayment of principal,
and the payment of interest, in respect of those debentures is guaranteed by
the Commonwealth.
(3) Subsections (1) and (1A) do not
apply to securities of a body that is:
(a) a public authority of a State or
Territory; or
(b) an instrumentality or agency of
the Crown in right of a State or Territory.
111AF
Securities (except debentures and managed investment products) held by 100 or
more persons
(1) Securities (except debentures or managed
investment products) in a class of securities of a body are ED securities
if:
(a) a disclosure document in relation
to securities in that class has been lodged with ASIC under Chapter 6D;
and
(b) securities in that class have been
issued pursuant to the disclosure document; and
(c) after an issue of securities in
that class pursuant to the disclosure document, 100 or more persons held
securities in that class; and
(d) securities in that class have been
held by 100 or more persons at all times since the issue of securities referred
to in paragraph (c).
(2) Securities (except debentures and managed
investment products) in a class of securities of a body are ED securities
if securities in that class have been issued under a recognised offer
and the offeror’s records indicate that 100 or more people who reside in this
jurisdiction have held securities in that class (whether or not as a result of
the recognised offer) at all times since the issue.
111AFA
Managed investment products held by 100 or more persons
(1) Managed investment products in a class of
managed investment products issued by a body are ED securities if
100 or more people hold managed investment products in that class as a result
of offers that gave rise to obligations to give Product Disclosure Statements
(whether or not all in the same terms) under Chapter 7.
(2) Interests in a class of interests in a
managed investment scheme issued by a body are ED securities if
interests in that class have been issued under a recognised offer and the
offeror’s records indicate that 100 or more people who reside in this jurisdiction
have held interests in that class (whether or not as a result of the recognised
offer) at all times since the issue.
111AG
Securities issued as consideration for an acquisition under an off‑market
takeover bid or Part 5.1 compromise or arrangement
(1) Securities (except debentures) in a class
of securities of a body are ED securities if:
(a) securities in that class have been
issued by the body as consideration for offers under an off‑market bid; and
(b) after an issue of securities in
that class under the off‑market bid, 100 or more persons held securities in
that class; and
(c) securities in that class have been
held by 100 or more persons at all times since the issue of securities referred
to in paragraph (b).
(2) Securities in a class of securities of a
body are ED securities if:
(a) securities in that class have been
issued as consideration for the acquisition or cancellation of securities of
another body pursuant to a compromise or arrangement under Part 5.1; and
(b) securities in that class, or those
or any other securities of the other body, were ED securities immediately
before securities in that class were first issued pursuant to the compromise or
arrangement; and
(c) after an issue of securities in
that class pursuant to the compromise or arrangement, 100 or more persons held
securities in that class; and
(d) securities in that class have been
held by 100 or more persons at all times since the issue of securities referred
to in paragraph (c).
111AH
When a person holds securities for the purposes of sections 111AF, 111AFA
and 111AG
(1) For the purposes of sections 111AF,
111AFA and 111AG, a person holds securities if, and only if:
(a) the person is registered as the
holder of the securities in a register under section 169, 170, 171 or
601CZB; or
(b) the person is entitled to be so
registered.
(2) For the purposes of sections 111AF,
111AFA and 111AG, joint holders of securities count as one person.
111AI
Debentures
Debentures of a borrower are ED
securities if:
(a) section 283AA requires the
borrower to appoint a trustee; or
(b) section 283AA does not apply
to the borrower only because the offer of the debentures to which
section 283AA would otherwise have applied is a recognised offer.
111AJ
Regulations may declare securities not to be ED securities
(1) The regulations may declare specified
securities of bodies not to be ED securities.
(2) Regulations in force for the purposes of subsection (1)
have effect accordingly, despite anything else in this Division.
111AK
ED securities of a disclosing entity
For the purposes of this Act, ED
securities because of which (having regard to section 111AC) a disclosing
entity is such an entity are ED securities of the entity.
111AL
Listed or unlisted disclosing entity
(1) For the purposes of this Act, a
disclosing entity is a listed disclosing entity if all or any ED
securities of the entity are quoted ED securities.
(2) For the purposes of this Act, a
disclosing entity that is not a listed disclosing entity is an unlisted
disclosing entity.
111AM
Quoted ED securities
For the purposes of this Act, ED
securities are quoted ED securities if they are ED securities
because of section 111AE.
Division 3—Significance of being a disclosing entity
111AN
Division contains outline of significance of being a disclosing entity
This Division outlines the significance
for this Act of being a disclosing entity.
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.
111AO
Accounting requirements
A disclosing entity incorporated or
formed in Australia has to prepare financial statements and reports for half‑years
as well as full financial years. These requirements are set out in Chapter 2M.
111AP
Continuous disclosure requirements
(1) A disclosing entity is subject to the
continuous disclosure requirements of sections 674 and 675.
111AQ Prospectus
relief
Section 713 applies (subject to
certain qualifications) to prospectuses for quoted ED securities of disclosing
entities. The section’s requirements for the content of prospectuses are less
comprehensive than those that apply to other prospectuses under section 710.
111AQA
Product Disclosure Statement relief
Obligations that apply to disclosing
entities can be taken into account in deciding what information should be
included in a Product Disclosure Statement—see section 1013FA and paragraph
1013F(2)(d).
Division 4—Exemptions and modifications
111AR
Meaning of disclosing entity provisions
(1) For the purposes of this Division, the disclosing
entity provisions are the provisions of the following:
(a) Chapter 2M as it applies to
disclosing entities;
(d) sections 674 and 675.
(2) A reference in subsection (1) to a
Part, Division or section includes a reference to regulations in force for the
purposes of the Part, Division or section.
111AS
Exemptions by regulations
(1) The regulations may exempt specified
persons from all or specified disclosing entity provisions:
(a) either generally or as otherwise
specified; and
(b) either unconditionally or subject
to specified conditions.
(2) Without limiting subsection (1), an
exemption may relate to specified securities.
111AT
Exemptions by ASIC
(1) ASIC may, by writing, exempt specified
persons from all or specified disclosing entity provisions:
(a) either generally or as otherwise
specified; and
(b) either unconditionally or subject
to specified conditions.
(2) Without limiting subsection (1), an
exemption may relate to specified securities.
(3) ASIC must cause a copy of an exemption to
be published in the Gazette.
111AU
Enforcing conditions of exemptions
(1) A person must not intentionally or
recklessly contravene a condition to which an exemption under section 111AS
or 111AT is subject.
(2) If a person contravenes such a condition,
the Court may, on the application of ASIC, order the person to comply with the
condition.
111AV
Modifications by regulations
(1) The regulations may make modifications of
all or specified disclosing entity provisions.
(2) Without limiting subsection (1), a
modification may relate to specified securities.
111AW
Exemptions and modifications have effect
Exemptions and modifications under this
Division have effect accordingly.
111AX
Effect of Division
Nothing in this Division limits, or is
limited by, any other exemption or modification power (for example, section 340,
341 or 741).
Part 1.4—Technical provisions about aids for readers
111J
Small business guide
(1) If, because of:
(a) regulations made under this Act;
or
(b) instruments issued by ASIC under
this Act;
the small business guide as set out in Part 1.5 has
become out of date, the regulations may set out modifications of the guide that
would bring it up to date. The guide then is to be read as if it were so
modified.
(2) The small business guide is divided into
sections (numbered 1, 2, 3…) and the
sections are divided into paragraphs (numbered 1.1, 1.2, 1.3…). For
example, a reference in the guide to 3.1 is a reference to paragraph 3.1 of the
guide.
Part 1.5—Small business guide
This guide summarises the main rules in
the Corporations Act (the Corporations Act 2001) that apply to
proprietary companies limited by shares—the most common type of company used by
small business. The guide gives a general overview of the Corporations Act as
it applies to those companies and directs readers to the operative provisions
in the Corporations Act.
The notes in square brackets at the end
of paragraphs in the guide indicate the main provisions of the Corporations
Act, the regulations made under the Corporations Act, and ASIC Practice Notes
that are relevant to the information in the paragraphs.
Other Commonwealth, State and Territory
laws also impose obligations on proprietary companies and their operators.
1 What
registration means
1.1 Separate legal entity that has its own powers
As far as the law is concerned, a
company has a separate legal existence that is distinct from that of its
owners, managers, operators, employees and agents. A company has its own
property, its own rights and its own obligations. A company’s money and other
assets belong to the company and must be used for the company’s purposes.
A company has the powers of an
individual, including the powers to:
• own and dispose of property and other assets
• enter into contracts
• sue and be sued.
Once a company is registered, its
separate legal status, property, rights and liabilities continue until ASIC
(Australian Securities and Investments Commission) deregisters the company.
[sections 119, 124—125, 601AA—601AD]
1.2 Limited liability of shareholders
Shareholders of a company are not liable
(in their capacity as shareholders) for the company’s debts. As shareholders,
their only obligation is to pay the company any amount unpaid on their shares
if they are called upon to do so. However, particularly if a shareholder is
also a director, this limitation may be affected by other laws and the
commercial practices discussed in 1.3 and 1.4.
[section 516]
1.3 Director’s liability for company’s debts
A director of a company may be liable
for debts incurred by the company at a time when the company itself is unable
to pay those debts as they fall due.
A director of a company may be liable to
compensate the company for any losses the company suffers from a breach of
certain of the director’s duties to the company (see 5.3).
In addition to having liability for the
company’s debts or to pay compensation to the company, a director may also be
subject to a civil penalty.
If a company holds property on trust, a
director of the company may be liable in some circumstances for liabilities
incurred by the company as trustee.
[sections 197, 344, 588G, 588J, 588M, 1317H]
1.4 Director’s liability as guarantor/security over
personal assets
As a matter of commercial practice, a
bank, trade creditor or anyone else providing finance or credit to a company
may ask a director of the company:
• for a personal guarantee of the company’s liabilities;
and
• for some form of security over their house or personal
assets to secure the performance by the company of its obligations.
The director of a company may, for
example, be asked by a bank to give a mortgage over their house to secure the
company’s repayment of a loan. If the company does not repay the loan as agreed
with the bank, the director may lose the house.
1.5 Continuous existence
A company continues to exist even if 1
or more of its shareholders or directors sells their shares, dies or leaves the
company. If a company has only 1 shareholder who is also the only director of
the company and that person dies, their personal representative is able to
ensure that the company continues to operate.
[sections 119, 224A]
1.6 Rules for the internal management of a company
The Corporations Act contains a basic
set of rules for the internal management of a company (appointments, meetings
etc.).
Some of these rules are mandatory for
all companies. There are a few special rules for single shareholder/single
director companies.
Other internal management rules in the
Corporations Act are replaceable rules. The replaceable rules do not apply to:
• a single shareholder/single director company; or
• a company that had a constitution before the
introduction of the replaceable rules regime and has not repealed it.
A company does not need to have a
separate constitution of its own; it can simply take advantage of the rules in
the Corporations Act. The company will need a constitution only if it wants to
displace, modify or add to the replaceable rules.
[sections 134‑141 and 198E]
1.7 How a company acts
A company does not have a physical
existence. It must act through other people.
Individual directors, the company
secretary, company employees or agents may be authorised to enter into
contracts that bind the company (see 7).
In some circumstances, a company will be
bound by something done by another person (see 1.8).
1.8 Directors
The directors of a company are
responsible for managing the company’s business. It is a replaceable rule (see
1.6) that generally the directors may exercise all the powers of the company
except a power that the Corporations Act, a replaceable rule or a provision of
the company’s constitution (if any) requires the company to exercise in general
meeting.
The only director of a company who is
also the only shareholder is responsible for managing the company’s business
and may exercise all of the company’s powers.
The Corporations Act sets out rules
dealing with the calling and conduct of directors’ meetings. Directors must
keep a written record (minutes) of their resolutions and meetings.
There are 2 ways that directors may pass
resolutions:
• at a meeting; or
• by having all of the directors record and sign their
decision.
If a company has only 1 director, the
sole director may also pass a resolution by recording and signing their
decision.
[sections 198A, 198E, 202C, subsection 202F(1),
sections 248A‑248G, 251A]
1.9 Shareholders
The shareholders of a company own the
company, but the company has a separate legal existence and the company’s
assets belong to the company.
Shareholders can make decisions about
the company by passing a resolution, usually at a meeting. A “special
resolution” usually involves more important questions affecting the company as
a whole or the rights of some or all of its shareholders.
There are 2 ways that shareholders may
pass a resolution:
• at a meeting; or
• by having all of the shareholders record and sign
their decision.
If a meeting is held, an ordinary
resolution must be passed by a majority of the votes cast by shareholders of
the company entitled to vote on the resolution at the meeting in person or by
proxy (if proxies are allowed). A special resolution must be passed by at least
75% of the votes cast by shareholders of the company entitled to vote on the
resolution and who vote at the meeting in person or by proxy (if proxies are
allowed).
The sole shareholder of a company may
pass a resolution by recording and signing their decision.
A company must keep a written record
(minutes) of the members’ resolutions and meetings.
[sections 9 (special resolution),
249A, 249B, 249L, 251A]
1.10 What others can assume about the company
Anyone who does any business with the
company is entitled to assume that the company has a legal right to conduct
that business unless the person knows, or suspects, otherwise. For example, an
outsider dealing with the company is entitled to assume:
• that a person who is shown in a notice lodged with
ASIC as being the director or company secretary of a company has been properly
appointed and is authorised to act for the company; and
• that a person who is held out by the company to be a
director, company secretary or agent of the company has been properly appointed
and is authorised to act for the company.
[sections 128—130]
2 The
company structure for small business
2.1 Proprietary company for small business
Generally, a proprietary company limited
by shares is the most suitable company for use by small business. Such a
proprietary company must have a least 1 shareholder but no more than 50
shareholders (not counting employee shareholders). It may have 1 or more
directors.
[sections 112—113]
3
Setting up a new company
The operators of small businesses can
either buy “shelf” companies or set up new companies themselves.
3.1 “Shelf” companies
The operator of a small business may
find it more convenient to buy a “shelf” company (a company that has already
been registered but has not traded) from businesses which set up companies for
this purpose or from some legal or accounting firms.
3.2 Setting up a company
To set up a new company themselves, the
operator must apply to ASIC for registration of the company.
A proprietary company limited by shares
must have at least 1 shareholder.
To obtain registration, a person must
lodge a properly completed application form with ASIC. The form must set out
certain information including details of every person who has consented to be a
shareholder, director or company secretary of the company.
The company comes into existence when
ASIC registers it.
[sections 117—119, 135—136, 140]
3.3 ACN and name
When a company is registered, ASIC
allocates to it a unique 9 digit number called the Australian Company Number
(ACN). (For use of the ACN see 4.1).
In practice, a new company must have a
name that is different from the name of a company that is already registered. A
proprietary company limited by shares must have the words “Proprietary Limited”
as part of its name. Those words can be abbreviated to “Pty Ltd”.
A proprietary company may adopt its ACN
as its name. If it does so, its name must also contain the words “Australian
Company Number” (which can be abbreviated to “ACN”). For example, the company’s
name might be “ACN 123 456 789 Pty Ltd”.
[sections 119, 147—161]
3.4 Contracts entered into before the company is
registered
A company can ratify a contract entered
into by someone on its behalf or for its benefit before it was registered. If
the company does not ratify the contract, the person who entered into the
contract may be personally liable.
[sections 131—133]
3.5 First shareholders, directors and company secretary
A person listed with their consent as a
shareholder, director or company secretary in the application for registration
of the company becomes a shareholder, director or company secretary of the
company on its registration.
The same person may be both a director
of the company and the company secretary.
See 5.1 and 5.2 for directors and 5.4
for company secretaries. See 6.1 for shareholders.
[section 120]
3.6 Issuing shares
It is a replaceable rule (see 1.6) that,
before issuing new shares, a company must first offer them to the existing shareholders
in the proportions that the shareholders already hold. A company may issue
shares at a price it determines.
[sections 254B, 254D]
3.7 Registered office
A company must have a registered office
in Australia and must inform ASIC of the location of the office. A post office
box cannot be the registered office of a company. The purpose of the registered
office is to have a place where all communications and notices to the company
may be sent.
If the company does not occupy the
premises where its registered office is located, the occupier of the premises
must agree in writing to having the company’s registered office located there.
A proprietary company is not required to
open its registered office to the public but this does not affect its obligation
to make documents available for inspection.
The company must notify ASIC of any
change of address of its registered office.
[sections 100, 142, 143, 173, 1300]
3.8 Principal place of business
If a company has a principal place of
business that is different from its registered office, it must notify ASIC of
the address of its principal place of business and of any changes to that
address.
[sections 117, 146]
3.9 Registers kept by the company
A company must keep registers, including
a register of shareholders and a register of charges. A company must keep its
registers at:
• the company’s registered office; or
• the company’s principal place of business; or
• a place (whether on premises of the company or of
someone else) where the work in maintaining the register is done; or
• another place approved by ASIC.
A register may be kept either in a bound
or looseleaf book or on computer.
If a register is kept on computer, its
contents must be capable of being printed out in hard copy.
[sections 172, 1300—1302, 1306]
3.10 Register of shareholders
A company must keep in its register of
shareholders such information as:
• the names and addresses of its shareholders; and
• details of shares held by individual shareholders.
[sections 168—169]
3.11 Register of charges
A company must keep a register of
charges if the company gives a bank, trade creditor or anybody else a charge
over company assets.
[section 271]
4
Continuing obligations after the company is set up
The Corporations Act and other laws impose
obligations on companies themselves and on their directors and company
secretaries. Some of the more important obligations imposed under the
Corporations Act are discussed below.
4.1 Use of company name and ACN
The name of a company must be shown at all
the company’s business premises (including its registered office) that are open
to the public. The company’s name and its ACN or ABN (if the last 9 digits are
the same, and in the same order, as the last 9 digits of its ACN) must appear:
• on some of its public documents; and
• on its cheques and negotiable instruments; and
• on all documents lodged with ASIC; and
• if it has one, on its common seal.
[sections 123, 144, 147—156,
ASIC Practice Note 47]
4.2 Extract of particulars
Each year, ASIC issues each company with
an extract of particulars within 2 weeks of the company’s review date (which is
generally the anniversary of the company’s registration). The extract includes
details recorded on ASIC’s database such as:
• names and addresses of each director and company
secretary;
• issued shares and options granted;
• details of its shareholders;
• address of its registered office;
• address of its principal place of business.
If any of the details are not correct as
at the date the extract is received, the company must correct those details.
The correction may be lodged with ASIC
on a printed form or, if an agreement is in place to lodge electronically, in
accordance with the agreement.
[Sections 346A and 346C, 352]
4.3 Review fee
A company must pay a review fee to ASIC
each year.
[Corporations (Review Fees) Act 2003]
4.4 Notification to ASIC of changes
The company must notify ASIC if certain
basic changes to the company occur. The following table sets out these
notification requirements.
|
Notification
requirements
|
|
|
If...
|
the company must notify
ASIC of the change...
|
see section...
|
|
1
|
a company issues shares
|
within 28 days after the issue
|
254X
|
|
2
|
a company changes the location of a register
|
within 7 days after the change
|
172, 1302
|
|
3
|
a company changes the address of its registered office or
principal place of business
|
within 28 days after the change
|
142, 146
|
|
4
|
a company changes its directors or company secretary
|
within 28 days after the change (unless the director or
company secretary has notified ASIC of the change)
|
205B
|
|
5
|
there is a change in the name or address of the company’s
directors or secretary
|
within 28 days after the change
|
205B
|
|
6
|
a company creates certain kinds of charges
|
within 45 days after the charge is created
|
263
|
|
7
|
a company has a new ultimate holding company, or details
about the ultimate holding company change
|
within 28 days after the change happens
|
349A
|
|
8
|
any of the changes in items 1 to 7 means that:
(a) the company must add or alter particulars in its member
register kept under section 169; or
(b) the company must add or alter particulars in its member
register kept under section 169, and as a result, details about the
number and class of shares on issue, or the amount paid and unpaid on the
shares, alter.
|
within the time determined under the table in section 178D
|
178A
178C
|
5
Company directors and company secretaries
5.1 Who can be a director
Only an individual who is at least 18
years old can be a director. If a company has only 1 director, they must
ordinarily reside in Australia. If a company has more than 1 director, at least
1 of the directors must ordinarily reside in Australia.
A director must consent in writing to
holding the position of director. The company must keep the consent and must
notify ASIC of the appointment.
In some circumstances, the Corporations
Act imposes the duties and obligations of a director on a person who, although
not formally appointed as a director of a company, nevertheless acts as a
director or gives instructions to the formally appointed directors as to how
they should act.
The Court or ASIC may prohibit a person
from being a director or from otherwise being involved in the management of a
company if, for example, the person has breached the Corporations Act.
A person needs the Court’s permission to
be a director if the person has been convicted of certain offences or is, in
some circumstances, unable to pay their debts as they fall due.
Generally, a director may resign by
giving notice of the resignation to the company. A director who resigns may
notify ASIC of the resignation. If the director does not do so, the company
must notify ASIC of the director’s resignation.
[sections 9, 201A, 201B, 201D, 205A, 205B and 206A‑206G,
228‑230 and 242 and subsection 1317EA(3)]
5.2 Appointment of new directors
It is a replaceable rule (see 1.6) that
shareholders may appoint directors by resolution at a general meeting.
[section 201G]
5.3 Duties and liabilities of directors
In managing the business of a company
(see 1.7), each of its directors is subject to a wide range of duties under the
Corporations Act and other laws. Some of the more important duties are:
• to act in good faith
• to act in the best interests of the company
• to avoid conflicts between the interests of the
company and the director’s interests
• to act honestly
• to exercise care and diligence
• to prevent the company trading while it is unable to
pay its debts
• if the company is being wound up—to report to the
liquidator on the affairs of the company
• if the company is being wound up—to help the
liquidator (by, for example, giving to the liquidator any records of the
company that the director has).
A director who fails to perform their
duties:
• may be guilty of a criminal offence with a penalty of
$200,000 or imprisonment for up to 5 years, or both; and
• may contravene a civil penalty provision (and the
Court may order the person to pay to the Commonwealth an amount of up to
$200,000); and
• may be personally liable to compensate the company or
others for any loss or damage they suffer; and
• may be prohibited from managing a company.
A director’s obligations may continue
even after the company has been deregistered.
[Sections 180, 181, 182, 183, 184, 475, 530A, 588G,
596, 601AE, 601AH, 1317H]
5.4 Company secretaries
A company other than a proprietary
company must have a company secretary. However, a proprietary company may
choose to have a company secretary. The directors appoint the company
secretary. A company secretary must be at least 18 years old. If a company has
only 1 company secretary, they must ordinarily reside in Australia. If a company has more than 1 company secretary, at least 1 of them must
ordinarily reside in Australia.
A company secretary must consent in
writing to holding the position of company secretary. The company must keep the
consent and must notify ASIC of the appointment.
The same person may be both a director
of a company and the company secretary.
Generally, a company secretary may
resign by giving written notice of the resignation to the company. A company
secretary who resigns may notify ASIC of the resignation. If the company
secretary does not do so, the company must notify ASIC of the company
secretary’s resignation.
The company secretary is an officer of
the company and, in that capacity, may be subject to the requirements imposed
by the Corporations Act on company officers.
The company secretary has specific
responsibilities under the Corporations Act, including responsibility for
ensuring that the company:
• notifies ASIC about changes to the identities, names
and addresses of the company’s directors and company secretaries; and
• notifies ASIC about changes to the register of
members; and
• notifies ASIC about changes to any ultimate holding
company; and
• responds, if necessary, to an extract of particulars
that it receives and that it responds to any return of particulars that it
receives.
A company secretary’s obligations may
continue even after the company has been deregistered.
[sections 83, 142, 178A, 178C, 188, 204A‑204G, 205A,
205B, 346C, 348D, 349A, 601AD, 601AH]
6
Shares and shareholders
A proprietary company limited by shares
must have a share capital and at least 1 shareholder. ASIC may apply to a Court
to have a company wound up if it does not have any shareholders.
[sections 461—462]
6.1 Becoming a shareholder and ceasing to be a
shareholder
A person may become a shareholder of a
company in several ways, including the following:
• the person being listed as a shareholder of the
company in the application for registration of the company
• the company issuing shares to the person
• the person buying shares in the company from an
existing shareholder and the company registering the transfer.
Some of the ways in which a person
ceases to be a shareholder are:
• the person sells all of their shares in the company
and the company registers the transfer of the shares
• the company buys back all the person’s shares
• ASIC cancels the company’s registration.
[sections 117, 120, 601AA—601AD]
6.2 Classes of shares
A company may have different classes of
shares. The rights and restrictions attached to the shares in a class
distinguish it from other classes of shares.
[sections 254A—254B]
6.3 Meetings of shareholders
Directors have the power to call
meetings of all shareholders or meetings of only those shareholders who hold a
particular class of shares.
Shareholders who hold at least 5% of the
votes which may be cast at a general meeting of a company have the power to
call and hold a meeting themselves or to require the directors to call and hold
a meeting. Meetings may be held regularly or to resolve specific questions
about the management or business of the company.
The Corporations Act sets out rules
dealing with shareholders’ meetings.
A shareholder of a company may ask the
company for a copy of the record of a meeting or of a decision of shareholders
taken without a meeting.
[sections 249A—251B]
6.4 Voting rights
Different rights to vote at meetings of
shareholders may attach to different classes of shares. It is a replaceable
rule (see 1.6) that, subject to those different rights, each shareholder has 1 vote on a show of hands and, on a poll, 1 vote for each share held.
[sections 250E, 254A—254B]
6.5 Buying and selling shares
A shareholder may sell their shares but
only if the sale would not breach the company’s constitution (if any). It is a
replaceable rule (see 1.6) that the directors have a discretion to refuse to
register a transfer of shares.
[sections 1091D—1091E]
7
Signing company documents
A company’s power to sign, discharge and
otherwise deal with contracts can be exercised by an individual acting with the
company’s authority and on its behalf. A company can deal with contracts
without using a common seal.
A company may execute a document by
having it signed by:
• 2 directors of the company; or
• a director and the company secretary; or
• for a company with a sole director who is also the
sole secretary—that director.
If the document is to have effect as a
deed, it should be expressed to be a deed.
[sections 126—127]
A company is not required to have a
common seal. If it does, the seal must show the company’s name and its ACN or
ABN (if the last 9 digits are the same, and in the same order, as the last 9
digits of its ACN). The seal is equivalent to the company’s signature and may
be used on important company documents such as mortgages.
[sections 123, 127(2)]
8
Funding the company’s operations
The shareholders may fund the company’s
operations by lending money to the company or by taking up other shares in the
company. Except if it is raising funds from its own employees or shareholders,
a proprietary company must not engage in any fundraising activity that would
require disclosure to investors under Chapter 6D (for example, advertising
in a newspaper inviting people to invest in the company).
The company may also borrow money from
banks and other financial organisations.
Anyone who has lent money, or provided
credit, to the company may ask for a mortgage or charge over the company’s
assets to secure the performance by the company of its obligations.
[sections 113, 124]
9
Returns to shareholders
Shareholders can take money out of the
company in a number of ways, but only if the company complies with its
constitution (if any), the Corporations Act and all other relevant laws. If a
company pays out money in a way that results in the company being unable to pay
its debts as they fall due, its directors may be liable:
• to pay compensation; and
• for criminal and civil penalties.
[sections 588G, 1317E, 1317G, 1317H, 1317P]
9.1 Dividends
Dividends are payments to shareholders.
They can only be paid if:
• the company’s assets are sufficiently in excess of its
liabilities immediately before the dividend is declared; and
• the payment of the dividend is fair and reasonable to
the company’s shareholders as a whole and does not materially prejudice the
company’s ability to pay its creditors.
It is a replaceable rule (see 1.6) that
the directors decide whether the company should pay a dividend.
[sections 254T, 254U]
9.2 Buy‑back of shares
A company can buy back shares from
shareholders.
[sections 257A—257J]
9.4 Distribution of surplus assets on winding up
If a company is wound up and there are
any assets left over after all the company’s debts have been paid, the surplus
is distributed to shareholders in accordance with the rights attaching to their
shares.
10
Annual financial reports and audit
10.1 The small/large distinction
The accounting requirements imposed on a
proprietary company under the Corporations Act depend on whether the company is
classified as small or large. A company’s classification can change from 1
financial year to another as its circumstances change.
A company is classified as small for a
financial year if it satisfies at least 2 of the following tests:
• gross operating revenue of less than $10 million for
the year
• gross assets of less than $5 million at the end of the
year
• fewer than 50 employees at the end of the year.
A company that does not satisfy at least
2 of these tests is classified as large.
[section 45A]
As the great majority of proprietary
companies are small under these tests, the discussion below deals mainly with
the accounting requirements for small proprietary companies.
[sections 286—301]
10.2 Financial records
Under the Corporations Act, all
proprietary companies must keep sufficient financial records to record and
explain their transactions and financial position and to allow true and fair
financial statements to be prepared and audited. Financial record
here means some kind of systematic record of the company’s financial
transactions—not merely a collection of receipts, invoices, bank statements and
cheque butts. Financial records may be kept on computer.
[sections 286—289]
10.3 Preparing annual financial reports and directors’
reports
The Corporations Act requires a small
proprietary company to prepare an annual financial report (an annual profit and
loss statement, a balance sheet and a statement of cash flows) and a directors’
report (about the company’s operations, dividends paid or recommended, options
issued etc.) if:
• the shareholders with at least 5% of the votes in the
company direct it to do so; or
• ASIC directs it to do so.
Unless the shareholders’ direction
specifies otherwise, the company must prepare the annual financial report in
accordance with the applicable accounting standards.
Although the Corporations Act itself may
not require a small proprietary company to prepare a financial report except in
the circumstances mentioned, the company may need to prepare the annual
financial reports for the purposes of other laws (for example, income tax
laws). Moreover, good business practice may also make it advisable for the
company to prepare the financial reports so that it can monitor and better
manage its financial position.
Large proprietary companies must prepare
annual financial reports and a directors’ report, have the financial report
audited and send both reports to shareholders. They must also lodge the annual
financial reports with ASIC unless exempted.
[sections 286—301, 319—320]
11
Disagreements within the company
11.1 Special problems faced by minority shareholders
There are remedies available to a
shareholder of a company if:
• the affairs of the company are being conducted in a
way that is unfair to that shareholder or to other shareholders of the company;
or
• the affairs of the company are being conducted in a
way that is against the interests of the company as a whole.
A Court may, for example, order the
winding up of a company or the appointment of a receiver.
[sections 232‑235, 461]
11.2 Buy—back of shares
A company may buy back the shares of a
shareholder who wants to sever their relationship with the company.
[sections 257A—257J]
11.3 Selling shares
A shareholder in a company who wants to
sever their relationship with the company may decide to sell their shares.
However, the shareholder may not be able to sell their shares
readily—particularly if they want to sell their shares to someone who is not an
existing shareholder. Some of the difficulties they may face in that case are:
• under the replaceable rules the directors have a
discretion to refuse to transfer the shares; and
• restrictions in the company’s constitution (if any) on
transferring shares.
[sections 707, 1041H, 1091D‑1091E]
12
Companies in financial trouble
12.1 Voluntary administration
If a company experiences financial
problems, the directors may appoint an administrator to take over the
operations of the company to see if the company’s creditors and the company can
work out a solution to the company’s problems.
If the company’s creditors and the
company cannot agree, the company may be wound up (see 12.3).
[Part 5.3A]
12.2 Receivers
A receiver, or receiver and manager, may
be appointed by order of a Court or under an agreement with a secured creditor
to take over some or all of the assets of a company. Generally this would occur
if the company is in financial difficulty. A receiver may be appointed, for
example, because an amount owed to a secured creditor is overdue.
[Part 5.2]
12.3 Winding up and distribution
A company may be wound up by order of a
Court, or voluntarily if the shareholders of the company pass a special
resolution to do so.
A liquidator is appointed:
• when a Court orders a company to be wound up; or
• the shareholders of a company pass a resolution to
wind up the company.
[Parts 5.4, 5.4B, 5.5].
12.4 Liquidators
A liquidator is appointed to administer
the winding up of a company. The liquidator’s main functions are:
• to take possession of the company’s assets; and
• to determine debts owed by the company and pay the
company’s creditors; and
• to distribute to shareholders any assets of the
company left over after paying creditors (any distribution to shareholders is
made according to the rights attaching to their shares); and
• finally, to have the company deregistered.
[Parts 5.4B, 5.6]
12.5 Order of payment of debts
Generally, creditors who hold security
over company assets are paid first.
[Division 6 of Part 5.6]
12.6 Cancellation of registration
If a
company has ceased trading or has been wound up, it remains on the register
until ASIC cancels the company’s registration. Once a company is deregistered,
it ceases to exist.
[sections 601AA—601AB,
601AH]
Chapter 2A—Registering a company
Part 2A.1—What companies can be registered
112
Types of companies
Types of companies
(1) The following types of companies can be
registered under this Act:
|
Proprietary companies
|
Limited by shares
|
|
|
Unlimited with share
capital
|
|
Public companies
|
Limited by shares
|
|
|
Limited by guarantee
|
|
|
Unlimited with share
capital
|
|
|
No liability company
|
Note: Other types of companies that were previously
allowed continue to exist under the Part 10.1 transitionals.
No liability companies
(2) A company may be registered as a no
liability company only if:
(a) the company has a share capital;
and
(b) the company’s constitution states
that its sole objects are mining purposes; and
(c) the company has no contractual
right under its constitution to recover calls made on its shares from a
shareholder who fails to pay them.
Note 1: Section 9 defines mining purposes
and minerals.
Note 2: Special provisions on no liability companies
are found in the provisions referred to in the following table:
|
No liability company
provisions
|
|
item
|
topic
|
provisions
|
|
1
|
names
|
148, 156, 162
|
|
2
|
terms of issue of shares
|
254B
|
|
3
|
liability on partly‑paid
shares
|
254M
|
|
4
|
calls
|
254P‑254R
|
|
5
|
winding up
|
477‑478, 483, 514
|
|
6
|
registering a body as a
company
|
601BA
|
|
7
|
transitional
|
the Part 10.1
transitionals
|
(3) A no liability company must not engage in
activities that are outside its mining purposes objects.
(4) The directors of a no liability company
must not:
(a) let the whole or proportion of a
mine or claim on tribute; or
(b) make any contract for working any
land on tribute;
unless:
(c) the letting or contract is
approved by a special resolution; or
(d) no such letting or contract has
been made within the period of 2 years immediately preceding the proposed
letting or contract.
(5) An act or transaction is not invalid
merely because of a contravention of subsection (3) or (4).
113
Proprietary companies
(1) A company must have no more than 50
non—employee shareholders if it is to:
(a) be registered as a proprietary
company; or
(b) change to a proprietary company;
or
(c) remain registered as a proprietary
company.
Note: Proprietary companies have different financial
reporting obligations depending on whether they are small proprietary companies
or large proprietary companies (see section 45A and Part 2M.3).
(2) In applying subsection (1):
(a) count joint holders of a
particular parcel of shares as 1 person; and
(b) an
employee shareholder is:
(i) a shareholder who is
an employee of the company or of a subsidiary of the company; or
(ii) a shareholder who was
an employee of the company, or of a subsidiary of the company, when they became
a shareholder.
(3) A proprietary company must not engage in
any activity that would require disclosure to investors under Chapter 6D,
except for an offer of its shares to:
(a) existing shareholders of the
company; or
(b) employees of the company or of a
subsidiary of the company.
(3A) An offence based on subsection (3) is
an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(4) An act or transaction is not invalid
merely because of a contravention of subsection (3).
Note: If a proprietary company contravenes this
section, ASIC may require it to change to a public company (see section 165).
114
Minimum of 1 member
A company needs to have at least 1
member.
115
Restrictions on size of partnerships and associations
(1) A person must not participate in the
formation of a partnership or association that:
(a) has as an object gain for itself
or for any of its members; and
(b) has more than 20 members;
unless the partnership or association is incorporated or
formed under an Australian law.
Note: For the effect of a contravention of this
section, see section 103.
(2) The regulations may specify a higher
number that is higher than the number specified in paragraph (1)(b) for
the purposes of the application of that paragraph to a particular kind of
partnership or association.
(3) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
116
Trade unions cannot be registered
A trade union cannot be registered under
this Act.
Part 2A.2—How a company is registered
117
Applying for registration
Lodging application
(1) To register a company, a person must
lodge an application with ASIC.
Note: For the types of companies that can be
registered, see section 112.
Contents of the application
(2) The application must state the following:
(a) the type of company that is
proposed to be registered under this Act;
(b) the company’s proposed name
(unless the ACN is to be used in its name);
(c) the name and address of each
person who consents to become a member;
(d) the present given and family name,
all former given and family names and the date and place of birth of each
person who consents in writing to become a director;
(e) the present given and family name,
all former given and family names and the date and place of birth of each
person who consents in writing to become a company secretary;
(f) the address of each person who
consents in writing to become a director or company secretary;
(g) the address of the company’s
proposed registered office;
(h) for a public company—the proposed
opening hours of its registered office (if they are not the standard opening
hours);
(j) the address of the company’s
proposed principal place of business (if it is not the address of the proposed
registered office);
(k) for a company limited by shares or
an unlimited company—the following:
(i) the number and class
of shares each member agrees in writing to take up;
(ii) the amount (if any)
each member agrees in writing to pay for each share;
(iia) whether the shares each
member agrees in writing to take up will be fully paid on registration;
(iii) if that amount is not
to be paid in full on registration—the amount (if any) each member agrees in
writing to be unpaid on each share;
(iv) whether or not the
shares each member agrees in writing to take up will be beneficially owned by
the member on registration;
(l) for a public company that is
limited by shares or is an unlimited company, if shares will be issued for non‑cash
consideration—the prescribed particulars about the issue of the shares, unless
the shares will be issued under a written contract and a copy of the contract
is lodged with the application;
(m) for a company limited by
guarantee—the proposed amount of the guarantee that each member agrees to in
writing;
(ma) whether or not, on registration, the
company will have an ultimate holding company;
(mb) if, on registration, the company
will have an ultimate holding company—the following:
(i) the name of the
ultimate holding company;
(ii) if the ultimate
holding company is registered in Australia—its ABN, ACN or ARBN;
(iii) if the ultimate
holding company is not registered in Australia—the place at which it was
incorporated or formed;
(n) the State or Territory in this
jurisdiction in which the company is to be taken to be registered.
Note 1: Paragraph (b)—sections 147 and 152
deal with the availability and reservation of names.
Note 2: Paragraph (f)—the address that must be
stated is usually the residential address, although an alternative address can
sometimes be stated instead (see section 205D).
Note 3: Paragraph (g)—if the company is not to be
the occupier of premises at the address of its registered office, the
application must state that the occupier has consented to the address being
specified in the application and has not withdrawn that consent (see section 100).
Note 4: Paragraph (h)—for standard opening
hours, see section 9.
(3) If the company is to be a public company
and is to have a constitution on registration, a copy of the constitution must
be lodged with the application.
(4) The application must be in the prescribed
form.
(5) An applicant must have the consents and
agreements referred to in subsection (2) when the application is lodged.
After the company is registered, the applicant must give the consents and
agreements to the company. The company must keep the consents and agreements.
(6) An offence based on subsection (5)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
118
ASIC gives company ACN, registers company and issues certificate
Registration
(1) If an application is lodged under section 117,
ASIC may:
(a) give the company an ACN; and
(b) register the company; and
(c) issue a certificate that states:
(i) the company’s name;
and
(ii) the company’s ACN; and
(iii) the company’s type;
and
(iv) that the company is
registered as a company under this Act; and
(v) the State or Territory
in this jurisdiction in which the company is taken to be registered; and
(vi) the date of
registration.
Note: For the evidentiary value of a certificate of
registration, see subsection 1274(7A).
ASIC must keep record of registration
(2) ASIC must keep a record of the
registration. Subsections 1274(2) and (5) apply to the record as if it were a
document lodged with ASIC.
119
Company comes into existence on registration
A company comes into existence as a body
corporate at the beginning of the day on which it is registered. The company’s
name is the name specified in the certificate of registration.
Note: The company remains in existence until it is
deregistered (see Chapter 5A).
119A
Jurisdiction of incorporation and jurisdiction of registration
Jurisdiction in which company incorporated
(1) A company is incorporated in this
jurisdiction.
Jurisdiction of registration
(2) A company is taken to be registered in:
(a) the State or Territory specified:
(i) in the application for
the company’s registration under paragraph 117(2)(n) (registration of company
under this Part); or
(ii) in the application for
the company’s registration under paragraph 601BC(2)(o) (registration of
registrable body as company under Part 5B.1); or
(b) the State or Territory in which
the company is taken to be registered under paragraph 5H(4)(b) (registration of
body as company on basis of State or Territory law).
This subsection has effect subject to subsection (3).
Note 1: ASIC must specify the State or Territory in
which the company is taken to be registered in the company’s certificate of
registration (see paragraph 118(1)(c)(v) and 601BD(1)(c)(v)).
Note 2: The company’s legal capacity and powers do not
depend in any way on the particular State or Territory it is taken to be
registered in (see section 124).
Note 3: A law of a State or Territory may impose
obligations, or confer rights or powers, on a person by reference to the State
or Territory in which a company is taken to be registered for the purposes of
this Act. For example, a State or Territory law dealing with stamp duty on
share transfers might impose duty on transfers of shares in companies that are
taken to be registered in that State or Territory for the purposes of this Act.
(3) The State or Territory in which a company
is taken to be registered changes to the State or Territory in this
jurisdiction nominated by the company if:
(a) either:
(i) the relevant Minister
of the State or Territory in which the company is taken to be registered before
the change approves the change; or
(ii) the State in which the
company is taken to be registered ceases to be a referring State; and
(b) the procedural requirements
specified in the regulations are satisfied.
(4) A company continues to be registered
under this Act even if the State in which the company is taken to be registered
ceases to be a referring State.
120
Members, directors and company secretary of a company
(1) A person becomes a member, director or
company secretary of a company on registration if the person is specified in
the application with their consent as a proposed member, director or company
secretary of the company.
(2) The shares to be taken up by the members
as specified in the application are taken to be issued to the members on
registration of the company.
Note: A member’s name must be entered in the
register of members (see section 169).
121
Registered office
The address specified in the application
for registration for the company’s proposed registered office becomes the
address of the company’s registered office on registration.
122
Expenses incurred in promoting and setting up company
The expenses incurred before registration
in promoting and setting up a company may be paid out of the company’s assets.
123
Company may have common seal
(1) A company may have a common seal. If a
company does have a common seal, the company must set out on it:
(a) for a company that has its ACN in
its name—the company’s name; or
(b) otherwise—the company’s name and
either:
(i) the expression
“Australian Company Number” and the company’s ACN; or
(ii) if the last 9 digits
of the company’s ABN are the same, and in the same order, as the last 9 digits
of its ACN—the expression “Australian Business Number” and the company’s ABN.
Note 1: A company may make contracts and execute
documents without using a seal (see sections 126 and 127).
Note 2: For abbreviations that can be used on a seal,
see section 149.
(2) A company may have a duplicate common
seal. The duplicate must be a copy of the common seal with the words “duplicate
seal”, “share seal” or “certificate seal” added.
(3) A person must not use, or authorise the
use of, a seal that purports to be the common seal of a company or a duplicate
if the seal does not comply with the requirements set out in subsection (1)
or (2).
(4) An offence based on subsection (3)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
Chapter 2B—Basic features of a company
Part 2B.1—Company powers and how they are exercised
124
Legal capacity and powers of a company
(1) A company has the legal capacity and
powers of an individual both in and outside this jurisdiction. A company also
has all the powers of a body corporate, including the power to:
(a) issue and cancel shares in the
company;
(b) issue debentures (despite any rule
of law or equity to the contrary, this power includes a power to issue
debentures that are irredeemable, redeemable only if a contingency, however
remote, occurs, or redeemable only at the end of a period, however long);
(c) grant options over unissued shares
in the company;
(d) distribute any of the company’s
property among the members, in kind or otherwise;
(e) give security by charging uncalled
capital;
(f) grant a floating charge over the
company’s property;
(g) arrange for the company to be
registered or recognised as a body corporate in any place outside this
jurisdiction;
(h) do anything that it is authorised
to do by any other law (including a law of a foreign country).
A company limited by guarantee does not have the power to
issue shares.
Note: For a company’s power to issue bonus,
partly—paid, preference and redeemable preference shares, see section 254A.
(2) A company’s legal capacity to do
something is not affected by the fact that the company’s interests are not, or
would not be, served by doing it.
(3) For the avoidance of doubt, this section
does not:
(a) authorise a company to do an act
that is prohibited by a law of a State or Territory; or
(b) give a company a right that a law
of a State or Territory denies to the company.
125
Constitution may limit powers and set out objects
(1) If a company has a constitution, it may
contain an express restriction on, or a prohibition of, the company’s exercise
of any of its powers. The exercise of a power by the company is not invalid
merely because it is contrary to an express restriction or prohibition in the
company’s constitution.
(2) If a company has a constitution,
it may set out the company’s objects. An act of the company is not invalid
merely because it is contrary to or beyond any objects in the company’s
constitution.
126
Agent exercising a company’s power to make contracts
(1) A company’s power to make, vary, ratify
or discharge a contract may be exercised by an individual acting with the
company’s express or implied authority and on behalf of the company. The power
may be exercised without using a common seal.
(2) This section does not affect the
operation of a law that requires a particular procedure to be complied with in
relation to the contract.
127
Execution of documents (including deeds) by the company itself
(1) A company may execute a document without
using a common seal if the document is signed by:
(a) 2 directors of the company; or
(b) a director and a company secretary
of the company; or
(c) for a proprietary company that has
a sole director who is also the sole company secretary—that director.
Note: If a company executes a document in this way,
people will be able to rely on the assumptions in subsection 129(5) for
dealings in relation to the company.
(2) A company with a common seal may execute
a document if the seal is fixed to the document and the fixing of the seal is
witnessed by:
(a) 2 directors of the company; or
(b) a director and a company secretary
of the company; or
(c) for a proprietary company that has
a sole director who is also the sole company secretary—that director.
Note: If a company executes a document in this way,
people will be able to rely on the assumptions in subsection 129(6) for
dealings in relation to the company.
(3) A company may execute a document as a
deed if the document is expressed to be executed as a deed and is executed in
accordance with subsection (1) or (2).
(4) This section does not limit the ways in
which a company may execute a document (including a deed).
Part 2B.2—Assumptions people dealing with companies are entitled to
make
128 Entitlement to make assumptions
(1) A person is entitled to make the
assumptions in section 129 in relation to dealings with a company. The
company is not entitled to assert in proceedings in relation to the dealings
that any of the assumptions are incorrect.
(2) A person is entitled to make the
assumptions in section 129 in relation to dealings with another person who
has, or purports to have, directly or indirectly acquired title to property
from a company. The company and the other person are not entitled to assert in
proceedings in relation to the dealings that any of the assumptions are
incorrect.
(3) The assumptions may be made even if an
officer or agent of the company acts fraudulently, or forges a document, in
connection with the dealings.
(4) A person is not entitled to make an
assumption in section 129 if at the time of the dealings they knew or
suspected that the assumption was incorrect.
129
Assumptions that can be made under section 128
Constitution and replaceable rules complied with
(1) A person may assume that the company’s
constitution (if any), and any provisions of this Act that apply to the company
as replaceable rules, have been complied with.
Director or company secretary
(2) A person may assume that anyone who
appears, from information provided by the company that is available to the
public from ASIC, to be a director or a company secretary of the company:
(a) has been duly appointed; and
(b) has authority to exercise the
powers and perform the duties customarily exercised or performed by a director
or company secretary of a similar company.
Officer or agent
(3) A person may assume that anyone who is
held out by the company to be an officer or agent of the company:
(a) has been duly appointed; and
(b) has authority to exercise the
powers and perform the duties customarily exercised or performed by that kind
of officer or agent of a similar company.
Proper performance of duties
(4) A person may assume that the officers and
agents of the company properly perform their duties to the company.
Document duly executed without seal
(5) A person may assume that a document has
been duly executed by the company if the document appears to have been signed
in accordance with subsection 127(1). For the purposes of making the
assumption, a person may also assume that anyone who signs the document and
states next to their signature that they are the sole director and sole company
secretary of the company occupies both offices.
Document duly executed with seal
(6) A person may assume that a document has been
duly executed by the company if:
(a) the company’s common seal appears
to have been fixed to the document in accordance with subsection 127(2); and
(b) the fixing of the common seal
appears to have been witnessed in accordance with that subsection.
For the purposes of making the assumption, a person may
also assume that anyone who witnesses the fixing of the common seal and states
next to their signature that they are the sole director and sole company
secretary of the company occupies both offices.
Officer or agent with authority to warrant that
document is genuine or true copy
(7) A person may assume that an officer or
agent of the company who has authority to issue a document or a certified copy
of a document on its behalf also has authority to warrant that the document is
genuine or is a true copy.
(8) Without limiting the generality of this
section, the assumptions that may be made under this section apply for the
purposes of this section.
130
Information available to the public from ASIC does not constitute constructive
notice
(1) A person is not taken to have information
about a company merely because the information is available to the public from
ASIC.
(2) Subsection (1) does not apply in
relation to a document that has been lodged with ASIC to the extent that the
document relates to a charge that is registrable under this Act.
Part 2B.3—Contracts before registration
131
Contracts before registration
(1) If a person enters into, or purports to
enter into, a contract on behalf of, or for the benefit of, a company before it
is registered, the company becomes bound by the contract and entitled to its
benefit if the company, or a company that is reasonably identifiable with it,
is registered and ratifies the contract:
(a) within the time agreed to by the
parties to the contract; or
(b) if there is no agreed time—within
a reasonable time after the contract is entered into.
(2) The person is liable to pay damages to
each other party to the pre‑registration contract if the company is not registered,
or the company is registered but does not ratify the contract or enter into a
substitute for it:
(a) within the time agreed to by the
parties to the contract; or
(b) if there is no agreed time—within
a reasonable time after the contract is entered into.
The amount that the person is liable to pay to a party is
the amount the company would be liable to pay to the party if the company had
ratified the contract and then did not perform it at all.
(3) If proceedings are brought to recover
damages under subsection (2) because the company is registered but does
not ratify the pre‑registration contract or enter into a substitute for it, the
court may do anything that it considers appropriate in the circumstances,
including ordering the company to do 1 or more of the following:
(a) pay all or part of the damages
that the person is liable to pay;
(b) transfer property that the company
received because of the contract to a party to the contract;
(c) pay an amount to a party to the
contract.
(4) If the company ratifies the
pre—registration contract but fails to perform all or part of it, the court may
order the person to pay all or part of the damages that the company is ordered
to pay.
132
Person may be released from liability but is not entitled to indemnity
(1) A party to the pre—registration contract
may release the person from all or part of their liability under section 131
to the party by signing a release.
(2) Despite any rule of law or equity, the
person does not have any right of indemnity against the company in respect of
the person’s liability under this Part. This is so even if the person was
acting, or purporting to act, as trustee for the company.
133
This Part replaces other rights and liabilities
This Part replaces any rights or liabilities
anyone would otherwise have on the pre—registration contract.
Part 2B.4—Replaceable rules and constitution
134
Internal management of companies
A company’s internal management may be
governed by provisions of this Act that apply to the company as replaceable
rules, by a constitution or by a combination of both.
Note: There are additional rules about internal
management in ordinary provisions of this Act and also in the common law.
135
Replaceable rules
Companies to which replaceable rules apply
(1) A section or subsection (except
subsection 129(1), this section and sections 140 and 141) whose heading
contains the words:
(a) replaceable rule—applies as
a replaceable rule to:
(i) each company that is
or was registered after 1 July 1998; and
(ii) any company registered
before 1 July 1998 that repeals or repealed its constitution after that
day; and
(b) replaceable rule for
proprietary companies and mandatory rule for public companies—applies:
(i) as a replaceable rule
to any proprietary company that is or was registered after 1 July 1998; and
(ii) as a replaceable rule
to any company that is or eas registered after 1 July 1998 and that changes or changed to a proprietary company (but only while it is a proprietary
company); and
(iii) as a replaceable rule
to any proprietary company that is or was registered before 1 July 1998
that repeals or repealed its constitution after that day; and
(iv) as an ordinary
provision of this Act to any public company whenever registered.
The
section or subsection does not apply to a proprietary company while the same
person is both its sole director and sole shareholder.
Note 1: See sections 198E, 201F and 202C for the
special provisions that apply to a proprietary company while the same person is
both its sole director and sole shareholder.
Note 2: A company may include in its constitution (by
reference or otherwise) a replaceable rule that does not otherwise apply to it.
Company’s constitution can displace or modify
replaceable rules
(2) A provision of a section or subsection
that applies to a company as a replaceable rule can be displaced or modified by
the company’s constitution.
Failure to comply with replaceable rules
(3) A failure to comply with the replaceable
rules as they apply to a company is not of itself a contravention of this Act
(so the provisions about criminal liability, civil liability and injunctions do
not apply).
Note: Replaceable rules that apply to a company have
effect as a contract (see section 140).
136
Constitution of a company
(1) A company adopts a constitution:
(a) on registration—if each person
specified in the application for the company’s registration as a person who
consents to become a member agrees in writing to the terms of a constitution
before the application is lodged; or
(b) after registration—if the company
passes a special resolution adopting a constitution or a court order is made
under section 233 that requires the company to adopt the constitution.
Note: The Life Insurance Act 1995 has rules
about how benefit fund rules become part of a company’s constitution and about
amending those rules. They override this Act (see section 1348 of this
Act). Consequential amendments to the rest of the company’s constitution can be
made under that Act or this Act (see Subdivision 2 of Division 4 of
Part 2A of that Act).
(2) The
company may modify or repeal its constitution, or a provision of its
constitution, by special resolution.
Note: The company may need leave of the Court to
modify or repeal its constitution if it was adopted as the result of a Court
order (see subsection 233(3)).
(3) The company’s constitution may provide
that the special resolution does not have any effect unless a further
requirement specified in the constitution relating to that modification or repeal
has been complied with.
(4) Unless the constitution provides
otherwise, the company may modify or repeal a further requirement described in subsection (3)
only if the further requirement is itself complied with.
(5) A public company must lodge with ASIC a
copy of a special resolution adopting, modifying or repealing its constitution
within 14 days after it is passed. The company must also lodge with ASIC within
that period:
(a) if the company adopts a
constitution—a copy of that constitution; or
(b) if the company modifies its
constitution—a copy of that modification.
This also applies to a proprietary company that has
applied under Part 2B.7 to change to a public company, while its
application has not yet been determined.
(6) An offence based on subsection (5)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
137
Date of effect of adoption, modification or repeal of constitution
If a new constitution is adopted or an
existing constitution is modified or repealed, that adoption, modification or
repeal takes effect:
(a) if it is the result of a special
resolution:
(i) on the date on which
the resolution is passed if it specified no later date; or
(ii) on a date specified
in, or determined in accordance with, the resolution if the relevant date is
later than the date on which the resolution is passed; or
(b) if
it is the result of a Court order made under section 233:
(i) on the date on which
the order is made if it specifies no later date; or
(ii) on a date specified by
the order.
138
ASIC may direct company to lodge consolidated constitution
ASIC may direct a company to lodge a
consolidated copy of its constitution with ASIC.
139
Company must send copy of constitution to member
(1) A company must send a copy of its
constitution to a member of the company within 7 days if the member:
(a) asks the company, in writing, for
the copy; and
(b) pays any fee (up to the prescribed
amount) required by the company.
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
140
Effect of constitution and replaceable rules
(1) A company’s constitution (if any) and any
replaceable rules that apply to the company have effect as a contract:
(a) between the company and each
member; and
(b) between the company and each
director and company secretary; and
(c) between a member and each other
member;
under which each person agrees to observe and perform the
constitution and rules so far as they apply to that person.
(2) Unless a member of a company agrees in
writing to be bound, they are not bound by a modification of the constitution
made after the date on which they became a member so far as the modification:
(a) requires the member to take up
additional shares; or
(b) increases the member’s liability
to contribute to the share capital of, or otherwise to pay money to, the
company; or
(c) imposes or increases restrictions
on the right to transfer the shares already held by the member, unless the
modification is made:
(i) in connection with the
company’s change from a public company to a proprietary company under Part 2B.7;
or
(ii) to insert proportional
takeover approval provisions into the company’s constitution.
141 Table
of replaceable rules
The following table sets out the
provisions of this Act that apply as replaceable rules.
|
Provisions that apply as replaceable rules
|
|
|
Officers and Employees
|
|
|
1
|
Voting and completion of transactions—directors of
proprietary companies
|
194
|
|
2
|
Powers of directors
|
198A
|
|
3
|
Negotiable instruments
|
198B
|
|
4
|
Managing director
|
198C
|
|
5
|
Company may appoint a director
|
201G
|
|
6
|
Directors may appoint other directors
|
201H
|
|
7
|
Appointment of managing directors
|
201J
|
|
8
|
Alternate directors
|
201K
|
|
9
|
Remuneration of directors
|
202A
|
|
10
|
Director may resign by giving written notice to company
|
203A
|
|
11
|
Removal by members—proprietary company
|
203C
|
|
12
|
Termination of appointment of managing director
|
203F
|
|
13
|
Terms and conditions of office for secretaries
|
204F
|
|
|
Inspection of books
|
|
|
14
|
Company or directors may allow member to inspect books
|
247D
|
|
|
Director’s Meetings
|
|
|
15
|
Circulating resolutions of companies with more than 1
director
|
248A
|
|
16
|
Calling directors’ meetings
|
248C
|
|
17
|
Chairing directors’ meetings
|
248E
|
|
18
|
Quorum at directors’ meetings
|
248F
|
|
19
|
Passing of directors’ resolutions
|
248G
|
|
|
Meetings of members
|
|
|
20
|
Calling of meetings of members by a director
|
249C
|
|
21
|
Notice to joint members
|
249J(2)
|
|
22
|
When notice by post or fax is given
|
249J(4)
|
|
22A
|
When notice under paragraph 249J(3)(cb) is given
|
249J(5)
|
|
23
|
Notice of adjourned meetings
|
249M
|
|
24
|
Quorum
|
249T
|
|
25
|
Chairing meetings of members
|
249U
|
|
26
|
Business at adjourned meetings
|
249W(2)
|
|
27
|
Who can appoint a proxy
[replaceable rule for proprietary companies only]
|
249X
|
|
28
|
Proxy vote valid even if member dies, revokes appointment
etc.
|
250C(2)
|
|
29
|
How many votes a member has
|
250E
|
|
30
|
Jointly held shares
|
250F
|
|
31
|
Objections to right to vote
|
250G
|
|
32
|
How voting is carried out
|
250J
|
|
33
|
When and how polls must be taken
|
250M
|
|
|
Shares
|
|
|
33A
|
Pre‑emption for existing shareholders on issue of shares
in proprietary company
|
254D
|
|
33B
|
Other provisions about paying dividends
|
254U
|
|
34
|
Dividend rights for shares in proprietary companies
|
254W(2)
|
|
|
Transfer of shares
|
|
|
35
|
Transmission of shares on death
|
1072A
|
|
36
|
Transmission of shares on bankruptcy
|
1072B
|
|
37
|
Transmission of shares on mental incapacity
|
1072D
|
|
38
|
Registration of transfers
|
1072F
|
|
39
|
Additional general discretion for directors of proprietary
companies to refuse to register transfers
|
1072G
|
Part 2B.5—Registered office and places of business
142
Registered office
(1) A company must have a registered office
in this jurisdiction. Communications and notices to the company may be
addressed to its registered office.
Note 1: A document may be served on a company by
leaving it at, or posting it to, the company’s registered office (see
subsection 109X(1)).
Note 2: Communications and notices from ASIC may also
be addressed to the company’s contact address (see section 146A).
(2) A company must lodge notice of a change
of address of its registered office with ASIC not later than 28 days after the
date on which the change occurs. The notice must be in the prescribed form.
Note: If the company is not to be the occupier of premises
at the address of its new registered office, the notice must state that the
occupier has consented to the address being specified in the notice and has not
withdrawn that consent (see section 100).
(2A) An offence based on subsection (1) or
(2) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(3) A notice of change of address takes
effect from the later of:
(a) the seventh day after the notice
was lodged; or
(b) a later day specified in the notice
as the date from which the change is to take effect.
143
ASIC may change address of registered office to a director’s address
(1) A company that does not occupy the
premises at the address of its registered office must be able to show to ASIC
the occupier’s written consent to the company’s use of those premises as its
registered office.
Note: ASIC can require the company to produce the
consent (see section 100).
(1A) An offence based on subsection (1) is
an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(2) If ASIC becomes aware that the occupier
of those premises:
(a) has not consented to the use of
the premises as the address of the company’s registered office; or
(b) has withdrawn the consent;
ASIC may give written notice to a director of the company
who resides in this jurisdiction that ASIC intends to change the address of the
company’s registered office to the director’s address.
(3) If ASIC is not notified of the address of
the company’s proposed new registered office under subsection 142(2) within 28
days after the notice under subsection (2) is sent, ASIC may change the
address of the company’s registered office to the director’s address.
144
Company’s name must be displayed at registered office etc.
(1) A company must display its name
prominently at every place at which the company carries on business and that is
open to the public.
(2) A public company must also display its
name and the words “Registered Office” prominently at its registered office.
(3) An offence based on subsection (1)
or (2) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
145
Opening hours of registered office of public company
(1) The registered office of a public company
must be open to the public:
(a) each business day from at least 10 am to 12 noon and from at least 2 pm to 4 pm; or
(b) at least 3 hours chosen by the
company between 9 am and 5 pm each business day.
(2) If the company chooses its own opening hours,
the hours must be specified:
(a) if the company is to have its own
opening hours from its registration—in the application for registration of the
company under section 117 (normal registration process) or the notice
lodged under section 5H (registration of body as company on basis of State
or Territory law); or
(b) if the company changes its opening
hours after its registration—in the most recent notice of change of opening
hours lodged with ASIC under subsection (3).
(3) The company must lodge notice of a change
in the opening hours of its registered office with ASIC before the day on which
a change occurs. The notice must be in the prescribed form.
(4) An offence based on subsection (1)
or (3) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
146
Change of address of principal place of business
(1) A company must lodge with ASIC notice of
a change of the address of its principal place of business not later than 28
days after the date on which the change occurs. The notice must be in the
prescribed form.
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
146A
Contact address
(1) A company may have a contact address
(whether or not in this jurisdiction). Communications and notices from ASIC to
the company may be addressed to its contact address.
(2) If a company is to have a contact
address, the company must lodge notice of the address in the prescribed form.
Part 2B.6—Names
Division 1—Selecting and using a name
147
When a name is available
Name is available unless identical or unacceptable
(1) A name is available to a company unless
the name is:
(a) identical (under rules set out in
the regulations) to a name that is reserved or registered under this Act for
another body; or
(b) identical (under rules set out in
the regulations) to a name that is included on the national business names
register in respect of another individual or body who is not the person
applying to have the name; or
(c) unacceptable for registration
under the regulations.
Minister may consent to a name being available to a
company
(2) The Minister may consent in writing to a
name being available to a company even if the name is:
(a) identical to a name that is
reserved or registered under this Act for another body; or
(b) unacceptable for registration
under the regulations.
(3) The Minister’s consent may be given
subject to conditions.
Note: If the company breaches a condition, ASIC may
direct it to change its name under section 158.
(4) The regulations may specify that a
particular unacceptable name is available to a company if:
(a) a specified public authority, or
an instrumentality or agency of the Crown in right of the Commonwealth, a State
or an internal Territory has consented to the company using or assuming the
name; or
(b) the company is otherwise permitted
to use or assume the name by or under:
(i) an Act of the
Commonwealth, a State or an internal Territory; or
(ii) a specified provision
of an Act of the Commonwealth, a State or an internal Territory.
The consent of the authority, instrumentality or agency
may be given subject to conditions.
Note: If the consent is withdrawn, the company
ceases to be permitted or the company breaches a condition, ASIC may direct it
to change its name under section 158.
National business names register
(5) If the Minister is satisfied that ASIC
has access to electronic records of information containing, in relation to a
State or Territory in this jurisdiction, names registered from time to time as
business names in that State or Territory, the Minister may, by notice
published in the Gazette identifying the records concerned, declare that
he or she is so satisfied.
148 A
company’s name
Company may use available name or ACN
(1) A company may have as its name:
(a) an available name; or
(b) the expression “Australian Company
Number” followed by the company’s ACN.
The name must also include the words required by subsection (2)
or (3).
Limited companies
(2) A limited public company must have the
word “Limited” at the end of its name unless section 150 or 151 applies. A
limited proprietary company must have the words “Proprietary Limited” at the
end of its name.
Unlimited proprietary companies
(3) An unlimited proprietary company must
have the word “Proprietary” at the end of its name.
No liability companies
(4) A no liability company must have the
words “No Liability” at the end of its name.
Public companies with “Proprietary” included in their
name
(5) A public company must not include the
word “Proprietary” (or an abbreviation of it) in its name unless:
(a) it was a public company before 1 July 1998; and
(b) the word “Proprietary” (or an
abbreviation of it) was included in its name before 1 July 1998.
(6) An offence based on subsection (2),
(3), (4) or (5) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
149
Acceptable abbreviations
(1) The abbreviations set out in the
following table may be used:
(a) instead of words that this Act
requires to be part of a company’s name or to be included in a document or on a
company’s common seal; and
(b) instead of words that are part of
a company’s name; and
(c) with or without full stops.
|
Acceptable abbreviations
|
[operative table]
|
|
|
Word
|
Abbreviation
|
|
1
|
Company
|
Co or Coy
|
|
2
|
Proprietary
|
Pty
|
|
3
|
Limited
|
Ltd
|
|
4
|
No Liability
|
NL
|
|
5
|
Australian
|
Aust
|
|
6
|
Number
|
No
|
|
7
|
and
|
&
|
|
8
|
Australian Company Number
|
ACN
|
|
9
|
Australian Business Number
|
ABN
|
(2) If a company’s name includes any of these
abbreviations, the word corresponding to the abbreviation may be used instead.
150
Exception to requirement for using “Limited” in name
(1) ASIC may register a company limited by
guarantee without “Limited” in its name, or alter the registration of a company
of that type by omitting “Limited” from its name, if its constitution:
(a) requires the company to pursue
charitable purposes only and to apply its income in promoting those purposes;
and
(b) prohibits the company making
distributions to its members and paying fees to its directors; and
(c) requires the directors to approve
all other payments the company makes to directors.
(2) The company must notify ASIC as soon as
practicable if any of those requirements or prohibitions in its constitution
are not complied with or if its constitution is modified to remove any of those
requirements or prohibitions.
(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.
151
Exception to requirement for using “Limited” in name—pre‑existing licences
(1) A licence that:
(a) allowed a company to omit
“Limited” from its name; and
(b) was in force immediately before 1 July 1998; and
(c) was in force immediately before
the commencement of this section;
continues in force subject to subsection (3).
(2) The company must notify ASIC as soon as
practicable if it:
(a) breaches a condition of the
licence; or
(b) pursues objects or purposes that
would have prevented it being granted the licence; or
(c) applies its profits or other
income to promote objects or purposes that would have prevented it being
granted the licence; or
(d) pays a dividend to its members; or
(e) modifies its constitution to allow
it to do anything set out in paragraphs (a) to (d).
(2AA) If:
(a) a company holds a licence that is
in force under this section; and
(b) either the licence or the
company’s constitution requires a modification to the constitution to have
previously been submitted to, and approved by:
(i) the Minister; or
(ii) another Minister of
the Commonwealth, a State or a Territory; or
(iii) an officer,
instrumentality or agency of the Commonwealth, a State or a Territory;
then the licence or constitution (as the case requires) is
taken instead to require the company to notify ASIC as soon as practicable of
the modification.
(2A) An offence based on subsection (2) is
an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(3) ASIC may revoke the company’s licence if:
(a) the company does anything set out
in paragraphs (2)(a) to (e); or
(b) the company fails to notify ASIC
in accordance with subsection (2AA).
152
Reserving a name
(1) A person may lodge an application in the
prescribed form with ASIC to reserve a name for a company. If the name is
available, ASIC must reserve it.
Note: For available names, see section 147.
(2) The reservation lasts for 2 months from
the date when the application was lodged. An applicant may ask ASIC in writing
for an extension of the reservation during a period that the name is reserved,
and ASIC may extend the reservation for 2 months.
(3) ASIC must cancel a reservation if the
applicant asks ASIC in writing to do so.
153
Using a name and ACN on documents
(1) A company must set out its name on all
its public documents and negotiable instruments.
(2) Subject to sections 154 and 155, if
the company’s ACN is not used in its name, the company must also set out with
its name, or with 1 of the references to its name, either:
(a) the expression “Australian Company
Number” followed by the company’s ACN; or
(b) if the last 9 digits of the
company’s ABN are the same, and in the same order, as the last 9 digits of its
ACN—the words “Australian Business Number” followed by the company’s ABN.
If the company’s name appears on 2 or more pages of the
document or instrument, this must be done on the first of those pages.
Note 1: If a company has a common seal, its name and
ACN or ABN must be set out on the seal (see section 123).
Note 2: A public company must display its name at its
registered office. Every company must display its name at places at which the
company carries on business and that are open to the public (see section 144).
Note 3: Section 149 provides that “ACN” is an
acceptable abbreviation of “Australian Company Number”, and that “ABN” is an
acceptable abbreviation of “Australian Business Number”.
Note 4: In any case where the company’s ACN would be
used, the company’s ABN may be used instead if section 1344 is satisfied.
(3) An offence based on subsection (1)
or (2) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
154
Exception to requirement to have ACN on receipts
A company does not have to set out the
expression “Australian Company Number” followed by its ACN on a receipt (for
example, a cash register receipt) that sets out information recorded in the
machine that produced the receipt.
155
Regulations may exempt from requirement to set out information on documents
The regulations may exempt a specified
company, or a class of companies, from the requirement in subsection 153(2) to
set out information on its public documents and negotiable instruments. The
exemption may relate to specified documents or instruments, or a class of
documents or instruments.
156
Carrying on business using “Limited”, “No Liability” or “Proprietary” in name
(1) A person must not carry on business in
this jurisdiction under a name or title that:
(a) has the words “Limited” or “No
Liability” (or an abbreviation of those words) at the end; or
(b) includes the word “Proprietary”
(or an abbreviation of it).
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(3) Subsection (1) does not apply to the
extent that the person is allowed or required to carry on business in this
jurisdiction under the name or title under a law of the Commonwealth or a law
of a State or Territory in this jurisdiction.
Note: A defendant bears an evidential burden in
relation to the matter in subsection (3), see subsection 13.3(3) of the Criminal
Code.
Division 2—Changing a company’s name
157
Company changing its name
(1) If a company wants to change its name, it
must:
(a) pass a special resolution adopting
a new name; and
(b) lodge an application in the
prescribed form with ASIC.
Note: The company may reserve a name before the
resolution is passed or the application is lodged (see section 152).
(2) The company must lodge a copy of the
special resolution with ASIC within 14 days after it is passed.
(2A) An offence based on subsection (2) is
an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(3) If the proposed name is available, ASIC
must change the company’s name by altering the details of the company’s
registration to reflect the change. The change of name takes effect when ASIC
alters the details of the company’s registration.
Note: For available names, see section 147.
157A
Change of name of company under external administration
Application by liquidator
(1) The liquidator of a company that is being
wound up may lodge an application with ASIC to change the name of the company
if the liquidator is satisfied that the proposed change of name is in the
interests of the creditors of the company as a whole.
(2) Subsection (1) does not apply to a
members’ voluntary winding up.
Application by administrator
(3) The administrator of a company under
administration may lodge an application with ASIC to change the name of the
company if the administrator is satisfied that the proposed change of name is
in the interests of the creditors of the company as a whole.
Application by deed administrator
(4) The administrator of a deed of company
arrangement may lodge an application with ASIC to change the name of the
company if the administrator is satisfied that the proposed change of name is
in the interests of the creditors of the company as a whole.
Application by managing controller
(5) If:
(a) a person is the managing
controller of property of a company; and
(b) the person is entitled to enforce
a charge on the whole, or substantially the whole, of the company’s property;
the person may lodge an application with ASIC to change
the name of the company if the person is satisfied that the proposed change of
name is in the interests of the creditors of the company as a whole.
Application by receiver
(6) If:
(a) a person is a receiver of property
of a company; and
(b) the property subject to the
receivership consists of, or includes, goodwill in relation to the name of the
company;
the person may lodge an application with ASIC to change
the name of the company if the person is satisfied that the proposed change of
name is in the interests of the creditors of the company as a whole.
Change of name
(7) If:
(a) an application is lodged under
subsection (1), (3), (4), (5) or (6); and
(b) the proposed name is available;
ASIC must change the company’s name by altering the
details of the company’s registration to reflect the change. The change of name
takes effect when ASIC alters the details of the company’s registration.
Note: For available names, see section 147.
158 ASIC’s
power to direct company to change its name
(1) ASIC may direct a company in writing to
change its name within 2 months if:
(a) the name should not have been
registered; or
(b) the company has breached a
condition under subsection 147(3) on the availability of the name; or
(c) a consent given under subsection
147(4) to use or assume the name has been withdrawn; or
(d) the company has breached a
condition on a consent given under subsection 147(4); or
(e) the company ceases to be permitted
to use or assume the name (as referred to in paragraph 147(4)(b)).
(2) The company must comply with the
direction within 2 months after being given it by doing everything necessary to
change its name under section 157.
(2A) An offence based on subsection (2) is
an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(3) If the company does not comply with subsection (2),
ASIC may change the company’s name to its ACN and any other words that section 148
requires, by altering the details of the company’s registration to reflect the
change.
(4) A change of name under subsection (3)
takes effect when ASIC alters the details of the company’s registration.
159
ASIC’s power to include “Limited” in company’s name
(1) ASIC may change a company’s name so that
it includes the word “Limited” by altering the details of the company’s
registration to reflect the change if:
(a) the company contravenes any of the
requirements or prohibitions in its constitution referred to in subsection
150(1); or
(b) the company modifies its
constitution to remove any of those requirements or prohibitions; or
(c) ASIC revokes a licence referred to
in section 151 that applies to the company.
(2) The change of name takes effect when ASIC
alters the details of the company’s registration.
160
ASIC must issue new certificate if company’s name changes
If ASIC changes a company’s name, it
must give the company a new certificate of registration. The company’s new name
is the name specified in the certificate of registration issued under this section.
Note: For the evidentiary value of a certificate of
registration, see subsection 1274(7A).
161
Effect of name change
(1) A change of company name does not:
(a) create a new legal entity; or
(b) affect the company’s existing
property, rights or obligations; or
(c) render defective any legal
proceedings by or against the company.
(2) Any legal proceedings that could have
been continued or begun by or against the company in its former name may be
continued or begun by or against it in its new name.
161A
Company under external administration—former name to be used on documents
(1) This section applies to a company if:
(a) any of the following conditions is
satisfied:
(i) the company is being
wound up;
(ii) the company is under
administration;
(iii) the company has
executed a deed of company arrangement that has not yet terminated;
(iv) there is a managing
controller of property of the company;
(v) there is a receiver of
property of the company; and
(b) any of the following conditions is
satisfied:
(i) a change of the
company’s name takes effect;
(ii) in the case of a
company that is being wound up—a change of the company’s name took effect
during the 6‑month period ending immediately before the relevant date;
(iii) in the case of a company
under administration—a change of the company’s name took effect during the 6‑month
period ending immediately before the administration began;
(iv) in the case of a
company that has executed a deed of company arrangement—a change of the
company’s name took effect during the 6‑month period ending immediately before
the beginning of the administration that ended when the deed was executed;
(v) in the case of a
company where there is a managing controller—a change in the company’s name
took effect during the 6‑month period ending immediately before the appointment
of the managing controller;
(vi) in the case of a
company where there is a receiver—a change in the company’s name took effect
during the 6‑month period ending immediately before the appointment of the
receiver.
(2) If subparagraph (1)(b)(i), (ii), (iii),
(v) or (vi) applies, the company must set out its former name on all its public
documents and negotiable instruments.
(3) If subparagraph (1)(b)(iv) applies,
then, except with the leave of the Court, the company must set out its former
name on all its public documents and negotiable instruments.
(4) An offence based on subsection (2)
or (3) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(5) The regulations may exempt a specified
company, or a class of companies, from the requirement in subsection (2)
or (3). The exemption may relate to specified documents or instruments, or a
specified class of documents or instruments.
(6) The Court may only grant leave under
subsection (3) on the application of the administrator of the deed of
company arrangement.
(7) The Court may only grant leave under
subsection (3) if it is satisfied that the granting of leave will not
result in any significant risk to the interests of the company’s creditors
(including contingent or prospective creditors) as a whole.
Part 2B.7—Changing company type
162
Changing company type
(1) A company may change to a company of a
different type as set out in the following table by:
(a) passing a special resolution
resolving to change its type; and
(b) complying with sections 163
and 164.
|
Allowed conversions
|
[operative table]
|
|
|
This type of company may change…
|
…to this type of company
|
|
1
|
proprietary company limited by shares
|
unlimited proprietary company
unlimited public company
public company limited by shares
|
|
2
|
unlimited proprietary company
|
proprietary company limited by shares (but only if,
within the last 3 years, it was not a limited company that became an
unlimited company)
public company limited by shares (but only if, within
the last 3 years, it was not a limited company that became an unlimited
company)
unlimited public company
|
|
3
|
public company limited by shares
|
unlimited public company
unlimited proprietary company
proprietary company limited by shares
no liability company (see subsection (2))
|
|
4
|
company limited by guarantee
|
public company limited by shares
unlimited public company
proprietary company limited by shares
unlimited proprietary company
|
|
5
|
unlimited public company
|
public company limited by shares (but only if, within
the last 3 years, it was not a limited company that became an unlimited
company)
proprietary company limited by shares (but only if,
within the last 3 years, it was not a limited company that became an
unlimited company)
unlimited proprietary company
|
|
6
|
public no liability company
|
public company limited by shares (but only if all the
issued shares are fully paid up)
proprietary company limited by shares (but only if all the
issued shares are fully paid up)
|
Note 1: A public company seeking to change to a
proprietary company must comply with the requirements for proprietary companies
set out in section 113.
Note 2: Other types of companies that were previously
allowed can change type under the Part 10.1 transitionals.
(2) A public company limited by shares may
only convert to a no liability company if:
(a) the company’s constitution states
that its sole objects are mining purposes; and
(b) under the constitution the company
has no contractual right to recover calls made on its shares from a shareholder
who fails to pay them; and
(c) all the company’s issued shares
are fully paid up.
Note: Section 9 defines mining purposes
and minerals.
(3) The company must lodge a copy of the
special resolution with ASIC within 14 days after it is passed.
(3A) An offence based on subsection (3) is
an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(4) A special
resolution to change an unlimited company that has share capital to a company
limited by shares may also provide that a specified portion of its uncalled
share capital may only be called up if the company becomes an externally‑administered
body corporate.
163
Applying for change of type
Lodging application
(1) To change its type, a company must lodge
an application with ASIC.
Contents of the application
(2) The application must be accompanied by
the following:
(a) a copy of:
(i) the special resolution
that resolves to change the type of the company, specifies the new type and the
company’s new name (if a change of name is necessary); and
(ii) any other special
resolution passed in connection with the change of type;
(b) for a company limited by guarantee
changing to a company limited by shares:
(i) a statement signed by
the directors of the company that in their opinion the company’s creditors are
not likely to be materially prejudiced by the change of type and that sets out
their reasons for that opinion; and
(ii) any special resolution
dealing with an issue of shares according to section 167;
(c) for a company limited by shares or
a company limited by guarantee changing to an unlimited company:
(i) an assent to the
change of type in the prescribed form signed by all the members of the company;
and
(ii) a statement signed by
a director or a company secretary of the company that all the members of the
company have signed the assent;
(d) for a proprietary company changing
to a public company:
(i) a consolidated copy of
the company’s constitution (if any) as at the date of lodgment; and
(ii) a copy of each
document (including an agreement or consent) or resolution that is necessary to
ascertain the rights attached to issued or unissued shares of the company.
Note 1: The company must lodge a copy of any special
resolution modifying its constitution passed after the application is lodged
(see subsection 136(5)).
Note 2: The company must lodge information relating to
any change of rights attached to its shares, or any division or conversion of
its shares into new classes, occurring after the application is lodged (see
section 246F).
Company limited by guarantee to company limited by
shares
(3) If shares will be issued to persons under
paragraph 166(2)(c) on the change of type from a company limited by guarantee
to a company limited by shares, the application must state:
(a) that the company has prepared a
list that sets out the following details about each person to whom the shares
will be issued:
(i) name and address;
(ii) the number and class
of shares the person will take up;
(iii) the amount (if any)
the person will pay for the shares;
(iv) the amount (if any)
that will be unpaid on the shares; and
(b) the number and class of shares
those persons will take up; and
(c) the amount (if any) those persons
will pay for the shares; and
(ca) the amount (if any) that
will be unpaid on the shares; and
(d) if the shares will be issued for
non‑cash consideration—the prescribed particulars about the issue of the
shares, unless the shares will be issued under a written contract and a copy of
the contract is lodged with the application; and
(e) that each of those persons who is
not a member of the company when the application is made consents in writing to
the inclusion in the list of the details about them that are referred to in paragraph (a).
The shares may be issued to existing members only, to new
members only or to existing and new members.
Note: An offer of shares associated with a proposed
change of type may need disclosure to investors under Part 6D.2 (see
sections 706, 707, 708, 708AA and 708A).
(3A) For a company changing to a proprietary
company, if any of the particulars in the register kept by the company under
section 169 and mentioned in paragraph 178A(1)(b) are different from the
particulars set out:
(a) in the latest extract of
particulars received by the company; or
(b) if the company responded to the
latest extract it received—in the company’s extract taken together with the
company’s response to the extract;
the application must set out those different particulars
in addition to the other information required by this section.
(3B) If the company has more than 20 members,
the company is only required to set out the different particulars under subsection (3A)
that relate to a person who is a top 20 member of a class of the company.
Note: See also section 107.
(3C) If subsection (3A) applies and any
details mentioned in subsection 178C(1) are different from the details set out:
(a) in the latest extract of
particulars received by the company; or
(b) if the company responded to the
latest extract it received—in the company’s extract taken together with the
company’s response to the extract;
the application must set out those different details as
well.
(4) The application must be in the prescribed
form.
(5) The company must have the consents
referred to in paragraph (3)(e) (if any) when the application is lodged.
The company must keep the consents.
(6) An offence based on subsection (5)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
164
ASIC changes type of company
(1) ASIC must give notice under subsection (3)
that it intends to alter the details of the company’s registration if:
(a) ASIC is satisfied that:
(i) the application complies
with section 163; and
(ii) for an application by
a company limited by guarantee to change to a company limited by shares—the
company’s creditors are not likely to be materially prejudiced by the change;
and
(b) for an application by a company
limited by guarantee to change to a company limited by shares that is
accompanied by a copy of a special resolution dealing with an issue of shares
according to section 167—ASIC is not of the opinion that the obligations
that would attach to the shares are unreasonable compared with the obligations
that attach to membership of the company limited by guarantee.
(2) To make a decision under subparagraph (1)(a)(ii),
ASIC may direct the company in writing to:
(a) notify some or all of its
creditors of the proposed change in the way ASIC specifies; and
(b) invite those creditors to make
submissions to ASIC.
(3) The notice that ASIC intends to alter the
details of the company’s registration must be:
(a) included on ASIC database; and
(b) published in the Gazette.
The notice must also state that ASIC will alter the
details of the company’s registration 1 month after the notice has been
published in the Gazette unless an order by a court or the
Administrative Appeals Tribunal prevents it from doing so.
(4) Subject to an order made by a court or
the Administrative Appeals Tribunal within that month, after that month has
passed ASIC must alter the details of the company’s registration to reflect the
company’s new type.
(5) A change
of type under this section takes effect when ASIC alters the details of the
company’s registration. Despite subsection 246D(3) and section 246E, a
special resolution passed in connection with the change of type also takes
effect when ASIC alters the details of the company’s registration.
(6) ASIC must give the company a new
certificate of registration after it alters the details of the company’s
registration. The company’s name is the name specified in the certificate of
registration issued under this section.
Note: For the evidentiary value of a certificate of
registration, see subsection 1274(7A).
(7) If ASIC alters the details of a company’s
registration under subsection (4), a court is not to make an order
reversing the alteration of the details of the company’s registration.
Note: The Administrative Appeals Tribunal cannot
review the change of the company’s type once ASIC has issued a new certificate
of registration to the company (see subsection 1274(7A) and paragraph
1317C(b)).
165
ASIC may direct a proprietary company to change to a public company in certain
circumstances
(1) ASIC may direct a proprietary company in
writing to change to a public company within 2 months if it is satisfied that
the company has contravened section 113 (requirements for proprietary
companies).
(2) The company must comply with the
direction within 2 months after being given it by doing everything necessary to
change to a public company under section 164.
(2A) An offence based on subsection (2) is
an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(3) If a proprietary company does not comply
with subsection (2), ASIC may change the company from a proprietary to a
public company by altering the details of the company’s registration to reflect
the company’s new type.
(4) A change of type under this section takes
effect when ASIC alters the details of the company’s registration.
(5) ASIC must give the company a new
certificate of registration after it alters the details of the company’s
registration under subsection (3). The company’s name is the name
specified in the certificate of registration issued under this section.
Note: For the evidentiary value of a certificate of
registration, see subsection 1274(7A).
166
Effect of change of type
(1) A change of type does not:
(a) create a new legal entity; or
(b) affect the company’s existing
property, rights or obligations (except as against the members of the company
in their capacity as members); or
(c) render defective any legal
proceedings by or against the company or its members.
(2) On the change of type of a company from a
company limited by guarantee to a company limited by shares:
(a) the liability of each member and
past member as a guarantor on the winding up of the company is extinguished;
and
(b) the members cease to be members of
the company; and
(c) if shares are to be issued to a
person as specified in the list referred to in subsection 163(3):
(i) the shares are taken
to be issued to that person; and
(ii) the person is taken to
have consented to be a member of the company; and
(iii) the person becomes a
member of the company.
Note: The company must maintain a register of
members that complies with subsection 169(3).
167
Issue of shares by company or holding company—company limited by guarantee
changing to company limited by shares
(1) If:
(a) a company limited by guarantee
changes type under this Part to a company limited by shares; and
(b) that
company, or another company that beneficially owns all the shares in that
company, issues shares to a person who was a member of that company immediately
before the change of type took effect;
the person becomes a member
of the company issuing the shares if:
(c) the issue of the shares is in
accordance with the special resolution that accompanied the application to
change type under subparagraph 163(2)(a)(ii); and
(d) the shares are fully paid up; and
(e) the business, assets and
liabilities of the issuing company (together with its subsidiaries) when the
shares are issued are substantially the same as the business, assets and
liabilities of the company changing type (together with its subsidiaries)
immediately before the change of type took effect.
(2) If shares are issued according to this
section, a court is not to make an order reversing the issue of the shares.
167AA
Application of Part to company limited both by shares and by guarantee
(1) A company limited both by shares and by
guarantee may change to one of the following types of companies under this
Part:
(a) a proprietary company limited by
shares;
(b) a public company limited by
shares;
(c) a company limited by guarantee.
(2) This Part applies to the change with any
modifications that are necessary.
Chapter 2C—Registers
Part 2C.1—Registers generally
167A
Who is covered by this Chapter
(1) This Chapter covers:
(a) all companies; and
(b) all registered schemes.
(2) A registered scheme’s responsible entity:
(a) must perform the obligations
imposed under this Chapter in respect of the scheme; and
(b) may exercise the powers given by
this Chapter in respect of the scheme.
168
Registers to be maintained
(1) A company or registered scheme must set
up and maintain:
(a) a register of members (see section 169);
and
(b) if the company or scheme grants
options over unissued shares or interests—a register of option holders and
copies of options documents (see section 170); and
(c) if the company issues debentures—a
register of debenture holders (see section 171).
Note 1: See also section 271 (register of
charges).
Note 1A: See also section 672DA (register of relevant
interests in listed company or registered scheme).
Note 2: The registers may be kept on computer (see
section 1306).
(1A) An offence based on subsection (1) is
an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(2) For the purposes of this Chapter, choses
in action (including an undertaking) that fall into one of the exceptions in paragraphs (a),
(b), (e) and (f) of the definition of debenture in section 9
must also be entered into the register of debenture holders.
169
Register of members
General requirements
(1) The register of members must contain the
following information about each member:
(a) the member’s name and address;
(b) the date on which the entry of the
member’s name in the register is made.
Index to register
(2) If the company or scheme has more than 50
members, the company or scheme must include in the register an up‑to‑date index
of members’ names. The index must be convenient to use and allow a member’s
entry in the register to be readily found. A separate index need not be
included if the register itself is kept in a form that operates effectively as
an index.
Companies with share capital
(3) If the company has a share capital, the
register must also show:
(a) the date on which every allotment
of shares takes place; and
(b) the number of shares in each
allotment; and
(c) the shares held by each member;
and
(d) the class of shares; and
(e) the share numbers (if any), or
share certificate numbers (if any), of the shares; and
(ea) the amount paid on the shares; and
(eb) whether or not the shares are fully
paid; and
(f) the amount unpaid on the shares
(if any).
Note 1: Transfers of shares are entered in the register
under section 1071D. Section 1072E deals with the registration of
trustees etc. on the death, incapacity or bankruptcy of the shareholder.
Note 2: For the treatment of joint holders see subsection (8).
(4) The register does not have to show the
amount unpaid on the shares (see paragraph (1)(f)) if:
(a) all of the company’s shares were
issued before 1 July 1998; and
(b) the register continues to show the
par values of the shares as they were immediately before 1 July 1998.
(5) The register does not have to show the
amount unpaid on the shares (see paragraph (1)(f)) if:
(a) all of the company’s shares were
issued before 1 July 1998; and
(b) the company is not a listed
company.
Non‑beneficial ownership—companies other than listed
companies
(5A) The register of a company that:
(a) has a share capital; and
(b) is
neither a listed company (within the meaning of section 603) nor a company
covered by an order under section 707;
must indicate any shares that a member does not hold
beneficially.
Note: See also section 1072H (in particular, subsection
1072H(8) which contains relevant presumptions about beneficial ownership).
(6) In deciding for the purposes of subsection (5A)
whether a member holds shares beneficially or non‑beneficially, the company is
to have regard only to information in notices given to the company under
section 1072H, 672B or 672C.
Registered schemes
(6A) The register of a registered scheme must
also show:
(a) the date on which every issue of
interests takes place; and
(b) the number of interests in each
issue; and
(c) the interests held by each member;
and
(d) the class of interests; and
(e) the amount paid, or agreed to be
considered as paid, on the interests.
Former members
(7) A register of members must also show:
(a) the name and details of each
person who stopped being a member of the company or scheme within the last 7
years; and
(b) the
date on which the person stopped being a member.
The company or scheme may keep these entries separately
from the rest of the register.
Joint holders
(8) For the purposes of this section:
(a) 2 or more persons who jointly hold
shares in the company or interests in the scheme are taken to be a single
member of the company or scheme in relation to those shares or interests; and
(b) 2 or more persons who have given a
guarantee jointly are taken to be a single member of the company.
They may also be members of the company or scheme because
of shares or interests that they hold, or a guarantee that they have given, in
their own right or jointly with others.
170
Register of option holders and copies of options documents
(1) The register of option holders must
contain the following information about each holder of options over unissued
shares in the company or unissued interests in the scheme:
(a) the option holder’s name and address;
(b) the date on which the entry of the
option holder’s name in the register is made;
(c) the date of grant of the options;
(d) the number and description of the
shares or interests over which the options were granted;
(e) either:
(i) the period during
which the options may be exercised; or
(ii) the time at which the
options may be exercised;
(f) any event that must happen before
the options can be exercised;
(g) any consideration for the grant of
the options;
(h) any
consideration for the exercise of the options or the method by which that
consideration is to be determined.
Because it is a register of the holders of options that
are still exercisable, the register must be updated whenever options are
exercised or expire.
(2) Information about the grant of an option
must be entered in the register within 14 days after the grant of the option.
Copies of options documents
(3) The company or scheme must keep with the
register a copy of every document that grants an option over unissued shares or
interests.
(3A) An offence based on subsection (3) is
an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(3B) Subsection (3) does not apply if the
option is listed for quotation on a prescribed financial market.
Note: A defendant bears an evidential burden in
relation to the matter in subsection (3B), see subsection 13.3(3) of the Criminal
Code.
(4) The company or scheme must change the
register to reflect the transfer of an option only if the person transferring
the option gives the company or scheme written notice of the transfer.
(5) A failure to comply with this section in
relation to an option does not affect the option itself.
171
Register of debenture holders
(1) The register of debenture holders must
contain the following information about each holder of a debenture:
(a) the debenture holder’s name and
address;
(b) the amount of the debentures held.
Note: See subsection 168(2) for the coverage of debenture.
(2) A company’s failure to comply with this
section in relation to a debenture does not affect the debenture itself.
172
Location of registers
(1) A register kept under this Chapter that
relates to a company must be kept at:
(a) the company’s registered office;
or
(b) the company’s principal place of
business in this jurisdiction; or
(c) a place in this jurisdiction
(whether of the company or of someone else) where the work involved in
maintaining the register is done; or
(d) another place in this jurisdiction
approved by ASIC.
(1A) A register kept under this Chapter that
relates to a registered scheme must be kept at:
(a) the responsible entity’s
registered office; or
(b) an office at the responsible
entity’s principal place of business in this jurisdiction; or
(c) an office in this jurisdiction
(whether of the responsible entity or of someone else) where the work involved
in maintaining the register is done; or
(d) another office in this
jurisdiction approved by ASIC.
Notice to ASIC
(2) The company or scheme must lodge with
ASIC a notice of the address at which the register is kept within 7 days after
the register is:
(a) established at an office that:
(i) is not the registered
office of the company or responsible entity; and
(ii) is not at the
principal place of business of the company or responsible entity in this
jurisdiction; or
(b) moved
from one place to another.
Notice is not required for moving the register between the
registered office and the principal place of business in this jurisdiction.
(3) An offence based on subsection (1),
(1A) or (2) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
173
Right to inspect and get copies
Right to inspect
(1) A company or registered scheme must allow
anyone to inspect a register kept under this Chapter. If the register is not
kept on a computer, the person inspects the register itself. If the register is
kept on a computer, the person inspects the register by computer.
Note: Other
provisions that are relevant to the inspection of registers are:
section 1300
(place and times for inspection)
section 1301
(the location of documents that are kept on computers)
section 1306
(form and evidentiary value).
Inspection fees
(2) A member of a company or a registered
scheme, a registered option holder or a registered debenture holder may inspect
a register kept under this Chapter without charge. Other people may inspect the
register only on payment of any fee (up to the prescribed amount) required by
the company or scheme.
Right to get copies
(3) The company or scheme must give a person
a copy of the register (or a part of the register) within 7 days if the person:
(a) makes an application to the
company or registered scheme in accordance with subsection (3A); and
(b) pays
any fee (up to the prescribed amount) required by the company or scheme.
ASIC may allow a longer period to comply with the request.
If the register is kept on a computer, the company or registered scheme must
give the copy to the person in the prescribed form.
(3A) An application is in accordance with this
subsection if:
(a) the application states each
purpose for which the person is accessing the copy; and
(b) none of those purposes is a
prescribed purpose; and
(c) the application is in the
prescribed form.
Note: Sections 137.1 and 137.2 of the Criminal
Code create offences for providing false or misleading information or
documents.
(4) A person has the same rights to inspect,
and obtain copies of, thedocuments kept under subsection 170(3) as the person
has in respect of the register of option holders itself.
(5) The company is not required under subsection (1)
or (3) to allow a person to see, or to give a person a copy that contains,
share certificate numbers.
ASIC power in relation to register of debenture holders
(6) ASIC may exempt a company from complying
with subsections (1) and (3) in relation to information in a register of
debenture holders about debentures that are not convertible into shares or
options over unissued shares.
(7) The exemption:
(a) must be in writing; and
(b) may be general or limited; and
(c) may be subject to conditions
specified in the exemption.
(8) ASIC must publish a copy of the exemption
in the Gazette.
(9) A person must not contravene a condition
of the exemption.
(9A) An offence based on subsection (1),
(3) or (9) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(10) On application by ASIC, the Court may
order a person who contravenes a condition of the exemption to comply with the
condition.
174
Agent’s obligations
(1) A person who agrees to maintain a
register on behalf of a company or registered scheme for the purposes of this
Chapter must:
(a) make the register available for
inspection under this Chapter; and
(b) provide the copies required by
this Chapter.
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
175
Correction of registers
(1) A company or registered scheme or a
person aggrieved may apply to the Court to have a register kept by the company
or scheme under this Part corrected.
(2) If the Court orders the company or scheme
to correct the register, it may also order the company or scheme to compensate
a party to the application for loss or damage suffered.
(3) If:
(a) the Court orders a company or
scheme to correct its register of members; and
(b) the
company or scheme has lodged a list of its members with ASIC;
the company or scheme must lodge notice of the correction
with ASIC.
Note: A proprietary company may also have to notify
certain particulars under Part 2C.2 of this Chapter.
176
Evidentiary value of registers
In the absence of evidence to the
contrary, a register kept under this Chapter is proof of the matters shown in
the register under this Chapter.
177
Use of information on registers
(1) A person must not:
(a) use information about a person
obtained from a register kept under this Chapter to contact or send material to
the person; or
(b) disclose information of that kind
knowing that the information is likely to be used to contact or send material
to the person.
Note: An example of using information to send
material to a person is putting a person’s name and address on a mailing list
for advertising material.
(1AA) A person must not:
(a) use information obtained from a
register kept under this Chapter for any purpose prescribed by regulations made
for the purposes of paragraph 173(3A)(b); or
(b) disclose information of that kind
knowing that the information is likely to be used for any such purpose.
(1A) Subsection (1)
does not apply if the use or disclosure of the information is:
(a) relevant to the holding of the
interests recorded in the register or the exercise of the rights attaching to
them; or
(b) approved by the company or scheme.
Note: A defendant bears an evidential burden in
relation to the matter in subsection (1A), see subsection 13.3(3) of the Criminal
Code.
(1B) An offence based on subsection (1) or
(1AA) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(2) A person who contravenes subsection (1)
or (1AA) is liable to compensate anyone else who suffers loss or damage because
of the contravention.
(3) A person who makes a profit from a contravention
of subsection (1) or (1AA) owes a debt to the company or the scheme. The
amount of the debt is the amount of the profit.
(4) If a person owes a debt under subsection (3)
to the scheme:
(a) the debt may be recovered by the
responsible entity as a debt due to it; and
(b) any amount paid or recovered in
respect of the debt forms part of the scheme property.
178
Overseas branch registers
(1) A company may keep a branch register of
members at a place outside Australia.
(2) If a company keeps an overseas branch
register under subsection (1):
(a) the company must keep the branch
register in the same manner as this Act requires the company to keep the
register kept under section 169 (the principal register);
and
(b) the company must enter in the principal
register the details contained in the branch register; and
(c) the company must distinguish
shares that are registered in the branch register from the shares registered in
the principal register.
Part 2C.2—Notice by proprietary companies of changes to member
register
178A
Notice of change to member register
(1) A proprietary company must notify
ASIC within the time determined under section 178D and in the prescribed
form, if:
(a) it is required to add or alter a
particular in the register it maintains under section 169; and
(b) the particular is one required to
be kept under any of the following:
(i) subsection 169(1)
(name and address and date of entry of member’s name into register);
(ii) paragraph 169(3)(b)
(number of shares in each allotment to the member);
(iii) paragraph 169(3)(c)
(the number of shares held by the member);
(iv) paragraph 169(3)(d)
(the class of shares held by the member);
(v) paragraph 169(3)(ea)
(the amount paid on the member’s shares);
(vi) paragraph 169(3)(eb)
(whether the member’s shares are fully paid);
(vii) paragraph 169(3)(f)
(the amount unpaid, if any, on the member’s shares);
(viii) subsection 169(5A)
(statement whether any of the member’s shares are held beneficially).
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
178B
Top 20 only
If a
proprietary company has more than 20 members, the company is only required to
notify additions or alterations of particulars under section 178A that
relate to a person who is, or as a result of the addition or alteration will
become, a top 20 member of a class of the company.
Note: See also section 107.
178C
Notice of change to share structure
(1) A proprietary company that is required to
notify ASIC under section 178A of an addition or alteration must also
notify ASIC, at the same time, of any of the following details in relation to
the company that are different from the details previously notified to ASIC:
(a) the total number of the company’s
shares on issue;
(b) the classes into which the shares
are divided;
(c) for each class issued:
(i) the total number of
shares for the class;
(ii) the total amount paid
up for the class;
(iii) the total amount
unpaid for the class.
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
178D
Time within which ASIC must be notified
A proprietary company must notify ASIC
under section 178A within the time determined by this table.
|
Time within which the
company must notify ASIC
|
|
Item
|
If the need to add or
alter a particular arises in connection with this event...
|
The company must notify
ASIC within this time...
|
|
1
|
the Court orders the company to correct its member
register kept under section 169
|
at the same time that it notifies ASIC of the correction
under subsection 175(3)
|
|
2
|
the company divides shares into classes, or converts
shares of a class into shares of another class
|
within the time within which it must notify ASIC of the
particulars of the division or conversion under subsection 246F(1)
|
|
3
|
the company issues shares
|
within the time within which it must notify ASIC of the
particulars of the issue under subsection 254X(1)
|
|
4
|
the company reduces its share capital
|
within the time within which it must notify ASIC of
shareholder approval of the reduction under subsection 256C(3)
|
|
5
|
an event not covered by items 1 to 4
|
within 28 days after the day on which it adds or alters
the particular in the register
|
Chapter 2D—Officers and employees
Part 2D.1—Duties and powers
179
Background to duties of directors, other officers and employees
(1) This Part sets out some of the most
significant duties of directors, secretaries, other officers and employees of
corporations. Other duties are imposed by other provisions of this Act and
other laws (including the general law).
(2) Section 9 defines both director
and officer. Officer includes, as well as directors
and secretaries, some other people who manage the corporation or its property
(such as receivers and liquidators).
Division 1—General duties
180
Care and diligence—civil obligation only
Care and diligence—directors and other officers
(1) A director or other officer of a
corporation must exercise their powers and discharge their duties with the
degree of care and diligence that a reasonable person would exercise if they:
(a) were a director or officer of a
corporation in the corporation’s circumstances; and
(b) occupied the office held by, and
had the same responsibilities within the corporation as, the director or
officer.
Note: This subsection is a civil penalty provision
(see section 1317E).
Business judgment rule
(2) A director or other officer of a
corporation who makes a business judgment is taken to meet the requirements of subsection (1),
and their equivalent duties at common law and in equity, in respect of the
judgment if they:
(a) make the judgment in good faith
for a proper purpose; and
(b) do not have a material personal
interest in the subject matter of the judgment; and
(c) inform themselves about the
subject matter of the judgment to the extent they reasonably believe to be
appropriate; and
(d) rationally believe that the
judgment is in the best interests of the corporation.
The director’s or officer’s belief that the judgment is in
the best interests of the corporation is a rational one unless the belief is
one that no reasonable person in their position would hold.
Note: This subsection only operates in relation to
duties under this section and their equivalent duties at common law or in
equity (including the duty of care that arises under the common law principles
governing liability for negligence)—it does not operate in relation to duties
under any other provision of this Act or under any other laws.
(3) In this
section:
business judgment means any decision to take
or not take action in respect of a matter relevant to the business operations
of the corporation.
181
Good faith—civil obligations
Good faith—directors and other officers
(1) A director or other officer of a
corporation must exercise their powers and discharge their duties:
(a) in good faith in the best
interests of the corporation; and
(b) for a proper purpose.
Note 1: This subsection is a civil penalty provision
(see section 1317E).
Note 2: Section 187 deals with the situation of
directors of wholly‑owned subsidiaries.
(2) A person who is involved in a
contravention of subsection (1) contravenes this subsection.
Note 1: Section 79 defines involved.
Note 2: This subsection is a civil penalty provision
(see section 1317E).
182
Use of position—civil obligations
Use of position—directors, other officers and employees
(1) A director, secretary, other officer or
employee of a corporation must not improperly use their position to:
(a) gain an advantage for themselves
or someone else; or
(b) cause detriment to the
corporation.
Note: This subsection is a civil penalty provision
(see section 1317E).
(2) A person who is involved in a
contravention of subsection (1) contravenes this subsection.
Note 1: Section 79 defines involved.
Note 2: This subsection is a civil penalty provision
(see section 1317E).
183
Use of information—civil obligations
Use of information—directors, other officers and
employees
(1) A person who obtains information because
they are, or have been, a director or other officer or employee of a
corporation must not improperly use the information to:
(a) gain an advantage for themselves
or someone else; or
(b) cause detriment to the
corporation.
Note 1: This duty continues after the person stops
being an officer or employee of the corporation.
Note 2: This subsection is a civil penalty provision
(see section 1317E).
(2) A person who is involved in a
contravention of subsection (1) contravenes this subsection.
Note 1: Section 79 defines involved.
Note 2: This subsection is a civil penalty provision
(see section 1317E).
184
Good faith, use of position and use of information—criminal offences
Good faith—directors and other officers
(1) A director or other officer of a
corporation commits an offence if they:
(a) are reckless; or
(b) are intentionally dishonest;
and fail to exercise their powers and discharge their
duties:
(c) in good faith in the best
interests of the corporation; or
(d) for a proper purpose.
Note: Section 187 deals with the situation of
directors of wholly‑owned subsidiaries.
Use of position—directors, other officers and employees
(2) A director, other officer or employee of
a corporation commits an offence if they use their position dishonestly:
(a) with the intention of directly or
indirectly gaining an advantage for themselves, or someone else, or causing
detriment to the corporation; or
(b) recklessly as to whether the use
may result in themselves or someone else directly or indirectly gaining an
advantage, or in causing detriment to the corporation.
Use of information—directors, other officers and
employees
(3) A person who obtains information because
they are, or have been, a director or other officer or employee of a corporation
commits an offence if they use the information dishonestly:
(a) with the intention of directly or
indirectly gaining an advantage for themselves, or someone else, or causing
detriment to the corporation; or
(b) recklessly as to whether the use may
result in themselves or someone else directly or indirectly gaining an
advantage, or in causing detriment to the corporation.
185
Interaction of sections 180 to 184 with other laws etc.
Sections 180 to 184:
(a) have effect in addition to, and
not in derogation of, any rule of law relating to the duty or liability of a
person because of their office or employment in relation to a corporation; and
(b) do not prevent the commencement of
civil proceedings for a breach of a duty or in respect of a liability referred
to in paragraph (a).
This section does not apply to subsections 180(2) and (3) to the extent to which they operate on the duties at common law and in equity
that are equivalent to the requirements of subsection 180(1).
186
Territorial application of sections 180 to 184
Sections 180 to 184 do not apply to
an act or omission by a director or other officer or employee of a foreign
company unless the act or omission occurred in connection with:
(a) the foreign company carrying on
business in this jurisdiction; or
(b) an act that the foreign company
does, or proposes to do, in this jurisdiction; or
(c) a decision by the foreign company
whether or not to do, or refrain from doing, an act in this jurisdiction.
187
Directors of wholly‑owned subsidiaries
A director of a corporation that is a
wholly‑owned subsidiary of a body corporate is taken to act in good faith in
the best interests of the subsidiary if:
(a) the constitution of the subsidiary
expressly authorises the director to act in the best interests of the holding
company; and
(b) the director acts in good faith in
the best interests of the holding company; and
(c) the subsidiary is not insolvent at
the time the director acts and does not become insolvent because of the
director’s act.
188
Responsibility of secretaries and directors for certain contraventions
Secretary’s functions
(1) A secretary of a company contravenes this
subsection if the company contravenes:
(a) section 142 (requirement for
companies to have registered office); or
(b) section 145 (requirement for
registered office of public company to be open to public); or
(c) section 346C (requirement to
respond to extract of particulars); or
(ca) section 348D (requirement to
respond to return of particulars); or
(d) section 205B (lodgment of
notices with ASIC); or
(e) section 146 (notice of change
of principal place of business); or
(f) section 178A (notice of
change to member register (proprietary companies only)); or
(g) section 178C (notice of
change to share structure (proprietary companies only)); or
(h) section 254X (notice of issue
of shares); or
(i) subsection 319(1) (lodgment of
financial reports); or
(j) section 349A (notice of
changes to ultimate holding company (proprietary companies only)).
Note: See section 204A for the circumstances in
which a company must have a secretary.
Consequence if director of proprietary company without
secretary does not fulfil secretary’s function
(2) Each director of a proprietary company
contravenes this subsection if:
(a) the proprietary company
contravenes a provision referred to in subsection (1); and
(b) the proprietary company does not
have a secretary when it contravenes that section.
(2A) An offence based on subsection (1) or
(2) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
Defence
(3) A person does not contravene subsection (1)
or (2) if they show that they took all reasonable steps to ensure that the
company complied with the section.
Note: A defendant bears a legal burden in relation
to a matter mentioned in subsection (3), see section 13.4 of the Criminal
Code.
189
Reliance on information or advice provided by others
If:
(a) a director relies on information,
or professional or expert advice, given or prepared by:
(i) an employee of the
corporation whom the director believes on reasonable grounds to be reliable and
competent in relation to the matters concerned; or
(ii) a professional adviser
or expert in relation to matters that the director believes on reasonable
grounds to be within the person’s professional or expert competence; or
(iii) another director or
officer in relation to matters within the director’s or officer’s authority; or
(iv) a committee of
directors on which the director did not serve in relation to matters within the
committee’s authority; and
(b) the reliance was made:
(i) in good faith; and
(ii) after making an
independent assessment of the information or advice, having regard to the
director’s knowledge of the corporation and the complexity of the structure and
operations of the corporation; and
(c) the reasonableness of the
director’s reliance on the information or advice arises in proceedings brought
to determine whether a director has performed a duty under this Part or an equivalent
general law duty;
the director’s reliance on the information or advice is
taken to be reasonable unless the contrary is proved.
190
Responsibility for actions of delegate
(1) If the directors delegate a power under
section 198D, a director is responsible for the exercise of the power by
the delegate as if the power had been exercised by the directors themselves.
(2) A director is not responsible under subsection (1)
if:
(a) the director believed on
reasonable grounds at all times that the delegate would exercise the power in
conformity with the duties imposed on directors of the company by this Act and
the company’s constitution (if any); and
(b) the director believed:
(i) on reasonable grounds;
and
(ii) in good faith; and
(iii) after making proper
inquiry if the circumstances indicated the need for inquiry;
that the delegate was reliable
and competent in relation to the power delegated.
190A
Limited application of Division to registrable Australian bodies
This Division does not apply to an act
or omission by a director or other officer or employee of a corporation that is
a registrable Australian body unless the act or omission occurred in connection
with:
(a) the body carrying on business
outside its place of origin; or
(b) an act that the body does or
proposed to do outside its place of origin; or
(c) a decision by the body whether or
not to do or refrain from doing outside its place of origin.
190B
Division does not apply to Aboriginal and Torres Strait Islander
corporations
This Division does not apply to a
corporation that is an Aboriginal and Torres Strait Islander corporation.
Note: Division 265 of the Corporations
(Aboriginal and Torres Strait Islander) Act 2006 deals with the general
duties of directors, secretaries, officers and employees of Aboriginal and
Torres Strait Islander corporations.
Division 2—Disclosure of, and voting on matters involving, material
personal interests
191
Material personal interest—director’s duty to disclose
Director’s duty to notify other directors of material
personal interest when conflict arises
(1) A director of a company who has a
material personal interest in a matter that relates to the affairs of the
company must give the other directors notice of the interest unless subsection (2)
says otherwise.
(1A) For an offence based on subsection (1),
strict liability applies to the circumstance, that the director of a company
has a material personal interest in a matter that relates to the affairs of the
company.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(2) The director does not need to give notice
of an interest under subsection (1) if:
(a) the interest:
(i) arises because the
director is a member of the company and is held in common with the other
members of the company; or
(ii) arises in relation to
the director’s remuneration as a director of the company; or
(iii) relates to a contract
the company is proposing to enter into that is subject to approval by the
members and will not impose any obligation on the company if it is not approved
by the members; or
(iv) arises merely because
the director is a guarantor or has given an indemnity or security for all or
part of a loan (or proposed loan) to the company; or
(v) arises merely because
the director has a right of subrogation in relation to a guarantee or indemnity
referred to in subparagraph (iv); or
(vi) relates to a contract
that insures, or would insure, the director against liabilities the director
incurs as an officer of the company (but only if the contract does not make the
company or a related body corporate the insurer); or
(vii) relates to any payment
by the company or a related body corporate in respect of an indemnity permitted
under section 199A or any contract relating to such an indemnity; or
(viii) is in a contract, or
proposed contract, with, or for the benefit of, or on behalf of, a related body
corporate and arises merely because the director is a director of the related
body corporate; or
(b) the company is a proprietary
company and the other directors are aware of the nature and extent of the
interest and its relation to the affairs of the company; or
(c) all the following conditions are
satisfied:
(i) the director has
already given notice of the nature and extent of the interest and its relation
to the affairs of the company under subsection (1);
(ii) if a person who was
not a director of the company at the time when the notice under subsection (1)
was given is appointed as a director of the company—the notice is given to that
person;
(iii) the nature or extent
of the interest has not materially increased above that disclosed in the
notice; or
(d) the director has given a standing
notice of the nature and extent of the interest under section 192 and the
notice is still effective in relation to the interest.
Note: Subparagraph (c)(ii)—the notice may be
given to the person referred to in this subparagraph by someone other than the
director to whose interests it relates (for example, by the secretary).
(3) The notice required by subsection (1)
must:
(a) give details of:
(i) the nature and extent
of the interest; and
(ii) the relation of the
interest to the affairs of the company; and
(b) be given at a directors’ meeting
as soon as practicable after the director becomes aware of their interest in
the matter.
The details must be recorded in the minutes of the
meeting.
Effect of contravention by director
(4) A contravention of this section by a
director does not affect the validity of any act, transaction, agreement,
instrument, resolution or other thing.
Section does not apply to single director proprietary
company
(5) This section does not apply to a
proprietary company that has only 1 director.
192
Director may give other directors standing notice about an interest
Power to give notice
(1) A director of a company who has an
interest in a matter may give the other directors standing notice of the nature
and extent of the interest in the matter in accordance with subsection (2).
The notice may be given at any time and whether or not the matter relates to
the affairs of the company at the time the notice is given.
Note: The standing notice may be given to the other
directors before the interest becomes a material personal interest.
(2) The notice under subsection (1)
must:
(a) give details of the nature and
extent of the interest; and
(b) be given:
(i) at a directors’
meeting (either orally or in writing); or
(ii) to the other directors
individually in writing.
The standing notice is given under subparagraph (b)(ii)
when it has been given to every director.
Standing notice must be tabled at meeting if given to
directors individually
(3) If the standing notice is given to the
other directors individually in writing, it must be tabled at the next
directors’ meeting after it is given.
Nature and extent of interest must be recorded in
minutes
(4) The director must ensure that the nature
and extent of the interest disclosed in the standing notice is recorded in the
minutes of the meeting at which the standing notice is given or tabled.
Dates of effect and expiry of standing notice
(5) The standing notice:
(a) takes effect as soon as it is
given; and
(b) ceases to have effect if a person
who was not a director of the company at the time when the notice was given is
appointed as a director of the company.
A standing notice that ceases to have effect under paragraph (b)
commences to have effect again if it is given to the person referred to in that
paragraph.
Note: The notice may be given to the person referred
to in paragraph (b) by someone other than the director to whose interests
it relates (for example, by the secretary).
Effect of material increase in nature or extent of
interest
(6) The standing notice ceases to have effect
in relation to a particular interest if the nature or extent of the interest
materially increases above that disclosed in the notice.
Effect of contravention by director
(7) A contravention of this section by a
director does not affect the validity of any act, transaction, agreement,
instrument, resolution or other thing.
193
Interaction of sections 191 and 192 with other laws etc.
Sections 191 and 192 have effect in
addition to, and not in derogation of:
(a) any general law rule about
conflicts of interest; and
(b) any provision in a company’s
constitution (if any) that restricts a director from:
(i) having a material
personal interest in a matter; or
(ii) holding an office or
possessing property;
involving duties or interests
that conflict with their duties or interests as a director.
194
Voting and completion of transactions—directors of proprietary companies (replaceable rule—see section 135)
If a director of a proprietary company
has a material personal interest in a matter that relates to the affairs of the
company and:
(a) under section 191 the director
discloses the nature and extent of the interest and its relation to the affairs
of the company at a meeting of the directors; or
(b) the interest is one that does not
need to be disclosed under section 191;
then:
(c) the director may vote on matters that
relate to the interest; and
(d) any transactions that relate to
the interest may proceed; and
(e) the director may retain benefits
under the transaction even though the director has the interest; and
(f) the company cannot avoid the
transaction merely because of the existence of the interest.
If disclosure is required under section 191, paragraphs (e)
and (f) apply only if the disclosure is made before the transaction is entered
into.
Note: A director may need to give notice to the
other directors if the director has a material personal interest in a matter
relating to the affairs of the company (see section 191).
195
Restrictions on voting—directors of public companies only
Restrictions on voting and being present
(1) A director of a public company who has a
material personal interest in a matter that is being considered at a directors’
meeting must not:
(a) be present while the matter is
being considered at the meeting; or
(b) vote on the matter.
(1A) Subsection (1) does not apply if:
(a) subsection (2) or (3) allows
the director to be present; or
(b) the interest does not need to be
disclosed under section 191.
Note: A defendant bears an evidential burden in
relation to the matter in subsection (1A), see subsection 13.3(3) of the Criminal
Code.
(1B) An offence based on subsection (1) is
an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
Participation with approval of other directors
(2) The director may be present and vote if
directors who do not have a material personal interest in the matter have
passed a resolution that:
(a) identifies the director, the
nature and extent of the director’s interest in the matter and its relation to
the affairs of the company; and
(b) states that those directors are
satisfied that the interest should not disqualify the director from voting or
being present.
Participation with ASIC approval
(3) The director may be present and vote if
they are so entitled under a declaration or order made by ASIC under section 196.
Director may consider or vote on resolution to deal
with matter at general meeting
(4) If there are not enough directors to form
a quorum for a directors’ meeting because of subsection (1), 1 or more of
the directors (including those who have a material personal interest in that
matter) may call a general meeting and the general meeting may pass a
resolution to deal with the matter.
Effect of contravention by director
(5) A contravention by a director of:
(a) this section; or
(b) a condition attached to a
declaration or order made by ASIC under section 196;
does not affect the validity of any resolution.
196
ASIC power to make declarations and class orders
ASIC’s power to make specific declarations
(1) ASIC may declare in writing that a
director of a public company who has a material personal interest in a matter
that is being, or is to be, considered at a directors’ meeting may, despite the
director’s interest, be present while the matter is being considered at the
meeting, vote on the matter, or both be present and vote. However, ASIC may
only make the declaration if:
(a) the number of directors entitled
to be present and vote on the matter would be less than the quorum for a
directors’ meeting if the director were not allowed to vote on the matter at
the meeting; and
(b) the matter needs to be dealt with
urgently, or there is some other compelling reason for the matter being dealt
with at the directors’ meeting, rather than by a general meeting called under
subsection 195(4).
(2) The declaration may:
(a) apply to all or only some of the
directors; or
(b) specify conditions that the
company or director must comply with.
ASIC’s power to make class orders
(3) ASIC may make an order in writing that
enables directors who have a material personal interest in a matter to be
present while the matter is being considered at a directors’ meeting, vote on
that matter, or both be present and vote. The order may be made in respect of a
specified class of public companies, directors, resolutions or interests.
(4) The order may be expressed to be subject
to conditions.
(5) Notice of the making, revocation or
suspension of the order must be published in the Gazette.
Division 3—Duty to discharge certain trust liabilities
197
Directors liable for debts and other obligations incurred by corporation as
trustee
(1) A person who is a director of a
corporation when it incurs a liability while acting, or purporting to act, as
trustee, is liable to discharge the whole or a part of the liability if the
corporation:
(a) has not discharged, and cannot
discharge, the liability or that part of it; and
(b) is not entitled to be fully
indemnified against the liability out of trust assets solely because of one or
more of the following:
(i) a breach of trust by
the corporation;
(ii) the corporation’s
acting outside the scope of its powers as trustee;
(iii) a term of the trust
denying, or limiting, the corporation’s right to be indemnified against the
liability.
The person is liable both individually and jointly with
the corporation and anyone else who is liable under this subsection.
Note: The person will not be liable under this
subsection merely because there are insufficient trust assets out of which the
corporation can be indemnified.
(2) The person is not liable under subsection (1)
if the person would be entitled to have been fully indemnified by 1 of the
other directors against the liability had all the directors of the corporation
been trustees when the liability was incurred.
(3) This section does not apply to a liability
incurred outside Australia by a foreign company.
(4) This section does not apply to a
liability incurred by a registrable Australian body outside its place of
origin.
(5) This section does not apply to a
corporation that is an Aboriginal and Torres Strait Islander corporation.
Note: Section 271‑1 of the Corporations
(Aboriginal and Torres Strait Islander) Act 2006 deals with the liability
of directors of Aboriginal and Torres Strait Islander corporations for debts
and other liabilities incurred by those corporations as trustee.
Division 4—Powers
198A
Powers of directors (replaceable
rule—see section 135)
(1) The business of a company is to be
managed by or under the direction of the directors.
Note: See section 198E for special rules about
the powers of directors who are the single director/shareholder of proprietary
companies.
(2) The directors may exercise all the powers
of the company except any powers that this Act or the company’s constitution
(if any) requires the company to exercise in general meeting.
Note: For example, the directors may issue shares,
borrow money and issue debentures.
198B
Negotiable instruments (replaceable
rule—see section 135)
(1) Any 2 directors of a company that has 2
or more directors, or the director of a proprietary company that has only 1
director, may sign, draw, accept, endorse or otherwise execute a negotiable
instrument.
(2) The directors may determine that a
negotiable instrument may be signed, drawn, accepted, endorsed or otherwise
executed in a different way.
198C
Managing director (replaceable rule—see
section 135)
(1) The directors of a company may confer on
a managing director any of the powers that the directors can exercise.
(2) The directors may revoke or vary a
conferral of powers on the managing director.
198D
Delegation
(1) Unless the company’s constitution
provides otherwise, the directors of a company may delegate any of their powers
to:
(a) a committee of directors; or
(b) a director; or
(c) an employee of the company; or
(d) any other person.
Note: The delegation must be recorded in the
company’s minute book (see section 251A).
(2) The delegate must exercise the powers
delegated in accordance with any directions of the directors.
(3) The exercise of the power by the delegate
is as effective as if the directors had exercised it.
198E
Single director/shareholder proprietary companies
Powers of director
(1) The director of a proprietary company who
is its only director and only shareholder may exercise all the powers of the
company except any powers that this Act or the company’s constitution (if any)
requires the company to exercise in general meeting. The business of the
company is to be managed by or under the direction of the director.
Note: For example, the director may issue shares,
borrow money and issue debentures.
Negotiable instruments
(2) The director of a proprietary company who
is its only director and only shareholder may sign, draw, accept, endorse or
otherwise execute a negotiable instrument. The director may determine that a
negotiable instrument may be signed, drawn, accepted, endorsed or otherwise
executed in a different way.
198F
Right of access to company books
Right while director
(1) A director of a company may inspect the
books of the company (other than its financial records) at all reasonable times
for the purposes of a legal proceeding:
(a) to which the person is a party; or
(b) that the person proposes in good
faith to bring; or
(c) that the person has reason to
believe will be brought against them.
Note: Section 290 gives the director a right of
access to financial records.
Right during 7 years after ceasing to be director
(2) A person who has ceased to be a director
of a company may inspect the books of the company (including its financial
records) at all reasonable times for the purposes of a legal proceeding:
(a) to which the person is a party; or
(b) that the person proposes in good
faith to bring; or
(c) that the person has reason to
believe will be brought against them.
This right continues for 7 years after the person ceased
to be a director of the company.
Right to take copies
(3) A person authorised to inspect books
under this section for the purposes of a legal proceeding may make copies of
the books for the purposes of those proceedings.
Company not to refuse access
(4) A company must allow a person to exercise
their rights to inspect or take copies of the books under this section.
Interaction with other rules
(5) This section does not limit any right of
access to company books that a person has apart from this section.
Part 2D.2—Restrictions on indemnities, insurance and termination
payments
Division 1—Indemnities and insurance for officers and auditors
199A
Indemnification and exemption of officer or auditor
Exemptions not allowed
(1) A company or a related body corporate
must not exempt a person (whether directly or through an interposed entity)
from a liability to the company incurred as an officer or auditor of the
company.
When indemnity for liability (other than for legal
costs) not allowed
(2) A company or a related body corporate
must not indemnify a person (whether by agreement or by making a payment and
whether directly or through an interposed entity) against any of the following
liabilities incurred as an officer or auditor of the company:
(a) a liability owed to the company or
a related body corporate;
(b) a liability for a pecuniary
penalty order under section 1317G or a compensation order under section 1317H,
1317HA or 1317HB;
(c) a liability that is owed to
someone other than the company or a related body corporate and did not arise
out of conduct in good faith.
This subsection does not apply to a liability for legal
costs.
When indemnity for legal costs not allowed
(3) A company or related body corporate must
not indemnify a person (whether by agreement or by making a payment and whether
directly or through an interposed entity) against legal costs incurred in
defending an action for a liability incurred as an officer or auditor of the
company if the costs are incurred:
(a) in defending or resisting
proceedings in which the person is found to have a liability for which they
could not be indemnified under subsection (2); or
(b) in defending or resisting criminal
proceedings in which the person is found guilty; or
(c) in defending or resisting
proceedings brought by ASIC or a liquidator for a court order if the grounds
for making the order are found by the court to have been established; or
(d) in connection with proceedings for
relief to the person under this Act in which the Court denies the relief.
Paragraph (c) does not apply to costs incurred in
responding to actions taken by ASIC or a liquidator as part of an investigation
before commencing proceedings for the court order.
Note 1: Paragraph (c)—This includes proceedings by
ASIC for an order under section 206C, 206D, 206E or 206EAA
(disqualification), section 232 (oppression), section 1317E, 1317G,
1317H, 1317HA or 1317HB (civil penalties) or section 1324 (injunction).
Note 2: The company may be able to give the person a
loan or advance in respect of the legal costs (see section 212).
(4) For the purposes of subsection (3),
the outcome of proceedings is the outcome of the proceedings and any appeal in
relation to the proceedings.
199B
Insurance premiums for certain liabilities of director, secretary, other
officer or auditor
(1) A company or a related body corporate
must not pay, or agree to pay, a premium for a contract insuring a person who
is or has been an officer or auditor of the company against a liability (other
than one for legal costs) arising out of:
(a) conduct involving a wilful breach
of duty in relation to the company; or
(b) a contravention of section 182
or 183.
This section applies to a premium whether it is paid
directly or through an interposed entity.
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
199C
Certain indemnities, exemptions, payments and agreements not authorised and
certain documents void
(1) Sections 199A and 199B do not
authorise anything that would otherwise be unlawful.
(2) Anything that purports to indemnify or
insure a person against a liability, or exempt them from a liability, is void
to the extent that it contravenes section 199A or 199B.
Division 2—Termination payments
200
Interpreting this Division
For the purposes of this Division, in
determining whether a benefit is given:
(a) give a broad interpretation to
benefits being given, even if criminal or civil penalties may be involved; and
(b) the economic and commercial
substance of conduct is to prevail over its legal form.
200AA
Meaning of managerial or executive office
If the company is a disclosing entity
(1) For a company to which section 300A
applies for the previous financial year for the company, a person holds a managerial
or executive office in the company during the current financial year if
the person’s details were included in the directors’ report for that previous
financial year for the company in accordance with paragraph 300A(1)(c).
Note: A person holding a managerial or executive
office ceases to do so if the person’s details are not included in the next
directors’ report. However, this is not relevant to whether the person has
retired from an office or position in the company (see paragraph 200A(1)(f)).
(2) The person is taken to hold the
managerial or executive office for the whole of the current financial year
unless and until the person retires from an office or position in the company
before the end of that year.
Note: Retires has an extended meaning
(see section 200A).
Otherwise
(3) For a body corporate not covered by
subsection (1), a managerial or executive office for the
body corporate is:
(a) an office of director of the body
corporate; or
(b) any other office or position in
connection with the management of the body corporate’s affairs that is held by
a person who also holds an office of director of the body corporate or a
related body corporate.
200AB
Meaning of benefit
(1) For the purposes of this Division, a benefit
includes any of the following:
(a) a payment or other valuable
consideration;
(b) any kind of real or personal
property;
(c) any legal or equitable estate or
interest in real or personal property;
(d) any legal or equitable right;
(e) a thing specified in regulations
made for the purposes of this paragraph.
Note: For specification by class, see subsection
13(3) of the Legislative Instruments Act 2003.
(2) However, for the purposes of this
Division, a benefit does not include a thing specified in
regulations made for the purposes of this subsection.
Note: For specification by class, see subsection
13(3) of the Legislative Instruments Act 2003.
200A
When benefit given in connection with retirement from an office or position
General rules
(1) For the purposes of this Division:
(a) a benefit is given in connection
with a person’s retirement from an office or position if the benefit is given:
(i) by way of compensation
for, or otherwise in connection with, the loss by the person of the office or
position; or
(ii) in connection with the
person’s retirement from the office or position; and
(b) giving a benefit includes:
(i) if the benefit is a
payment—making the payment; and
(ii) if the benefit is an
interest in property—transferring the interest; and
(c) a person gives a benefit even if
the person is obliged to give the benefit under a contract; and
(d) a pension or lump sum is paid or
payable in connection with the person’s retirement from an office or position
if the pension or lump sum is paid or payable:
(i) by way of compensation
for, or otherwise in connection with, the loss by the person of the office or
position; or
(ii) in connection with the
person’s retirement from the office or position; and
(e) retirement from an office or
position includes:
(i) loss of the office or
position; and
(ii) resignation from the
office or position; and
(iii) death of a person at a
time when they hold the office or position; and
(f) when working out whether a person
has retired from an office or position, disregard whether or not the person’s
details are included in a directors’ report in accordance with paragraph
300A(1)(c).
Rules in regulations
(1A) Without limiting subsection (1), a
benefit is given in connection with a person’s retirement from an office or
position if the benefit is given in circumstances specified in regulations made
for the purposes of this subsection.
Note: For specification by class, see subsection
13(3) of the Legislative Instruments Act 2003.
Related benefits
(2) For the purposes of this Division, if:
(a) a person (person A)
gives another person a benefit (benefit A); and
(b) person A gives benefit A for the
purpose, or for purposes including the purpose, of enabling or assisting
someone to give a person a benefit in connection with the retirement of a
person (person B) from an office or position;
person A is taken to give benefit A in connection with the
person B’s retirement from that office or position.
200B
Retirement benefits generally need membership approval
Benefits in connection with retirement if person has
held a managerial or executive office
(1) An entity mentioned in
subsection (1AA) must not give a person a benefit in connection with a
person’s (the retiree’s) retirement from an office, or position
of employment, in a company or a related body corporate if:
(a) the office or position is a
managerial or executive office; or
(b) the retiree has, at any time
during the last 3 years before his or her retirement, held a managerial or
executive office in the company or a related body corporate;
unless there is member approval under section 200E
for the giving of the benefit.
Note 1: This subsection extends to benefits given by
way of compensation for, or otherwise in connection with, a person’s loss of an
office or position (see subsections 200A(1) and (3)).
Note 2: Sections 200F, 200G and 200H provide for
exceptions to this subsection.
Note 3: The recipient of the benefit need not be the
retiree.
(1AA) The entities are as follows:
(a) the company;
(b) an associate of the company (other
than a body corporate that is related to the company and is itself a company);
(c) a prescribed superannuation fund
in relation to the company.
(1A) For an offence based on subsection (1),
strict liability applies to the circumstance, that the benefit is in connection
with the retiree’s, or someone else’s, retirement.
Note: For strict liability, see
section 6.1 of the Criminal Code.
Prescribed superannuation funds
(2) For the purposes of this section:
(a) a superannuation fund is taken to
be a prescribed superannuation fund in relation to a company if the company, or
an associate of the company, gives a benefit to the superannuation fund in
prescribed circumstances; and
(b) if a prescribed superannuation fund
in relation to a company gives a benefit to another superannuation fund in
prescribed circumstances, the other superannuation fund is taken to be a
prescribed superannuation fund in relation to the company.
Prescribed circumstances
(3) For the purposes of this section, if:
(a) a company, or an associate of a
company, gives a benefit to a superannuation fund solely for the purpose of
enabling or assisting the superannuation fund to give to a person a benefit in
connection with the retiree’s retirement from an office or position in the
company or a related body corporate; or
(b) a superannuation fund gives a
benefit to another superannuation fund solely for the purpose of enabling or
assisting the other superannuation fund to give to a person a benefit in
connection with the retiree’s retirement from an office or position in a
company or a related body corporate;
the benefit first referred to in paragraph (a) or (b)
is taken to be given in prescribed circumstances.
(4) In this section:
superannuation fund means a provident,
benefit, superannuation or retirement fund.
200C
Benefits on transfer of undertaking or property need membership approval
(1) A person must not give a benefit to a
person who:
(a) holds, or has at any previous time
held, a managerial or executive office in a company or a related body
corporate; or
(b) is the spouse of a person referred
to in paragraph (a); or
(c) is a relative of a person referred
to in paragraph (a) or of the spouse of such a person; or
(d) is an associate of a person
referred to in paragraph (a) or the spouse of an associate of such a
person;
in connection with the transfer of the whole or any part
of the undertaking or property of the company.
(2) For an offence based on subsection (1),
strict liability applies to the circumstance, that the transfer is in
connection with the transfer of the whole or any part of the undertaking or
property of the company.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(3) Subsection (1) does not apply to the
extent that there is member approval under section 200E.
Note: A defendant bears an evidential burden in
relation to the matter in subsection (3), see subsection 13.3(3) of the Criminal
Code.
200D
Contravention to receive benefit without member approval
(1) A person
who:
(a) holds, or has at any previous time
held, a managerial or executive office in a company or related body corporate;
or
(b) is the spouse of a person referred
to in paragraph (a); or
(c) is a relative of a person referred
to in paragraph (a) or of the spouse of such a person; or
(d) is an associate of a person
referred to in paragraph (a) or the spouse of an associate of such a
person;
must not receive a benefit if the giving of the benefit
contravenes section 200B or 200C.
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
200E
Approval by members
Conditions for member approval
(1) For the purposes of section 200B,
the conditions set out in subsections (1B), (2) and (2A) must be satisfied
for there to be member approval under this section for the giving of the
benefit to the person in connection with the retiree’s retirement from the
office or position.
(1A) For the purposes of section 200C, the conditions
set out in subsections (1B) and (2) must be satisfied for there to be
member approval under this section for the giving of the benefit.
First condition
(1B) The first condition is that the giving of
the benefit be approved by a resolution passed at a general meeting of:
(a) the company; and
(b) if the company is a subsidiary of
a listed domestic corporation—the listed corporation; and
(c) if the company has a holding
company that:
(i) is a domestic
corporation that is not listed; and
(ii) is not itself a
subsidiary of a domestic corporation;
the holding company.
Second condition
(2) The second condition is that details of
the benefit must be set out in, or accompany, the notice of the general meeting
that is to consider the resolution. The details must include:
(a) if the proposed benefit is a
payment:
(i) the amount of the
payment; or
(ii) if that amount cannot
be ascertained at the time of the disclosure—the manner in which that amount is
to be calculated and any matter, event or circumstance that will, or is likely
to, affect the calculation of that amount; and
(b) otherwise:
(i) the money value of the
proposed benefit; or
(ii) if that value cannot
be ascertained at the time of the disclosure—the manner in which that value is
to be calculated and any matter, event or circumstance that will, or is likely
to, affect the calculation of that value.
These requirements are in addition to, and not in
derogation of, any other law that requires disclosure to be made with respect
to giving or receiving a benefit.
Third condition—for approvals relating to
section 200B
(2A) The third condition is that at the general
meeting, a vote on the resolution must not be cast (in any capacity) by or on
behalf of:
(a) the retiree; or
(b) an associate of the retiree.
(2B) Subsection (2A) does not prevent the
casting of a vote if:
(a) it is cast by a person as a proxy
appointed by writing that specifies how the proxy is to vote on the resolution;
and
(b) it is not cast on behalf of the
retiree or an associate of the retiree.
(2C) The regulations may prescribe cases where
subsection (2A) does not apply.
Meeting may approve a lesser benefit
(3) For the purposes of subsection (1B),
the resolution may give approval by approving the giving of another benefit to
the person if:
(a) the other benefit is given to the
person instead of the proposed benefit; and
(b) the amount or money value of the
benefit is less than the amount or money value of the proposed benefit.
Effect of approval on directors’ duties
(4) Member approval under this section does
not relieve a director of a body corporate from any duty to the body corporate
(whether under section 180, 181, 182, 183 or 184 or otherwise and whether
of a fiduciary nature or not) in connection with the giving of the benefit.
200F
Exempt benefits and benefits given in certain circumstances
(1) Subsection 200B(1) does not apply to:
(a) a benefit that is a payment made
in respect of leave of absence to which the person is entitled under an
industrial instrument; or
(aa) a benefit given under an order of
a court; or
(b) a benefit given in prescribed
circumstances.
(2) Subsection 200B(1) does not apply to a
benefit given in connection with a person’s retirement from an office or
position in relation to a company if:
(a) the benefit is:
(i) a genuine payment by
way of damages for breach of contract; or
(ii) given to the person
under an agreement made between the company and the person before the person
became the holder of the office or position as the consideration, or part of
the consideration, for the person agreeing to hold the office or position; and
(b) the value of the benefit, when
added to the value of all other benefits (if any) already given in connection
with the person’s retirement from offices or positions in the company and
related bodies corporate, does not exceed the amount worked out under whichever
of subsections (3) and (4) is applicable.
(3) This subsection applies if the relevant
period for the person is less than 1 year. The amount worked out under this
subsection is:
where:
estimated annual base salary is a reasonable
estimate of the base salary that the person would have received from the
company and related bodies corporate during the relevant period if the relevant
period had been 1 year.
Note: The relevant period for the
person is defined in subsection (5).
(4) This subsection applies in every other
case. The amount worked out under this subsection is:
(a) if the relevant period is 1
year—the base salary that the person received from the company and related
bodies corporate during the relevant period; or
(b) if the relevant period is more
than 1 year but less than 2 years—the average annual base salary that the
person received from the company and related bodies corporate during the
relevant period, worked out as if:
(i) the relevant period
were 2 years; and
(ii) the person’s annual
base salary for the second year were a reasonable estimate of what the person
would have received as base salary after the first year of the relevant period
had the relevant period been 2 years; or
(c) if the relevant period is 2
years—the average annual base salary that the person received from the company
and related bodies corporate during the relevant period; or
(d) if the relevant period is more than
2 years but less than 3 years—the average annual base salary that the person
received from the company and related bodies corporate during the relevant
period, worked out as if:
(i) the relevant period
were 3 years; and
(ii) the person’s annual
base salary for the third year were a reasonable estimate of what the person
would have received as base salary after the second year of the relevant period
had the relevant period been 3 years; or
(e) if the relevant period is 3 years
or more—the average annual base salary that the person received from the
company and related bodies corporate during the last 3 years of the relevant
period.
(5) For the purposes of this section, if a
person has held a managerial or executive office in relation to a company:
(a) throughout a period; or
(b) throughout a number of periods;
the relevant period for that person is that
period or the period consisting of those periods.
200G
Genuine payments of pension and lump sum
(1) Subsection 200B(1) does not apply to a
benefit if:
(a) the benefit is a payment in
connection with a person’s retirement from an office or position in a company
or a related body corporate; and
(b) the payment is for past services
the person rendered to:
(i) the company; or
(ii) a related body corporate;
or
(iii) a body that was a
related body corporate of the company when the past services were rendered; and
(c) the value of the benefit, when
added to the value of all other benefits (if any) already given in connection
with the person’s retirement from offices or positions in the company and
related bodies corporate does not exceed the amount worked out under whichever
of subsections (2) and (3) is applicable.
In applying paragraph (c), disregard any pensions or
lump sums that section 200F applies to.
(2) This subsection applies if the relevant
period for the person is less than 1 year. The amount worked out under this
subsection is:
where:
estimated annual base salary is a reasonable
estimate of the base salary that the person would have received from the
company and related bodies corporate during the relevant period if the relevant
period had been 1 year.
Note: The relevant period for the
person is defined in subsection (6).
(3) This subsection applies in every other
case. The amount worked out under this subsection is:
(a) if the relevant period is 1
year—the base salary that the person received from the company and related
bodies corporate during the relevant period; or
(b) if the relevant period is more
than 1 year but less than 2 years—the average annual base salary that the
person received from the company and related bodies corporate during the
relevant period, worked out as if:
(i) the relevant period
were 2 years; and
(ii) the person’s annual
base salary for the second year were a reasonable estimate of what the person
would have received as base salary after the first year of the relevant period
had the relevant period been 2 years; or
(c) if the relevant period is 2
years—the average annual base salary that the person received from the company
and related bodies corporate during the relevant period; or
(d) if the relevant period is more
than 2 years but less than 3 years—the average annual base salary that the
person received from the company and related bodies corporate during the
relevant period, worked out as if:
(i) the relevant period
were 3 years; and
(ii) the person’s annual
base salary for the third year were a reasonable estimate of what the person
would have received as base salary after the second year of the relevant period
had the relevant period been 3 years; or
(e) if the relevant period is 3 years
or more—the average annual base salary that the person received from the
company and related bodies corporate during the last 3 years of the relevant
period.
(4) In determining for the purposes of paragraph (1)(c)
the value of a pension or lump sum payment, disregard any part of the pension
or lump sum payment that is attributable to:
(a) a contribution made by the person;
or
(b) a contribution made by a person
other than:
(i) the company; or
(ii) a body corporate (a relevant
body corporate) that is a related body corporate of the company, or
that was, when the contribution was made, such a related body corporate; or
(iii) an associate of the
company, or of a relevant body corporate, in respect of:
(A) the
payment of the pension, or the making of the lump sum payment, as the case may
be; or
(B) the
making of the contribution.
(6) In this section:
payment means a payment by way of pension or
lump sum and includes a superannuation, retiring allowance, superannuation
gratuity or similar payment.
relevant period: if a person has held a
managerial or executive office in the company or a related body corporate:
(a) throughout a period; or
(b) throughout a number of periods;
the relevant period for that person is that
period or the period consisting of those periods.
200H
Benefits required by law
Subsection 200B(1) does not apply to a
benefit given by a person if failure to give the benefit would constitute a
contravention of a law in force in Australia or elsewhere (otherwise than
because of breach of contract or breach of trust).
200J
Benefits to be held on trust and repaid
(1) If an entity (the giver)
contravenes section 200B by giving a benefit to a person (the recipient),
then the amount of the benefit, or the money value of the benefit if it is not
a payment:
(a) is taken to be received by the
recipient on trust for the giver; and
(b) must be immediately repaid by the
recipient to the giver.
(1A) An amount repayable under
subsection (1) to the giver:
(a) is a debt due to the giver; and
(b) may be recovered by the giver in a
court of competent jurisdiction.
(2) Subsection (1) applies to the whole
of the amount of a payment or of the money value of the benefit even though
giving the benefit would not have contravened section 200B if that amount
or value of the benefit had been less.
Part 2D.3—Appointment, remuneration and cessation of appointment of
directors
Division 1—Appointment of directors
Subdivision A—General rules
201A
Minimum number of directors
Proprietary companies
(1) A proprietary company must have at least
1 director. That director must ordinarily reside in Australia.
Public companies
(2) A public company must have at least 3
directors (not counting alternate directors). At least 2 directors must
ordinarily reside in Australia.
201B
Who can be a director
(1) Only an individual who is at least 18 may
be appointed as a director of a company.
(2) A person who is disqualified from
managing corporations under Part 2D.6 may only be appointed as
director of a company if the appointment is made with permission granted by
ASIC under section 206F or leave granted by the Court under section 206G.
201D
Consent to act as director
(1) A company contravenes this subsection if
a person does not give the company a signed consent to act as a director of the
company before being appointed.
(2) The company must keep the consent.
(3) An offence based on subsection (1)
or (2) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
201E
Special rules for the appointment of public company directors
(1) A resolution passed at a general meeting
of a public company appointing or confirming the appointment of 2 or more directors
is void unless:
(a) the meeting has resolved that the
appointments or confirmations may be voted on together; and
(b) no votes were cast against the
resolution.
(2) This section does not affect:
(a) a resolution to appoint directors
by an amendment to the company’s constitution (if any); or
(b) a ballot or poll to elect 2 or
more directors if the ballot or poll does not require members voting for 1
candidate to vote for another candidate.
(3) For the purposes of paragraph (2)(b),
a ballot or poll does not require a member to vote for a candidate merely
because the member is required to express a preference among individual
candidates in order to cast a valid vote.
201F
Special rules for the appointment of directors for single director/single shareholder
proprietary companies
(1) The director of a proprietary company who
is its only director and only shareholder may appoint another director by
recording the appointment and signing the record.
Appointment of new director on death, mental incapacity
or bankruptcy
(2) If a person who is the only director and
the only shareholder of a proprietary company:
(a) dies; or
(b) cannot manage the company because
of the person’s mental incapacity;
and a personal representative or trustee is appointed to
administer the person’s estate or property, the personal representative or
trustee may appoint a person as the director of the company.
(3) If:
(a) the office of the director of a
proprietary company is vacated under subsection 206B(3) or (4) because of the
bankruptcy of the director; and
(b) the person is the only director
and the only shareholder of the company; and
(c) a trustee in bankruptcy is
appointed to the person’s property;
the trustee may appoint a person as the director of the
company.
(4) A person who has a power of appointment
under subsection (2) or (3) may appoint themselves as director.
(5) A person appointed as a director of a
company under subsection (2), (3) or (4) holds office as if they had been
appointed in the usual way.
201G Company
may appoint a director (replaceable
rule—see section 135)
A company may appoint a person as a
director by resolution passed in general meeting.
201H
Directors may appoint other directors (replaceable
rule—see section 135)
Appointment by other directors
(1) The directors of a company may appoint a
person as a director. A person can be appointed as a director in order to make
up a quorum for a directors’ meeting even if the total number of directors of
the company is not enough to make up that quorum.
Proprietary company—confirmation by meeting within 2
months
(2) If a person is appointed under this
section as a director of a proprietary company, the company must confirm the
appointment by resolution within 2 months after the appointment is made. If the
appointment is not confirmed, the person ceases to be a director of the company
at the end of those 2 months.
Public company—confirmation by next AGM
(3) If a person is appointed by the other
directors as a director of a public company, 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.
201J
Appointment of managing directors (replaceable
rule—see section 135)
The directors of a company may appoint 1
or more of themselves to the office of managing director of the company for the
period, and on the terms (including as to remuneration), as the directors see
fit.
201K
Alternate directors (replaceable
rule—see section 135)
(1) With the other directors’ approval, a
director may appoint an alternate to exercise some or all of the director’s
powers for a specified period.
(2) If the appointing director requests the
company to give the alternate notice of directors’ meetings, the company must
do so.
(3) When an alternate exercises the
director’s powers, the exercise of the powers is just as effective as if the
powers were exercised by the director.
(4) The appointing director may terminate the
alternate’s appointment at any time.
(5) An appointment or its termination must be
in writing. A copy must be given to the company.
Note: ASIC must be given notice of the appointment
and termination of appointment of an alternate (see subsections 205B(2) and
(5)).
201L
Signpost—ASIC to be notified of appointment
Under section 205B, a company must
notify ASIC within 28 days if a person is appointed as a director or as an
alternate director.
201M
Effectiveness of acts by directors
(1) An act done by a director is effective even
if their appointment, or the continuance of their appointment, is invalid
because the company or director did not comply with the company’s constitution
(if any) or any provision of this Act.
(2) Subsection (1) does not deal with
the question whether an effective act by a director:
(a) binds the company in its dealings
with other people; or
(b) makes the company liable to
another person.
Note: The kinds of acts that this section validates
are those that are only legally effective if the person doing them is a
director (for example, calling a meeting of the company’s members or signing a
document to be lodged with ASIC or minutes of a meeting). Sections 128‑130
contain rules about the assumptions people are entitled to make when dealing
with a company and its officers.
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.
Division 2—Remuneration of directors
202A
Remuneration of directors (replaceable
rule—see section 135)
(1) The directors of a company are to be paid
the remuneration that the company determines by resolution.
Note: Chapter 2E makes special provision for
the payment of remuneration to the directors of public companies.
(2) The company may also pay the directors’
travelling and other expenses that they properly incur:
(a) in attending directors’ meetings
or any meetings of committees of directors; and
(b) in attending any general meetings
of the company; and
(c) in connection with the company’s
business.
202B
Members may obtain information about directors’ remuneration
(1) A company must disclose the remuneration
paid to each director of the company or a subsidiary (if any) by the company or
by an entity controlled by the company if the company is directed to disclose
the information by:
(a) members with at least 5% of the
votes that may be cast at a general meeting of the company; or
(b) at least 100 members who are
entitled to vote at a general meeting of the company.
The company must disclose all remuneration paid to the
director, regardless of whether it is paid to the director in relation to their
capacity as director or another capacity.
(1A) An offence based on subsection (1) is
an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(2) The company must comply with the
direction as soon as practicable by:
(a) preparing a statement of the
remuneration of each director of the company or subsidiary for the last
financial year before the direction was given; and
(b) having the statement audited; and
(c) sending a copy of the audited
statement to each person entitled to receive notice of general meetings of the
company.
202C
Special rule for single director/single shareholder proprietary companies
A person who is the only director and
the only shareholder of a proprietary company is to be paid any remuneration
for being a director that the company determines by resolution. The company may
also pay the director’s travelling and other expenses properly incurred by the
director in connection with the company’s business.
Division 3—Resignation, retirement or removal of directors
203A
Director may resign by giving written notice to company (replaceable rule—see section 135)
A director of a company may resign as a
director of the company by giving a written notice of resignation to the
company at its registered office.
203B
Signpost to consequences of disqualification from managing corporations
A person ceases to be a director of a
company if the person becomes disqualified from managing corporations under
Part 2D.6 (see subsection 206A(2)) unless ASIC or the Court allows them to
manage the company (see sections 206F and 206G).
203C
Removal by members—proprietary companies (replaceable
rule—see section 135)
A proprietary company:
(a) may by resolution remove a
director from office; and
(b) may by resolution appoint another
person as a director instead.
203D
Removal by members—public companies
Resolution for removal of director
(1) A public company may by resolution remove
a director from office despite anything in:
(a) the company’s constitution (if
any); or
(b) an agreement between the company
and the director; or
(c) an agreement between any or all
members of the company and the director.
If the director was appointed to represent the interests
of particular shareholders or debenture holders, the resolution to remove the
director does not take effect until a replacement to represent their interests
has been appointed.
Note: See sections 249C to 249G for the rules
on who may call meetings, sections 249H to 249M on how to call meetings
and sections 249N to 249Q for rules on members’ resolutions.
Notice of intention to move resolution for removal of
director
(2) Notice of intention to move the
resolution must be given to the company at least 2 months before the meeting is
to be held. However, if the company calls a meeting after the notice of
intention is given under this subsection, the meeting may pass the resolution
even though the meeting is held less than 2 months after the notice of
intention is given.
Note: Short notice of the meeting cannot be given
for this resolution (see subsection 249H(3)).
Director to be informed
(3) The company must give the director a copy
of the notice as soon as practicable after it is received.
Director’s right to put case to members
(4) The director is entitled to put their
case to members by:
(a) giving the company a written
statement for circulation to members (see subsections (5) and (6)); and
(b) speaking to the motion at the
meeting (whether or not the director is a member of the company).
(5) The written statement is to be circulated
by the company to members by:
(a) sending a copy to everyone to whom
notice of the meeting is sent if there is time to do so; or
(b) if there is not time to comply
with paragraph (a)—having the statement distributed to members attending
the meeting and read out at the meeting before the resolution is voted on.
(6) The director’s statement does not have to
be circulated to members if it is more than 1,000 words long or defamatory.
Time of retirement
(7) If a person is appointed to replace a
director removed under this section, the time at which:
(a) the replacement director; or
(b) any other director;
is to retire is to be worked out as if the replacement
director had become director on the day on which the replaced director was last
appointed a director.
Strict liability offences
(8) An offence based on subsection (3)
or (5) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
203E
Director cannot be removed by other directors—public companies
A resolution, request or notice of any
or all of the directors of a public company is void to the extent that it
purports to:
(a) remove a director from their
office; or
(b) require a director to vacate their
office.
203F
Termination of appointment of managing director (replaceable rule—see section 135)
(1) A person ceases to be managing director
if they cease to be a director.
(2) The directors may revoke or vary an
appointment of a managing director.
Part 2D.4—Appointment of secretaries
204A
Minimum number of secretaries
Proprietary companies
(1) A proprietary company is not required to
have a secretary but, if it does have 1 or more secretaries, at least 1 of them
must ordinarily reside in Australia.
Public companies
(2) A public company must have at least 1
secretary. At least 1 of them must ordinarily reside in Australia.
Strict liability offences
(3) An offence based on subsection (1)
or (2) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
204B
Who can be a secretary
(1) Only an individual who is at least 18 may
be appointed as a secretary of a company.
(2) A person who is disqualified from
managing corporations under Part 2D.6 may only be appointed as a
secretary of a company if the appointment is made with permission granted by
ASIC under section 206F or leave granted by the Court under section 206G.
204C
Consent to act as secretary
(1) A company contravenes this subsection if
a person does not give the company a signed consent to act as secretary of the
company before being appointed.
(2) The company must keep the consent.
(3) An offence based on subsection (1)
or (2) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
204D
How a secretary is appointed
A secretary is to be appointed by the
directors.
Note 1: The company must notify ASIC of the appointment
within 28 days (see subsection 205B(1)).
Note 2: Section 188 deals with the
responsibilities of secretaries for contraventions by the company.
204E
Effectiveness of acts by secretaries
(1) An act done by a secretary is effective
even if their appointment, or the continuance of their appointment, is invalid
because the company or secretary did not comply with the company’s constitution
(if any) or any provision of this Act.
(2) Subsection (1) does not deal with
the question whether an effective act by a secretary:
(a) binds the company in its dealings
with other people; or
(b) makes the company liable to
another person.
Note: The kinds of acts that this section validates
are those that are only legally effective if the person doing them is a
secretary (for example, signing and sending out a notice of a meeting of
directors if the company’s constitution authorises the secretary to do so or
signing a document to be lodged with ASIC). Sections 128‑130 contain rules
about the assumptions people are entitled to make when dealing with a company
and its officers.
204F
Terms and conditions of office for secretaries (replaceable rule—see section 135)
A secretary holds office on the terms
and conditions (including as to remuneration) that the directors determine.
204G
Signpost to consequences of disqualification from managing corporations
A person ceases to be a secretary of a
company if the person becomes disqualified from managing corporations under
Part 2D.6 (see subsection 206A(2)) unless ASIC or the Court allows them to
manage the company (see sections 206F and 206G).
Part 2D.5—Public information about directors and secretaries
205A
Director, secretary or alternate director may notify ASIC of resignation or
retirement
(1) If a director, secretary or alternate
director retires or resigns, they may give ASIC written notice of the
retirement or resignation. The notice must be in the prescribed form.
(2) To be effective, a notice of resignation
must be accompanied by a copy of the letter of resignation given to the
company.
Note: If a director, secretary or alternative
director of a company gives a written notice in accordance with this section,
the company is not required to lodge a notice with ASIC under subsection
205B(5) (see subsection 205B(6)).
205B
Notice of name and address of directors and secretaries to ASIC
New directors or secretaries
(1) A company must lodge with ASIC a notice
of the personal details of a director or secretary within 28 days after they
are appointed. The notice must be in the prescribed form.
Note 1: If a person becomes a director under subsection
120(1) there is no appointment and no notice is required under this subsection.
Note 2: If a person who was appointed as an alternate
director becomes a director under the terms of their appointment as an
alternate director, there is no appointment as a director and no notice is
required under this subsection.
New alternate directors
(2) A company must lodge with ASIC a notice
of:
(a) the personal details of a person
who is appointed as an alternate director; and
(b) the terms of their appointment
(including terms about when the alternate director is to act as a director);
within 28 days after their appointment as an alternate
director. The notice must be in the prescribed form.
Personal details
(3) The personal details of a director,
alternate director, or secretary are:
(a) their given and family names; and
(b) all of their former given and
family names; and
(c) their date and place of birth; and
(d) their address.
Note: For address see section 205D.
Changes in details
(4) The company must lodge with ASIC notice
of any change in the personal details of a director, alternate director or
secretary within 28 days after the change. The notice must be in the prescribed
form.
Notice required if person stops being a director or
secretary
(5) If a person stops being a director,
alternate director or secretary of the company, the company must lodge with
ASIC notice of the fact within 28 days. The notice must be in the prescribed
form.
(6) Subsection (5) does not apply if:
(a) the person was an alternate
director who stopped being a director in accordance with the terms of their
appointment as an alternate director; or
(b) the person gives ASIC a written
notice of the person’s retirement or resignation as a director, alternate
director or secretary of the company in accordance with section 205A.
Note: A defendant bears an evidential burden in
relation to the matter in subsection (6), see subsection 13.3(3) of the Criminal
Code.
(7) An offence based on subsection (1),
(2), (4) or (5) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
205C
Director and secretary must give information to company
(1) A director, alternate director or
secretary must give the company any information the company needs to comply
with subsection 205B(1) or (2) within 7 days after their initial appointment
unless they have previously given the information to the company.
(2) A director, alternate director or
secretary must give the company any information the company needs to comply
with subsection 205B(4) within 7 days after any change in their personal
details.
(3) An offence based on subsection (1)
or (2) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
205D
Address for officers
Address is normally residential address
(1) A person’s address for the purposes of a
notice or application under subsection 5H(2), 117(2), 205B(1), (2) or (4) or
601BC(2) must be their usual residential address unless they are entitled to
have an alternative address substituted for their usual residential address
under subsection (2).
Entitlement to have alternative address
(2) The person is entitled to have an
alternative address substituted for their usual residential address if:
(a) their name, but not their
residential address, is on an electoral roll under the Commonwealth
Electoral Act 1918 because of section 104 of that Act; or
(b) their name is not on an electoral
roll under that Act and ASIC determines, in writing, that including their
residential address in the notice or application would put at risk their
personal safety or the personal safety of members of their family.
This alternative address must be in Australia and be one at which documents can be served on the person. At any particular
time, a person is entitled to have only 1 alternative address under this
section.
Note: See subsection 109X(2) on the status of the alternative
address as an address for service.
(3) A person who takes advantage of subsection (2)
must:
(a) before or at the same time as the
alternative address is first included in a notice or application, lodge with
ASIC notice of the person’s usual residential address; and
(b) lodge with ASIC notice of any
change in the person’s usual residential address within 14 days after the
change.
A notice under this subsection must be in the prescribed
form.
(4) If a court gives a judgment for payment
of a sum of money against a person who is taking advantage of subsection (2),
ASIC may give details of the person’s usual residential address to an officer
of the court for the purposes of enforcing the judgment debt.
205E
ASIC’s power to ask for information about person’s position as director or
secretary
(1) ASIC may ask a person, in writing, to
inform ASIC:
(a) whether the person is a director
or secretary of a particular company; and
(b) if the person is no longer a
director or secretary of the company—the date on which the person stopped being
a director or secretary.
(2) The person must give the information to
ASIC in writing by the date specified in the request.
(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.
205F
Director must give information to company
(1) A director must give the company any
information affecting or relating to the director that the company needs, or
will need, to comply with Chapter 6. The director must give the
information to the company as soon as practicable after becoming aware that the
company needs, or will need, the information. The company must give the
information to each of the other directors of the company within 7 days of receiving
it.
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
205G
Listed company—director to notify market operator of shareholdings etc.
Notifiable interests
(1) A director of a listed public company
must notify the relevant market operator under subsections (3) and (4) of
the following interests of the director:
(a) relevant interests in securities
of the company or a related body corporate;
(b) contracts:
(i) to which the director
is a party or under which the director is entitled to a benefit; and
(ii) that confer a right to
call for or deliver shares in, debentures of, or interests in a managed
investment scheme made available by, the company or a related body corporate.
Note: Under section 353, ASIC may determine
conditions that must be complied with when lodging documents electronically
under this subsection.
(2) A notice of a relevant interest in
securities under paragraph (1)(a) must give details of:
(a) the number of securities; and
(b) the circumstances giving rise to
the relevant interest.
Occasions for initial notification
(3) The director must notify the relevant
market operator within 14 days after each of the following occasions:
(a) appointment as a director of the
company;
(b) the listing of the company.
Paragraph (a) does not apply to a director who
retires and is then reappointed at the same meeting.
Note: Under section 353, ASIC may determine
conditions that must be complied with when lodging documents electronically
under this subsection.
Updating notices
(4) The director must notify the relevant
market operator within 14 days after any change in the director’s interests.
Note: Under section 353, ASIC may determine
conditions that must be complied with when lodging documents electronically
under this subsection.
(5) The director need not give the
information to the relevant market operator under this section if the director
has already given the information to the relevant market operator.
ASIC’s power to make class orders
(6) ASIC may make an order in writing
relieving a director of the obligation to notify the relevant market operator
of an interest in a security or contract. The order may be made in respect of a
specified class of companies, directors, securities or contracts.
(7) The order may be expressed to be subject
to conditions.
(8) Notice of the making, revocation or
suspension of the order must be published in the Gazette.
Strict liability offences
(9) An offence based on subsection (1),
(3) or (4) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
Part 2D.6—Disqualification from managing corporations
206A
Disqualified person not to manage corporations
(1) A person who is disqualified from
managing corporations under this Part commits an offence if:
(a) they make, or participate in
making, decisions that affect the whole, or a substantial part, of the business
of the corporation; or
(b) they exercise the capacity to
affect significantly the corporation’s financial standing; or
(c) they communicate instructions or
wishes (other than advice given by the person in the proper performance of
functions attaching to the person’s professional capacity or their business
relationship with the directors or the corporation) to the directors of the
corporation:
(i) knowing that the
directors are accustomed to act in accordance with the person’s instructions or
wishes; or
(ii) intending that the
directors will act in accordance with those instructions or wishes.
Note: Under section 1274AA, ASIC is required to
keep a record of persons disqualified from managing corporations.
(1A) For an offence based on subsection (1),
strict liability applies to the circumstance, that the person is disqualified
from managing corporations under this Part.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(1B) It is a defence to a contravention of subsection (1)
if the person had permission to manage the corporation under either section 206F
or 206G and their conduct was within the terms of that permission.
Note: A defendant bears an evidential burden in
relation to the matters in subsection (1B), see subsection 13.3(3) of the Criminal
Code.
(2) A person ceases to be a director,
alternate director or a secretary of a company if:
(a) the person becomes disqualified
from managing corporations under this Part; and
(b) they are not given permission to
manage the corporation under section 206F or 206G.
Note: If a person ceases to be a director, alternate
director or a secretary under subsection (2) the company must notify ASIC
(see subsection 205B(5)).
206B
Automatic disqualification
Convictions
(1) A person becomes disqualified from
managing corporations if the person:
(a) is convicted on indictment of an
offence that:
(i) concerns the making,
or participation in making, of decisions that affect the whole or a substantial
part of the business of the corporation; or
(ii) concerns an act that
has the capacity to affect significantly the corporation’s financial standing;
or
(b) is convicted of an offence that:
(i) is a contravention of
this Act and is punishable by imprisonment for a period greater than 12 months;
or
(ii) involves dishonesty
and is punishable by imprisonment for at least 3 months; or
(c) is convicted of an offence against
the law of a foreign country that is punishable by imprisonment for a period
greater than 12 months.
The offences covered by paragraph (a) and subparagraph (b)(ii)
include offences against the law of a foreign country.
(2) The period of disqualification under subsection (1)
starts on the day the person is convicted and lasts for:
(a) if the person does not serve a
term of imprisonment—5 years after the day on which they are convicted; or
(b) if the person serves a term of
imprisonment—5 years after the day on which they are released from prison.
Bankruptcy or personal insolvency agreement
(3) A person is disqualified from managing
corporations if the person is an undischarged bankrupt under the law of Australia, its external territories or another country.
(4) A person is disqualified from managing
corporations if:
(a) the person has executed a personal
insolvency agreement under:
(i) Part X of the Bankruptcy
Act 1966; or
(ii) a similar law of an external
Territory or a foreign country; and
(b) the terms of the agreement have
not been fully complied with.
(5) A person is disqualified from managing
corporations at a particular time if the person is, at that time, disqualified
from managing Aboriginal and Torres Strait Islander corporations under
Part 6‑5 of the Corporations (Aboriginal and Torres Strait Islander)
Act 2006.
Foreign court orders
(6) A person is disqualified from managing
corporations if the person is disqualified, under an order made by a court of a
foreign jurisdiction that is in force, from:
(a) being a director of a foreign
company; or
(b) being concerned in the management
of a foreign company.
Definitions
(7) In this section:
foreign jurisdiction means a foreign country,
or part of a foreign country, prescribed by the regulations as a foreign
jurisdiction for the purposes of this section.
206BA
Extension of period of automatic disqualification
(1) This section applies if:
(a) under subsection 206B(1); or
(b) as a result of the operation of
subsection 279‑5(1) of the Corporations (Aboriginal and Torres Strait
Islander) Act 2006 and subsection 206B(5) of this Act;
a person is disqualified from managing corporations on
being convicted of an offence.
(2) On application by ASIC, the Court may
extend by up to an additional 15 years the period of disqualification.
(3) ASIC must apply:
(a) before the period of
disqualification begins; or
(b) before the end of the first year
of the disqualification.
(4) ASIC may apply only once in relation to
the disqualification.
(5) In determining whether an extension is
justified (and if so, for how long), the Court may have regard to any matters
that the Court considers appropriate.
206C
Court power of disqualification—contravention of civil penalty provision
(1) On application by ASIC, the Court may
disqualify a person from managing corporations for a period that the Court
considers appropriate if:
(a) a declaration is made under:
(i) section 1317E
(civil penalty provision) that the person has contravened a corporation/scheme
civil penalty provision; or
(ii) section 386‑1
(civil penalty provision) of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 that the person has contravened a civil penalty
provision (within the meaning of that Act); and
(b) the Court is satisfied that the
disqualification is justified.
(2) In determining whether the
disqualification is justified, the Court may have regard to:
(a) the person’s conduct in relation
to the management, business or property of any corporation; and
(b) any other matters that the Court
considers appropriate.
(3) To avoid doubt, the reference in
paragraph (2)(a) to a corporation includes a reference to an Aboriginal
and Torres Strait Islander corporation.
206D
Court power of disqualification—insolvency and non‑payment of debts
(1) On application by ASIC, the Court may
disqualify a person from managing corporations for up to 20 years if:
(a) within the last 7 years, the
person has been an officer of 2 or more corporations when they have failed; and
(b) the Court is satisfied that:
(i) the manner in which
the corporation was managed was wholly or partly responsible for the
corporation failing; and
(ii) the disqualification
is justified.
(1A) To avoid doubt, the references in
paragraphs (1)(a) and (b) to a corporation include references to an
Aboriginal and Torres Strait Islander corporation.
(2) For the purposes of subsection (1),
a corporation fails if:
(a) a Court orders the corporation to
be wound up under:
(i) section 459B of
this Act; or
(ii) section 526‑1 of
the Corporations (Aboriginal and Torres Strait Islander) Act 2006;
because the Court is satisfied
that the corporation is insolvent; or
(b) the corporation enters into
voluntary liquidation and creditors are not fully paid or are unlikely to be
fully paid; or
(c) the corporation executes a deed of
company arrangement and creditors are not fully paid or are unlikely to be
fully paid; or
(d) the corporation ceases to carry on
business and creditors are not fully paid or are unlikely to be fully paid; or
(e) a levy of execution against the
corporation is not satisfied; or
(f) a receiver, receiver and manager,
or provisional liquidator is appointed in relation to the corporation; or
(g) the corporation enters into a
compromise or arrangement with its creditors under Part 5.1 (including
that Part as applied by section 45‑1 of the Corporations (Aboriginal
and Torres Strait Islander) Act 2006); or
(h) the corporation is wound up and a
liquidator lodges a report under subsection 533(1) (including that subsection
as applied by section 526‑35 of the Corporations (Aboriginal and Torres Strait Islander) Act 2006) about the corporation’s inability to pay its debts.
Note: To satisfy paragraph (h), a corporation
must begin to be wound up while the person is an officer or within 12 months
after the person ceases to be an officer. However, the report under subsection
533(1) may be lodged by the liquidator at a time that is more than 12 months
after the person ceases to be an officer. Sections 513A to 513D contain
rules about when a company begins to be wound up.
(2A) The reference in paragraph (2)(c) to a
deed of company arrangement includes a reference to a deed of corporation
arrangement (within the meaning of the Corporations (Aboriginal and Torres Strait Islander) Act 2006.
(2B) For the purposes of subsection (1), a
person is an officer of an Aboriginal and Torres Strait Islander
corporation if the person is an officer of that corporation within the meaning
of the Corporations (Aboriginal and Torres Strait Islander) Act 2006.
(3) In determining whether the
disqualification is justified, the Court may have regard to:
(a) the person’s conduct in relation
to the management, business or property of any corporation; and
(b) any other matters that the Court
considers appropriate.
(4) To avoid doubt, the reference in
paragraph (3)(a) to a corporation includes a reference to an Aboriginal
and Torres Strait Islander corporation.
206E
Court power of disqualification—repeated contraventions of Act
(1) On application by ASIC, the Court may
disqualify a person from managing corporations for the period that the Court
considers appropriate if:
(a) the person:
(i) has at least twice
been an officer of a body corporate that has contravened this Act or the Corporations
(Aboriginal and Torres Strait Islander) Act 2006 while they were an officer
of the body corporate and each time the person has failed to take reasonable
steps to prevent the contravention; or
(ii) has at least twice
contravened this Act or the Corporations (Aboriginal and Torres Strait
Islander) Act 2006 while they were an officer of a body corporate; or
(iii) has been an officer of
a body corporate and has done something that would have contravened subsection
180(1) or section 181 if the body corporate had been a corporation; and
(b) the Court is satisfied that the
disqualification is justified.
(1A) For the purposes of subsection (1), a
person is an officer of an Aboriginal and Torres Strait Islander
corporation if the person is an officer of that corporation within the meaning
of the Corporations (Aboriginal and Torres Strait Islander) Act 2006.
(2) In determining whether the
disqualification is justified, the Court may have regard to:
(a) the person’s conduct in relation
to the management, business or property of any corporation; and
(b) any other matters that the Court
considers appropriate.
(3) To avoid doubt, the reference in
paragraph (2)(a) to a corporation includes a reference to an Aboriginal
and Torres Strait Islander corporation.
206EAA
Court power of disqualification—disqualification under a law of a foreign
jurisdiction
(1) On application by ASIC, the Court may
disqualify a person from managing corporations for the period that the Court
considers appropriate if:
(a) the person is disqualified under
the law of a foreign jurisdiction from:
(i) being a director of,
or being concerned in the management of, a foreign company; or
(ii) carrying on activities
that the Court is satisfied are substantially similar to being a director of,
or being concerned in the management of, a foreign company; and
(b) the Court is satisfied that the
disqualification under this subsection is justified.
(2) In determining what is an appropriate
period for which to disqualify the person, the Court may have regard to the
period for which the person is disqualified under the law of the foreign
jurisdiction.
(3) In determining whether the
disqualification is justified, the Court may have regard to:
(a) the person’s conduct in relation
to the management, business or property of a foreign company; and
(b) any other matters that the Court
considers appropriate.
(4) In this section:
foreign jurisdiction has the same meaning as
in section 206B.
206EA
Disqualification under the Competition and Consumer Act 2010 etc.
A person is disqualified from managing
corporations if a court order disqualifying the person from managing
corporations is in force under:
(a) section 86E of the Competition
and Consumer Act 2010; or
(b) section 248 of
Schedule 2 to that Act, as that section applies as a law of the
Commonwealth, a State or a Territory.
206EB
Disqualification under the ASIC Act
A person is disqualified from managing
corporations if a court order disqualifying the person from managing
corporations is in force under section 12GLD of the ASIC Act.
206F
ASIC’s power of disqualification
Power to disqualify
(1) ASIC may disqualify a person from
managing corporations for up to 5 years if:
(a) within 7 years immediately before
ASIC gives a notice under paragraph (b)(i):
(i) the person has been an
officer of 2 or more corporations; and
(ii) while the person was
an officer, or within 12 months after the person ceased to be an officer of
those corporations, each of the corporations was wound up and a liquidator
lodged a report under subsection 533(1) (including that subsection as applied
by section 526‑35 of the Corporations (Aboriginal and Torres Strait
Islander) Act 2006) about the corporation’s inability to pay its debts; and
(b) ASIC has given the person:
(i) a notice in the
prescribed form requiring them to demonstrate why they should not be
disqualified; and
(ii) an opportunity to be
heard on the question; and
(c) ASIC is satisfied that the
disqualification is justified.
(1A) To avoid doubt, the references in
paragraph (1)(a) to corporations include references to Aboriginal and
Torres Strait Islander corporations.
Grounds for disqualification
(2) In determining whether disqualification
is justified, ASIC:
(a) must have regard to whether any of
the corporations mentioned in subsection (1) were related to one another;
and
(b) may have regard to:
(i) the person’s conduct
in relation to the management, business or property of any corporation; and
(ii) whether the
disqualification would be in the public interest; and
(iii) any other matters that
ASIC considers appropriate.
(2A) To avoid doubt, the references in
subsection (2) to a corporation includes a reference to an Aboriginal and
Torres Strait Islander corporation.
Notice of disqualification
(3) If ASIC disqualifies a person from
managing corporations under this section, ASIC must serve a notice on the
person advising them of the disqualification. The notice must be in the
prescribed form.
Start of disqualification
(4) The disqualification takes effect from
the time when a notice referred to in subsection (3) is served on the
person.
ASIC power to grant leave
(5) ASIC may give a person who it has
disqualified from managing corporations under this Part written permission to
manage a particular corporation or corporations. The permission may be
expressed to be subject to conditions and exceptions determined by ASIC.
206G
Court power to grant leave
(1) A person who is disqualified from
managing corporations may apply to the Court for leave to manage:
(a) corporations; or
(b) a particular class of
corporations; or
(c) a particular corporation;
if the person was not disqualified by ASIC.
(2) The person must lodge a notice with ASIC
at least 21 days before commencing the proceedings. The notice must be in the
prescribed form.
(3) The order granting leave may be expressed
to be subject to exceptions and conditions determined by the Court.
Note: If the Court grants the person leave to manage
the corporation, the person may be appointed as a director (see section 201B)
or secretary (see section 204B) of a company.
(4) The person must lodge with ASIC a copy of
any order granting leave within 14 days after the order is made.
(5) On application by ASIC, the Court may
revoke the leave. The order revoking leave does not take effect until it is
served on the person.
206GA
Involvement of ACCC—leave orders under section 206G
Scope of section
(1) This section applies in relation to a
person who is disqualified from managing corporations under section 206EA.
Notice lodged with ASIC before leave application
(2) If the person lodges a notice with ASIC
under subsection 206G(2), ASIC must give the ACCC a copy of the notice.
Leave orders
(3) If the person lodges a copy of an order
with ASIC under subsection 206G(4), ASIC must give the ACCC a copy of the
order.
Revoking leave
(4) If ASIC decides to apply for an order
under subsection 206G(5) in relation to the person, it must consult the ACCC
before making the application.
Definition
(5) In this section:
ACCC means the Australian Competition and
Consumer Commission.
206H
Territorial application of this Part
This Part (except for subsection 206B(6)
and section 206EAA) does not apply in respect of an act or omission by a
person while they are managing a corporation that is a foreign company unless
the act or omission occurred in connection with:
(a) the foreign company carrying on
business in this jurisdiction; or
(b) an act that the foreign company
does, or proposes to do, in this jurisdiction; or
(c) a decision by the foreign company
whether or not to do, or refrain from doing, an act in this jurisdiction.
206HA
Limited application of Part to registrable Australian bodies
This Part does not apply in respect of
an act or omission by a person while they are managing a corporation that is a
registrable Australian body unless the act or omission occurred in connection
with:
(a) the body carrying on business
outside its place of origin; or
(b) an act that the body does or
proposes to do outside its place of origin; or
(c) a decision by the body whether or
not to do, or refrain from doing, an act outside its place of origin.
206HB
Part does not apply to Aboriginal and Torres Strait Islander corporations
This Part does not apply, of its own
force, to disqualify a person from managing a corporation that is an Aboriginal
and Torres Strait Islander corporation.
Note 1: Subsection 279‑5(5) of the Corporations
(Aboriginal and Torres Strait Islander) Act 2006 provides that a person who
is disqualified from managing corporations under this Part will be
automatically disqualified under Part 6‑5 of that Act from managing
Aboriginal and Torres Strait Islander corporations.
Note 2: Similarly, subsection 206B(5) of this Act
provides that a person who is disqualified from managing Aboriginal and Torres
Strait Islander corporations under Part 6‑5 of the Corporations
(Aboriginal and Torres Strait Islander) Act 2006 will be automatically
disqualified under this Part from managing corporations.
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.
Chapter 2E—Related party transactions
207
Purpose
The rules in this Chapter are designed
to protect the interests of a public company’s members as a whole, by requiring
member approval for giving financial benefits to related parties that could
endanger those interests.
Part 2E.1—Member approval
needed for related party benefit
Division 1—Need for member approval
208
Need for member approval for financial benefit
(1) For a public company, or an entity that
the public company controls, to give a financial benefit to a related party of
the public company:
(a) the public company or entity must:
(i) obtain the approval of
the public company’s members in the way set out in sections 217 to 227;
and
(ii) give the benefit
within 15 months after the approval; or
(b) the giving of the benefit must
fall within an exception set out in sections 210 to 216.
Note: Section 228 defines related party,
section 9 defines entity, section 50AA defines control
and section 229 affects the meaning of giving a financial benefit.
(2) If:
(a) the giving of the benefit is
required by a contract; and
(b) the making of the contract was
approved in accordance with subparagraph (1)(a)(i) as a financial benefit
given to the related party; and
(c) the contract was made:
(i) within 15 months after
that approval; or
(ii) before that approval,
if the contract was conditional on the approval being obtained;
member approval for the giving of the benefit is taken to
have been given and the benefit need not be given within the 15 months.
209
Consequences of breach
(1) If the public company or entity
contravenes section 208:
(a) the contravention does not affect
the validity of any contract or transaction connected with the giving of the
benefit; and
(b) the public company or entity is
not guilty of an offence.
Note: A Court may order an injunction to stop the
company or entity giving the benefit to the related party (see section 1324).
(2) A person contravenes this subsection if
they are involved in a contravention of section 208 by a public company or
entity.
Note 1: This subsection is a civil penalty provision.
Note 2: Section 79 defines involved.
(3) A person commits an offence if they are
involved in a contravention of section 208 by a public company or entity
and the involvement is dishonest.
Division 2—Exceptions to the requirement for member approval
210
Arm’s length terms
Member approval is not needed to give a
financial benefit on terms that:
(a) would be reasonable in the
circumstances if the public company or entity and the related party were
dealing at arm’s length; or
(b) are less favourable to the related
party than the terms referred to in paragraph (a).
211
Remuneration and reimbursement for officer or employee
Benefits that are reasonable remuneration
(1) Member approval is not needed to give a
financial benefit if:
(a) the benefit is remuneration to a
related party as an officer or employee of the following:
(i) the public company;
(ii) an entity that the
public company controls;
(iii) an entity that
controls the public company;
(iv) an entity that
is controlled by an entity that controls the public company; and
(b) to give the remuneration would be
reasonable given:
(i) the circumstances of
the public company or entity giving the remuneration; and
(ii) the related party’s
circumstances (including the responsibilities involved in the office or
employment).
Benefits that are payments of expenses incurred
(2) Member approval is not needed to give a
financial benefit if:
(a) the benefit is payment of expenses
incurred or to be incurred, or reimbursement for expenses incurred, by a
related party in performing duties as an officer or employee of the following:
(i) the public company;
(ii) an entity that the
public company controls;
(iii) an entity that
controls the public company;
(iv) an entity that
is controlled by an entity that controls the public company; and
(b) to give the benefit would be
reasonable in the circumstances of the public company or entity giving the
remuneration.
(3) For the purposes of this section:
(a) a contribution made by a body
corporate to a fund for the purpose of making provision for, or obtaining,
superannuation benefits for an officer of the body, or for dependants of an
officer of the body, is remuneration provided by the body to the officer of the
body; and
(b) a financial benefit given to a
person because of the person ceasing to hold an office or employment as an
officer or employee of a body corporate is remuneration paid or provided to the
person in a capacity as an officer of the body.
212
Indemnities, exemptions, insurance premiums and payment for legal costs for
officers
Indemnities, exemptions and insurance premiums
(1) Member approval is not needed to give a
financial benefit if:
(a) the benefit is for a related party
who is an officer of the public company or entity; and
(b) the benefit is:
(i) an indemnity,
exemption or insurance premium in respect of a liability incurred as an officer
of the public company or entity; or
(ii) an agreement to give
an indemnity or exemption, or to pay an insurance premium, of that kind; and
(c) to give the benefit would be
reasonable in the circumstances of the public company or entity giving the
benefit.
Note: Sections 199A to 199C may prohibit giving
an indemnity or exemption or paying an insurance premium for an officer.
Payments in respect of legal costs
(2) Member approval is not needed to give a
financial benefit if:
(a) the benefit is for a related party
who is an officer of the public company or entity; and
(b) the benefit is the making of, or
an agreement to make, a payment (whether by way of advance, loan or otherwise)
in respect of legal costs incurred by the officer in defending an action for a
liability incurred as an officer of the public company or entity; and
(c) either:
(i) section 199A does
not apply to the costs; or
(ii) if section 199A
applies to the costs—the officer must repay the amount paid if the costs become
costs for which the company must not give the officer an indemnity under that
section; and
(d) to give the benefit would be
reasonable in the circumstances of the public company or entity giving the
benefit.
(3) In working out for the purposes of subsection (1)
or (2) whether giving the benefit is reasonable in the circumstances:
(a) assess whether it would be
reasonable on the basis of the circumstances existing:
(i) if the benefit is
given under an agreement—at the time when the agreement is or was made; or
(ii) if the benefit is not
given under an agreement—at the time when the benefit is or was given; and
(b) disregard any other financial
benefit given or payable to the officer by the public company or entity.
213
Small amounts given to related entity
(1) Member approval is not needed to give a
financial benefit to a related party in a financial year if the total of the
following amounts or values is less than or equal to the amount
prescribed by the regulations for the purposes of this section:
(a) the amount or value of the
financial benefit;
(b) the total of all other amounts or
values of financial benefits given to the related party, in the financial year,
for which member approval was not needed because of this section.
(2) In working out the total of the amounts
or values referred to in paragraphs (1)(a) and (b):
(a) add in all amounts or values of
financial benefits given to the related party in the financial year by:
(i) the public company or
entity; and
(ii) any entities
controlled by the public company or entity; and
(b) disregard:
(i) amounts that have been
repaid; and
(ii) amounts that fall
under any other exception in this Part.
For the purposes of this subsection, the time at which the
entity must be controlled by the public company is the time at which the
financial benefit is given.
214
Benefit to or by closely‑held subsidiary
(1) Member approval is not needed to give a
financial benefit if the benefit is given:
(a) by a body corporate to a closely‑held
subsidiary of the body; or
(b) by a closely‑held subsidiary of a
body corporate to the body or an entity it controls.
(2) For the purposes of this section, a body
corporate is a closely‑held subsidiary of another body corporate if, and only
if, no member of the first‑mentioned body is a person other than:
(a) the other body; or
(b) a nominee of the other body; or
(c) a body corporate that is a closely‑held
subsidiary of the other body because of any other application or applications
of this subsection; or
(d) a nominee of a body referred to in
paragraph (c).
(3) For the purposes of subsection (2),
disregard shares that are not voting shares.
215
Benefits to members that do not discriminate unfairly
Member approval is not needed to give a
financial benefit if:
(a) the benefit is given to the
related party in their capacity as a member of the public company; and
(b) giving the benefit does not
discriminate unfairly against the other members of the public company.
216
Court order
Member approval is not needed to give a
financial benefit under an order of a court.
Division 3—Procedure for obtaining member approval
217
Resolution may specify matters by class or kind
A resolution under this Division may
specify anything either in particular or by reference to class or kind.
218
Company must lodge material that will be put to members with ASIC
(1) At least 14 days before the notice
convening the relevant meeting is given, the public company must lodge:
(a) a proposed notice of meeting
setting out the text of the proposed resolution; and
(b) a proposed explanatory statement
satisfying section 219; and
(c) any other document that is
proposed to accompany the notice convening the meeting and that relates to the
proposed resolution; and
(d) any other document that any of the
following proposes to give to members of the public company before or at the
meeting:
(i) the company;
(ii) a related party of the
company to whom the proposed resolution would permit a financial benefit to be
given;
(iii) an associate of the company
or of such a related party;
and can reasonably be expected
to be material to a member in deciding how to vote on the proposed resolution.
(2) If, when the notice convening the meeting
is given, ASIC:
(a) has approved in writing a period
of less than 14 days for the purposes of subsection (1); and
(b) has not revoked the approval by
written notice to the public company;
subsection (1) applies as if the reference to 14 days
were a reference to the approved period.
(3) ASIC may give and revoke approvals for
the purposes of subsection (2).
219
Requirements for explanatory statement to members
(1) The proposed explanatory statement lodged
under section 218 must be in writing and set out:
(a) the related parties to whom the
proposed resolution would permit financial benefits to be given; and
(b) the nature of the financial
benefits; and
(c) in relation to each director of
the company:
(i) if the director wanted
to make a recommendation to members about the proposed resolution—the
recommendation and his or her reasons for it; or
(ii) if not—why not; or
(iii) if the director was
not available to consider the proposed resolution—why not; and
(d) in relation to each such director:
(i) whether the director
had an interest in the outcome of the proposed resolution; and
(ii) if so—what it was; and
(e) 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 resolution; and
(ii) is known to the
company or to any of its directors.
(2) An example of the kind of information
referred to in paragraph (1)(e) is information about what, from an
economic and commercial point of view, are the true potential costs and
detriments of, or resulting from, giving financial benefits as permitted by the
proposed resolution, including (without limitation):
(a) opportunity costs; and
(b) taxation consequences (such as
liability to fringe benefits tax); and
(c) benefits forgone by whoever would
give the benefits.
Note: Sections 180 and 181 require an officer
of a corporation to act honestly and to exercise care and diligence. These
duties extend to preparing an explanatory statement under this section. Section 1309
creates offences where false and misleading material relating to a
corporation’s affairs is made available or furnished to members.
220
ASIC may comment on proposed resolution
(1) Within 14 days after a public company
lodges documents under section 218, ASIC may give to the company written
comments on those documents (other than comments about whether the proposed
resolution is in the company’s best interests).
(2) If the company is listed, ASIC may
consult with the relevant market operator for the purposes of giving comments
to the company.
(3) Subsection (2) does not limit the
persons with whom ASIC may consult.
(4) ASIC must keep a copy of the written
comments it gives to a company under subsection (1), and subsections
1274(2) and (5) apply to the copy as if it were a document lodged with ASIC.
(5) The fact that ASIC has given particular
comments, or has declined to give comments, under subsection (1) does not
in any way affect the performance or exercise of any of ASIC’s functions and
powers.
221
Requirements for notice of meeting
The notice convening the meeting:
(a) must be the same, in all material
respects, as the proposed notice lodged under section 218; and
(b) must be accompanied by an
explanatory statement that is the same, in all material respects, as the
proposed explanatory statement lodged under that section; and
(c) must be accompanied by a document
that is, or documents that are, the same, in all material respects, as the
document or documents (if any) lodged under paragraph 218(1)(c); and
(d) if ASIC has given to the public
company, under section 220, comments on the documents lodged under section 218—must
be accompanied by a copy of those comments; and
(e) must not be accompanied by any
other documents.
222
Other material put to members
Each document (if any) that:
(a) did not accompany the notice
convening the meeting; and
(b) was given to members of the public
company before or at the meeting by:
(i) the public company; or
(ii) a related party of the
public company to whom the proposed resolution would permit a financial benefit
to be given; or
(iii) an associate of the
public company or of such a related party; and
(c) can reasonably be expected to have
been material to a member in deciding how to vote on the proposed resolution;
must be the same, in all material respects, as a document
lodged under paragraph 218(1)(d).
223
Proposed resolution cannot be varied
The resolution must be the same as the
proposed resolution set out in the proposed notice lodged under section 218.
224
Voting by or on behalf of related party interested in proposed resolution
(1) At a general meeting, a vote on a
proposed resolution under this Division must not be cast (in any capacity) by
or on behalf of:
(a) a related party of the public
company to whom the resolution would permit a financial benefit to be given; or
(b) an associate of such a related
party.
(2) Subsection (1) does not prevent the
casting of a vote if:
(a) it is cast by a person as a proxy
appointed by writing that specifies how the proxy is to vote on the proposed
resolution; and
(b) it is not cast on behalf of a
related party or associate of a kind referred to in subsection (1).
(3) The regulations may prescribe cases where
subsection (1) does not apply.
(4) ASIC may by writing declare that:
(a) subsection (1) does not apply
to a specified proposed resolution; or
(b) subsection (1) does not
prevent the casting of a vote, on a specified proposed resolution, by a
specified entity, or on behalf of a specified entity;
but may only do so if satisfied that the declaration will not
cause unfair prejudice to the interests of any member of the public company.
(5) A declaration in force under subsection (4)
has effect accordingly.
(6) If a vote is cast in contravention of subsection (1),
the related party or associate, as the case may be, contravenes this
subsection, whether or not the proposed resolution is passed.
(7) For the purposes of this section, a vote
is cast on behalf of an entity if, and only if, it is cast:
(a) as proxy for the entity; or
(b) otherwise on behalf of the entity;
or
(c) in respect of a share in respect
of which the entity has:
(i) power to vote; or
(ii) power to exercise, or
control the exercise of, a right to vote.
(8) Subject to subsection 225(1), a
contravention of this section does not affect the validity of a resolution.
(9) Subject to Part 1.1A, this section
has effect despite:
(a) anything else in:
(i) this Act; or
(ii) any other law
(including the general law) of a State or Territory; or
(b) anything in a body corporate’s
constitution.
225
Voting on the resolution
(1) If any votes on the resolution are cast
in contravention of subsection 224(1), it must be the case that the resolution
would still be passed even if those votes were disregarded.
(2) If a poll was duly demanded on the question
that the resolution be passed, subsections (3) and (4) apply in relation
to voting on the poll.
(3) In relation to each member of the public
company who voted on the resolution in person, the public company must record
in writing:
(a) the member’s name; and
(b) how many votes the member cast for
the resolution and how many against.
(4) In relation to each member of the public
company who voted on the resolution by proxy, or by a representative authorised
under section 250D, the public company must record in writing:
(a) the member’s name; and
(b) in relation to each person who
voted as proxy, or as such a representative, for the member:
(i) the person’s name; and
(ii) how many votes the
person cast on the resolution as proxy, or as such a representative, for the
member; and
(iii) how many of those
votes the person cast for the resolution and how many against.
(5) For 7 years after the day when a
resolution under this Division is passed, the public company must retain the
records it made under this section in relation to the resolution.
(6) An offence based on subsection (3),
(4) or (5) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
226
Notice of resolution to be lodged
The public company must lodge a notice
setting out the text of the resolution within 14 days after the resolution is
passed.
227
Declaration by court of substantial compliance
(1) The Court may declare that the conditions
prescribed by this Division have been satisfied if it finds that they have been
substantially satisfied.
(2) A declaration may be made only on the
application of an interested person.
Part 2E.2—Related parties and financial benefits
228
Related parties
Controlling entities
(1) An entity that controls a public company
is a related party of the public company.
Directors and their spouses
(2) The following persons are related parties
of a public company:
(a) directors of the public company;
(b) directors (if any) of an entity
that controls the public company;
(c) if the public company is
controlled by an entity that is not a body corporate—each of the persons making
up the controlling entity;
(d) spouses of the persons referred to
in paragraphs (a), (b) and (c).
Relatives of directors and spouses
(3) The following relatives of persons
referred to in subsection (2) are related parties of the public company:
(a) parents;
(b) children.
Entities controlled by other related parties
(4) An entity controlled by a related party
referred to in subsection (1), (2) or (3) is a related party of the public
company unless the entity is also controlled by the public company.
Related party in previous 6 months
(5) An entity is a related party of a public
company at a particular time if the entity was a related party of the public
company of a kind referred to in subsection (1), (2), (3) or (4) at any
time within the previous 6 months.
Entity has reasonable grounds to believe it will become
related party in future
(6) An entity is a related party of a public
company at a particular time if the entity believes or has reasonable grounds
to believe that it is likely to become a related party of the public company of
a kind referred to in subsection (1), (2), (3) or (4) at any time in the
future.
Acting in concert with related party
(7) An entity is a related party of a public
company if the entity acts in concert with a related party of the public
company on the understanding that the related party will receive a financial
benefit if the public company gives the entity a financial benefit.
229
Giving a financial benefit
(1) In determining whether a financial
benefit is given for the purposes of this Chapter:
(a) give a broad interpretation to
financial benefits being given, even if criminal or civil penalties may be
involved; and
(b) the economic and commercial
substance of conduct is to prevail over its legal form; and
(c) disregard any consideration that
is or may be given for the benefit, even if the consideration is adequate.
(2) Giving a financial benefit
includes the following:
(a) giving a financial benefit
indirectly, for example, through 1 or more interposed entities;
(b) giving a financial benefit by
making an informal agreement, oral agreement or an agreement that has no
binding force;
(c) giving a financial benefit that
does not involve paying money (for example by conferring a financial
advantage).
(3) The following are examples of giving
a financial benefit to a related party:
(a) giving or providing the related
party finance or property;
(b) buying an asset from or selling an
asset to the related party;
(c) leasing an asset from or to the
related party;
(d) supplying services to or receiving
services from the related party;
(e) issuing
securities or granting an option to the related party;
(f) taking up or releasing an
obligation of the related party.
Part 2E.3—Interaction with other rules
230
General duties still apply
A director is not relieved from any of
their duties under this Act (including sections 180 and 184), or their
fiduciary duties, in connection with a transaction merely because the
transaction is authorised by a provision of this Chapter or is approved by a
resolution of members under a provision of this Chapter.
Chapter 2F—Members’ rights and remedies
231
Membership of a company
A person is a member of a company if
they:
(a) are a member of the company on its
registration; or
(b) agree to become a member of the
company after its registration and their name is entered on the register of
members; or
(c) become a member of the company
under section 167 (membership arising from conversion of a company from
one limited by guarantee to one limited by shares).
Part 2F.1—Oppressive conduct of affairs
232
Grounds for Court order
The Court may make an order under
section 233 if:
(a) the conduct of a company’s
affairs; or
(b) an actual or proposed act or
omission by or on behalf of a company; or
(c) a resolution, or a proposed
resolution, of members or a class of members of a company;
is either:
(d) contrary to the interests of the
members as a whole; or
(e) oppressive to, unfairly
prejudicial to, or unfairly discriminatory against, a member or members whether
in that capacity or in any other capacity.
For the purposes of this Part, a person to whom a share in
the company has been transmitted by will or by operation of law is taken to be
a member of the company.
Note: For affairs, see section 53.
233
Orders the Court can make
(1) The Court can make any order under this
section that it considers appropriate in relation to the company, including an
order:
(a) that the company be wound up;
(b) that the company’s existing
constitution be modified or repealed;
(c) regulating the conduct of the
company’s affairs in the future;
(d) for the purchase of any shares by
any member or person to whom a share in the company has been transmitted by
will or by operation of law;
(e) for the purchase of shares with an
appropriate reduction of the company’s share capital;
(f) for the company to institute,
prosecute, defend or discontinue specified proceedings;
(g) authorising a member, or a person
to whom a share in the company has been transmitted by will or by operation of
law, to institute, prosecute, defend or discontinue specified proceedings in
the name and on behalf of the company;
(h) appointing a receiver or a
receiver and manager of any or all of the company’s property;
(i) restraining a person from
engaging in specified conduct or from doing a specified act;
(j) requiring a person to do a
specified act.
Order that the company be wound up
(2) If an order that a company be wound up is
made under this section, the provisions of this Act relating to the winding up
of companies apply:
(a) as if the order were made under
section 461; and
(b) with such changes as are
necessary.
Order altering constitution
(3) If an order made under this section
repeals or modifies a company’s constitution, or requires the company to adopt
a constitution, the company does not have the power under section 136 to
change or repeal the constitution if that change or repeal would be
inconsistent with the provisions of the order, unless:
(a) the order states that the company
does have the power to make such a change or repeal; or
(b) the company first obtains the
leave of the Court.
234
Who can apply for order
An application for an order under
section 233 in relation to a company may be made by:
(a) a member of the company, even if
the application relates to an act or omission that is against:
(i) the member in a
capacity other than as a member; or
(ii) another member in
their capacity as a member; or
(b) a person who has been removed from
the register of members because of a selective reduction; or
(c) a person who has ceased to be a
member of the company if the application relates to the circumstances in which
they ceased to be a member; or
(d) a person to whom a share in the
company has been transmitted by will or by operation of law; or
(e) a person whom ASIC thinks
appropriate having regard to investigations it is conducting or has conducted
into:
(i) the company’s affairs;
or
(ii) matters connected with
the company’s affairs.
Note 1: If an application is made under this section,
in certain cases the court may order that the company be wound up in insolvency
(see section 459B).
Note 2: For selective reduction, see
subsection 256B(2).
235
Requirement for person to lodge order
(1) If an order is made under section 233,
the applicant must lodge a copy of the order with ASIC within 14 days after it
is made.
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
Part 2F.1A—Proceedings on behalf of a company by members and others
236
Bringing, or intervening in, proceedings on behalf of a company
(1) A person may bring proceedings on behalf
of a company, or intervene in any proceedings to which the company is a party
for the purpose of taking responsibility on behalf of the company for those
proceedings, or for a particular step in those proceedings (for example,
compromising or settling them), if:
(a) the person is:
(i) a member, former
member, or person entitled to be registered as a member, of the company or of a
related body corporate; or
(ii) an officer or former
officer of the company; and
(b) the person is acting with leave
granted under section 237.
(2) Proceedings brought on behalf of a
company must be brought in the company’s name.
(3) The right of a person at general law to
bring, or intervene in, proceedings on behalf of a company is abolished.
Note 1: For the right to inspect company books, see
subsections 247A(3) to (6).
Note 2: For the requirements to disclose proceedings
and leave applications in the annual directors’ report, see subsections 300(14)
and (15).
Note 3: This section does not prevent a person
bringing, or intervening in, proceedings on their own behalf in respect of a
personal right.
237
Applying for and granting leave
(1) A person referred to in paragraph
236(1)(a) may apply to the Court for leave to bring, or to intervene in,
proceedings.
(2) The Court must grant the application if
it is satisfied that:
(a) it is probable that the company
will not itself bring the proceedings, or properly take responsibility for
them, or for the steps in them; and
(b) the applicant is acting in good
faith; and
(c) it is in the best interests of the
company that the applicant be granted leave; and
(d) if the applicant is applying for
leave to bring proceedings—there is a serious question to be tried; and
(e) either:
(i) at least 14 days
before making the application, the applicant gave written notice to the company
of the intention to apply for leave and of the reasons for applying; or
(ii) it is appropriate to
grant leave even though subparagraph (i) is not satisfied.
(3) A rebuttable presumption that granting
leave is not in the best interests of the company arises if it is established
that:
(a) the proceedings are:
(i) by the company against
a third party; or
(ii) by a third party
against the company; and
(b) the company has decided:
(i) not to bring the
proceedings; or
(ii) not to defend the
proceedings; or
(iii) to discontinue, settle
or compromise the proceedings; and
(c) all of the directors who
participated in that decision:
(i) acted in good faith
for a proper purpose; and
(ii) did not have a
material personal interest in the decision; and
(iii) informed themselves
about the subject matter of the decision to the extent they reasonably believed
to be appropriate; and
(iv) rationally believed
that the decision was in the best interests of the company.
The director’s belief that the decision was in the best
interests of the company is a rational one unless the belief is one that no
reasonable person in their position would hold.
(4) For the purposes of subsection (3):
(a) a person is a third party if:
(i) the company is a
public company and the person is not a related party of the company; or
(ii) the company is not a
public company and the person would not be a related party of the company if
the company were a public company; and
(b) proceedings by or against the
company include any appeal from a decision made in proceedings by or against
the company.
Note: Related party is defined in
section 228.
238
Substitution of another person for the person granted leave
(1) Any of the following persons may apply to
the Court for an order that they be substituted for a person to whom leave has
been granted under section 237:
(a) a member, former member, or a
person entitled to be registered as a member, of the company or of a related
body corporate;
(b) an officer, or former officer, of
the company.
(2) The Court may make the order if it is
satisfied that:
(a) the applicant is acting in good
faith; and
(b) it is appropriate to make the
order in all the circumstances.
(3) An order substituting one person for
another has the effect that:
(a) the grant of leave is taken to
have been made in favour of the substituted person; and
(b) if the other person has already
brought the proceedings or intervened—the substituted person is taken to have
brought those proceedings or to have made that intervention.
239
Effect of ratification by members
(1) If the members of a company ratify or
approve conduct, the ratification or approval:
(a) does not prevent a person from
bringing or intervening in proceedings with leave under section 237 or
from applying for leave under that section; and
(b) does not have the effect that
proceedings brought or intervened in with leave under section 237 must be
determined in favour of the defendant, or that an application for leave under
that section must be refused.
(2) If members of a company ratify or approve
conduct, the Court may take the ratification or approval into account in
deciding what order or judgment (including as to damages) to make in
proceedings brought or intervened in with leave under section 237 or in
relation to an application for leave under that section. In doing this, it must
have regard to:
(a) how well‑informed about the
conduct the members were when deciding whether to ratify or approve the
conduct; and
(b) whether the members who ratified
or approved the conduct were acting for proper purposes.
240
Leave to discontinue, compromise or settle proceedings brought, or intervened
in, with leave
Proceedings brought or intervened in
with leave must not be discontinued, compromised or settled without the leave
of the Court.
241
General powers of the Court
(1) The Court may make any orders, and give
any directions, that it considers appropriate in relation to proceedings
brought or intervened in with leave, or an application for leave, including:
(a) interim orders; and
(b) directions about the conduct of
the proceedings, including requiring mediation; and
(c) an order directing the company, or
an officer of the company, to do, or not to do, any act; and
(d) an order appointing an independent
person to investigate, and report to the Court on:
(i) the financial affairs
of the company; or
(ii) the facts or
circumstances which gave rise to the cause of action the subject of the
proceedings; or
(iii) the costs incurred in
the proceedings by the parties to the proceedings and the person granted leave.
(2) A person appointed by the Court under paragraph (1)(d)
is entitled, on giving reasonable notice to the company, to inspect any books
of the company for any purpose connected with their appointment.
(3) If the
Court appoints a person under paragraph (1)(d):
(a) the Court must also make an order
stating who is liable for the remuneration and expenses of the person
appointed; and
(b) the Court may vary the order at
any time; and
(c) the persons who may be made liable
under the order, or the order as varied, are:
(i) all or any of the
parties to the proceedings or application; and
(ii) the company; and
(d) if the order, or the order as
varied, makes 2 or more persons liable, the order may also determine the nature
and extent of the liability of each of those persons.
(4) Subsection (3) does not affect the
powers of the Court as to costs.
242
Power of the Court to make costs orders
The Court may at any time make any
orders it considers appropriate about the costs of the following persons in
relation to proceedings brought or intervened in with leave under section 237
or an application for leave under that section:
(a) the person who applied for or was
granted leave;
(b) the company;
(c) any other party to the proceedings
or application.
An order under this section may require indemnification
for costs.
Part 2F.2—Class rights
Note: This Part does not apply to the adoption or
amendment of benefit fund rules or to consequential amendments to the rest of
the company’s constitution made under the Life Insurance Act 1995, see
Subdivision 2 of Division 4 of Part 2A of that Act.
246B
Varying and cancelling class rights
If constitution sets out procedure
(1) If a company has a constitution that sets
out the procedure for varying or cancelling:
(a) for a company with a share
capital—rights attached to shares in a class of shares; or
(b) for a company without a share
capital—rights of members in a class of members;
those rights may be varied or cancelled only in accordance
with the procedure. The procedure may be changed only if the procedure itself
is complied with.
If constitution does not set out procedure
(2) If a company does not have a
constitution, or has a constitution that does not set out the procedure for
varying or cancelling:
(a) for a company with a share
capital—rights attached to shares in a class of shares; or
(b) for a company without a share
capital—rights of members in a class of members;
those rights may be varied or cancelled only by special
resolution of the company and:
(c) by special resolution passed at a
meeting:
(i) for a company with a
share capital of the class of members holding shares in the class; or
(ii) for a company without
a share capital of the class of members whose rights are being varied or
cancelled; or
(d) with the written consent of
members with at least 75% of the votes in the class.
(3) The company must give written notice of
the variation or cancellation to the members of the class within 7 days after
the variation or cancellation is made.
(4) An offence based on subsection (3)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
246C
Certain actions taken to vary rights etc.
Company with share capital
(1) If the shares in a class of shares in a
company are divided into further classes, and after the division the rights
attached to all of those shares are not the same:
(a) the division is taken to vary the
rights attached to every share that was in the class existing before the
division; and
(b) members who hold shares to which
the same rights are attached after the division form a separate class.
(2) If the rights attached to some of the
shares in a class of shares in a company are varied:
(a) the variation is taken to vary the
rights attached to every other share that was in the class existing before the
variation; and
(b) members who hold shares to which the
same rights are attached after the variation form a separate class.
Company without share capital
(3) If the members in a class of members in a
company without share capital are divided into further classes of members, and
after the division the rights of all of those members are not the same:
(a) the division is taken to vary the
rights of every member who was in the class existing before the division; and
(b) members who have the same rights
after the division form a separate class.
(4) If the rights of some of the members in a
class of members in a company without a share capital are varied:
(a) the variation is taken to vary the
rights of every other member who was in the class existing before the
variation; and
(b) members who have the same rights
after the variation form a separate class.
Company with 1 class of shares issuing new class of
shares
(5) If a company with 1 class of shares
issues new shares, the issue is taken to vary the rights attached to shares
already issued if:
(a) the rights attaching to the new
shares are not the same as the rights attached to shares already issued; and
(b) those rights are not provided for
in:
(i) the company’s
constitution (if any); or
(ii) a notice, document or
resolution that is lodged with ASIC.
(6) If a company issues new preference shares
that rank equally with existing preference shares, the issue is taken to vary
the rights attached to the existing preference shares unless the issue is
authorised by:
(a) the terms of issue of the existing
preference shares; or
(b) the company’s constitution (if
any) as in force when the existing preference shares were issued.
246D
Variation, cancellation or modification without unanimous support of class
(1) If members in a class do not all agree
(whether by resolution or written consent) to:
(a) a variation or cancellation of
their rights; or
(b) a modification of the company’s
constitution (if any) to allow their rights to be varied or cancelled;
members with at least 10% of the votes in the class may
apply to the Court to have the variation, cancellation or modification set
aside.
(2) An application may only be made within 1
month after the variation, cancellation or modification is made.
(3) The variation, cancellation or
modification takes effect:
(a) if no application is made to the
Court to have it set aside—1 month after the variation, cancellation or
modification is made; or
(b) if an application is made to the
Court to have it set aside—when the application is withdrawn or finally
determined.
(4) The members of the class who want to have
the variation, cancellation or modification set aside may appoint 1 or more of
themselves to make the application on their behalf. The appointment must be in
writing.
(5) The Court may set aside the variation, cancellation
or modification if it is satisfied that it would unfairly prejudice the
applicants. However, the Court must confirm the variation, cancellation or
modification if the Court is not satisfied of unfair prejudice.
(6) Within 14 days after the Court makes an
order, the company must lodge a copy of it with ASIC.
(7) An offence based on subsection (6)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
246E
Variation, cancellation or modification with unanimous support of class
If the members in a class all agree
(whether by resolution or written consent) to the variation, cancellation or
modification, it takes effect:
(a) if no later date is specified in
the resolution or consent—on the date of the resolution or consent; or
(b) on a later date specified in the
resolution or consent.
246F
Company must lodge documents and resolutions with ASIC
(1) A company must lodge with ASIC a notice
in the prescribed form setting out particulars of any of the following:
(a) a division of shares in the
company into classes if the shares were not previously so divided;
(b) a conversion of shares in a class
of shares in the company into shares in another class.
Note: A proprietary company may also have to notify
certain particulars under Part 2C.2.
(2) The notice
must be lodged within 14 days after the division or conversion.
(3) A public company must lodge with ASIC a
copy of each document (including an agreement or consent) or resolution that:
(a) does any of the following:
(i) attaches rights to
issued or unissued shares;
(ii) varies or cancels
rights attaching to issued or unissued shares;
(iii) varies or cancels
rights of members in a class of members of a company that does not have a share
capital;
(iv) binds a class of
members; and
(b) is not already lodged with ASIC.
This also applies to a proprietary company that has
applied under Part 2B.7 to change to a public company, while its
application has not yet been determined.
(3A) An offence based on subsection (1) or
(3) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(4) The document must be lodged within 14
days after it is made. The resolution must be lodged within 14 days after it is
passed.
246G
Member’s copies of documents and resolutions
(1) A member of a company may ask the company
in writing for a copy of a document or resolution referred to in section 246F.
The company must send the copy to the member.
(1A) An offence based on subsection (1) is
an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(2) If the company requires the member to pay
for the copy, the company must send it:
(a) within 7 days after the company
receives the payment; or
(b) within any longer period approved
by ASIC.
(3) The amount of any payment the company
requires cannot exceed the prescribed amount.
(4) If the company does not require payment
for the copy, the company must send it:
(a) within 7 days after the member
asks for it; or
(b) within any longer period approved
by ASIC.
Part 2F.3—Inspection of books
247A
Order for inspection of books of company or registered managed investment
scheme
(1) On application by a member of a company
or registered managed investment scheme, the Court may make an order:
(a) authorising the applicant to
inspect books of the company or scheme; or
(b) authorising another person
(whether a member or not) to inspect books of the company or scheme on the
applicant’s behalf.
The Court may only make the order if it is satisfied that
the applicant is acting in good faith and that the inspection is to be made for
a proper purpose.
(2) A person authorised to inspect books may
make copies of the books unless the Court orders otherwise.
(3) A person who:
(a) is granted leave under section 237;
or
(b) applies for leave under that
section; or
(c) is eligible to apply for leave
under that section;
may apply to the Court for an order under this section.
(4) On application, the Court may make an
order authorising:
(a) the applicant to inspect books of
the company; or
(b) another person to inspect books of
the company on the applicant’s behalf.
(5) The Court may make the order only if it
is satisfied that:
(a) the applicant is acting in good
faith; and
(b) the inspection is to be made for a
purpose connected with:
(i) applying for leave
under section 237; or
(ii) bringing or
intervening in proceedings with leave under that section.
(6) A person authorised to inspect books may
make copies of the books unless the Court orders otherwise.
247B
Ancillary orders
If the Court makes an order under
section 247A, the Court may make any other orders it considers
appropriate, including either or both of the following:
(a) an order limiting the use that a
person who inspects books may make of information obtained during the
inspection;
(b) an order limiting the right of a
person who inspects books to make copies in accordance with subsection 247A(2).
247C
Disclosure of information acquired in inspection
(1) A person who inspects books on behalf of
an applicant under section 247A must not disclose information obtained
during the inspection.
(2) Subsection (1) does not apply to the
extent that the disclosure is to:
(a) ASIC; or
(b) the applicant.
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) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
247D
Company or directors may allow member to inspect books (replaceable rule see section 135)
The directors of a company, or the
company by a resolution passed at a general meeting, may authorise a member to
inspect books of the company.
Part 2F.4—Proceedings against a company by members and others
247E
Shareholding does not prevent compensation claim
A person is not prevented from obtaining
damages or other compensation from a company only because the person:
(a) holds, or has held, shares in the
company; or
(b) has subscribed for shares in the
company; or
(c) has a right to be included in the
register that the company maintains under section 169.
Chapter 2G—Meetings
Part 2G.1—Directors’ meetings
Division 1—Resolutions and declarations without meetings
248A
Circulating resolutions of companies with more than 1 director (replaceable rule see section 135)
Resolutions
(1) The directors of a company may pass a
resolution without a directors’ meeting being held if all the directors
entitled to vote on the resolution sign a document containing a statement that
they are in favour of the resolution set out in the document.
Copies
(2) Separate copies of a document may be used
for signing by directors if the wording of the resolution and statement is
identical in each copy.
When the resolution is passed
(3) The resolution is passed when the last
director signs.
Note: Passage of a resolution under this section
must be recorded in the company’s minute books (see section 251A).
248B
Resolutions and declarations of 1 director proprietary companies
Resolutions
(1) The director of a proprietary company
that has only 1 director may pass a resolution by recording it and signing the
record.
Declarations
(2) The director of a proprietary company
that has only 1 director may make a declaration by recording it and signing the
record. Recording and signing the declaration satisfies any requirement in this
Act that the declaration be made at a directors’ meeting.
Note 1: For directors’ declarations, see sections 295
and 494.
Note 2: Passage of a resolution or the making of a
declaration under this section must be recorded in the company’s minute books
(see section 251A).
Division 2—Directors’ meetings
248C
Calling directors’ meetings (replaceable
rule see section 135)
A directors’ meeting may be called by a
director giving reasonable notice individually to every other director.
Note: A director who has appointed an alternate
director may ask for the notice to be sent to the alternate director (see
subsection 201K(2)).
248D
Use of technology
A directors’ meeting may be called or
held using any technology consented to by all the directors. The consent may be
a standing one. A director may only withdraw their consent within a reasonable
period before the meeting.
248E
Chairing directors’ meetings (replaceable
rule see section 135)
(1) The directors may elect a director to
chair their meetings. The directors may determine the period for which the
director is to be the chair.
(2) The directors must elect a director
present to chair a meeting, or part of it, if:
(a) a director has not already been
elected to chair the meeting; or
(b) a previously elected chair is not
available or declines to act, for the meeting or the part of the meeting.
248F
Quorum at directors’ meetings (replaceable
rule see section 135)
Unless the directors determine
otherwise, the quorum for a directors’ meeting is 2 directors and the quorum
must be present at all times during the meeting.
Note 1: For special quorum rules for public companies,
see section 195.
Note 2: For resolutions of 1 director proprietary
companies without meetings, see section 248B.
248G
Passing of directors’ resolutions (replaceable
rule see section 135)
(1) A resolution of the directors must be
passed by a majority of the votes cast by directors entitled to vote on the
resolution.
(2) The chair has a casting vote if necessary
in addition to any vote they have in their capacity as a director.
Note: The chair may be precluded from voting, for
example, by a conflict of interest.
Part 2G.2—Meetings of members of companies
Division 1—Resolutions without meetings
249A
Circulating resolutions of proprietary companies with more than 1 member
(1) This section applies to resolutions of
the members of proprietary companies that this Act or, if a company has a
constitution, the company’s constitution requires or permits to be passed at a
general meeting. It does not apply to a resolution under section 329 to
remove an auditor.
(2) A company may pass a resolution without a
general meeting being held if all the members entitled to vote on the
resolution sign a document containing a statement that they are in favour of
the resolution set out in the document. Each member of a joint membership must sign.
(3) Separate copies of a document may be used
for signing by members if the wording of the resolution and statement is
identical in each copy.
(4) The resolution is passed when the last
member signs.
(5) A company that passes a resolution under
this section without holding a meeting satisfies any requirement in this Act:
(a) to give members information or a
document relating to the resolution—by giving members that information or
document with the document to be signed; and
(b) to lodge with ASIC a copy of a
notice of meeting to consider the resolution—by lodging a copy of the document
to be signed by members; and
(c) to lodge a copy of a document that
accompanies a notice of meeting to consider the resolution—by lodging a copy of
the information or documents referred to in paragraph (a).
(6) The passage of the resolution satisfies
any requirement in this Act, or a company’s constitution (if any), that the
resolution be passed at a general meeting.
(7) This section does not affect any rule of
law relating to the assent of members not given at a general meeting.
Note 1: A body corporate representative may sign a
circulating resolution (see section 250D).
Note 2: Passage of a resolution under this section must
be recorded in the company’s minute books (see section 251A).
249B
Resolutions of 1 member companies
(1) A company that has only 1 member may pass
a resolution by the member recording it and signing the record.
(2) If this Act requires information or a
document relating to the resolution to be lodged with ASIC, that requirement is
satisfied by lodging the information or document with the resolution that is
passed.
Note 1: A body corporate representative may sign such a
resolution (see section 250D).
Note 2: Passage of a resolution under this section must
be recorded in the company’s minute books (see section 251A).
Division 2—Who may call meetings of members
249C
Calling of meetings of members by a director (replaceable rule—see section 135)
A director may call a meeting of the
company’s members.
249CA
Calling of meetings of members of a listed company by a director
(1) A director may call a meeting of the
company’s members.
(2) This section only applies to a company
that is listed.
(3) This section applies despite anything in
the company’s constitution.
249D
Calling of general meeting by directors when requested by members
(1) The directors of a company must call and
arrange to hold a general meeting on the request of:
(a) members with at least 5% of the
votes that may be cast at the general meeting; or
(b) at least 100 members who are
entitled to vote at the general meeting.
(1A) The regulations may prescribe a different
number of members for the purposes of the application of paragraph (1)(b)
to:
(a) a particular company; or
(b) a particular class of company.
Without limiting this, the regulations may specify the
number as a percentage of the total number of members of the company.
(2) The request must:
(a) be in writing; and
(b) state any resolution to be
proposed at the meeting; and
(c) be signed by the members making
the request; and
(d) be given to the company.
(3) Separate copies of a document setting out
the request may be used for signing by members if the wording of the request is
identical in each copy.
(4) The percentage of votes that members have
is to be worked out as at the midnight before the request is given to the
company.
(5) The directors must call the meeting
within 21 days after the request is given to the company. The meeting is to be
held not later than 2 months after the request is given to the company.
249E
Failure of directors to call general meeting
(1) Members with more than 50% of the votes
of all of the members who make a request under section 249D may call and
arrange to hold a general meeting if the directors do not do so within 21 days
after the request is given to the company.
(2) The meeting must be called in the same
way—so far as is possible—in which general meetings of the company may be
called. The meeting must be held not later than 3 months after the request is
given to the company.
(3) To call the meeting the members
requesting the meeting may ask the company under section 173 for a copy of
the register of members. Despite paragraph 173(3)(b), the company must give the
members the copy of the register without charge.
(4) The company must pay the reasonable
expenses the members incurred because the directors failed to call and arrange
to hold the meeting.
(4A) An offence based on subsection (3) or
(4) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(5) The company may recover the amount of the
expenses from the directors. However, a director is not liable for the amount
if they prove that they took all reasonable steps to cause the directors to
comply with section 249D. The directors who are liable are jointly and
individually liable for the amount. If a director who is liable for the amount
does not reimburse the company, the company must deduct the amount from any sum
payable as fees to, or remuneration of, the director.
249F
Calling of general meetings by members
(1) Members with at least 5% of the votes
that may be cast at a general meeting of the company may call, and arrange to
hold, a general meeting. The members calling the meeting must pay the expenses
of calling and holding the meeting.
(2) The meeting must be called in the same
way—so far as is possible—in which general meetings of the company may be
called.
(3) The percentage of votes that members have
is to be worked out as at the midnight before the meeting is called.
249G
Calling of meetings of members by the Court
(1) The Court may order a meeting of the
company’s members to be called if it is impracticable to call the meeting in
any other way.
(2) The Court may make the order on
application by:
(a) any director; or
(b) any member who would be entitled
to vote at the meeting.
Note: For the directions the Court may give for
calling, holding or conducting a meeting it has ordered be called, see section 1319.
Division 3—How to call meetings of members
249H
Amount of notice of meetings
General rule
(1) Subject to subsection (2), at least
21 days notice must be given of a meeting of a company’s members. However, if a
company has a constitution, it may specify a longer minimum period of notice.
Calling meetings on shorter notice
(2) A company may call on shorter notice:
(a) an AGM, if all the members
entitled to attend and vote at the AGM agree beforehand; and
(b) any other general meeting, if
members with at least 95% of the votes that may be cast at the meeting agree
beforehand.
A company cannot call an AGM or other general meeting on
shorter notice if it is a meeting of the kind referred to in subsection (3)
or (4).
Shorter notice not allowed—removing or appointing
director
(3) At least 21 days notice must be given of
a meeting of the members of a public company at which a resolution will be
moved to:
(a) remove a director under section 203D;
or
(b) appoint a director in place of a
director removed under that section.
Shorter notice not allowed—removing auditor
(4) At least 21 days notice must be given of
a meeting of a company at which a resolution will be moved to remove an auditor
under section 329.
249HA
Amount of notice of meetings of listed company
(1) Despite section 249H, at least 28
days notice must be given of a meeting of a company’s members.
(2) This section only applies to a company
that is listed.
(3) This section applies despite anything in
the company’s constitution.
249J
Notice of meetings of members to members and directors
Notice to members and directors individually
(1) Written notice of a meeting of a
company’s members must be given individually to each member entitled to vote at
the meeting and to each director. Notice need only be given to 1 member of a
joint membership.
Notice to joint members (replaceable rule—see section 135)
(2) Notice to joint members must be given to
the joint member named first in the register of members.
How notice is given
(3) A company may give the notice of meeting
to a member:
(a) personally; or
(b) by sending it by post to the
address for the member in the register of members or the alternative address
(if any) nominated by the member; or
(c) by sending it to the fax number or
electronic address (if any) nominated by the member; or
(ca) by sending it to the member by
other electronic means (if any) nominated by the member; or
(cb) by notifying the member in
accordance with subsection (3A); or
(d) by any other means that the
company’s constitution (if any) permits.
Note: A defect in the notice given may not
invalidate a meeting (see
section 1322).
(3A) If the member nominates:
(a) an electronic means (the nominated
notification means) by which the member may be notified that notices of
meeting are available; and
(b) an electronic means (the nominated
access means) the member may use to access notices of meeting;
the company may give the member notice of the meeting by
notifying the member (using the nominated notification means):
(c) that the notice of meeting is
available; and
(d) how the member may use the
nominated access means to access the notice of meeting.
This subsection does not limit subsection (3).
When notice by post or fax is given (replaceable
rule—see section 135)
(4) A notice of meeting sent by post is taken
to be given 3 days after it is posted. A notice of meeting sent by fax, or
other electronic means, is taken to be given on the business day after it is
sent.
When notice under paragraph (3)(cb) is given
(replaceable rule—see section 135)
(5) A notice of meeting given to a member
under paragraph (3)(cb) is taken to be given on the business day after the
day on which the member is notified that the notice of meeting is available.
249K
Auditor entitled to notice and other communications
(1) A company must give its auditor:
(a) notice of a general meeting in the
same way that a member of the company is entitled to receive notice; and
(b) any other communications relating
to the general meeting that a member of the company is entitled to receive.
Note 1: For when a company must have an auditor, see
Part 2M.3.
Note 2: An auditor may appoint a representative to
attend a meeting (see subsection 249V(4)).
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
249L
Contents of notice of meetings of members
(1) A notice of a meeting of a company’s
members must:
(a) set out the place, date and time
for the meeting (and, if the meeting is to be held in 2 or more places, the
technology that will be used to facilitate this); and
(b) state the general nature of the
meeting’s business; and
(c) if a special resolution is to be
proposed at the meeting—set out an intention to propose the special resolution
and state the resolution; and
(d) if a member is entitled to appoint
a proxy—contain a statement setting out the following information:
(i) that the member has a
right to appoint a proxy;
(ii) whether or not the
proxy needs to be a member of the company;
(iii) that a member who is
entitled to cast 2 or more votes may appoint 2 proxies and may specify the
proportion or number of votes each proxy is appointed to exercise.
Note: There may be other requirements for disclosure
to members.
(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.
(3) The information included in the notice of
meeting must be worded and presented in a clear, concise and effective manner.
249LA
Notice of meeting not required to contain certain information
(1) The regulations may provide that a notice
of a meeting of a company’s members is not required by section 249L or
otherwise to include information specified in the regulations if any conditions
specified in the regulations are satisfied.
(2) Without limiting subsection (1), the
regulations may specify different conditions for:
(a) different kinds of information;
and
(b) a notice of meeting given by a
company or a class of companies.
(3) If:
(a) regulations are made for the
purposes of subsection (1); and
(b) a notice of meeting does not
include particular information in accordance with those regulations;
the information is taken to be included in the notice of
meeting.
249M
Notice of adjourned meetings (replaceable
rule—see section 135)
When a meeting is adjourned, new notice
of the resumed meeting must be given if the meeting is adjourned for 1 month or
more.
Division 4—Members’ rights to put resolutions etc. at general meetings
249N
Members’ resolutions
(1) The following members may give a company
notice of a resolution that they propose to move at a general meeting:
(a) members with at least 5% of the
votes that may be cast on the resolution; or
(b) at least 100 members who are
entitled to vote at a general meeting.
(1A) The regulations may prescribe a different
number of members for the purposes of the application of paragraph (1)(b)
to:
(a) a particular company; or
(b) a particular class of company.
Without limiting this, the regulations may specify the
number as a percentage of the total number of members of the company.
(2) The notice must:
(a) be in writing; and:
(b) set out the wording of the
proposed resolution; and
(c) be signed by the members proposing
to move the resolution.
(3) Separate copies of a document setting out
the notice may be used for signing by members if the wording of the notice is
identical in each copy.
(4) The percentage of votes that members have
is to be worked out as at the midnight before the members give the notice.
249O
Company giving notice of members’ resolutions
(1) If a company has been given notice of a
resolution under section 249N, the resolution is to be considered at the
next general meeting that occurs more than 2 months after the notice is given.
(2) The company must give all its members
notice of the resolution at the same time, or as soon as practicable afterwards,
and in the same way, as it gives notice of a meeting.
(3) The company is responsible for the cost
of giving members notice of the resolution if the company receives the notice
in time to send it out to members with the notice of meeting.
(4) The members requesting the meeting are
jointly and individually liable for the expenses reasonably incurred by the
company in giving members notice of the resolution if the company does not
receive the members’ notice in time to send it out with the notice of meeting.
At a general meeting, the company may resolve to meet the expenses itself.
(5) The company need not give notice of the
resolution:
(a) if it is more than 1,000 words
long or defamatory; or
(b) if the members making the request
are to bear the expenses of sending the notice out—unless the members give the
company a sum reasonably sufficient to meet the expenses that it will
reasonably incur in giving the notice.
249P
Members’ statements to be distributed
(1) Members may request a company to give to
all its members a statement provided by the members making the request about:
(a) a resolution that is proposed to
be moved at a general meeting; or
(b) any other matter that may be
properly considered at a general meeting.
(2) The request must be made by:
(a) members with at least 5% of the
votes that may be cast on the resolution; or
(b) at least 100 members who are
entitled to vote at the meeting.
(2A) The regulations may prescribe a different
number of members for the purposes of the application of paragraph (2)(b)
to:
(a) a particular company; or
(b) a particular class of company.
Without limiting this, the regulations may specify the
number as a percentage of the total number of members of the company.
(3) The request must be:
(a) in writing; and
(b) signed by the members making the
request; and
(c) given to the company.
(4) Separate copies of a document setting out
the request may be used for signing by members if the wording of the request is
identical in each copy.
(5) The percentage of votes that members have
is to be worked out as at the midnight before the request is given to the
company.
(6) After receiving the request, the company
must distribute to all its members a copy of the statement at the same time, or
as soon as practicable afterwards, and in the same way, as it gives notice of a
general meeting.
(7) The company is responsible for the cost
of making the distribution if the company receives the statement in time to
send it out to members with the notice of meeting.
(8) The members making the request are
jointly and individually liable for the expenses reasonably incurred by the
company in making the distribution if the company does not receive the
statement in time to send it out with the notice of meeting. At a general
meeting, the company may resolve to meet the expenses itself.
(9) The company need not comply with the
request:
(a) if the statement is more than
1,000 words long or defamatory; or
(b) if the members making the request
are responsible for the expenses of the distribution—unless the members give
the company a sum reasonably sufficient to meet the expenses that it will
reasonably incur in making the distribution.
Division 5—Holding meetings of members
249Q
Purpose
A meeting of a company’s members must be
held for a proper purpose.
249R
Time and place for meetings of members
A meeting of a company’s members must be
held at a reasonable time and place.
249S
Technology
A company may hold a meeting of its
members at 2 or more venues using any technology that gives the members as a
whole a reasonable opportunity to participate.
Note: See section 1322 for the consequences of
a member not being given a reasonable opportunity to participate.
249T
Quorum (replaceable rule—see section 135)
(1) The quorum for a meeting of a company’s
members is 2 members and the quorum must be present at all times during the
meeting.
Note: For single member companies, see section 249B.
(2) In determining whether a quorum is
present, count individuals attending as proxies or body corporate
representatives. However, if a member has appointed more than 1 proxy or
representative, count only 1 of them. If an individual is attending both as a
member and as a proxy or body corporate representative, count them only once.
Note 1: For rights to appoint proxies, see section 249X.
Note 2: For body corporate representatives, see section 250D.
(3) A meeting of the company’s members that
does not have a quorum present within 30 minutes after the time for the meeting
set out in the notice of meeting is adjourned to the date, time and place the
directors specify. If the directors do not specify 1 or more of those things,
the meeting is adjourned to:
(a) if the date is not specified—the
same day in the next week; and
(b) if the time is not specified—the
same time; and
(c) if the place is not specified—the
same place.
(4) If no quorum is present at the resumed
meeting within
30 minutes after the time for the meeting, the meeting is dissolved.
249U
Chairing meetings of members (replaceable
rule—see section 135)
(1) The directors may elect an individual to
chair meetings of the company’s members.
(2) The directors at a meeting of the
company’s members must elect an individual present to chair the meeting (or
part of it) if an individual has not already been elected by the directors to
chair it or, having been elected, is not available to chair it, or declines to
act, for the meeting (or part of the meeting).
(3) The members at a meeting of the company’s
members must elect a member present to chair the meeting (or part of it) if:
(a) a chair has not previously been
elected by the directors to chair the meeting; or
(b) a previously elected chair is not
available, or declines to act, for the meeting (or part of the meeting).
(4) The chair must adjourn a meeting of the
company’s members if the members present with a majority of votes at the
meeting agree or direct that the chair must do so.
249V
Auditor’s right to be heard at general meetings
(1) A company’s auditor is entitled to attend
any general meeting of the company.
Note: Section 250RA imposes on the auditor of a
listed public company an obligation to attend or be represented at the AGM.
(2) The auditor is entitled to be heard at
the meeting on any part of the business of the meeting that concerns the
auditor in their capacity as auditor.
(3) The
auditor is entitled to be heard even if:
(a) the auditor retires at the
meeting; or
(b) the meeting passes a resolution to
remove the auditor from office.
(4) The auditor may authorise a person in
writing as their representative for the purpose of attending and speaking at
any general meeting.
Note 1: At an AGM, members may ask the auditor
questions (see section 250T).
Note 2: For when a company must have an auditor, see
Part 2M.3.
249W Adjourned
meetings
When resolution passed
(1) A resolution passed at a meeting resumed
after an adjournment is passed on the day it was passed.
Business at adjourned meetings (replaceable rule—see section 135)
(2) Only unfinished business is to be transacted
at a meeting resumed after an adjournment
Division 6—Proxies and body corporate representatives
249X
Who can appoint a proxy (replaceable
rule for proprietary companies and mandatory rule for public companies—see
section 135)
(1) A member of a company who is entitled to
attend and cast a vote at a meeting of the company’s members may appoint a
person as the member’s proxy to attend and vote for the member at the meeting.
(1A) The person appointed as the member’s proxy
may be an individual or a body corporate.
Note: A body corporate may appoint a representative
to exercise the powers that the body corporate may exercise as the member’s
proxy, see section 250D.
(2) The appointment may specify the
proportion or number of votes that the proxy may exercise.
(3) Each member may appoint a proxy. If the
member is entitled to cast 2 or more votes at the meeting, they may appoint 2
proxies. If the member appoints 2 proxies and the appointment does not specify
the proportion or number of the member’s votes each proxy may exercise, each
proxy may exercise half of the votes.
(4) Disregard any fractions of votes
resulting from the application of subsection (2) or (3).
249Y
Rights of proxies
Rights of proxies
(1) A proxy appointed to attend and vote for
a member has the same rights as the member:
(a) to speak at the meeting; and
(b) to vote (but only to the extent
allowed by the appointment); and
(c) join in a demand for a poll.
Proxy’s right to vote
(2) If a company has a constitution, the
constitution may provide that a proxy is not entitled to vote on a show of
hands.
Note: Even if the proxy is not entitled to vote on a
show of hands, they may make or join in the demand for a poll.
Effect of member’s presence on proxy’s authority
(3) A company’s constitution (if any) may
provide for the effect that a member’s presence at a meeting has on the
authority of a proxy appointed to attend and vote for the member. However, if
the constitution does not deal with this, a proxy’s authority to speak and vote
for a member at a meeting is suspended while the member is present at the
meeting.
249Z
Company sending appointment forms or lists of proxies must send to all members
(1) If a company sends a member a proxy
appointment form for a meeting or a list of persons willing to act as proxies
at a meeting:
(a) if the member requested the form
or list—the company must send the form or list to all members who ask for it
and who are entitled to appoint a proxy to attend and vote at the meeting; or
(b) otherwise—the company must send
the form or list to all its members entitled to appoint a proxy to attend and
vote at the meeting.
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
250A Appointing
a proxy
(1) An appointment of a proxy is valid if it
is signed, or otherwise authenticated in a manner prescribed by the
regulations, by the member of the company making the appointment and contains
the following information:
(a) the member’s name and address;
(b) the company’s name;
(c) the proxy’s name or the name of
the office held by the proxy;
(d) the meetings at which the
appointment may be used.
An appointment may be a standing one.
(1A) The regulations made for the purposes of subsection (1)
may prescribe different requirements for the authentication of an appointment
given to the company by different means (electronic or otherwise).
(2) If a company has a constitution, the
constitution may provide that an appointment is valid even if it contains only
some of the information required by subsection (1).
(3) An undated appointment is taken to have
been dated on the day it is given to the company.
(6) An appointment does not have to be
witnessed.
(7) A later appointment revokes an earlier
one if both appointments could not be validly exercised at the meeting.
250B
Proxy documents
Documents to be received by company before meeting
(1) For an appointment of a proxy for a
meeting of a company’s members to be effective, the following documents must be
received by the company at least 48 hours before the meeting:
(a) the proxy’s appointment;
(b) if the appointment is signed, or
otherwise authenticated in a manner prescribed by regulations made for the
purposes of subsection 250A(1), by the appointor’s attorney—the authority under
which the appointment was signed or authenticated or a certified copy of the
authority.
Documents received following adjournment of meeting
(2) If a meeting of a company’s members has
been adjourned, an appointment and any authority received by the company at
least 48 hours before the resumption of the meeting are effective for the
resumed part of the meeting.
Receipt of documents
(3) A company receives a document referred to
in subsection (1):
(a) when the document is received at
any of the following:
(i) the company’s
registered office;
(ii) a fax number at the
company’s registered office;
(iii) a place, fax number or
electronic address specified for the purpose in the notice of meeting; and
(b) if the notice of meeting specifies
other electronic means by which a member may give the document—when the
document given by those means is received by the company as prescribed by the
regulations.
Constitution or notice of meeting may provide for
different notification period
(5) The company’s constitution (if any) or
the notice of meeting may reduce the period of 48 hours referred to in subsection (1)
or (2).
250BA
Proxy documents—listed companies
(1) In a notice of meeting for a meeting of
the members of the company, the company:
(a) must specify a place and a fax
number for the purposes of receipt of proxy appointments and proxy appointment
authorities; and
(b) may specify:
(i) an electronic address
for the purposes of receipt of proxy appointments and proxy appointment
authorities; and
(ii) other electronic means
by which a member may give the company a proxy appointment or proxy appointment
authority.
(2) This section only applies to a company
that is listed.
(3) This section applies despite anything in
the company’s constitution.
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.
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.
250C
Validity of proxy vote
Proxy vote valid even if proxy cannot vote as member
(1) A proxy who is not entitled to vote on a
resolution as a member may vote as a proxy for another member who can vote if
their appointment specifies the way they are to vote on the resolution and they
vote that way.
Proxy vote valid even if member dies, revokes
appointment etc. (replaceable rule—see section 135)
(2) Unless the company has received written
notice of the matter before the start or resumption of the meeting at which a
proxy votes, a vote cast by the proxy will be valid even if, before the proxy
votes:
(a) the appointing member dies; or
(b) the member is mentally
incapacitated; or
(c) the member revokes the proxy’s
appointment; or
(d) the member revokes the authority
under which the proxy was appointed by a third party; or
(e) the member transfers the share in
respect of which the proxy was given.
Note: A proxy’s authority to vote is suspended while
the member is present at the meeting (see subsection 249Y(3)).
250D
Body corporate representative
(1) A body corporate may appoint an
individual as a representative to exercise all or any of the powers the body
corporate may exercise:
(a) at meetings of a company’s
members; or
(b) at meetings of creditors or
debenture holders; or
(c) relating to resolutions to be
passed without meetings; or
(d) in the capacity of a member’s
proxy appointed under subsection 249X(1).
The appointment may be a standing one.
(2) The appointment may set out restrictions
on the representative’s powers. If the appointment is to be by reference to a
position held, the appointment must identify the position.
(3) A body corporate may appoint more than 1
representative but only 1 representative may exercise the body’s powers at any
one time.
(4) Unless otherwise specified in the
appointment, the representative may exercise, on the body corporate’s behalf,
all of the powers that the body could exercise at a meeting or in voting on a
resolution.
Note: For resolutions of members without meetings,
see sections 249A and 249B.
Division 7—Voting at meetings of members
250E
How many votes a member has (replaceable
rule—see section 135)
Company with share capital
(1) Subject to any rights or restrictions
attached to any class of shares, at a meeting of members of a company with a
share capital:
(a) on a show of hands, each member
has 1 vote; and
(b) on a poll, each member has 1 vote
for each share they hold.
Note: Unless otherwise specified in the appointment,
a body corporate representative has all the powers that a body corporate has as
a member (including the power to vote on a show of hands).
Company without share capital
(2) Each member of a company that does not
have a share capital has 1 vote, both on a show of hands and a poll.
Chair’s casting vote
(3) The chair has a casting vote, and also,
if they are a member, any vote they have in their capacity as a member.
Note 1: The chair may be precluded from voting, for
example, by a conflict of interest.
Note 2: For rights to appoint proxies, see section 249X.
250F
Jointly held shares (replaceable
rule—see section 135)
If a share is held jointly and more than
1 member votes in respect of that share, only the vote of the member whose name
appears first in the register of members counts.
250G
Objections to right to vote (replaceable
rule—see section 135)
A challenge to a right to vote at a
meeting of a company’s members:
(a) may only be made at the meeting;
and
(b) must be determined by the chair,
whose decision is final.
250H
Votes need not all be cast in the same way
On a poll a person voting who is
entitled to 2 or more votes:
(a) need not cast all their votes; and
(b) may cast their votes in different
ways.
Note: For proxy appointments that specify the way
the proxy is to vote on a particular resolution, see subsection 250BB(1).
250J
How voting is carried out (replaceable
rule—see section 135)
(1) A resolution put to the vote at a meeting
of a company’s members must be decided on a show of hands unless a poll is
demanded.
(1A) Before a vote is taken the chair must
inform the meeting whether any proxy votes have been received and how the proxy
votes are to be cast.
(2) On a show of hands, a declaration by the
chair is conclusive evidence of the result, provided that the declaration
reflects the show of hands and the votes of the proxies received. Neither the
chair nor the minutes need to state the number or proportion of the votes
recorded in favour or against.
Note: Even though the chair’s declaration is
conclusive of the voting results, the members present may demand a poll (see
paragraph 250L(3)(c)).
250K
Matters on which a poll may be demanded
(1) A poll may be demanded on any resolution.
(2) If a company has a constitution, the
constitution may provide that a poll cannot be demanded on any resolution
concerning:
(a) the election of the chair of a
meeting; or
(b) the adjournment of a meeting.
(3) A demand for a poll may be withdrawn.
250L
When a poll is effectively demanded
(1) At a meeting of a company’s members, a
poll may be demanded by:
(a) at least 5 members entitled to
vote on the resolution; or
(b) members with at least 5% of the
votes that may be cast on the resolution on a poll; or
(c) the chair.
Note: A proxy may join in the demand for a poll (see
paragraph 249Y(1)(c)).
(2) If a company has a constitution, the
constitution may provide that fewer members or members with a lesser percentage
of votes may demand a poll.
(3) The poll may be demanded:
(a) before a vote is taken; or
(b) before the voting results on a
show of hands are declared; or
(c) immediately after the voting
results on a show of hands are declared.
(4) The percentage of votes that members have
is to be worked out as at the midnight before the poll is demanded.
250M
When and how polls must be taken (replaceable
rule—see section 135)
(1) A poll demanded on a matter other than
the election of a chair or the question of an adjournment must be taken when
and in the manner the chair directs.
(2) A poll on the election of a chair or on
the question of an adjournment must be taken immediately.
Division 8—AGMs of public companies
250N
Public company must hold AGM
(1) A public company must hold an annual
general meeting (AGM) within 18 months after its registration.
(2) A public company must hold an AGM at
least once in each calendar year and within 5 months after the end of its
financial year.
Note: An AGM held to satisfy this subsection may
also satisfy
subsection (1).
(2A) An offence based on subsection (1) or
(2) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(3) An AGM is to be held in addition to any
other meetings held by a public company in the year.
Note 1: The company’s annual financial report,
directors’ report and auditor’s report must be laid before the AGM (see section 317).
Note 2: The rules in sections 249C‑250M apply to
an AGM.
(4) A public company that has only 1 member
is not required to hold an AGM under this section.
250P
Extension of time for holding AGM
(1) A public company may lodge an application
with ASIC to extend the period within which section 250N requires the
company to hold an AGM.
(2) If the company applies before the end of
the period within which the company would otherwise be required to hold an AGM,
ASIC may extend the period in writing. ASIC must specify the period of the
extension.
(3) A company granted an extension under subsection (2)
must hold its AGM within the extended period.
(4) ASIC may impose conditions on the
extension and the company must comply with those conditions.
(5) An offence based on subsection (3)
or (4) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
250PAA
Exemptions by ASIC—class orders relating to externally‑administered companies
(1) ASIC may, by legislative instrument, make
an order exempting any of the following from section 250N:
(a) a specified class of companies
that are being wound up;
(b) a specified class of companies
under administration;
(c) a specified class of companies
subject to deeds of company arrangement.
(2) The order may be:
(a) unconditional; or
(b) subject to one or more specified
conditions.
(3) ASIC must cause a copy of the order to be
published in the Gazette.
250PAB
Exemptions by ASIC—individual externally‑administered companies
(1) The liquidator of a company that is being
wound up may lodge an application with ASIC to exempt the company from
section 250N.
(2) The administrator of a company under
administration may lodge an application with ASIC to exempt the company from
section 250N.
(3) The administrator of a deed of company
arrangement may lodge an application with ASIC to exempt the company from
section 250N.
(4) If an application is lodged under
subsection (1), (2) or (3), ASIC may, by writing, exempt the company from
section 250N.
(5) The exemption may be:
(a) unconditional; or
(b) subject to one or more specified conditions.
(6) ASIC must cause a copy of the exemption
to be published in the Gazette.
250PA
Written questions to auditor submitted by members of listed company before AGM
Member may submit question
(1) A member of a listed company who is
entitled to cast a vote at the AGM may submit a written question to the auditor
under this section if the question is relevant to:
(a) the content of the auditor’s
report to be considered at the AGM; or
(b) the conduct of the audit of the
annual financial report to be considered at the AGM.
The member submits the question to the auditor under this
subsection by giving the question to the listed company no later than the fifth
business day before the day on which the AGM is held.
(2) Despite the question being one that is
addressed to the auditor, the listed company may:
(a) examine the contents of the
question; and
(b) make a copy of the question.
Company to pass question on to auditor
(3) The listed company must, as soon as
practicable after the question is received by the company, pass the question on
to the auditor. The company must pass the question on to the auditor even if
the company believes the question is not relevant to the matters specified in paragraph (1)(a)
and (b).
Contravention by individual auditor
(4) If the auditor is an individual auditor,
the auditor contravenes this subsection if the auditor does not prepare, and
give to the listed company, a document (the question list) that
sets out the questions that:
(a) the listed company has passed on
to the auditor; and
(b) the auditor considers to be
relevant to the matters specified in paragraphs (1)(a) and (b);
as soon as practicable after the end of the time for
submitting questions under subsection (1) and a reasonable time before the
AGM.
(5) An offence based on subsection (4)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
Contravention by lead auditor
(6) A person contravenes this subsection if:
(a) the auditor is an audit firm or
audit company; and
(b) the person is the lead auditor for
the audit; and
(c) the person does not prepare, and
give to the listed company, a document (the question list) that
sets out the questions that:
(i) the listed company has
passed on to the auditor; and
(ii) the person considers
to be relevant to the matters specified in paragraphs (1)(a) or (b);
as soon as practicable after the
end of the time for submitting questions under subsection (1) and a
reasonable time before the AGM.
(7) An offence based on subsection (6)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
Certain questions do not need to be included in
question list
(8) A question need not be included in the
question list under subsection (4) or (6) if:
(a) the question list includes a
question that is the same in substance as that question (even if it is
differently expressed); or
(b) it is not practicable to include
the question in the question list, or to decide whether to include the question
in the question list, because of the time when the question is passed on to the
auditor.
Listed company to make question list available at AGM
(9) The listed company must, at or before the
start of the AGM, make copies of the question list reasonably available to the
members attending the AGM.
250R
Business of AGM
(1) The
business of an AGM may include any of the following, even if not referred to in
the notice of meeting:
(a) the consideration of the annual
financial report, directors’ report and auditor’s report;
(b) the election of directors;
(c) the appointment of the auditor;
(d) the fixing of the auditor’s
remuneration.
Advisory resolution for adoption of remuneration report
(2) At a listed company’s AGM, a resolution
that the remuneration report be adopted must be put to the vote.
Note: Under paragraph 249L(2)(a), the notice of the
AGM must inform members that this resolution will be put at the AGM.
(3) The vote on the resolution is advisory
only and does not bind the directors or the company.
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.
250RA
Auditor required to attend listed company’s AGM
Contravention by individual auditor
(1) If a listed company’s auditor for a
financial year is an individual auditor, the auditor contravenes this
subsection if:
(a) the auditor does not attend the
company’s AGM at which the audit report for that financial year is considered;
and
(b) the auditor does not arrange to be
represented, at that AGM, by a person who:
(i) is a suitably
qualified member of the audit team that conducted the audit; and
(ii) is in a position to
answer questions about the audit.
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
Contravention by lead auditor
(3) A person contravenes this subsection if:
(a) a listed company’s auditor for a
financial year is an audit firm or an audit company; and
(b) the person is the lead auditor for
the audit; and
(c) the person is not represented, at
the AGM at which the audit report for that financial year is considered, by a
person who:
(i) is a suitably
qualified member of the audit team that conducted the audit; and
(ii) is in a position to
answer questions about the audit.
(4) An offence based on subsection (3)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
250S
Questions and comments by members on company management at AGM
(1) The chair of an AGM must allow a
reasonable opportunity for the members as a whole at the meeting to ask
questions about or make comments on the management of the company.
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
250SA
Listed company—remuneration report
At a listed company’s AGM, the chair
must allow a reasonable opportunity for the members as a whole to ask questions
about, or make comments on, the remuneration report. This section does not
limit section 250S.
250T
Questions by members of auditors at AGM
(1) If the company’s auditor or their
representative is at the meeting, the chair of an AGM must:
(a) allow a reasonable opportunity for
the members as a whole at the meeting to ask the auditor or the auditor’s
representative questions relevant to:
(i) the conduct of the
audit; and
(ii) the preparation and
content of the auditor’s report; and
(iii) the accounting
policies adopted by the company in relation to the preparation of the financial
statements; and
(iv) the independence of the
auditor in relation to the conduct of the audit; and
(b) allow a reasonable opportunity for
the auditor or their representative to answer written questions submitted to
the auditor under section 250PA.
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(3) If :
(a) the company’s auditor or their
representative is at the meeting; and
(b) the auditor has prepared a written
answer to a written question submitted to the auditor under section 250PA;
the Chair of the AGM may permit the auditor or their
representative to table the written answer to the written question.
(4) The listed company must make the written
answer tabled under subsection (3) reasonably available to members as soon
as practicable after the AGM.
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).
Part 2G.3—Minutes and members’ access to minutes
251A
Minutes
(1) A company must keep minute books in which
it records within 1 month:
(a) proceedings and resolutions of
meetings of the company’s members; and
(b) proceedings and resolutions of
directors’ meetings (including meetings of a committee of directors); and
(c) resolutions passed by members
without a meeting; and
(d) resolutions passed by directors
without a meeting; and
(e) if the company is a proprietary
company with only 1 director—the making of declarations by the director.
Note: For resolutions and declarations without meetings,
see sections 248A, 248B, 249A and 249B.
(2) The company must ensure that minutes of a
meeting are signed within a reasonable time after the meeting by 1 of the
following:
(a) the chair of the meeting;
(b) the chair of the next meeting.
(3) The company must ensure that minutes of
the passing of a resolution without a meeting are signed by a director within a
reasonable time after the resolution is passed.
(4) The director of a proprietary company
with only 1 director must sign the minutes of the making of a declaration by
the director within a reasonable time after the declaration is made.
(5) A company must keep its minute books at:
(a) its registered office; or
(b) its principal place of business in
this jurisdiction; or
(c) another place in this jurisdiction
approved by ASIC.
(5A) An offence based on subsection (1),
(2), (3), (4) or (5) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(6) A minute that is so recorded and signed
is evidence of the proceeding, resolution or declaration to which it relates,
unless the contrary is proved.
251AA
Disclosure of proxy votes—listed companies
(1) A company must record in the minutes of a
meeting, in respect of each resolution in the notice of meeting, the total
number of proxy votes exercisable by all proxies validly appointed and:
(a) if the resolution is decided by a
show of hands—the total number of proxy votes in respect of which the
appointments specified that:
(i) the proxy is to vote
for the resolution; and
(ii) the proxy is to vote
against the resolution; and
(iii) the proxy is to
abstain on the resolution; and
(iv) the proxy may vote at
the proxy’s discretion; and
(b) if the resolution is decided on a
poll—the information specified in paragraph (a) and the total number of
votes cast on the poll:
(i) in favour of the
resolution; and
(ii) against the
resolution; and
(iii) abstaining on the
resolution.
(2) A company that must notify the operator
of each market on which financial products of the company are listed of a
resolution passed by members at a meeting of the company must, at the same
time, give the relevant market operator the information specified in subsection (1).
(3) This section only applies to a company
that is listed.
(4) This section applies despite anything in
the company’s constitution.
251B
Members’ access to minutes
(1) A company must ensure that the minute
books for the meetings of its members and for resolutions of members passed
without meetings are open for inspection by members free of charge.
(2) A member
of a company may ask the company in writing for a copy of:
(a) any minutes of a meeting of the
company’s members or an extract of the minutes; or
(b) any minutes of a resolution passed
by members without a meeting.
(3) If the company does not require the
member to pay for the copy, the company must send it:
(a) within 14 days after the member
asks for it; or
(b) within any longer period that ASIC
approves.
(4) If the company requires payment for the
copy, the company must send it:
(a) within 14 days after the company
receives the payment; or
(b) within any longer period that ASIC
approves.
The amount of any payment the company requires cannot
exceed the prescribed amount.
(5) An offence based on subsection (1),
(3) or (4) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
Part 2G.4—Meetings of members of registered managed investment schemes
Division 1—Who may call meetings of members
252A
Calling of meetings of members by responsible entity
The responsible entity of a registered
scheme may call a meeting of the scheme’s members.
252B
Calling of meetings of members by responsible entity when requested by members
(1) The responsible entity of a registered
scheme must call and arrange to hold a meeting of the scheme’s members to
consider and vote on a proposed special or extraordinary resolution on the
request of:
(a) members with at least 5% of the
votes that may be cast on the resolution; or
(b) at least 100 members who are
entitled to vote on the resolution.
(1A) The regulations may prescribe a different
number of members for the purposes of the application of paragraph (1)(b)
to:
(a) a particular scheme; or
(b) a particular class of scheme.
Without limiting this, the regulations may specify the
number as a percentage of the total number of members of the scheme.
(2) The request must:
(a) be in writing; and
(b) state any resolution to be
proposed at the meeting; and
(c) be signed by the members proposing
to move the resolution.
(3) The request may be accompanied by a
statement about the proposed resolution provided by the members making the
request.
(4) Separate copies of a document setting out
the request and statement (if any) may be used for signing by members if the
wording of the request and statement (if any) is identical in each copy.
(5) The percentage of the votes that members
have is to be worked out as at the midnight before the request is given to the
responsible entity.
(6) The responsible entity must call the
meeting within 21 days after the request is given to it. The meeting is to be
held not later than 2 months after the request is given to the responsible
entity.
(7) The responsible entity must give to each
of the members a copy of the proposed resolution and statement (if any) at the
same time, or as soon as practicable afterwards, as it gives notice of the
meeting. The responsible entity must distribute the copies in the same way in
which it gives notice of the meeting.
(8) The responsible entity does not have to
distribute a copy of the resolution or statement if either is more than 1,000
words long or defamatory.
(9) The responsible entity is responsible for
the expenses of calling and holding the meeting and making the distribution.
The responsible entity may meet those expenses from the scheme’s assets.
252C
Failure of responsible entity to call meeting of the scheme’s members
(1) Members with more than 50% of the votes
carried by interests held by the members who make a request under section 252B
may call and arrange to hold a meeting of the scheme’s members and distribute
the statement (if any) if the responsible entity does not do so within 21 days
after the request is given to the responsible entity.
(2) The meeting must be called and the
statement is to be distributed in the same way—so far as is possible—in which
meetings of the scheme’s members may be called by the responsible entity and
information is distributed to members by the responsible entity. The meeting
must be held not later than 3 months after the request is given to the
responsible entity.
(3) To call the meeting the members
requesting the meeting may ask the responsible entity under section 173
for a copy of the register of members. Despite paragraph 173(3)(b), the
responsible entity must give the members requesting the meeting the copy of the
register without charge.
(4) The responsible entity must pay the
reasonable expenses the members incurred because the responsible entity failed
to call and arrange to hold the meeting and to make the distribution (if any).
The responsible entity must not pay those expenses from the scheme’s assets.
(5) An offence based on subsection (3)
or (4) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
252D
Calling of meetings of members by members
(1) Members of a registered scheme who hold
interests carrying at least 5% of the votes that may be cast at a meeting of
the scheme’s members may call and arrange to hold a meeting of the scheme’s
members to consider and vote on a proposed special resolution or a proposed
extraordinary resolution. The members calling the meeting must pay the expenses
of calling and holding the meeting.
(2) The meeting must be called in the same
way—so far as is possible—in which meetings of the scheme’s members may be
called by the responsible entity.
(3) The percentage of the votes carried by
interests that members hold is to be worked out as at the midnight before the meeting is called.
252E
Calling of meetings of members by the Court
(1) The Court may order a meeting of a
registered scheme’s members to be called to consider and vote on a proposed
special or extraordinary resolution if it is impracticable to call the meeting
in any other way.
(2) The Court may make the order on
application by:
(a) the responsible entity; or
(b) any member of the scheme who would
be entitled to vote at the meeting.
Note: For the directions the Court may give for
calling, holding or conducting a meeting it has ordered be called, see section 1319.
Division 2—How to call meetings of members
252F
Amount of notice of meetings
At least 21 days notice must be given of
a meeting of the members of a registered scheme. However, the scheme’s
constitution may specify a longer minimum period of notice.
252G
Notice of meetings of members to members, directors and auditors
Notice to members, directors and auditors individually
(1) Written notice of a meeting of a
registered scheme’s members must be given to:
(a) each member of the scheme entitled
to vote at the meeting; and
(b) each director of the responsible
entity; and
(c) the auditor of the scheme; and
(d) the auditor of the scheme
compliance plan.
If an interest is held jointly, notice need only be given
to 1 of the members.
Notice to joint members
(2) Unless the scheme’s constitution provides
otherwise, notice to joint members must be given to the joint member named
first in the register of members.
How notice is given
(3) Unless the scheme’s constitution provides
otherwise, the responsible entity may give notice of the meeting to a member:
(a) personally; or
(b) by sending it by post to the
address for the member in the register of members or an alternative address (if
any) nominated by the member; or
(c) by sending it to the fax number or
electronic address (if any) nominated by the member.
Note: A defect in the notice given may not
invalidate a meeting (see section 1322).
When notice by post or fax is given
(4) Unless the scheme’s constitution provides
otherwise, a notice of meeting sent by post is taken to be given 3 days after
it is posted. A notice of meeting sent by fax, or other electronic means, is
taken to be given on the business day after it is sent.
252H
Auditors entitled to other communications
(1) The responsible entity of a registered
scheme must give the auditor of the scheme and the auditor of the scheme
compliance plan any other communications relating to the meeting that a member
of the scheme is entitled to receive.
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
252J
Contents of notice of meetings of members
A notice of a meeting of a registered
scheme’s members must:
(a) set out the place, date and time
for the meeting (and, if the meeting is to be held in 2 or more places, the
technology that will be used to facilitate this); and
(b) state the general nature of the
meeting’s business; and
(c) if a special or extraordinary resolution
is to be proposed at the meeting—set out an intention to propose the special or
extraordinary resolution and state the resolution; and
(d) contain a statement setting out
the following information:
(i) that the member has a
right to appoint a proxy;
(ii) that the proxy does
not need to be a member of the registered scheme;
(iii) that if the member
appoints 2 proxies the member may specify the proportion or number of votes the
proxy is appointed to exercise.
Note: There may be other requirements for disclosure
to members.
252K
Notice of adjourned meetings
When a meeting is adjourned, new notice
of the adjourned meeting must be given if the meeting is adjourned for 1 month
or more.
Division 3—Members’ rights to put resolutions etc. at meetings of
members
252L
Members’ resolutions
(1) The following members of a registered
scheme may give the responsible entity notice of a resolution that they propose
to move at a meeting of the scheme’s members:
(a) members with at least 5% of the
votes that may be cast on the resolution; or
(b) at least 100 members who are
entitled to vote at a meeting of the scheme’s members.
(1A) The regulations may prescribe a different
number of members for the purposes of the application of paragraph (1)(b)
to:
(a) a particular scheme; or
(b) a particular class of scheme.
Without limiting this, the regulations may specify the
number as a percentage of the total number of members of the scheme.
(1B) The resolution must be:
(a) a special resolution; or
(b) an extraordinary resolution; or
(c) a resolution to remove the
responsible entity of a scheme that is listed and choose a new responsible
entity.
(2) The notice must:
(a) be in writing; and
(b) set out the wording of the
proposed resolution; and
(c) be signed by the members giving
the notice.
(3) Separate copies of a document setting out
the notice may be used for signing by members if the wording of the notice is
identical in each copy.
(4) The percentage of the votes that members
have is to be worked out as at the midnight before the members give the notice.
252M
Responsible entity giving notice of members’ resolutions
(1) If a responsible entity has been given
notice of a resolution under section 252L, the resolution is to be
considered at the next meeting of the scheme’s members that occurs more than 2
months after the notice is given.
(2) The responsible entity must give all the
members of the scheme notice of the resolution at the same time, or as soon as
practicable afterwards, and in the same way, as it gives notice of a meeting.
(3) The responsible entity is responsible for
the cost of giving members notice of the resolution if the responsible entity
receives the notice in time to send it out to members with the notice of
meeting.
(4) The members requesting the meeting are
jointly and individually liable for the expenses reasonably incurred by the
responsible entity in giving members notice of the resolution if the
responsible entity does not receive the members’ notice in time to send it out
with the notice of meeting. A resolution may be passed at a meeting of the
scheme’s members that the responsible entity is to meet the expenses out of the
scheme’s assets.
(5) The responsible entity need not give
notice of the resolution:
(a) if it is more than 1,000 words
long or defamatory; or
(b) if the members making the request
are to bear the expenses of sending the notice out—unless the members give the
responsible entity a sum reasonably sufficient to meet the expenses that it
will reasonably incur in giving the notice.
252N
Members’ statements to be distributed
(1) Members may request a responsible entity
to give to all its members a statement provided by the members making the
request about:
(a) a resolution that is proposed to
be moved at a meeting of the scheme’s members; or
(b) any other matter that may be
properly considered at a meeting of the scheme’s members.
(2) The
request must be made by:
(a) members with at least 5% of the
votes that may be cast on the resolution; or
(b) at least 100 members who are
entitled to vote at the meeting.
(2A) The regulations may prescribe a different
number of members for the purposes of the application of paragraph (2)(b)
to:
(a) a particular scheme; or
(b) a particular class of scheme.
Without limiting this, the regulations may specify the
number as a percentage of the total number of members of the scheme.
(3) The request must be:
(a) in writing; and
(b) signed by the members making the
request; and
(c) given to the responsible entity.
(4) Separate copies of a document setting out
the request may be used for signing by members if the wording of the request is
identical in each copy.
(5) The percentage of the votes that members
have is to be worked out as at the midnight before the request is given to the
responsible entity.
(6) After receiving the request, the
responsible entity must distribute to all the members of the scheme a copy of
the statement at the same time, or as soon as practicable afterwards, and in
the same way, as it gives notice of a meeting.
(7) The responsible entity is responsible for
the cost of making the distribution if the responsible entity receives the
statement in time to send it out to members with the notice of meeting.
(8) The members making the request are
jointly and individually liable for the expenses reasonably incurred by the
responsible entity in making the distribution if the responsible entity does
not receive the statement in time to send it out with the notice of meeting. A
resolution may be passed at a meeting of the scheme’s members that the
responsible entity is to meet the expenses out of the scheme’s assets.
(9) The
responsible entity need not comply with the request:
(a) if the statement is more than
1,000 words long or defamatory; or
(b) if the members making the request
are responsible for the expenses of the distribution—unless the members give
the company a sum reasonably sufficient to meet the expenses that it will
reasonably incur in making the distribution.
Division 4—Holding meetings of members
252P
Time and place for meetings of members
A meeting of a registered scheme’s
members must be held at a reasonable time and place.
252Q
Technology
A responsible entity of a registered
scheme may hold a meeting of the scheme’s members at 2 or more venues using any
technology that gives the members as a whole a reasonable opportunity to
participate.
Note: See section 1322 for the consequences of
members not being given a reasonable opportunity to participate.
252R
Quorum
(1) This section applies to a registered
scheme subject to the provisions of the scheme’s constitution.
(2) The quorum for a meeting of a registered
scheme’s members is 2 members and the quorum must be present at all times
during the meeting.
(3) In determining whether a quorum is
present, count individuals attending as proxies or body corporate
representatives. However, if a member has appointed more than 1 proxy or
representative, count only 1 of them. If an individual is attending both as a
member and as a proxy or body corporate representative, count them only once.
Note 1: For rights to appoint proxies, see section 252V.
Note 2: For body corporate representatives, see section 253B.
(4) A meeting of the scheme’s members that
does not have a quorum present within 30 minutes after the time for the start
of the meeting set out in the notice of meeting is adjourned to the date, time
and place the responsible entity specifies. If the responsible entity does not
specify 1 or more of those things, the meeting is adjourned to:
(a) if the date is not specified—the
same day in the next week; and
(b) if
the time is not specified—the same time; and
(c) if the place is not specified—the
same place.
(5) If no quorum is present at the resumed
meeting within 30 minutes after the time for the start of the meeting, the
meeting is dissolved.
252S
Chairing meetings of members
(1) The responsible entity may, in writing,
appoint an individual to chair a meeting called under section 252A or
252B.
(2) The members present at a meeting called
under section 252A or 252B must elect a member present to chair the
meeting (or part of it) if:
(a) a chair has not previously been
appointed to chair the meeting; or
(b) a previously appointed chair is
not available, or declines to act, for the meeting (or part of the meeting).
(3) The members present at a meeting called
under section 252C, 252D or 252E must elect a member present to chair the
meeting. This is not so if the meeting is called under section 252E and
the Court has directed otherwise under section 1319.
252T
Auditors’ right to be heard at meetings of members
(1) The auditor of a registered scheme and
the auditor of the scheme compliance plan are entitled to attend any meeting of
the scheme’s members.
(2) An auditor is entitled to be heard at the
meeting on any part of the business of the meeting that concerns the auditor in
their capacity as auditor.
(3) An auditor may authorise a person in
writing as their representative for the purpose of attending and speaking at
any meeting of the scheme’s members.
252U
Adjourned meetings
(1) A resolution passed at a meeting resumed
after an adjournment is passed on the day it was passed.
(2) Only unfinished business is to be
transacted at a meeting resumed after an adjournment.
Division 5—Proxies and body corporate representatives
252V
Who can appoint a proxy
(1) A member of a registered scheme who is
entitled to attend and cast a vote at a meeting of the scheme’s members may
appoint a person as the member’s proxy to attend and vote for the member at the
meeting.
(2) The appointment may specify the
proportion or number of votes that the proxy may exercise.
(3) A member may appoint 1 or 2 proxies. If
the member appoints 2 proxies and the appointment does not specify the
proportion or number of the member’s votes each proxy may exercise, each proxy
may exercise half of the votes.
(4) Disregard any fractions of votes
resulting from the application of subsection (2) or (3).
252W
Rights of proxies
Rights of proxies
(1) A proxy appointed to attend and vote for
a member has the same rights as the member:
(a) to speak at the meeting; and
(b) to vote (but only to the extent
allowed by the appointment).
Proxy’s right to vote
(2) A registered scheme’s constitution (if
any) may provide that a proxy is not entitled to vote on a show of hands.
Note: Even if the proxy is not entitled to vote on a
show of hands, they may make or join in the demand for a poll (see section 253L).
Effect of member’s presence on proxy’s authority
(3) A registered scheme’s constitution (if
any) may provide for the effect that a member’s presence at a meeting has on
the authority of a proxy appointed to attend and vote for the member. However,
if the constitution does not make such provision, a proxy’s authority to speak
and vote for a member at a meeting is suspended while the member is present at
the meeting.
252X
Responsible entity sending appointment forms or lists of proxies must send to
all members
(1) If the responsible entity of a registered
scheme sends a member a proxy appointment form for a meeting or a list of
persons willing to act as proxies at a meeting:
(a) if the member requested the form
or list—the responsible entity must send the form or list to all members who
ask for it and who are entitled to appoint a proxy to attend and vote at the
meeting; or
(b) otherwise—the responsible entity
must send the form or list to all its members entitled to appoint a proxy to
attend and vote at the meeting.
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
252Y
Appointing a proxy
(1) An appointment of a proxy is valid if it
is signed by the member of the registered scheme making the appointment and
contains the following information:
(a) the member’s name and address;
(b) the scheme’s name;
(c) the proxy’s name or the name of
the office held by the proxy;
(d) the meetings at which the
appointment may be used.
An appointment may be a standing one
(2) A registered scheme’s constitution may
provide that an appointment is valid even if it contains only some of the
information required by subsection (1).
(3) An undated appointment is taken to have
been dated on the day it is given to the responsible entity.
(4) An
appointment 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—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 a 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: The scheme’s constitution may provide that a
proxy is not entitled to vote on a show of hands (see subsection 252W(2)).
(5) A person who contravenes subsection (4)
is guilty of an offence, but only if their appointment as a proxy resulted from
the responsible entity sending to members:
(a) a list of persons willing to act
as proxies; or
(b) a proxy appointment form holding
the person out as being willing to act as a proxy.
(5A) An offence based on subsection (5) is
an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(6) An appointment does not have to be
witnessed.
(7) A later appointment revokes an earlier
one if both appointments could not be validly exercised at the meeting.
252Z
Proxy documents
Section applies subject to scheme’s constitution
(1) Subsections (2), (3) and (4) apply
to a registered scheme subject to the provisions of the scheme’s constitution.
Documents to be received by responsible entity before
meeting
(2) For an appointment of a proxy for a
meeting of the scheme’s members to be effective, the following documents must
be received by the responsible entity at least 48 hours before the meeting:
(a) the proxy’s appointment
(b) if the appointment is signed by
the appointor’s attorney—the authority under which the appointment was signed
or a certified copy of the authority.
Documents received following adjournment of meeting
(3) If a meeting of the scheme’s members has
been adjourned, an appointment and any authority received by the responsible
entity at least 48 hours before the resumption of the meeting are effective for
the resumed part of the meeting.
Receipt of documents
(3A) A responsible entity receives an
appointment authority when it is received at any of the following:
(a) the responsible entity’s
registered office;
(b) a fax number at the responsible
entity’s registered office;
(c) a place, fax number or electronic
address specified for the purpose in the notice of meeting.
Ineffective appointments of fax or electronic
notification
(4) An appointment of a proxy is ineffective
if:
(a) the responsible entity receives either
or both the appointment or authority at a fax number or electronic address; and
(b) a requirement (if any) in the
notice of meeting that:
(i) the transmission be
verified in a way specified in the notice; or
(ii) the proxy produce the
appointment and authority (if any) at the meeting;
is not complied with.
Constitution or notice of meeting may provide for
different notification period
(5) The scheme’s constitution or the notice
of meeting may reduce the period of 48 hours referred to in subsection (2)
or (3).
253A
Validity of proxy vote
Proxy vote valid even if member dies, revokes
appointment etc.
(1) Unless the responsible entity has
received written notice of the matter before the start or resumption of the
meeting at which a proxy votes, a vote cast by the proxy will be valid even if,
before the proxy votes:
(a) the appointing member dies; or
(b) the member is mentally
incapacitated; or
(c) the member revokes the proxy’s
appointment; or
(d) the member revokes the authority
under which the proxy was appointed by a third party; or
(e) the member transfers the interest
in respect of which the proxy was given.
This subsection applies to a registered scheme subject to
the provisions of the scheme’s constitution.
Note: A proxy’s authority to vote is suspended while
the member is present at the meeting (see subsection 252W(3)).
Proxy vote valid even if proxy cannot vote as member
(2) A proxy who is not entitled to vote on a
resolution as a member may vote as a proxy for another member who can vote if
their appointment specifies the way they are to vote on the resolution and they
vote that way.
253B
Body corporate representative
(1) A body corporate may appoint an
individual as a representative to exercise all or any of its powers at a
meeting of a registered scheme’s members. The appointment may be a standing
one.
(2) The appointment must set out what the
representative is appointed to do and may set out restrictions on the
representative’s powers. If the appointment is to be by reference to a position
held, the appointment must identify the position.
(3) A body corporate may appoint more than 1
representative but only 1 representative may exercise the body’s powers at any
one time.
(4) Unless otherwise specified in the
appointment, the representative may exercise, on the body corporate’s behalf,
all of the powers that the body could exercise at a meeting or in voting on a
resolution.
Division 6—Voting at meetings of members
253C
How many votes a member has
(1) On a show of hands, each member of a
registered scheme has 1 vote.
(2) On a poll, each member of the scheme has
1 vote for each dollar of the value of the total interests they have in the
scheme.
Note 1: For rights to appoint proxies, see section 252V.
Note 2: Unless otherwise specified in the appointment,
a body corporate representative has all the powers that a body corporate has as
a member (including the power to vote on a show of hands).
253D
Jointly held interests
If an interest in a registered scheme is
held jointly and more than 1 member votes in respect of that interest, only the
vote of the member whose name appears first in the register of members counts.
253E
Responsible entity and associates cannot vote if interested in resolution
The responsible entity of a registered
scheme and its associates are not entitled to vote their interest on a
resolution at a meeting of the scheme’s members if they have an interest in the
resolution or matter other than as a member. However, if the scheme is listed,
the responsible entity and its associates are entitled to vote their interest
on resolutions to remove the responsible entity and choose a new responsible
entity.
Note: The responsible entity and its associates may
vote as proxies if their appointments specify the way they are to vote and they
vote that way (see subsection 253A(2)).
253F
How to work out the value of an interest
The value of an interest in a registered
scheme is:
(a) if it is quoted on a prescribed
financial market—the last sale price on that market on the trading day
immediately before the day on which the poll is taken; or
(b) if it is not quoted on a
prescribed financial market and the scheme is liquid and has a withdrawal
provision in its constitution—the amount that would be paid for the interest
under that provision on the business day immediately before the day on which
the poll is taken; or
(c) in any other case—the amount that
the responsible entity determines in writing to be the price that a willing but
not anxious buyer would pay for the interest if it was sold on the business day
immediately before the day on which the poll is taken.
253G
Objections to a right to vote
A challenge to a right to vote at a
meeting of members of a registered scheme:
(a) may only be made at the meeting;
and
(b) must be determined by the chair,
whose decision is final.
253H
Votes need not all be cast in the same way
On a poll a person voting who is
entitled to 2 or more votes:
(a) need not cast all their votes; and
(b) may cast their votes in different
ways.
Note: For proxy appointments that specify the proxy
is to vote on a particular resolution, see subsection 252Y(4).
253J
How voting is carried out
(1) A special or extraordinary resolution put
to the vote at a meeting of a registered scheme’s members must be decided on a
poll.
(2) Any other resolution put to the vote at a
meeting of the scheme’s members must be decided on a show of hands unless a
poll is demanded. The resolution is passed on a poll if it has been passed by
at least 50% of the votes cast by members entitled to vote on the resolution.
(3) On a show of hands, a declaration by the
chair is conclusive evidence of the result. Neither the chair nor the minutes
need to state the number or proportion of the votes recorded in favour or
against.
Note: Even though the chair’s declaration is
conclusive of the voting results, the members present may demand a poll (see
paragraph 253L(3)(c)).
253K
Matters on which a poll may be demanded
(1) A poll may be demanded on any resolution.
(2) A registered scheme’s constitution may
provide that a poll cannot be demanded on any resolution concerning:
(a) the election of the chair of a
meeting; or
(b) the adjournment of a meeting.
(3) A demand for a poll may be withdrawn.
253L
When a poll is effectively demanded
(1) At a meeting of a registered scheme’s
members, a poll may be demanded by:
(a) at least 5 members present
entitled to vote on the resolution; or
(b) members present with at least 5%
of the votes that may be cast on the resolution on a poll; or
(c) the chair.
(2) A registered scheme’s constitution may
provide that fewer members or members with a lesser percentage of votes may
demand a poll.
(3) The poll may be demanded:
(a) before a vote is taken; or
(b) before the voting results on a
show of hands are declared; or
(c) immediately after the voting
results on a show of hands are declared.
(4) The percentage of votes that members have
is to be worked out as at close of business on the day before the poll is
demanded.
Division 7—Minutes and members’ access to minutes
253M
Minutes
(1) A responsible entity of a registered
scheme must keep minute books in which it records within 1 month:
(a) proceedings of meetings of the
scheme’s members; and
(b) resolutions of meetings of the
scheme’s members.
(2) The responsible entity must ensure that
minutes of a meeting are signed within a reasonable time after the meeting by
the chair of the meeting or the chair of the next meeting.
(3) The responsible entity must keep the
minute books at:
(a) its registered office; or
(b) its principal place of business in
this jurisdiction; or
(c) another place in this jurisdiction
approved by ASIC.
(3A) An offence based on subsection (1),
(2) or (3) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(4) A minute that is so recorded and signed
is evidence of the proceeding or resolution to which it relates, unless the
contrary is proved.
253N
Members’ access to minutes
(1) The responsible entity of a registered
scheme must ensure that the minute books for the meetings of the scheme’s
members are open for inspection by members free of charge.
(2) A member of a registered scheme may ask
the responsible entity in writing for a copy of any minutes of a meeting of the
scheme’s members or an extract of the minutes.
(3) If the responsible entity does not
require the member to pay for the copy, the responsible entity must send it:
(a) within 14 days after the member
asks for it; or
(b) within any longer period that ASIC
approves.
(4) If the responsible entity requires
payment for the copy, the responsible entity must send it:
(a) within 14 days after the
responsible entity receives the payment; or
(b) within any longer period that ASIC
approves.
The amount of any payment the responsible entity requires
cannot exceed the prescribed amount.
(5) An offence based on subsection (1),
(3) or (4) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
Chapter 2H—Shares
Part 2H.1—Issuing and converting shares
254A
Power to issue bonus, partly‑paid, preference and redeemable preference shares
(1) A company’s power under section 124
to issue shares includes the power to issue:
(a) bonus shares (shares for whose
issue no consideration is payable to the issuing company); and
(b) preference shares (including
redeemable preference shares); and
(c) partly‑paid shares (whether or not
on the same terms for the amount of calls to be paid or the time for paying
calls).
Note 1: Subsections 246C(5) and (6) provide that in
certain circumstances the issue of preference shares is taken to be a variation
of class rights.
Note 2: Partly‑paid shares are dealt with in sections 254M‑254N.
Note 3: On the issue of a bonus share there need not be
any increase in the company’s share capital.
(2) A company can issue preference shares
only if the rights attached to the preference shares with respect to the
following matters are set out in the company’s constitution (if any) or have
been otherwise approved by special resolution of the company:
(a) repayment of capital;
(b) participation in surplus assets
and profits;
(c) cumulative and non‑cumulative
dividends;
(d) voting;
(e) priority of payment of capital and
dividends in relation to other shares or classes of preference shares.
(3) Redeemable preference shares are
preference shares that are issued on the terms that they are liable to be
redeemed. They may be redeemable:
(a) at a fixed time or on the
happening of a particular event; or
(b) at the company’s option; or
(c) at
the shareholder’s option.
Note: Redeemable preference shares are dealt with in
sections 254J‑254L.
254B
Terms of issue
(1) A company may determine:
(a) the terms on which its shares are
issued; and
(b) the rights and restrictions
attaching to the shares.
Note 1: Details of any division of shares into classes
or conversion of classes of shares must be given to ASIC by a notice in the
prescribed form (see subsection 246F(1)).
Note 2: For public companies, any document or resolution
that attaches rights to shares or varies or cancels rights attaching to shares
must be lodged with ASIC (see subsection 246F(3)).
Note 3: Sections 246B‑246G provide safeguards in
cases where class rights are cancelled or varied.
Note 4: The company cannot issue par value shares (see
section 254C) or bearer shares (see section 254F).
No liability companies—special terms of issue
(2) A share in a no liability company is
issued on the following terms:
(a) if a no liability company is wound
up and a surplus remains, it must be distributed among the parties entitled to
it in proportion to the number of shares held by them, irrespective of the
amounts paid up on the shares; and
(b) a member who is in arrears in
payment of a call on a share, but whose share has not been forfeited, is not
entitled to participate in the distribution on the basis of holding that share
until the amount owing in respect of the call has been fully paid and
satisfied.
Companies incorporated as no liability
companies—special terms of issue
(3) If a company:
(a) either:
(i) is a no liability
company; or
(ii) was initially
registered as a no liability company and has changed its status under section 162
to another type of company; and
(b) ceases
to carry on business within 12 months after its registration and is wound up;
shares issued for cash rank (to the extent of the capital
contributed by subscribing shareholders) in the winding up in priority to
shares issued to vendors or promoters, or both, for consideration other than cash.
(4) The holders of shares issued to vendors
or promoters are not entitled to preference on the winding up of a company
that:
(a) is a no liability company; or
(b) was initially registered as a no
liability company and has changed its status under section 162 to another
type of company.
This is so despite anything in the company’s constitution
or the terms on which the shares are on issue.
254C
No par value shares
Shares of a company have no par value.
Note: The Part 10.1 transitional provisions contain
provisions that deal with the introduction of no par value shares. See also
subsection 169(4).
254D
Pre‑emption for existing shareholders on issue of shares in proprietary company
(replaceable rule—see section 135)
(1) Before issuing shares of a particular
class, the directors of a proprietary company must offer them to the existing
holders of shares of that class. As far as practicable, the number of shares
offered to each shareholder must be in proportion to the number of shares of
that class that they already hold.
(2) To make the offer, the directors must
give the shareholders a statement setting out the terms of the offer,
including:
(a) the number of shares offered; and
(b) the period for which it will
remain open.
(3) The directors may issue any shares not
taken up under the offer under subsection (1) as they see fit.
(4) The company may by resolution passed at a
general meeting authorise the directors to make a particular issue of shares
without complying with subsection (1).
254E
Court validation of issue
(1) On application by a company, a
shareholder, a creditor or any other person whose interests have been or may be
affected, the Court may make an order validating, or confirming the terms of, a
purported issue of shares if:
(a) the issue is or may be invalid for
any reason; or
(b) the terms of the issue are
inconsistent with or not authorised by:
(i) this Act; or
(ii) another law of a State
or Territory; or
(iii) the company’s
constitution (if any).
(2) On lodgment of a copy of the order with
ASIC, the order has effect from the time of the purported issue.
254F
Bearer shares and stock must not be issued
A company does not have the power to:
(a) issue bearer shares; or
(b) issue stock or convert shares into
stock.
Note: The Part 10.1 transitionals contain
provisions for the conversion of existing stock into shares.
254G
Conversion of shares
(1) A company may:
(a) convert an ordinary share into a
preference share; and
(b) convert a preference share into an
ordinary share.
Note: The variation of class rights provisions
(sections 246B‑246G) will apply to the conversion.
(2) A company can convert ordinary shares
into preference shares only if the holders’ rights with respect to the
following matters are set out in the company’s constitution (if any) or have
been otherwise approved by special resolution of the company:
(a) repayment of capital;
(b) participation in surplus assets
and profits;
(c) cumulative and non‑cumulative
dividends;
(d) voting;
(e) priority of payment of capital and
dividends in relation to other shares or classes of preference shares.
(3) A share that is not a redeemable
preference share when issued cannot afterwards be converted into a redeemable
preference share.
254H
Resolution to convert shares into larger or smaller number
(1) A company may convert all or any of its
shares into a larger or smaller number of shares by resolution passed at a
general meeting.
Note: The variation of class rights provisions
(sections 246B‑246G) may apply to the conversion.
(2) The conversion takes effect on:
(a) the day the resolution is passed;
or
(b) a later date specified in the
resolution.
(3) Any amount unpaid on shares being
converted is to be divided equally among the replacement shares.
(4) The company must lodge a copy of the
resolution with ASIC within 1 month after it is passed.
(5) An offence based on subsection (4)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
Part 2H.2—Redemption of redeemable preference shares
254J
Redemption must be in accordance with terms of issue
(1) A company may redeem redeemable
preference shares only on the terms on which they are on issue. On redemption,
the shares are cancelled.
Note: For the power to issue redeemable preference
shares see paragraph 254A(1)(b) and subsections 254A(2) and (3).
(2) This section does not affect the terms on
which redeemable preference shares may be cancelled under a reduction of
capital or a share buy‑back under Part 2J.1.
254K
Other requirements about redemption
A company may only redeem redeemable
preference shares:
(a) if the shares are fully paid‑up;
and
(b) out of profits or the proceeds of
a new issue of shares made for the purpose of the redemption.
Note: For a director’s duty to prevent insolvent
trading on redeeming redeemable preference shares, see section 588G.
254L
Consequences of contravening section 254J or 254K
(1) If a company redeems shares in
contravention of section 254J or 254K:
(a) the contravention does not affect
the validity of the redemption or of any contract or transaction connected with
it; and
(b) the company is not guilty of an
offence.
(2) Any person who is involved in a company’s
contravention of section 254J or 254K contravenes this subsection.
Note 1: Subsection (2) is a civil penalty
provision (see section 1317E).
Note 2: Section 79 defines involved.
(3) A person commits an offence if they are
involved in a company’s contravention of section 254J or 254K and the
involvement is dishonest.
Part 2H.3—Partly‑paid shares
254M
Liability on partly‑paid shares
General rule about shareholder’s liability for calls
(1) If shares in a company are partly‑paid,
the shareholder is liable to pay calls on the shares in accordance with the
terms on which the shares are on issue. This subsection does not apply to a no
liability company.
Note: The shareholder may also be liable as a
contributory under sections 514‑529 if the company is wound up.
No liability companies
(2) The acceptance by a person of a share in
a no liability company, whether by issue or transfer, does not constitute a
contract by the person to pay:
(a) calls in respect of the share; or
(b) any contribution to the debts and
liabilities of the company.
254N
Calls may be limited to when company is externally‑administered
(1) A limited company may provide by special
resolution that the whole or a part of its unpaid share capital may be called
up only if the company becomes an externally‑administered body corporate.
(2) The company must lodge with ASIC a copy
of the special resolution within 14 days after it is passed.
(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.
254P
No liability companies—calls on shares
Making calls
(1) A call on a share in a no liability
company is not effective unless it is made payable at least 14 days after the
call is made.
Notice of call
(2) At least 7 days before a call on shares
in a no liability company becomes payable, the company must give the holders of
the shares notice of:
(a) the amount of the call; and
(b) the day when it is payable; and
(c) the place for payment.
The notice must be sent by post. If the notice is not
given, the call is not payable.
(3) A call does not have any effect on a
forfeited share that is held by or in trust for the company under subsection
254Q(6). However, when the share is re‑issued or sold by the company, the share
may be credited as paid up to the amount determined by the company in
accordance with its constitution or by resolution.
254Q
No liability companies—forfeiture and sale of shares for failure to meet call
Forfeiture and sale of shares
(1) A share in a no liability company is
immediately forfeited if:
(a) a call is made on the share; and
(b) the call is unpaid at the end of
14 days after it became payable.
Note: The holder of the share may redeem it under
section 254R.
(2) The forfeited share must then be offered
for sale by public auction within 6 weeks after the call became payable.
Advertisement of sale
(3) At least 14 days, and not more than 21
days, before the day of the sale, the sale must be advertised in a daily
newspaper circulating generally throughout Australia. The specific number of
shares to be offered need not be specified in the advertisement and it is
sufficient to give notice of the sale by advertising to the effect that all
shares on which a call remains unpaid will be sold.
Postponement of sale
(4) An intended sale of forfeited shares that
has been duly advertised may be postponed for not more than 21 days from the
advertised date of sale. The date to which the sale is postponed must be
advertised in a daily newspaper circulating generally in Australia.
(5) There may be more than 1 postponement but
the sale cannot be postponed to a date more than 90 days from the first date
fixed for the intended sale.
Shares may be offered as credited to a particular
amount
(6) The share may be sold credited as paid up
to the sum of:
(a) the amount paid upon the share at
the time of forfeiture; and
(b) the amount of the call; and
(c) the amount of any other calls
becoming payable on or before the day of the sale;
if the company in accordance with its constitution or by
ordinary resolution so determines.
Reserve price
(7) The directors may fix a reserve price for
the share that does not exceed the sum of:
(a) the amount of the call due and
unpaid on the share at the time of forfeiture; and
(b) the amount of any other calls that
become payable on or before the date of the sale.
Withdrawal from sale
(8) The share may be withdrawn from sale if
no bid at least equal to the reserve price is made at the sale.
Disposal of shares withdrawn from sale
(9) If:
(a) no bid for the share is received
at the sale; or
(b) the share is withdrawn from sale;
the share must be held by the directors in trust for the
company. It must be then disposed of in the manner determined by the company in
accordance with its constitution or by resolution. Unless otherwise
specifically provided by resolution, the share must first be offered to
shareholders for a period of 14 days before being disposed of in any other
manner.
Suspension of voting rights attached to share held in
trust
(10) At any meeting of the company, no person
is entitled to any vote in respect of the shares held by the directors in trust
under subsection (9).
Application of proceeds of sale
(11) The proceeds of the sale under subsection (2)
or the disposal under subsection (9) must be applied to pay:
(a) first, the expenses of the sale;
and
(b) then, any expenses necessarily
incurred in respect of the forfeiture; and
(c) then, the calls on the share that
are due and unpaid.
The balance (if any) must be paid to the member whose
share has been sold. If there is a share certificate that relates to the share,
the balance does not have to be paid until the member delivers the certificate
to the company.
Validity of sale
(12) If a sale is not held in time because of
error or inadvertence, a late sale is not invalid if it is held as soon as
practicable after the discovery of the error or inadvertence.
Failure to comply an offence
(13) If there is failure to comply with subsection (2)
or (3), the company and any officer of the company who is involved in the
contravention are each guilty of an offence.
Strict liability offences
(14) An offence by the company based on subsection (13)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
254R
No liability companies—redemption of forfeited shares
(1) Despite section 254Q, if a person’s
share has been forfeited, the person may redeem the share, at any time up to or
on the last business day before the proposed sale, by paying the company:
(a) all calls due on the share; and
(b) if the company so requires:
(i) a portion, calculated
on a pro rata basis, of all expenses incurred by the company in respect
of the forfeiture; and
(ii) a portion, calculated
on a pro rata basis, of all costs and expenses of any proceeding that
has been taken in respect of the forfeiture.
On payment, the person is entitled to the share as if the
forfeiture had not occurred.
(2) On the last business day before the
proposed sale, the registered office of the company must be open during the
hours for which it is by this Act required to be open and accessible to the
public.
Part 2H.4—Capitalisation of profits
254S
Capitalisation of profits
A company may capitalise profits. The
capitalisation need not be accompanied by the issue of shares.
Part 2H.5—Dividends
254SA
Companies limited by guarantee not to pay dividends
A company limited by guarantee must not
pay a dividend to its members.
254T
Circumstances in which a dividend may be paid
(1) A company must not pay a dividend unless:
(a) the company’s assets exceed its
liabilities immediately before the dividend is declared and the excess is
sufficient for the payment of the dividend; and
(b) the payment of the dividend is
fair and reasonable to the company’s shareholders as a whole; and
(c) the payment of the dividend does
not materially prejudice the company’s ability to pay its creditors.
Note 1: As an example, the payment of a dividend would
materially prejudice the company’s ability to pay its creditors if the company
would become insolvent as a result of the payment.
Note 2: For a director’s duty to prevent insolvent
trading on payment of dividends, see section 588G.
(2) Assets and liabilities are to be
calculated for the purposes of this section in accordance with accounting
standards in force at the relevant time (even if the standard does not
otherwise apply to the financial year of some or all of the companies
concerned).
254U
Other provisions about paying dividends (replaceable
rule—see section 135)
(1) The directors may determine that a dividend
is payable and fix:
(a) the amount; and
(b) the time for payment; and
(c) the method of payment.
The methods of payment may include the payment of cash,
the issue of shares, the grant of options and the transfer of assets.
(2) Interest is not payable on a dividend.
254V
When does the company incur a debt?
(1) A company does not incur a debt merely by
fixing the amount or time for payment of a dividend. The debt arises only when
the time fixed for payment arrives and the decision to pay the dividend may be
revoked at any time before then.
(2) However, if the company has a
constitution and it provides for the declaration of dividends, the company
incurs a debt when the dividend is declared.
254W
Dividend rights
Shares in public companies
(1) Each share in a class of shares in a
public company has the same dividend rights unless:
(a) the company has a constitution and
it provides for the shares to have different dividend rights; or
(b) different dividend rights are
provided for by special resolution of the company.
Shares in proprietary companies (replaceable rule—see
section 135)
(2) Subject to the terms on which shares in a
proprietary company are on issue, the directors may pay dividends as they see
fit.
No liability companies
(3) A person is not entitled to a dividend on
a share in a no liability company if a call:
(a) has been made on the share; and
(b) is due and unpaid.
(4) Dividends are payable to the shareholders
in a no liability company in proportion to the number of shares held by them,
irrespective of the amount paid up, or credited as paid up, on the shares. This
subsection has effect subject to any provisions in the company’s constitution
relating to shares that are not ordinary shares.
Part 2H.6—Notice requirements
254X Notice
to ASIC of share issue
(1) Within 28 days after issuing shares, a
company must lodge with ASIC a notice in the prescribed form that sets out:
(a) the number of shares that were
issued; and
(b) if the company has different
classes of shares—the class to which each of those shares belongs; and
(c) the amount (if any) paid, or
agreed to be considered as paid, on each of those shares; and
(d) the amount unpaid (if any) on each
of those shares; and
(e) if the company is a public company
and the shares were issued for non‑cash consideration—the prescribed
particulars about the issue of the shares, unless the shares were issued under
a written contract and a copy of the contract is lodged with the notice.
Note 1: The company must lodge information when rights
attached to the shares change, or when the shares are divided or converted into
new classes (see section 246F).
Note 2: A proprietary company may also have to notify
certain particulars under Part 2C.2.
(2) If the shares were issued for non‑cash consideration
under a contract, the company must also lodge with ASIC a certificate stating
that all stamp duty payable on the contract under any applicable law relating
to stamp duty has been paid. This certificate must be lodged with the subsection (1)
notice or at a later time permitted by the regulations or by ASIC.
(2A) An offence based on subsection (1) or
(2) is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(3) The company does not have to lodge a subsection (1)
notice about the issue of shares to a person on the registration of the company
or on the company changing its type from a company limited by guarantee to a
company limited by shares.
Note: Information about shares issued in these
situations will come to ASIC under subsections 5H(2), 117(2), 163(3) and
601BC(2).
254Y
Notice to ASIC of share cancellation
(1) Within 1 month after shares are
cancelled, the company must lodge with ASIC a notice in the prescribed form
that sets out:
(a) the number of shares cancelled;
and
(b) any amount paid by the company (in
cash or otherwise) on the cancellation of the shares; and
(c) if the shares are cancelled
following a share buy‑back—the amount paid by the company (in cash or
otherwise) on the buy‑back; and
(d) if the company has different
classes of shares—the class to which each cancelled share belonged.
Note: Provisions under which shares are cancelled
include section 254J (redeemable preference shares), section 256B
(capital reductions),
subsection 257H(3) (shares a company has bought back), section 258D
(forfeited shares), and subsections 258E(2) and (3) (shares returned to a
company).
(2) An offence based on subsection (1)
is an offence of strict liability.
Note: For strict liability, see section 6.1
of the Criminal Code.
Chapter 2J—Transactions affecting share capital
Part 2J.1—Share capital reductions and share buy‑backs
256A
Purpose
This Part states the rules to be
followed by a company for reductions in share capital and for share buy‑backs.
The rules are designed to protect the interests of shareholders and creditors
by:
(a) addressing the risk of these
transactions leading to the company’s insolvency
(b) seeking to ensure fairness between
the company’s shareholders
(c) requiring the company to disclose
all material information.
Division 1—Reductions in share capital not otherwise authorised by law
256B
Company may make reduction not otherwise authorised
(1) A company may reduce its share capital in
a way that is not otherwise authorised by law if the reduction:
(a) is fair and reasonable to the
company’s shareholders as a whole; and
(b) does not materially prejudice the
company’s ability to pay its creditors; and
(c) is approved by shareholders under
section 256C.
A cancellation of a share for no consideration is a
reduction of share capital, but paragraph (b) does not apply to this kind
of reduction.
Note 1: One of the ways in which a company might reduce
its share capital is cancelling uncalled capital.
Note 2: Sections 258A‑258F deal with some of the
other situations in which reductions of share capital are authorised.
Subsection 254K(2) authorises capital reductions involved in the redemption of
redeemable preference shares and subsection 257A(2) authorises reductions involved
in share buy‑backs.
Note 3: For a director’s duty to prevent insolvent
trading on reductions of share capital, see section 588G.
(1A) To avoid doubt, a cancellation of a partly‑paid
share is taken to be for consideration.
(2) The reduction is either an equal
reduction or a selective reduction. The reduction is an equal reduction
if:
(a) it relates only to ordinary
shares; and
(b) it applies to each holder of
ordinary shares in proportion to the number of ordinary shares they hold; and
(c) the terms of the reduction are the
same for each holder of ordinary shares.
Otherwise, the reduction is a selective reduction.
(3) In applying subsection (2), ignore
differences in the terms of the reduction that are:
(a) attributable to the fact that
shares have different accrued dividend entitlements; or
(b) attributable to the fact that
shares have different amounts unpaid on them; or
(c) introduced solely to ensure that
each shareholder is left with a whole number of shares.
256C
Shareholder approval
Ordinary resolution required for equal reduction
(1) If the reduction is an equal reduction,
it must be approved by a resolution passed at a general meeting of the company.
Special shareholder approval for selective reduction
(2) If the reduction is a selective
reduction, it must be approved by either:
(a) a special resolution passed at a
general meeting of the company, with no votes being cast in favour of the
resolution by any person who is to receive consideration as part of the
reduction or whose liability to pay amounts unpaid on shares is to be reduced,
or by their associates; or
(b) a resolution agreed to, at a
general meeting, by all ordinary shareholders.
If the reduction involves the cancellation of shares, the
reduction must also be approved by a special resolution passed at a meeting of
the shareholders whose shares are to be cancelled.
(3) The company must lodge with ASIC a copy
of any resolution under subsection (2) within 14 days after it is passed.
The company must not make the reduction until 14 days after lodgment.
Note: A proprietary company may also have to notify
certain particulars under Part 2C.2.
Information to accompany the notice of meeting
(4) The company must include with the notice
of the meeting a statement setting out all information known to the company
that is material to the decision on how to vote on the resolution. However, the
company does not have to disclose information if it would be unreasonable to
require the company to do so because the company had previously disclosed the
information to its shareholders.
Documents to be lodged with ASIC
(5) Before the notice of the meeting is sent
to shareholders, the company must lodge with ASIC a copy of:
(a) the notice of the meeting; and
(b) any document relating to the
reduction that will accompany the notice of the meeting sent to shareholders.
256D
Consequences of failing to comply with section 256B
(1) The company must not make the reduction
unless it complies with subsection 256B(1).
(2) If the company contravenes subsection (1):
(a) the contravention does not affect
the validity of the reduction or of any contract or transaction connected with
it; and
(b) the company is not guilty of an
offence.
(3) Any person who is involved in a company’s
contravention of subsection (1) contravenes this subsection.
Note 1: Subsection (3) is a civil penalty
provision (see section 1317E).
Note 2: Section 79 defines involved.
(4) A person commits an offence if they are
involved in a company’s contravention of section 256B and the involvement
is dishonest.
256E
Signposts to other relevant provisions
The following table lists other
provisions of this Act that are relevant to reductions in share capital.
|
Other provisions relevant to reductions in share
capital
|
|
|
|
1
|
section 588G
section 1317H
|
liability of directors on insolvency
Under the combined operation of these sections the
directors may have to compensate the company if the company is, or becomes,
insolvent when the company reduces its share capital.
|
|
2
|
section 1324
|
injunctions to restrain contravention
Under this section the Court may grant an injunction
against conduct that constitutes or would constitute a contravention of this
Act.
|
|
4
|
Chapter 6CA
|
continuous disclosure provisions
Under this Chapter a disclosing entity is required to
disclose information about its securities that is material and not generally
available.
|
|
5
|
Chapter 2E
|
benefits to related parties to be disclosed
Under this Chapter a financial benefit to a director or
other related party that could adversely affect the interests of a public
company’s members as a whole must be approved at a general meeting before it
can be given.
|
|
6
|
section 125
|
provisions in constitution
This section deals with the way in which a company’s
constitution may restrict the exercise of the company’s powers and the
consequences of a failure to observe these restrictions.
|
|
7
|
sections 246B‑246G
|
variation of class rights
These sections deal with the variation of rights attached
to a class of shares. This variation may be governed by the provisions of the
company’s constitution.
|
|
|
|
|
|
Division 2—Share buy‑backs
257A
The company’s power to buy back its own shares
A company may buy back its own shares
if:
(a) the buy‑back does not materially
prejudice the company’s ability to pay its creditors; and
(b) the
company follows the procedures laid down in this Division.
Note 1: If a company has
a constitution, it may include provisions in the constitution that preclude the
company buying back its own shares or impose restrictions on the exercise of
the company’s power to buy back its own shares.
Note 2: A company may buy‑back redeemable preference
shares and may do so on terms other than the terms on which they could be
redeemed. For the redemption of redeemable preference shares, see sections 254J‑254L.
257B
Buy‑back procedure—general
(1) The following table specifies the steps
required for, and the sections that apply to, the different types of buy‑back.
|
Procedures
[and sections applied]
|
minimum holding
|
employee share scheme
|
on‑market
|
equal access scheme
|
selective buy‑back
|
|
|
|
|
within 10/12 limit
|
over 10/12 limit
|
within 10/12 limit
|
over 10/12 limit
|
within 10/12 limit
|
over 10/12 limit
|
|
|
ordinary resolution
[257C]
|
—
|
—
|
yes
|
—
|
yes
|
—
|
yes
|
—
|
|
special/unanimous resolution
[257D]
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
yes
|
|
lodge offer documents with ASIC
[257E]
|
—
|
—
|
—
|
—
|
—
|
yes
|
yes
|
yes
|
|
14 days notice [257F]
|
—
|
yes
|
yes
|
yes
|
yes
|
yes
|
yes
|
yes
|
|
disclose relevant
information when offer made [257G]
|
—
|
—
|
—
|
—
|
—
|
yes
|
yes
|
yes
|
|
cancel shares [257H]
|
yes
|
yes
|
yes
|
yes
|
yes
|
yes
|
yes
|
yes
|
|
notify cancellation to ASIC [254Y]
|
yes
|
yes
|
yes
|
yes
|
yes
|
yes
|
yes
|
yes
|
Note: Subsections (2)
and (3) of this section explain what an equal access scheme is. The 10/12 limit
is the 10% in 12 months limit laid down in subsections (4) and (5). Subsections (6)
and (7) of this section explain what an on‑market buy‑back is. See section 9
for definitions of minimum holding buy‑back, employee share
scheme buy‑back and selective buy‑back.
Equal access scheme
(2) An equal access scheme is a scheme that
satisfies all the following conditions:
(a) the offers under the scheme relate
only to ordinary shares;
(b) the offers are to be made to every
person who holds ordinary shares to buy back the same percentage of their
ordinary shares;
(c) all of those persons have a
reasonable opportunity to accept the offers made to them;
(d) buy‑back agreements are not
entered into until a specified time for acceptances of offers has closed;
(e) the terms of all the offers are
the same.
(3) In applying subsection (2), ignore:
(a) differences in consideration
attributable to the fact that the offers relate to shares having different
accrued dividend entitlements;
(b) differences in consideration
attributable to the fact that the offers relate to shares on which different
amounts remain unpaid;
(c) differences in the offers
introduced solely to ensure that each shareholder is left with a whole number
of shares.
10/12 limit
(4) The 10/12 limit for a company proposing
to make a buy‑back is 10% of the smallest number, at any time during the last
12 months, of votes attaching to voting shares of the company.
Exceeding the 10/12 limit
(5) A proposed buy‑back would exceed the
10/12 limit if the number of votes attaching to:
(a) all the voting shares in the
company that have been bought back during the last 12 months; and
(b) the voting shares that will be
bought back if the proposed buy‑back is made;
would exceed the 10/12 limit.
On‑market buy‑backs
(6) A buy‑back is an on‑market buy‑back if it
results from an offer made by a listed corporation on a prescribed financial
market in the ordinary course of trading on that market.
(7) A buy‑back by a company (whether listed
or not) is also an on‑market buy‑back if it results from an offer made in the
ordinary course of trading in a financial market outside Australia which ASIC declares in writing to be an approved overseas financial market for
the purposes of this subsection. A buy‑back by a listed company is an on‑market
buy‑back under this subsection only if an offer to buy‑back those shares is
also made on a prescribed financial market at the same time.
(8) A declaration under subsection (7)
may be subject to conditions. Notice of the making of the declaration must be
published in the Gazette.
257C
Buy‑back procedure—shareholder approval if the 10/12 limit exceeded
Ordinary resolution required
(1) If section 257B applies this section
to a buy‑back, the terms of the buy‑back agreement must be approved before it
is entered into by a resolution passed at a general meeting of the company, or
the agreement must be conditional on such an approval.
Information to accompany the notice of meeting
(2) The company must include with the notice
of the meeting a statement setting out all information known to the company
that is material to the decision how to vote on the resolution. However, the
company does not have to disclose information if it would be unreasonable to
require the company to do so because the company had previously disclosed the
information to its shareholders.
Documents to be lodged with the ASIC
(3) Before the notice of the meeting is sent
to shareholders, the company must lodge with ASIC a copy of:
(a) the notice of the meeting; and
(b) any document relating to the buy‑back
that will accompany the notice of the meeting sent to shareholders.
257D
Buy‑back procedure—special shareholder approval for selective buy‑back
Selective buy‑back requires special or unanimous
resolution
(1) If section 257B applies this section
to a buy‑back, the terms of the buy‑back agreement must be approved before it
is entered into by either:
(a) a special resolution passed at a
general meeting of the company, with no votes being cast in favour of the
resolution by any person whose shares are proposed to be bought back or by
their associates; or
(b) a resolution agreed to, at a
general meeting, by all ordinary shareholders;
or the agreement must be conditional on such an approval.
Information to accompany the notice of meeting
(2) The company must include with the notice
of the meeting a statement setting out all information known to the company
that is material to the decision how to vote on the resolution. However, the
company does not have to disclose information if it would be unreasonable to
require the company to do so because the company had previously disclosed the
information to its shareholders.
Documents to be lodged with the ASIC
(3) Before the notice of the meeting is sent
to shareholders, the company must lodge with ASIC a copy of:
(a) the notice of the meeting; and
(b) any document relating to the buy‑back
that will accompany the notice of the meeting sent to shareholders.
(4) ASIC may exempt a company from the
operation of this section. The exemption:
(a) must be in writing; and
(b) must be granted before the buy‑back
agreement is entered into; and
(c) may be granted subject to
conditions.
257E
Buy‑back procedure—lodgment of offer documents with ASIC
If section 257B applies this
section to a buy‑back, the company must lodge with ASIC, before the buy‑back
agreement is entered into, a copy of:
(a) a document setting out the terms
of the offer; and
(b) any document that is to accompany
the offer.
257F
Notice of intended buy‑back
(1) If section 257B applies this section
to a buy‑back, the company must satisfy the lodgment requirement in subsection (2)
at least 14 days before:
(a) if the buy‑back agreement is
conditional on the passing of a resolution under subsection 257C(1) or
257D(1)—the resolution is passed; or
(b) if it is not—the agreement is
entered into.
(2) The company satisfies the lodgment requirement
when it lodges with ASIC:
(a) documents under subsection 257C(3)
or 257D(3) or section 257E; or
(b) a notice that the company intends
to carry out the buy‑back.
Note 1: A company that has to lodge documents under
section 257C, 257D or 257E needs to lodge a notice under paragraph (2)(b)
of this section only if it wants for some reason to enter into the agreement or
pass the resolution less than 14 days after lodging the section 257C, 257D
or 257E documents.
Note 2: The company may specify a buy‑back under paragraph (2)(b)
in any way. It may, for instance, choose to lodge a notice covering buy‑backs
to be carried out:
under a
particular scheme; or
as part
of particular on‑market buy‑back activity.
257G
Buy‑back procedure—disclosure of relevant information when offer made
If section 257B applies this
section to a buy‑back, the company must include with the offer to buy back
shares a statement setting out all information known to the company that is
material to the decision whether to accept the offer.
257H
Acceptance of offer and transfer of shares to the company
Effect of acceptance of the buy‑back offer on share
rights
(1) Once a company has entered into an
agreement to buy back shares, all rights attaching to the shares are suspended.
The suspension is lifted if the agreement is terminated.
Shares transferred to the company and cancelled
(2) A company must not dispose of shares it
buys back. An agreement entered into in contravention of this subsection is
void.
(3) Immediately after the registration of the
transfer to the company of the shares bought back, the shares are cancelled.
Note: ASIC must be notified of the cancellation
under section 254Y.
257J
Signposts to other relevant provisions
The following table sets out other
provisions of this Act that are relevant to buy‑backs.
|
Other provisions
relevant to buy‑backs
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|
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provision
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comment
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1
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section 588G section 1317H
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liability of directors on insolvency
The directors may have to compensate the company if the
company is, or becomes, insolvent when the company enters into the buy‑back
agreement.
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2
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section 1324
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injunctions to restrain contravention
The Court may grant an injunction against conduct that
constitutes, or would constitute, a contravention of this Act.
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4
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subsection 609(4) section 611 (item 19 of the
table)
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application of takeover provisions
These sections deal with the application of Chapter 6
to buy‑backs.
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5
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section 259A
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consequences of failure to follow procedures—the
company and the officers
If a company fails to follow the procedure in this
Division, the company contravenes this section and the officers who are
involved in the contravention are liable to a civil penalty under Part 9.4B
and may commit an offence.
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6
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section 256D
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consequences of failure to follow procedures if reduction
in share capital involved—the company and the officers
If the buy‑back involves a reduction in share capital and
the company fails to follow the procedures in this Division, the company
contravenes this section and the officers who are involved in the
contravention are liable to a civil penalty under Part 9.4B and may
commit an offence.
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7
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section 256D
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consequences of failure to follow procedures if
reduction in share capital involved—the transaction
This section provides that a failure to follow the
procedures for share capital reductions does not affect the validity of the
buy‑back transaction itself.
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8
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Chapter 6CA
|
continuous disclosure provisions
Under this Chapter a disclosing entity is required to
disclose information about its securities that is material and not generally
available.
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9
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Chapter 2E
|
benefits to related parties to be disclosed
Under this Chapter, a financial benefit to a director or
other related party may need to be approved at a general meeting before it is
given.
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10
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section 125
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provisions in constitution
This section deals with the way in which a company’s
constitution may restrict the exercise of the company’s powers and the
consequences of a failure to observe these restrictions.
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11
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sections 246B‑246G
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variation of class rights
These sections deal with the variation of rights attached
to a class of shares. This variation may be governed by the provisions of a
company’s constitution.
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Division 3—Other share capital reductions
258A
Unlimited companies
An unlimited company may reduce its
share capital in any way.
258B
Right to occupy or use real property
(1) If a company has a constitution, under it
the company may grant to a shareholder, as a shareholder, a right to occupy or
use real property that the company owns or holds under lease, whether the right
is a lease or licence or a contractual right.
Note: Before the introduction of strata or unit
titles systems, rights to occupy real property were sometimes based on a
holding of shares in a company.
(2) A company may transfer to a person an
interest in land in exchange for, or in satisfaction of, a right to occupy or
use the land of the kind referred to in subsection (1).
Example: A person has a right to occupy an apartment in a
block of units because they hold shares in a company. As part of converting the
block of units to strata title, the person surrenders the shares in return for
a transfer of strata title over the apartment. The capital reduction involved
in the transfer is authorised under this subsection.
258C
Brokerage or commission
A company may pay brokerage or
commission to a person in respect of that person or another person agreeing to
take up shares in the company.
258D
Cancellation of forfeited shares
A company may, by resolution passed at a
general meeting, cancel shares that have been forfeited under the terms on
which the shares are on issue.
258E
Other share cancellations
(1) Any
reduction in share capital involved in:
(a) the redemption of redeemable
preference shares out of the proceeds of a new issue of shares made for the
purpose of the redemption (see section 254K); or
(b) a company’s buying‑back of its own
shares under sections 257A to 257J if the shares are paid for out of share
capital.
is authorised by this section.
(2) A company may cancel shares returned to
it under section 651C, 724(2), 737 or 738 and any reduction in the
company’s share capital that is involved is authorised by this subsection.
(3) Any reduction in a company’s share
capital because of an order under section 1325A is authorised by this
subsection.
258F
Reductions because of lost capital
(1) A company may reduce its share capital by
cancelling any paid‑up share capital that is lost or is not represented by
available assets.
(2) This power does not apply if:
(a) the company also cancels shares;
or
(b) the cancellation of paid‑up share
capital is inconsistent with the requirements of any accounting standard.
Part 2J.2—Self‑acquisition and control of shares
259A
Directly acquiring own shares
A company must not acquire shares (or
units of shares) in itself except:
(a) in buying back shares under
section 257A; or
(b) in acquiring an interest (other
than a legal interest) in fully‑paid shares in the company if no consideration
is given for the acquisition by the company or an entity it controls; or
(c) under a court order; or
(d) in circumstances covered by
subsection 259B(2) or (3).
259B
Taking security over own shares or shares in holding company
(1) A company must not take security over
shares (or units of shares) in itself or in a company that controls it, except
as permitted by subsection (2) or (3).
(2) A company may take security over shares
in itself under an employee share scheme that has been approved by:
(a) a resolution passed at a general
meeting of the company; and
(b) if the company is a subsidiary of
a listed domestic corporation—a resolution passed at a general meeting of the
listed domestic corporation; and
(c) if paragraph (b) does not
apply but the company has a holding company that is a domestic corporation and that is not itself a
subsidiary of a domestic corporation—a
resolution passed at a general meeting of that holding company.
Special exemptions for financial institutions
(3) A company’s taking security over shares
(or units of shares) in itself or in a company that controls it is exempted
from subsection (1) if:
(a) the company’s ordinary business
includes providing finance; and
(b) the security is taken in the
ordinary course of that business and on ordinary commercial terms.
(4) If a company acquires shares (or units of
shares) in itself because it exercises rights under a security permitted by subsection (2)
or (3), then, within the following 12 months, the company must cease to hold
those shares (or units of shares). ASIC may extend this period of 12 months if
the company applies for the extension before the end of the period.
(5) Any voting rights attached to the shares
(or units of shares) cannot be exercised while the company continues to hold
them.
(6) If, at the end of the 12 months (or
extended period), the company still holds any of the shares (or units of
shares), the company commits an offence for each day while that situation
continues.
(7) An offence based on subsection (6)
is an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
259C
Issuing or transferring shares to controlled entity
(1) The issue or transfer of shares (or units
of shares) of a company to an entity it controls is void unless:
(a) the issue or transfer is to the
entity as a personal representative; or
(b) the issue or transfer is to the
entity as trustee and neither the company nor any entity it controls has a
beneficial interest in the trust, other than a beneficial interest that
satisfies these conditions:
(i) the interest arises
from a security given for the purposes of a transaction entered into in the
ordinary course of business in connection with providing finance; and
(ii) that transaction was
not entered into with an associate of the company or an entity it controls; or
(c) the issue to the entity is made as
a result of an offer to all the members of the company who hold shares of the
class being issued and is made on a basis that does not discriminate unfairly,
either directly or indirectly, in favour of the entity; or
(d) the transfer to the entity is by a
wholly‑owned subsidiary of a body corporate and the entity is also a wholly‑owned
subsidiary of that body corporate.
(2) ASIC may exempt a company from the
operation of this section. The exemption:
(a) must be in writing; and
(b) may be granted subject to
conditions.
(3) If paragraph (1)(c) or (d) applies
to an issue or transfer of shares (or units of shares), section 259D
applies.
259D
Company controlling entity that holds shares in it
(1) If any of the following occur:
(a) a company obtains control of an
entity that holds shares (or units of shares) in the company;
(b) a company’s control over an entity
that holds shares (or units of shares) in the company increases;
(c) a company issues shares (or units
of shares) to an entity it controls in the situation covered by paragraph
259C(1)(c);
(d) shares (or units of shares) in the
company are transferred to an entity it controls in the situation covered by
paragraph 259C(1)(d);
then, within 12 months after it occurs either:
(e) the entity must cease to hold the
shares (or units); or
(f) the company must cease to control
the entity.
ASIC may extend this period of 12 months if the company
applies for the extension before the end of the period.
(2) If this section applies to shares (or
units of shares), it also applies to bonus shares issued in respect of those
shares (or units of shares). Within the same period that applies to the shares
themselves under subsection (1), either:
(a) the entity must cease to hold the
bonus shares; or
(b) the company must cease to control
the entity.
(3) Any voting rights attached to the shares
(or units of shares) cannot be exercised while the company continues to control
the entity.
(4) If, at the end of the 12 months (or
extended period), the company still controls the entity and the entity still
holds the shares (or units of shares), the company commits an offence for each
day while that situation continues.
(4A) An offence based on subsection (4) is
an offence of strict liability.
Note: For strict liability, see
section 6.1 of the Criminal Code.
(5) This section does not apply to shares (or
units of shares) if:
(a) they are held by the entity as a
personal representative; or
(b) they are held by the entity as
trustee and neither the company nor any entity it controls has a beneficial
interest in the trust, other than a beneficial interest that satisfies these
conditions:
(i) the interest arises
from a security given for the purposes of a transaction entered into in the
ordinary course of business in connection with providing finance; and
(ii) that transaction was
not entered into with an associate of the company or an entity it controls.
(6) A contravention of this section does not
affect the validity of any transaction.
259E
When a company controls an entity
(1) For the purposes of this Part, a company
controls an entity if the company has the capacity to determine the outcome of
decisions about the entity’s financial and operating policies.
(2) In determining whether a company has this
capacity:
(a) the practical influence the
company can exert (rather than the rights it can enforce) is the issue to be
addressed; and
(b) any practice or pattern of
behaviour affecting the entity’s financial or operating policies is to be taken
into account (even if it involves a breach of an agreement or a breach of
trust).
(3) Merely because the company and an
unrelated entity jointly have the capacity to determine the outcome of
decisions about another entity’s financial and operating policies, the company
does not control the other entity.
(4) A company is not taken to control an
entity merely because of a capacity that it is under a legal obligation to
exercise for the benefit of someone other than its shareholders.
Note: This situation could arise, for example, if
the company holds shares as a trustee or is performing duties as a liquidator.
259F
Consequences of failing to comply with section 259A or 259B
(1) If a company contravenes section 259A
or subsection 259B(1):
(a) the contravention does not affect
the validity of the acquisition or security or of any contract or transaction
connected with it; and
(b) the company is not guilty of an
offence.
(2) Any person who is involved in a company’s
contravention of section 259A or subsection 259B(1) contravenes this
subsection.
Note 1: Subsection (2) is a civil penalty
provision (see section 1317E).
Note 2: Section 79 defines involved.
(3) A person commits an offence if they are
involved in a company’s contravention of section 259A or subsection
259B(1) and the involvement is dishonest.
Part 2J.3—Financial assistance
260A
Financial assistance by a company for acquiring shares in the company or a
holding company
(1) A company may financially assist a person
to acquire shares (or units of shares) in the company or a holding company of
the company only if:
(a) giving the assistance does not
materially prejudice:
(i) the interests of the
company or its shareholders; or
(ii) the company’s ability
to pay its creditors; or
(b) the assistance is approved by
shareholders under section 260B (that section also requires advance notice
to ASIC); or
(c) the assistance is exempted under
section 260C.
(2) Without limiting subsection (1),
financial assistance may:
(a) be given before or after the
acquisition of shares (or units of shares); and
(b) take the form of paying a
dividend.
(3) Subsection (1) extends to the
acquisition of shares (or units of shares) by:
(a) issue; or
(b) transfer; or
(c) any other means.
260B
Shareholder approval
Approval by company’s own shareholders
(1) Shareholder approval for financial
assistance by a company must be given by:
(a) a special resolution passed at a
general meeting of the company, with no votes being cast in favour of the
resolution by the person acquiring the shares (or units of shares) or by their
associates; or
(b) a resolution agreed to, at a
general meeting, by all ordinary shareholders.
Approval by shareholders of listed holding corporation
(2) If the company will be a subsidiary of a
listed domestic corporation immediately after the acquisition referred to in
section 260A occurs, the financial assistance must also be approved by a
special resolution passed at a general meeting of that corporation.
Approval by shareholders in ultimate Australian holding
company
(3) If, immediately after the acquisition,
the company will have a holding company that:
(a) is a domestic corporation but not
listed; and
(b) is not itself a subsidiary of a
domestic corporation;
the financial assistance must also be approved by a
special resolution passed at a general meeting of the body corporate that will
be the holding company.
Information to accompany the notice of meeting
(4) A company or other body that calls a
meeting for the purpose of subsection (1), (2) or (3) must include with
the notice of the meeting a statement setting out all the information known to
the company or body that is material to the decision on how to vote on the
resolution. However, the company or body does not have to disclose information
if it would be unreasonable to require the company or body to do so because the
company or body had previously disclosed the information to its members.
Documents to be lodged with the ASIC before notice of
meeting is sent out
(5) Before the notice of a meeting for the
purpose of subsection (1), (2) or (3) is sent to members of a company or
other body, the company or body must lodge with ASIC a copy of:
(a) the notice of the meeting; and
(b) any document relating to the
financial assistance that will accompany the notice of the meeting sent to the
members.
(6) The company must lodge with ASIC, at
least 14 days before giving the financial assistance, a notice in the
prescribed form stating that the assistance has been approved under this
section.
Lodgment of special resolutions
(7) A special resolution passed for the
purpose of subsection (1), (2) or (3) must be lodged with ASIC by the
company, listed domestic corporation or holding company within 14 days after it
is passed.
260C
Exempted financial assistance
General exemptions based on ordinary course of
commercial dealing
(1) Financial assistance is exempted from
section 260A if it is given in the ordinary course of commercial dealing
and consists of:
(a) acquiring or creating a lien on
partly‑paid shares in the company for amounts payable to the company on the
shares; or
(b) entering into an agreement with a
person under which the person may make payments to the company on shares by
instalments.
Special exemptions for financial institutions
(2) Financial assistance is exempted from
section 260A if:
(a) the company’s ordinary business
includes providing finance; and
(b) the financial assistance is given
in the ordinary course of that business and on ordinary commercial terms.
Special exemptions for subsidiaries of debenture
issuers
(3) Financial assistance is exempted from
section 260A if:
(a) the company is a subsidiary of a
borrower in relation to debentures; and
(b) the financial assistance is a
guarantee or other security given by the company for the repayment by the
borrower of money that it is or will be liable to repay; and
(c) the borrower is a borrower in
relation to the debentures because it is or will be liable to repay the money;
and
(d) the guarantee or security is given
by the company in the ordinary course of commercial dealing.
Special exemption for approved employee share schemes
(4) Financial assistance is exempted from
section 260A if it is given under an employee share scheme that has been
approved by:
(a) a resolution passed at a general
meeting of the company; and
(b) if the company is a subsidiary of
a listed domestic corporation—a
resolution passed at a general meeting of the listed domestic corporation; and
(c) if paragraph (b) does not
apply but the company has a holding company that is a domestic corporation and
that is not itself a subsidiary of a domestic corporation—a resolution passed
at a general meeting of that holding company.
Other exemptions
(5) The following types of financial
assistance are exempted from section 260A:
(a) a reduction of share capital in
accordance with Division 1 of Part 2J.1;
(b) a share buy‑back in accordance
with Division 2 of Part 2J.1;
(c) assistance given under a court
order;
(d) a discharge on ordinary commercial
terms of a liability that the company incurred as a result of a transaction
entered into on ordinary commercial terms.
260D
Consequences of failing to comply with section 260A
(1) If a company provides financial
assistance in contravention of section 260A:
(a) the contravention does not affect
the validity of the financial assistance or of any contract or transaction
connected with it; and
(b) the company is not guilty of an
offence.
(2) Any person
who is involved in a company’s contravention of section 260A contravenes
this subsection.
Note 1: Subsection (2) is a civil penalty
provision (see section 1317E).
Note 2: Section 79 defines involved.
(3) A person commits an offence if they are
involved in a company’s contravention of section 260A and the involvement
is dishonest.
Part 2J.4—Interaction with general directors’ duties
260E
General duties still apply
A director is not relieved from any of
their duties under this Act (including sections 180, 181, 182, 183 and
184), or their fiduciary duties, in connection with a transaction merely
because the transaction is authorised by a provision of this Chapter or is
approved by a resolution of members under a provision of this Chapter.
Chapter 2K—Charges
Part 2K.1—Preliminary
261
Interpretation and application
(1) In this Chapter, unless the contrary
intention appears:
document of title means a document:
(a) used in the ordinary course of
business as proof of possession or control, or of the right to possession or
control, of property other than land; or
(b) authorising
or purporting to authorise, whether by endorsement or delivery, the possessor
of the document to transfer or receive property other than land;
and includes:
(c) a bill of lading; and
(d) a warehousekeeper’s certificate;
and
(e) a wharfinger’s certificate; and
(f) a warrant or order for the
delivery of goods; and
(g) a document that is, or evidences
title to, a marketable security.
present liability, in relation to a charge,
means a liability that has arisen, being a liability the extent or amount of
which is fixed or capable of being ascertained, whether or not the liability is
immediately due to be met.
property:
(a) of a company—means property that
is held by the company (whether or not as trustee) wherever the property is
situated (whether in Australia or elsewhere); or
(b) of a foreign company—means
property that is held by the company (whether or not as trustee) and that is in
this jurisdiction or in an external Territory; or
(c) of a registrable Australian
body—means property that is held by the body (whether or not as trustee) and
that is in this jurisdiction and outside the body’s place of origin.
prospective liability, in relation to a
charge, means any liability that may arise in the future, or any other
liability, but does not include a present liability.
Register means the Australian Register of
Company Charges referred to in section 265.
registrable charge means a charge in relation
to which, by virtue of section 262, the provisions of this Chapter
mentioned in subsection 262(1) apply.
(2) A charge referred to in subsection 263(3)
or section 264 is, until the charge is registered, treated for the
purposes of this Chapter as if it were not a registrable charge but, when the
charge is so registered, it has the priority accorded to a registered charge as
from the time of registration.
(3) The registration of a charge referred to
in subsection 263(3) or section 264 does not prejudice any priority that
would have been accorded to the charge under any other law (whether an
Australian law or not) if the charge had not been registered.
(4) For the purposes of this Chapter, a
notice or other document is taken to be lodged when it is received at an office
of ASIC in this jurisdiction by an officer authorised to receive it.
Part 2K.2—Registration
262
Charges required to be registered
(1) Subject to this section, the provisions
of this Chapter relating to the giving of notice in relation to, the
registration of, and the priorities of, charges apply in relation to the
following charges (whether legal or equitable) on property of a company and do
not apply in relation to any other charges:
(a) a floating charge on the whole or
a part of the property, business or undertaking of the company;
(b) a charge on uncalled share
capital;
(c) a charge on a call on shares made
but not paid;
(d) a charge on a personal chattel,
including a personal chattel that is unascertained or is to be acquired in the
future, but not including a ship registered in an official register kept under
an Australian law relating to title to ships;
(e) a charge on goodwill, on a patent
or licence under a patent, on a trade mark or service mark or a licence to use
a trade mark or service mark, on a copyright or a licence under a copyright or
on a registered design or a licence to use a registered design;
(f) a charge on a book debt;
(g) a charge on a marketable security,
not being:
(i) a charge created in
whole or in part by the deposit of a document of title to the marketable security;
or
(ii) a mortgage under which
the marketable security is registered in the name of the chargee or a person
nominated by the chargee; or
(iii) a charge where there
is an agreement in force under which the chargee (or a person who has agreed to
act on the instructions of the chargee) controls the sending of some or all
electronic messages or other electronic communications by which the marketable
security could be transferred;
(h) a lien or charge on a crop, a lien
or charge on wool or a stock mortgage;
(j) a charge on a negotiable
instrument other than a marketable security.
(2) The provisions of this Chapter mentioned
in subsection (1) do not apply in relation to:
(a) a charge, or a lien over property,
arising by operation of law; or
(b) a pledge of a personal chattel or
of a marketable security; or
(c) a charge created in relation to a
negotiable instrument or a document of title to goods, being a charge by way of
pledge, deposit, letter of hypothecation or trust receipt; or
(d) a transfer of goods in the
ordinary course of the practice of any profession or the carrying on of any
trade or business; or
(e) a dealing, in the ordinary course
of the practice of any profession or the carrying on of any trade or business,
in respect of goods outside Australia.
(3) The reference in paragraph (1)(d) to
a charge on a personal chattel is a reference to a charge on any article
capable of complete transfer by delivery, whether at the time of the creation
of the charge or at some later time, and includes a reference to a charge on a
fixture or a growing crop that is charged separately from the land to which it
is affixed or on which it is growing, but does not include a reference to a
charge on:
(a) a document evidencing title to
land; or
(b) a chattel interest in land; or
(c) a marketable security; or
(d) a document evidencing a thing in
action; or
(e) stock or produce on a farm or land
that by virtue of a covenant or agreement ought not to be removed from the farm
or land where the stock or produce is at the time of the creation of the
charge.
(4) The reference in paragraph (1)(f) to
a charge on a book debt is a reference to a charge on a debt due or to become
due to the company at some future time on account of or in connection with a
profession, trade or business carried on by the company, whether entered in a
book or not, and includes a reference to a charge on a future debt of the same
nature although not incurred or owing at the time of the creation of the
charge, but does not include a reference to a charge on a marketable security,
on a negotiable instrument or on a debt owing in respect of a mortgage, charge
or lease of land.
(5) The reference in paragraph (1)(h) to
a lien or charge on a crop, a lien or charge on wool or a stock mortgage includes
a reference to a security (however described) that is registrable under a
prescribed law of a State or Territory.
(6) For the purposes of this section, a
company is taken to have deposited a document of title to property with another
person (in this subsection referred to as the chargee) in a case
where the document of title is not in the possession of the company if:
(a) the person who holds the document
of title acknowledges in writing that the person holds the document of title on
behalf of the chargee; or
(b) a government, an authority or a
body corporate that proposes to issue a document of title in relation to the
property agrees, in writing, to deliver the document of title, when issued, to
the chargee.
(7) For the purposes of this section, a
charge is taken to be a charge on property of a kind to which a particular
paragraph of subsection (1) applies even though the instrument of charge
also charges other property of the company including other property that is of
a kind to which none of the paragraphs of that subsection applies.
(8) The provisions of this Chapter mentioned
in subsection (1) do not apply in relation to a charge on land.
(9) The provisions of this Chapter mentioned
in subsection (1) do not apply in relation to a charge on fixtures given
by a charge on the land to which they are affixed.
(10) The provisions of this Chapter mentioned
in subsection (1) do not apply in relation to a charge created by a
company in its capacity as legal personal representative of a deceased person
or as trustee of the estate of a deceased person.
(11) A charge on property of a company is not
invalid merely because of the failure to lodge with ASIC, or give to the
company or another person, a notice or other document that is required by this
Part to be so lodged or given.
263
Lodgment of notice of charge and copy of instrument
(1) Where a company creates a charge, the
company must ensure that there is lodged, within 45 days after the creation of
the charge:
(a) a notice in the prescribed form
setting out the following particulars:
(i) the name of the
company and the date of the creation of the charge;
(ii) whether the charge is
a fixed charge, a floating charge or both a fixed and floating charge;
(iii) if the charge is a
floating charge—whether there is any provision in the resolution or instrument
creating or evidencing the charge that prohibits or restricts the creation of
subsequent charges;
(iv) a short description of
the liability (whether present or prospective) secured by the charge;
(v) a short description of
the property charged;
(vi) whether the charge is
created or evidenced by a resolution, by an instrument or by a deposit or other
conduct;
(vii) if the charge is
constituted by the issue of a debenture or debentures—the name of the trustee
(if any) for debenture holders;
(viii) if the charge is not
constituted by the issue of a debenture or debentures or there is no trustee
for debenture holders—the name of the chargee;
(ix) such other information
as is prescribed; and
(b) if, pursuant to a resolution or
resolutions passed by the company, the company issues a series of debentures
constituting a charge to the benefit of which all the holders of debentures in
the series are entitled in equal priority, and the charge is evidenced only by
the resolution or resolutions and the debentures—a copy of the resolution or of
each of the resolutions verified by a statement in writing to be a true copy,
and a copy of the first debenture issued in the series and a statement in
writing verifying the execution of that first debenture; and
(c) if, in a case to which paragraph (b)
does not apply, the charge was created or evidenced by an instrument or
instruments:
(i) the instrument or each
of the instruments; or
(ii) a copy of the
instrument or of each of the instruments verified by a statement in writing to
be a true copy, and a statement in writing verifying the execution of the
instrument or of each of the instruments.
(2) In a case to which paragraph (1)(b)
applies:
(a) the charge is, for the purposes of
subsection (1), taken to be created when the first debenture in the series
of debentures is issued; and
(b) if, after the issue of the first
debenture in the series, the company passes a further resolution authorising
the issue of debentures in the series, the company must ensure that a copy of
that resolution, verified by a statement in writing to be a true copy of that
resolution, is lodged within 45 days after the passing of that resolution.
(3) A body that applies for registration as a
company under Part 5B.1, or for registration under Part 5B.2, must
lodge with the application for registration the documents specified in subsection (4)
in relation to any charge on property of the body that would be registrable
under this Part if the body were already registered under Part 5B.1, or
Part 5B.2, as the case may be.
(4) The documents required to be lodged under
subsection (3) in relation to a charge on property of a body are the
following documents:
(a) a notice in the prescribed form:
(i) setting out the name
of the body; and
(ii) if the charge was
created by the body—specifying the date of the creation of the charge; and
(iii) if the charge was a
charge existing on property acquired by the body—setting out the date on which
the property was so acquired; and
(iv) otherwise complying
with the requirements of paragraph (1)(a);
(b) if the charge was created or
evidenced as mentioned in paragraph (1)(b):
(i) in the case of a
charge created by the body—a copy of the resolution or of each of the
resolutions referred to in that paragraph verified by a statement in writing to
be a true copy and a copy of the first debenture issued in the series referred
to in that paragraph and a statement in writing verifying the execution of that
first debenture; or
(ii) in the case of a
charge that existed on property acquired by the body—the copies referred to in subparagraph (i)
verified by statements in writing to be true copies;
(c) if the charge was created or
evidenced by an instrument or instruments (otherwise than as mentioned in paragraph (1)(b)):
(i) in the case of a
charge created by the body:
(A) the
instrument or each of the instruments; or
(B) a copy
of the instrument or of each of the instruments verified by a statement in
writing to be a true copy, and a statement in writing verifying the execution
of the instrument or of each of the instruments; or
(ii) in the case of a
charge that existed on property acquired by the body—a copy of the instrument
or of each of the instruments verified by a statement in writing to be a true
copy;
(d) if the charge was created or
evidenced as mentioned in paragraph (1)(b) and, after the issue of the
first debenture in the series, the body passed a further resolution or
resolutions authorising the issue of debentures in the series—a copy of that
resolution or of each of those resolutions verified by a statement in writing
to be a true copy.
(5) A notice in relation to a charge, being a
charge in relation to which paragraph (1)(b) or (c) or (4)(b) or (c) applies,
is not taken to have been lodged under subsection (1) or (3) unless the
notice is accompanied by the documents specified in that paragraph.
(6) Where a notice with respect to an
instrument creating a charge has been lodged under subsection (1) or (3),
being a charge in respect of an issue of several debentures the holders of
which are entitled under the instrument in equal priority to the benefit of the
charge, sections 279 to 282 (inclusive) have effect as if any charges
constituted by those debentures were registered at the time when the charge to
which the notice relates was registered.
(7) Where a payment or discount has been made
or allowed, either directly or indirectly, by a company or registrable body to
a person in consideration of the person’s subscribing or agreeing to subscribe,
whether absolutely or conditionally, for debentures, or procuring or agreeing
to procure subscriptions, whether absolute or conditional, for debentures, the
notice required to be lodged under subsection (1) or (3) must include
particulars as to the amount or rate per centum of the payment or discount.
(8) Where a company or registrable body
issues debentures as security for a debt of the company or registrable body,
the company or registrable body is not thereby to be regarded, for the purposes
of subsection (7), as having allowed a discount in respect of the
debentures.
264
Acquisition of property subject to charge
(1) Where a company acquires property that is
subject to a charge, being a charge that would have been registrable when it
was created if it had been created by a company, the company must, within 45
days after the acquisition of the property:
(a) ensure that there is lodged:
(i) a notice in the
prescribed form in relation to the charge, setting out the name of the company
and the date on which the property was so acquired and otherwise complying with
the requirements of paragraph 263(1)(a); and
(ii) if the charge was
created or evidenced as mentioned in paragraph 263(1)(b)—a copy of the
resolution or of each of the resolutions referred to in that paragraph verified
by a statement in writing to be a true copy and a copy of the first debenture
issued in the series referred to in that paragraph verified by a statement in
writing to be a true copy; and
(iii) if the charge was
created or evidenced by an instrument or instruments (otherwise than as
mentioned in paragraph 263(1)(b)):
(A) the
instrument or each of the instruments; or
(B) a copy
of the instrument or of each of the instruments verified by a statement in
writing to be a true copy; and
(b) give to the chargee notice that it
has acquired the property and the date on which it was so acquired.
(2) A notice in relation to a charge, being a
charge in relation to which subparagraph (1)(a)(ii) or (iii) applies, is
not taken to have been lodged under subsection (1) unless it is
accompanied by the documents specified in that subparagraph.
265
Registration of documents relating to charges
(1) ASIC must keep a register to be known as
the Australian Register of Company Charges.
(2) Where a notice in respect of a charge on
property of a company that is required by section 263 or 264 to be lodged
is lodged (whether during or after the period within which the notice was
required to be lodged) and the notice contains all the particulars required by
the relevant section to be included in the notice, ASIC must as soon as
practicable cause to be entered in the Register the time and date when the
notice was lodged and the following particulars in relation to the charge:
(a) if the charge is a charge created
by the company, the date of its creation or, if the charge was a charge
existing on property acquired by the company, the date on which the property
was so acquired;
(b) a short description of the
liability (whether present or prospective) secured by the charge;
(c) a short description of the
property charged;
(d) the name of the trustee for
debenture holders or, if there is no such trustee, the name of the chargee.
(3) Subject to subsection (9), where
particulars in respect of a charge are entered in the Register in accordance
with subsection (2), the charge is taken to be registered, and to have
been registered from and including the time and date entered in the Register
under that subsection.
(4) Where:
(a) a notice in respect of a charge on
property of a company is lodged under section 263 or 264 (whether during
or after the period within which the notice was required to be lodged); and
(b) the
notice is not accompanied by a certificate to the effect that all documents
accompanying the notice have been duly stamped as required by any applicable
law relating to stamp duty;
ASIC must cause to be entered in the Register the time and
date when the notice was lodged and the particulars referred to in paragraphs (2)(a),
(b), (c) and (d), but must cause the word “provisional” to be entered in the
Register in relation to the entry specifying that time and date.
(5) Where:
(a) in accordance with subsection (4),
the word “provisional” is entered in the Register in relation to an entry
specifying the time and date on which a notice in respect of a charge was
lodged; and
(b) within
a period of 30 days or such longer period as is prescribed after the notice was
lodged, or within such further period as ASIC, if it considers it to be
appropriate in a particular case, allows, a certificate to the effect set out
in paragraph (4)(b) has been produced to ASIC;
ASIC must delete the word
“provisional” that was so entered in relation to the entry relating to that
charge, but if such a certificate is not produced within the period, or the
further period, referred to in paragraph (b), ASIC must delete from the
Register all the particulars that were entered in relation to the charge.
(6) Where a document that purports to be a
notice in respect of a charge on property of a company for the purposes of
section 263 or 264 is lodged (whether during or after the period within
which the notice was required to be lodged) and the document contains the name
of the company concerned and the particulars referred to in subparagraph
263(1)(a)(vii) or (viii), as the case requires, but does not contain some or
all of the other particulars that are required to be included in the notice or
is otherwise defective:
(a) ASIC must cause to be entered in
the Register the time and date when the document was lodged and such of the
particulars referred to in paragraphs (2)(a), (b), (c) and (d) as are
ascertainable from the document, but must cause the word “provisional” to be
entered in the Register in relation to the entry specifying that time and date;
and
(b) ASIC must, by notice in writing to
the person who lodged the document, direct the person to ensure that there is
lodged, on or before the day specified in the notice, a notice in relation to
the charge that complies with the requirements of section 263 or 264, as
the case may be, but the giving by ASIC of a direction to the person under this
paragraph does not affect any liability that the company may have incurred or
may incur by reason of a contravention of section 263 or 264.
(7) Where ASIC gives a direction to a person
under paragraph (6)(b) in relation to a charge:
(a) if the direction is complied with
on or before the day specified in the notice containing the direction, ASIC
must:
(i) delete from the
Register the word “provisional” that was inserted pursuant to paragraph (6)(a);
and
(ii) cause to be entered in
the Register in relation to the charge any particulars referred to in subsection (2)
that have not previously been entered; and
(b) if the direction is not complied
with on or before that day—ASIC must delete from the Register all the
particulars that were entered in relation to the charge; and
(c) if the direction is complied with
after that day—ASIC must cause to be entered in the Register in relation to the
charge the time at which and day on which the direction was complied with and
the particulars referred to in paragraphs (2)(a), (b), (c) and (d).
(8) ASIC may enter in the Register in
relation to a charge, in addition to the particulars expressly required by this
section to be entered, such other particulars as ASIC thinks fit.
(9) If the word “provisional” is entered in
the Register in relation to an entry specifying a time and day in relation to a
charge, the charge is taken not to have been registered but:
(a) where the word “provisional” is
deleted from the Register pursuant to subsection (5) or paragraph (7)(a)—the
charge is taken to be registered and to have been registered from and including
the time and day specified in the Register pursuant to subsection (4) or paragraph (6)(a),
as the case may be; or
(b) where the particulars in relation
to the charge are deleted from the Register pursuant to paragraph (7)(b)
and those particulars and a time and day are subsequently entered in the
Register in relation to the charge pursuant to paragraph (7)(c)—the charge
is taken to be registered from and including that last‑mentioned time and day.
(10) Where, pursuant to subsection 263(3), a
registrable body lodges notices relating to 2 or more charges on the same
property of the registrable body, the time and day that must be entered in the
Register in relation to each of those charges are the time and day when the
first notice was lodged.
(11) Where, in accordance with subsection (10),
the time and day that are entered in the Register are the same in relation to 2
or more charges on property of a registrable body, those charges have, as
between themselves, the respective priorities that they would have had if they
had not been registered under this Part.
(12) Where, pursuant to section 264, a
company lodges notices relating to 2 or more charges on the same property
acquired by the company (being charges that are not already registered under
this Part), the time and day that must be entered in the Register in relation
to each of those charges are the time and day when the first notice was lodged.
(13) Where, in accordance with subsection (12),
the time and day that are entered in the Register are the same in relation to 2
or more charges on property acquired by a company, those charges have, as
between themselves, the respective priorities that they would have had if they
had not been registered under this Part.
(14) Where a notice is lodged under section 268
(whether during or after the period within which it was required to be lodged),
ASIC must as soon as practicable cause to be entered in the Register the time
and day when the notice was so lodged and the particulars set out in the
notice.
265A
Standard time for the purposes of section 265
(1) ASIC may, by Gazette notice,
declare a specified standard time to be the standard time for the purposes of
section 265.
(2) Where a notice is in force under subsection (1)
of this section, a reference in subsection 265(2) or (4), paragraph 265(6)(a)
or (7)(c), or subsection 265(10), (12) or (14), to entering the time when a
particular event happened is a reference to entering that time as expressed in
terms of the standard time specified in the notice.
266
Certain charges void against liquidator or administrator
(1) Where:
(a) an order is made, or a resolution
is passed, for the winding up of a company; or
(b) an administrator of a company is
appointed under section 436A, 436B or 436C; or
(ba) a
company executes a deed of company arrangement;
a registrable charge on property of the company is void as
a security on that property as against the liquidator, the administrator of the
company, or the deed’s administrator, as the case may be, unless:
(c) a notice in respect of the charge
was lodged under section 263 or 264, as the case requires:
(i) within the relevant
period; or
(ii) at least 6 months
before the critical day; or
(d) in relation to a charge other than
a charge to which subsection 263(3) applies—the period within which a notice in
respect of the charge (other than a notice under section 268) is required
to be lodged, being the period specified in the relevant section or that period
as extended by the Court under subsection (4), has not ended at the start
of the critical day and the notice is lodged before the end of that period; or
(e) in relation to a charge to which
subsection 263(3) applies—the period of 45 days after the chargee becomes aware
that the registrable body has been registered as a company under Part 5B.1,
or registered under Part 5B.2, has not ended at the start of the critical
day and the notice is lodged before the end of that period; or
(f) in relation to a charge to which
section 264 applies—the period of 45 days after the chargee becomes aware
that the property charged has been acquired by a company has not ended at the
start of the critical day and the notice is lodged before the end of that
period.
(2) The reference in paragraph (1)(c) to
the relevant period is to be construed as a reference to:
(a) in relation to a charge to which
subsection 263(1) applies—the period of 45 days specified in that subsection,
or that period as extended by the Court under subsection (4) of this
section; or
(b) in relation to a charge to which
subsection 263(3) applies—the period of 45 days after the chargee becomes aware
that the registrable body has been registered as a company under Part 5B.1
or registered under Part 5B.2; or
(c) in relation to a charge to which
section 264 applies—the period of 45 days after the chargee becomes aware
that the property has been acquired by a company.
(3) Where, after there has been a variation
in the terms of a registrable charge on property of a company having the effect
of increasing the amount of the debt or increasing the liabilities (whether
present or prospective) secured by the charge:
(a) an order is made, or a resolution
is passed, for the winding up of the company; or
(b) an administrator of a company is
appointed under section 436A, 436B or 436C; or
(ba) a
company executes a deed of company arrangement;
the registrable charge is void as a security on that
property to the extent that it secures the amount of the increase in that debt
or liability unless:
(c) a notice in respect of the
variation was lodged under section 268:
(i) within the period of
45 days specified in subsection 268(2) or that period as extended by the Court
under subsection (4) of this section; or
(ii) not later than 6
months before the critical day; or
(d) the period of 45 days specified in
subsection 268(2), or that period as extended by the Court under subsection (4)
of this section, has not ended at the start of the critical day and the notice
is lodged before the end of that period.
(4) The Court, if it is satisfied that the
failure to lodge a notice in respect of a charge, or in respect of a variation
in the terms of a charge, as required by any provision of this Part:
(a) was accidental or due to
inadvertence or some other sufficient cause; or
(b) is not of a nature to prejudice
the position of creditors or shareholders;
or that on other grounds it is just and equitable to grant
relief, may, on the application of the company or any person interested and on
such terms and conditions as seem to the Court just and expedient, by order,
extend the period for such further period as is specified in the order.
(5) Where:
(a) a registrable charge (in this
subsection referred to as the later charge) is created before the
end of 45 days after the creation of an unregistered registrable charge (in
this subsection referred to as the earlier charge); and
(b) the later charge relates to all or
any of the property to which the earlier charge related; and
(c) the
later charge is given as a security for the same liability as is secured by the
earlier charge or any part of that liability;
the later charge, to the extent to which it is a security
for the same liability or part thereof, and so far as it relates to the
property comprised in the earlier charge, is void as a security on that
property as against a liquidator or administrator of the company, or an
administrator of a deed of company arrangement executed by the company, even if
a notice in respect of the later charge was lodged under section 263
within a period mentioned in paragraph (1)(c) or (d) of this section,
unless it is proved to the satisfaction of the Court that the later charge was
given in good faith for the purpose of correcting some material error in the
earlier charge or under other proper circumstances and not for the purposes of
avoiding or evading the provisions of this Part.
(6) Nothing in subsection (1) or (3)
operates to affect the title of a person to property purchased for value from a
chargee or from a receiver appointed by a chargee in the exercise of powers
conferred by the charge or implied by law if that person purchased the property
in good faith and without notice of:
(a) the filing of an application for
an order for the winding up of the company; or
(b) the passing of a resolution for
the voluntary winding up of the company; or
(c) an administrator of the company
being appointed under section 436A, 436B or 436C; or
(d) the company executing a deed of
company arrangement.
(7) The onus of proving that a person
purchased property in good faith and without notice of any of the matters
referred to in paragraphs (6)(a), (b), (c) and (d) is on the person
asserting that the property was so purchased.
(8) In this section:
critical day, in relation to a company,
means:
(a) if the company is being wound
up—the day when the winding up began; or
(b) if the company is under
administration—the section 513C day in relation to the administration; or
(c) if the company has executed a deed
of company arrangement—the section 513C day in relation to the
administration that ended when the deed was executed.
267
Charges in favour of certain persons void in certain cases
(1) Where:
(a) a company creates a charge on
property of the company in favour of a person who is, or in favour of persons
at least one of whom is, a relevant person in relation to the charge; and
(b) within
6 months after the creation of the charge, the chargee purports to take a step
in the enforcement of the charge without the Court having, under subsection (3),
given leave for the charge to be enforced;
the charge, and any powers purported to be conferred by an
instrument creating or evidencing the charge, are, and are taken always to have
been, void.
(2) Without limiting the generality of subsection (1),
a person who:
(a) appoints a receiver of property of
a company under powers conferred by an instrument creating or evidencing a
charge created by the company; or
(b) whether
directly or by an agent, enters into possession or assumes control of property
of a company for the purposes of enforcing a charge created by the company;
is taken, for the purposes of subsection (1), to take
a step in the enforcement of the charge.
(3) On
application by the chargee under a charge, the Court may, if it is satisfied
that:
(a) immediately after the creation of
the charge, the company that created the charge was solvent; and
(b) in
all the circumstances of the case, it is just and equitable for the Court to do
so;
give leave for the charge to be enforced.
(4) Nothing in subsection (1) affects a
debt, liability or obligation of a company that would, if that subsection had
not been enacted, have been secured by a charge created by the company.
(5) Nothing in subsection (1) operates
to affect the title of a person to property (other than the charge concerned or
an interest in the charge concerned) purchased for value from a chargee under a
charge, from an agent of a chargee under a charge, or from a receiver appointed
by a chargee under a charge in the exercise of powers conferred by the charge
or implied by law, if that person purchased the property in good faith and
without notice that the charge was created in favour of a person who is, or in
favour of persons at least one of whom is, as the case may be, a relevant
person in relation to the charge.
(6) The onus of proving that a person purchased
property in good faith and without notice that a charge was created as
mentioned in subsection (5) is on the person asserting that the property
was so purchased.
(7) In this section:
chargee, in relation to a charge, means:
(a) in any case—the holder, or all or
any of the holders, of the charge; or
(b) in the case of a charge that is an
agreement to give or execute a charge in favour of a person or persons, whether
upon demand or otherwise—that person, or all or any of those persons.
officer, in relation to a company, includes,
in the case of a registered foreign company, a local agent of the foreign
company.
receiver includes a receiver and manager.
relevant person, in relation to a charge
created by a company, means:
(a) a person who is at the time when
the charge is created, or who has been at any time during the period of 6
months ending at that time, an officer of the company; or
(b) a person associated, in relation
to the creation of the charge, with a person of a kind referred to in paragraph (a).
268
Assignment and variation of charges
(1) Where, after a registrable charge on
property of a company has been created, a person other than the original
chargee becomes the holder of the charge, the person who becomes the holder of
the charge must, within 45 days after he, she or it becomes the holder of the
charge:
(a) lodge a notice stating that he,
she or it has become the holder of the charge; and
(b) give the company a copy of the
notice.
(2) Where, after a registrable charge on
property of a company has been created, there is a variation in the terms of
the charge having the effect of:
(a) increasing the amount of the debt
or increasing the liabilities (whether present or prospective) secured by the
charge; or
(b) prohibiting
or restricting the creation of subsequent charges on the property;
the company must, within 45 days after the variation
occurs, ensure that there is lodged a notice setting out particulars of the
variation and accompanied by the instrument (if any) effecting the variation or
a certified copy of that instrument.
(3) Where a charge created by a company
secures a debt of an unspecified amount or secures a debt of a specified amount
and further advances, a payment or advance made by the chargee to the company
in accordance with the terms of the charge is not taken, for the purposes of subsection (2),
to be a variation in the terms of the charge having the effect of increasing
the amount of the charge or the liabilities (whether present or prospective)
secured by the charge.
(4) A
reference in this section to the chargee in relation to a charge is, if the
charge is constituted by a debenture and debentures and there is a trustee for
debenture holders, to be construed as a reference to the trustee for debenture
holders.
(5) Nothing in section 263 requires the
lodgment of a notice under that section in relation to a charge merely because
of the fact that the terms of the charge are varied only in a manner mentioned
in this section.
269
Satisfaction of, and release of property from, charges
(1) Where, with respect to a charge
registered under this Part:
(a) the debt or other liability the
payment or discharge of which was secured by the charge has been paid or
discharged in whole or in part; or
(b) the
property charged or part of that property is released from the charge;
the person who was the holder of the charge at the time
when the debt or other liability was so paid or discharged or the property or
part of the property was released must, within 14 days after receipt of a
request in writing made by the company on whose property the charge exists,
give to the company a memorandum in the prescribed form acknowledging that the
debt or other liability has been paid or discharged in whole or in part or that
the property or that part of it is no longer subject to the charge, as the case
may be.
(2) The company may lodge the memorandum and,
upon the memorandum being lodged, ASIC must enter in the Register particulars
of the matters stated in the memorandum.
(3) The reference in subsection (1) to
the person who was the holder of a charge at the time when the debt or other
liability was so paid or discharged or the property or part of the property was
released is, if the charge was constituted by a debenture or debentures and there
was a trustee for debenture holders, to be construed as a reference to the
person who was, at that time, the trustee for debenture holders.
270
Lodgment of notices, offences etc.
(1) Where a notice in respect of a charge on
property of a company is required to be lodged under section 263 or 264 or
subsection 268(2), the notice may be lodged by the company or by any interested
person.
(2) Where default is made in complying with
section 263 or 264 or subsection 268(2) in relation to a registrable charge
on property of a company, the company and any officer of the company who is in
default each contravene this subsection.
(3) Where a person who becomes the holder of
a registrable charge fails to comply with subsection 268(1), the person and, if
the person is a body corporate, any officer of the body corporate who is in
default, each contravene this subsection.
(4) Where a document required by this Part
other than subsection 268(1) to be lodged is lodged by a person other than the
company concerned, that person:
(a) must, within 7 days after the
lodgment of the document, give to the company a copy of the document; and
(b) is entitled to recover from the
company the amount of any fees properly paid by the person on lodgment of the
document.
271
Company to keep documents relating to charges and register of charges
(1) A company must keep, at the place where
the register referred to in subsection (2) is kept, a copy of:
(a) every document relating to a
charge on property of the company that was or is lodged under this Part; and
(b) a copy of every document given to
the company under this Part.
(2) A company must keep a register and must,
upon the creation of a charge (whether registrable or not) on property of the
company, or upon the acquisition of property subject to a charge (whether
registrable or not), as soon as practicable enter in the register particulars
of the charge, giving in each case:
(a) if the charge is a charge created
by the company, the date of its creation or, if the charge was a charge
existing on property acquired by the company, the date on which the property
was so acquired; and
(b) a short description of the
liability (whether present or prospective) secured by the charge; and
(c) a short description of the
property charged; and
(d) the name of the trustee for
debenture holders or, if there is no such trustee, the name of the chargee; and
(e) the name of the person whom the
company believes to be the holder of the charge.
(3) A register kept by a company pursuant to subsection (2)
must be open for inspection:
(a) by any creditor or member of the
company—without charge; and
(b) by any other person—on payment for
each inspection of such amount, not exceeding the prescribed amount, as the
company requires or, where the company does not require the payment of an
amount, without charge.
(4) A person may request a company to furnish
the person with a copy of the register or any part of the register and, where
such a request is made, the company must send the copy to that person:
(a) if the company requires payment of
an amount not exceeding the prescribed amount—within 21 days after payment of
the amount is received by the company or within such longer period as ASIC
approves; or
(b) in a case to which paragraph (a)
does not apply—within 21 days after the request is made or within such longer
period as ASIC approves.
(5) If default is made in complying with any
provision of this section, the company and any officer of the company who is in
default are each guilty of an offence.
272
Certificates
(1) Where particulars of a charge are entered
in the Register in accordance with this Part, ASIC must, on request by any
person, issue to that person a certificate setting out those particulars and
stating the time and day when a notice in respect of the charge containing
those particulars was lodged with ASIC and, if the word “provisional” appears
in the Register in relation to the reference to that time and day, stating that
fact.
(2) A certificate issued under subsection (1)
is prima facie evidence of the matters stated in the certificate.
(3) Where particulars of a charge are entered
in the Register in accordance with this Part, and the word “provisional” does
not appear in the Register in relation to the reference to the time and day
when a notice in respect of the charge was lodged, ASIC must, on request by any
person, issue to that person a certificate stating that particulars of the
charge are entered in the Register in accordance with this Part.
(4) A certificate issued under subsection
272(3) is conclusive evidence that the requirements of Part 2K.2 as to
registration (other than the requirements relating to the period after the
creation of the charge within which notice in respect of the charge is required
to be lodged) have been complied with.
273A
Application of State and Territory laws to charges required to be registered
under this Part
(1) This section deals with how particular
State or Territory laws apply to a charge if notice of the charge must be
lodged under this Part (whether before or after the prescribed time). The laws
are called specified laws and are identified in subsections (4)
and (5).
Note: Section 273D provides that this section
does not apply to certain joint charges.
(2) A failure to register the charge under a
specified law does not affect the validity, or limit the effect, of the charge.
(3) The priority of the charge is to be
determined under this Chapter and not under a specified law.
(4) The specified laws are the
State or Territory laws that are:
(a) specified in the following table;
or
(b) specified by the regulations for
the purposes of this section.
|
Specified laws for the purposes of this section
|
|
|
Law
|
State or Territory
|
|
1
|
Bills of Sale Act 1898
|
New South Wales
|
|
2
|
Liens on Crops and Wool and Stock Mortgages Act 1898
|
New South Wales
|
|
3
|
Instruments Act 1958
|
Victoria
|
|
4
|
Bills of Sale and Other Instruments Act 1955
|
Queensland
|
|
5
|
Liens on Crops of Sugar Cane Act 1931
|
Queensland
|
|
6
|
Bills of Sale Act 1886
|
South Australia
|
|
7
|
Liens on Fruit Act 1923
|
South Australia
|
|
8
|
Stock Mortgages and Wool Liens Act 1924
|
South Australia
|
|
9
|
Bills of Sale Act 1899
|
Western Australia
|
|
10
|
Bills of Sale Act 1900
|
Tasmania
|
|
11
|
Stock, Wool, and Crop Mortgages Act 1930
|
Tasmania
|
|
12
|
Instruments Act 1933
|
Australian Capital Territory
|
|
13
|
Instruments Act
|
Northern Territory
|
(5) The regulations may provide that a law
specified in the table in subsection (4) is not a specified law for the
purposes of this section.
273B
Application of State and Territory laws to transfers, assignments or giving of
charges registered under this Part
(1) This section deals with how particular
State and Territory laws apply to a transfer, assignment or giving of a
security by a company that is registrable under those laws if:
(a) notice in relation to the
transfer, assignment or giving of security must be lodged under this Part; and
(b) the
transfer, assignment or giving of security is registered under this Part.
The laws are called specified laws and are
identified in subsections (3) and (4). The particular specified law under
which the transfer, assignment or giving of security is registrable is called
the applicable registration law.
Note: Section 273D provides that this section
does not apply to certain joint charges.
(2) The transfer, assignment or giving of
security is, subject to subsection 273A(3), as valid and effectual as if it had
been duly registered under the applicable registration law.
(3) The specified laws are the
State or Territory laws that are:
(a) specified in the following table;
or
(b) specified by the regulations for
the purposes of this section.
|
Specified laws for the purposes of this section
|
|
|
Law
|
Jurisdiction
|
|
1
|
Bills of Sale Act 1898
|
New South Wales
|
|
2
|
Bills of Sale and Other Instruments Act 1955
Part II
|
Queensland
|
|
3
|
Bills of Sale Act 1886
|
South Australia
|
|
4
|
Bills of Sale Act 1899
|
Western Australia
|
|
5
|
Bills of Sale Act 1900
|
Tasmania
|
|
6
|
Instruments Act 1933
Part III
|
Australian Capital Territory
|
|
7
|
Instruments Act
Part II
|
Northern Territory
|
(4) The regulations may provide that a law
specified in the table in subsection (3) is not a specified law for the
purposes of this section.
273C
Application of specified State and Territory laws to crop liens, wool liens and
stock mortgages registered under this Part
(1) This section deals with how particular
State and Territory laws apply to a crop lien, wool lien or stock mortgage
given by a company that is registrable under those laws if:
(a) notice in relation to the lien or
stock mortgage is required to be lodged under this Part; and
(b) the
lien or mortgage is registered under this Part.
The laws are called specified laws and are
identified in subsections (3) and (4). The particular specified law under
which the lien or mortgage is registrable is called the applicable
registration law.
Note: Section 273D provides that this section
does not apply to certain joint charges.
(2) The lien or mortgage is, subject to
subsection 273A(3), as valid and effectual as if it had been duly registered
under the applicable registration law.
(3) The specified laws are the
State or Territory laws that are:
(a) specified in the following table;
or
(b) specified by the regulations for
the purposes of this section.
|
Specified laws for the purposes of this section
|
|
|
Law
|
Jurisdiction
|
|
1
|
Liens on Crops and Wool and Stock Mortgages Act 1898
Parts II and III
|
New South Wales
|
|
2
|
Instruments Act 1958
Parts VII and VIII
|
Victoria
|
|
3
|
Bills of Sale and Other Instruments Act 1955
Part II
|
Queensland
|
|
4
|
Liens on Crops of Sugar Cane Act 1931
|
Queensland
|
|
5
|
Liens on Fruit Act 1923
|
South Australia
|
|
6
|
Stock Mortgages and Wool Liens Act 1924
|
South Australia
|
|
7
|
Bills of Sale Act 1899
sections 7, 8 and 37
|
Western Australia
|
|
8
|
Stock, Wool, and Crop Mortgages Act 1930
|
Tasmania
|
|
9
|
Instruments Act 1933
Parts IV and V
|
Australian Capital Territory
|
|
10
|
Instruments Act
Parts III and IV
|
Northern Territory
|
(4) The regulations may provide that a law
specified in the table in subsection (3) is not a specified law for the
purposes of this section.
273D
Sections 273A to 273C do not apply to charges given by company jointly
with person who is not a company
Nothing in section 273A, 273B or
273C applies in relation to a charge given by a company jointly with another
person who is not, or other persons at least one of whom is not, a company.
274
Power of Court to rectify Register
Where the Court is satisfied:
(a) that a particular with respect to
a registrable charge on property of a company has been omitted from, or
misstated in, the Register or a memorandum referred to in section 269; and
(b) that the omission or misstatement:
(i) was accidental or due
to inadvertence or to some other sufficient cause; or
(ii) is
not of a nature to prejudice the position of creditors or shareholders; or
(iii) was due to a failure
of an electronic system to lodge a notice in respect of a charge;
or
that on other grounds it is just and equitable to grant relief;
the Court may, on the application of ASIC, the company or
any person interested and on such terms and conditions as seem to the Court just
and expedient, order that the omission or mis‑statement be rectified.
277
Power to exempt from compliance with certain requirements of Division
(1) ASIC may, by instrument in writing,
exempt a person, as specified in the instrument and subject to such conditions
(if any) as are specified in the instrument, from compliance with such of the
requirements of section 263, 264 or 268 relating to:
(a) the particulars to be contained in
a notice under the relevant section; or
(b) the documents (other than the
notice) to be lodged under the relevant section; or
(c) the
verification of any document required to be lodged under the relevant section;
as are specified in the instrument.
(2) A person who is exempted by ASIC, subject
to a condition, from compliance with a requirement of section 263, 264 or
268 must not contravene the condition.
(3) Where a person has contravened or failed
to comply with a condition to which an exemption under this section is subject,
the Court may, on the application of ASIC, order the person to comply with the
condition.
Part 2K.3—Order of priority
278
Definitions
(1) In this Part:
priority time, in relation to a registered
charge, means:
(a) except as provided by paragraph (b)
or (c)—the time and date appearing in the Register in relation to the charge,
being a time and day entered in the Register pursuant to section 265; and
(b) where a notice has been lodged
under section 264 in relation to a charge on property, being a charge
that, at the time when the notice was lodged, was already registered under Part 2K.2—the
earlier or earliest time and day appearing in the Register in relation to the
charge, being a time and day entered in the Register pursuant to section 264;
and
(c) to the extent that the charge has
effect as varied by a variation notice of which was required to be lodged under
subsection 268(2)—the time and day entered in the Register in relation to the
charge pursuant to subsection 265(14).
prior registered charge, in relation to
another registered charge, means a charge the priority time of which is earlier
than the priority time of the other charge.
registered charge means a charge that is
registered under Part K.2.
subsequent registered charge, in relation to
another registered charge, means a charge the priority time of which is later
than the priority time of the other registered charge.
unregistered charge means a charge that is
not registered under Part 2K.2 but does not include a charge that is not a
registrable charge.
(2) A reference in this Part to a person
having notice of a charge includes a reference to a person having constructive
notice of the charge.
(3) Where, by virtue of the definition of
priority time in subsection (1), a registered charge has 2 or more
priority times each of which relates to a particular liability secured by the
charge, each of those liabilities is, for the purposes of this Part, taken to
be secured by a separate registered charge the priority time of which is the
priority time of the first‑mentioned registered charge that relates to the
liability concerned.
279
Priorities of charges
(1) Subject to this section, sections 280
to 282, inclusive, have effect with respect to the priorities, in relation to
each other, of registrable charges on the property of a company.
(2) The application, in relation to
particular registrable charges, of the order of priorities of charges set out
in sections 280 to 282, inclusive, is subject to:
(a) any consent (express or implied)
that varies the priorities in relation to each other of those charges, being a
consent given by the holder of one of those charges, being a charge that would
otherwise be entitled to priority over the other charge; and
(b) any agreement between those
chargees that affects the priorities in relation to each other of the charges
in relation to which those persons are the chargees.
(3) The holder of a registered charge, being
a floating charge, on property of a company is taken, for the purposes of subsection (2),
to have consented to that charge being postponed to a subsequent registered
charge, being a fixed charge that is created before the floating charge becomes
fixed, on any of that property unless:
(a) the creation of the subsequent
registered charge contravened a provision of the instrument or resolution creating
or evidencing the floating charge; and
(b) a notice in respect of the
floating charge indicating the existence of the provision referred to in paragraph (a)
was lodged with ASIC under section 263, 264 or 268 before the creation of
the subsequent registered charge.
(4) Where a charge relates to property of a
kind or kinds to which a particular paragraph or paragraphs of subsection
262(1) applies or apply and also relates to other property, sections 280
to 282, inclusive, apply so as to affect the priority of the charge only in so
far as it relates to the first‑mentioned property and do not affect the
priority of the charge in so far as it relates to the other property.
(5) Sections 280 to 282, inclusive, do
not apply so as to affect the operation of:
(a) the Copyright Act 1968; or
(b) the Designs Act 1906; or
(c) the Life Insurance Act 1995;
or
(d) the Patents Act 1952; or
(e) the Trade Marks Act 1955.
280
General priority rules in relation to registered charges
(1) A registered charge on property of a
company has priority over:
(a) a subsequent registered charge on
the property, unless the subsequent registered charge was created before the
creation of the prior registered charge and the chargee in relation to the
subsequent registered charge proves that the chargee in relation to the prior
registered charge had notice of the subsequent registered charge at the time
when the prior registered charge was created; and
(b) an unregistered charge on the
property created before the creation of the registered charge, unless the
chargee in relation to the unregistered charge proves that the chargee in
relation to the registered charge had notice of the unregistered charge at the
time when the registered charge was created; and
(c) an unregistered charge on the
property created after the creation of the registered charge.
(2) A registered charge on property of a
company is postponed to:
(a) a subsequent registered charge on
the property, where the subsequent registered charge was created before the creation
of the prior registered charge and the chargee in relation to the subsequent
registered charge proves that the chargee in relation to the prior registered
charge had notice of the subsequent registered charge at the time when the
prior registered charge was created; and
(b) an unregistered charge on the
property created before the creation of the registered charge, where the
chargee in relation to the unregistered charge proves that the chargee in
relation to the registered charge had notice of the unregistered charge at the
time when the registered charge was created.
281
General priority rule in relation to unregistered charges
An unregistered charge on property of a
company has priority over:
(a) a registered charge on the
property that was created after the creation of the unregistered charge and
does not have priority over the unregistered charge under subsection 280(1);
and
(b) another unregistered charge on the
property created after the first‑mentioned unregistered charge.
282
Special priority rules
(1) Except as provided by this section, any
priority accorded by this Part to a charge over another charge does not extend
to any liability that, at the priority time in relation to the first‑mentioned
charge, is not a present liability.
(2) Where a registered charge on property of
a company secures:
(a) a present liability and a
prospective liability of an unspecified amount; or
(b) a
prospective liability of an unspecified amount;
any priority accorded by this Part to the charge over
another charge of which the chargee in relation to the first‑mentioned charge
does not have actual knowledge extends to the prospective liability, whether
the prospective liability became a present liability before or after the
registration of the first‑mentioned charge.
(3) Where a registered charge on property of
a company secures:
(a) a present liability and a
prospective liability up to a specified maximum amount; or
(b) a
prospective liability up to a specified maximum amount;
and the notice lodged under section 263 or 264 in
relation to the charge sets out the nature of the prospective liability and the
amount so specified, then any priority accorded by this Part to the charge over
another charge extends to any prospective liability secured by the first‑mentioned
charge to the extent of the maximum amount so specified, whether the
prospective liability became a present liability before or after the
registration of the first‑mentioned charge and notwithstanding that the chargee
in relation to the first‑mentioned charge had actual knowledge of the other
charge at the time when the prospective liability became a present liability.
(4) Where:
(a) a registered charge on property of
a company secures:
(i) a present liability
and a prospective liability up to a specified maximum amount; or
(ii) a
prospective liability up to a specified maximum amount;
but the notice lodged under
section 263 or 264 in relation to the charge does not set out the nature
of the prospective liability or the maximum amount so specified; or
(b) a
registered charge on property of a company secures a prospective liability of
an unspecified amount;
the following paragraphs have effect:
(c) any priority accorded by this Part
to the charge over another charge of which the chargee in relation to the first‑mentioned
charge has actual knowledge extends to any prospective liability secured by the
first‑mentioned charge that had become a present liability at the time when the
chargee in relation to the first‑mentioned charge first obtained actual
knowledge of the other charge;
(d) any priority accorded by this Part
to the charge over another charge of which the chargee in relation to the first‑mentioned
charge has actual knowledge extends to any prospective liability secured by the
first‑mentioned charge that became a present liability, as the result of the
making of an advance, after the time when the chargee in relation to the first‑mentioned
charge first obtained actual knowledge of the other charge if, at that time,
the terms of the first‑mentioned charge required the chargee in relation to
that charge to make the advance after that time, and so extends to that
prospective liability whether the advance was made before or after the
registration of the first‑mentioned charge and notwithstanding that the chargee
in relation to the first‑mentioned charge had actual knowledge of the other
charge at the time when the advance was made.