Commonwealth Numbered Acts Commonwealth Numbered Acts1 Part 1.5, the heading to Chapter 2 and Parts 2.1, 2.2, 2.3 and 2.4
Repeal the Parts and heading, substitute:
Part 1.5--Small business guide
This guide summarises the main rules in the Corporations Law 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 Law as it applies to those companies and directs readers to the operative provisions in the Law.
The notes in square brackets at the end of paragraphs in the guide indicate the main provisions of the Corporations Law, the regulations made under the Law, and Australian Securities Commission 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.
SECT 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:
* enter into contracts
* sue and be sued.
[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 232, 233, 344, 588G, 588J, 588M, 1317HA, 1317HD]
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 some form of security over their house or personal assets to secure the performance by the company of its obligations.
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 Law 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 Law are replaceable rules. The replaceable rules do not apply to:
* a company that had a constitution before the introduction of the replaceable rules regime and has not repealed it.
[sections 134-141, 224B]
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 Law, 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 Law 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:
* by having all of the directors record and sign their decision.
[sections 224B, 226A, 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:
* by having all of the shareholders record and sign their decision.
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 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.
SECT 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.
SECT 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 the ASC 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 the ASC. 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 the ASC registers it.
[sections 117-119, 135-136, 140]
3.3 ACN and name
When a company is registered, the ASC 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 the ASC 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 the ASC 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 to its registered office, it must notify the ASC 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 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 the ASC.
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:
* details of shares held by individual shareholders.
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.
SECT 4 Continuing obligations after the company is set up The Corporations Law 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 Law 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 must appear:
* on its cheques and negotiable instruments; and
* on all documents lodged with the ASC; and
* if it has one, on its common seal.
4.2 Annual return
A company must lodge with the ASC an annual return which contains such information as:
* issued shares and options granted; and
* details of its shareholders; and
* address of its registered office; and
* address of its principal place of business; and
* a statement that the directors have resolved in the last month that, in the directors' opinion, there are reasonable grounds to believe the company will be able to pay its debts as and when they become payable (but if the company has lodged an annual financial report with the ASC within the last 12 months, it does not need to include this statement).
The ASC may send a partially completed annual return to a company that wants to lodge its annual return on a printed form for the company to check, amend if necessary, verify and send back to the ASC. However, a company must lodge an annual return with the ASC even if the ASC does not send a partially completed annual return to the company.
[sections 345-348, 352]
4.3 Annual fee
A company must pay an annual fee to the ASC on lodgment of the annual return.
[Corporations (Fees) Regulations]
4.4 Notification to ASC of changes
The company must notify the ASC if certain basic changes to the company occur. The following table sets out these notification requirements.
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 the ASC of the appointment.
In some circumstances, the Corporations Law 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 the ASC 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 Law.
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. The company must notify the ASC of a director's resignation. A director who resigns may also notify the ASC of the resignation.
[sections 60, 221, 222A, 224, 228-230, 242, 242C, 599, 600, 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 224C]
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 Law and other laws. Some of the more important duties are:
* 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).
* 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.
[sections 232, 475, 530A, 588G, 596, 601AD, 601AH, 1317FA,
1317HA, 1317HB, 1317HD]
5.4 Company secretaries
A company must 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 the ASC 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. The company must notify the ASC of a company secretary's resignation. A company secretary who resigns may also notify the ASC of the resignation.
The company secretary is an officer of the company and, in that capacity, may be subject to the requirements imposed by the Corporations Law on company officers. The company secretary has specific responsibilities under the Corporations Law, including responsibility for ensuring that the company notifies the ASC about changes to the identities, names and addresses of the company's directors and company secretaries and that the company lodges its annual return.
A company secretary's obligations may continue even after the company has been deregistered.
[sections 83, 142, 222A, 240, 242, 242C, 345, 601AD, 601AH]
SECT 6 Shares and shareholders A proprietary company limited by shares must have a share capital and at least 1 shareholder. The ASC 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 company issuing shares to the person
* the person buying shares in the company from an existing shareholder and the company registering the transfer.
* the company buys back all the person's shares
* the ASC cancels the company's registration.
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 Law 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.
SECT 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:
* a director and the company secretary; or
* for a company with a sole director who is also the sole secretary--that director.
[sections 126-127, 240]
A company is not required to have a common seal. If it does, the seal must show the company's name and its ACN. The seal is equivalent to the company's signature and may be used on important company documents such as mortgages.
SECT 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 the company to lodge a prospectus with the ASC (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.
SECT 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 Law 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:
* for criminal and civil penalties.
9.1 Dividends
Dividends are payments to shareholders out of the company's after tax profits. 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.
SECT 10 Annual financial reports and audit 10.1 The small/large distinction
The accounting requirements imposed on a proprietary company under the Corporations Law 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 assets of less than $5 million at the end of the year
* fewer than 50 employees at the end of the year.
[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 Law, 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 Law 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 ASC directs it to do so.
Although the Corporations Law 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 the ASC unless exempted.
SECT 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 against the interests of the company as a whole.
[sections 246AA, 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:
* restrictions in the company's constitution (if any) on transferring shares.
SECT 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:
* the shareholders of a company pass a resolution to wind up the company.
12.4 Liquidators
A liquidator is appointed to administer the winding up of a company. The liquidator's main functions are:
* 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.
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 the ASC cancels the company's registration. Once a company is deregistered, it ceases to exist.
Chapter 2A--Registering a company Part 2A.1--What companies can be registered
SECT 112 Types of companies Types of companies
(1) The following types of companies can be registered under this Law:
| Proprietary companies
| Limited by shares
|
| Unlimited with share capital
| |
| Public companies
| Limited by shares
|
| Limited by guarantee
| |
| Unlimited
with share capital
| |
| No liability company
|
(2) A company may be registered as a no liability company only if:
(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 2: Special provisions on no liability companies are found in the sections referred to in the following table:
(4) The directors of a no liability company must not:
(b) make any contract for working any land on tribute;
(d) no such letting or contract has been made within the period of 2 years immediately preceding the proposed letting or contract.
SECT 113 Proprietary companies (1) A company must have no more than 50 non-employee shareholders if it is to:
(b) change to a proprietary company; or
(c) remain registered as a proprietary company.
(b) an employee shareholder is:
(ii) a shareholder who was an employee of the company, or of a subsidiary of the company, when they became a shareholder.
(b) employees of the company or of a subsidiary of the company.
SECT 115 Restrictions on size of partnerships and associations A person must not participate in the formation of a partnership or association which has as an object gain for itself or for any of its members and which either:
(b) has more than the number of members it is allowed to have under an application order made by the Minister under Part 1.3;
Part 2A.2--How a company is registered
SECT 117 Applying for registration Lodging application
(1) To register a company, a person must lodge an application with the ASC.
(2) The application must state the following:
(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:
(ii) the amount (if any) paid, taken to be paid or due and payable on the issue of each share
(m) for a company limited by guarantee--the proposed amount of the guarantee that each member agrees to in writing.
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 242AA).
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.
(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.
SECT 118 ASC gives company ACN, registers company and issues certificate Registration
(1) If an application is lodged under section 117, the ASC may:
(b) register the company; and
(c) issue a certificate that states:
(ii) the company's ACN; and
(iii) the company's type; and
(iv) that the company is registered as a company under the Corporations Law of this jurisdiction; and
(v) the date of registration.
(2) The ASC must keep a record of the registration. Subsections 1274(2) and (5) apply to the record as if it were a document lodged with the ASC.
SECT 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.
(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. The shares have the nominal value specified for them in the application.
SECT 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.
SECT 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:
(b) otherwise--the company's name, the expression "Australian Company Number" and the company's ACN.
Note 2: For abbreviations that can be used on a seal, see section 149.
(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).
Chapter 2B--Basic features of a company Part 2B.1--Company powers and how they are exercised
SECT 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:
(b) issue debentures
(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).
SECT 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.
SECT 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.
SECT 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:
(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.
(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.
(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
SECT 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.
SECT 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 Law 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 the ASC, to be a director or a company secretary of the company:
(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.
(3) A person may assume that anyone who is held out by the company to be an officer or agent of the company:
(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.
(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:
(b) the fixing of the common seal appears to have been witnessed in accordance with that subsection.
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.
SECT 130 Information available to the public from the ASC 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 the ASC.
(2) Subsection (1) does not apply in relation to a document that has been lodged with the ASC to the extent that the document relates to a charge that is registrable under this Law.
Part 2B.3--Contracts before registration
SECT 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:
(b) if there is no agreed time--within a reasonable time after the contract is entered into.
(b) if there is no agreed time--within a reasonable time after the contract is entered into.
(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:
(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.
SECT 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.
SECT 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
SECT 134 Internal management of companies A company's internal management may be governed by provisions of this Law that apply to the company as replaceable rules, by a constitution or by a combination of both.
(1) A section or subsection (except subsection 129(1), this section and sections 140 and 141) whose heading contains the words:
(ii) any company registered before that commencement that repeals its constitution after that commencement; and
(ii) as a replaceable rule to any company that is registered after that commencement and that changes to a proprietary company (but only while it is a proprietary company); and
(iii) as a replaceable rule to any proprietary company registered before that commencement that repeals its constitution after that commencement; and
(iv) as an ordinary provision of this Law to any public company whenever registered.
Note 2: A company may include in its constitution (by reference or otherwise) a replaceable rule that does not otherwise apply to it.
(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 Law (so the provisions about criminal liability, civil liability and injunctions do not apply).
(b) after registration--if the company passes a special resolution adopting a constitution.
(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 the ASC 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 the ASC within that period:
(b) if the company modifies its constitution--a copy of that modification.
SECT 137 Date of effect of adoption, modification or repeal of constitution (1) A special resolution adopting, modifying or repealing a company's constitution takes effect:
(b) on a later date specified in, or determined in accordance with, the resolution.
SECT 139 Company must send copy of constitution to member A company must send a copy of its constitution to a member of the company within 7 days if the member:
(b) pays any fee (up to the prescribed amount) required by the company.
(b) between the company and each director and company secretary; and
(c) between a member and each other member;
(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:
(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:
| Provisions that apply as replaceable rules
| ||
|---|---|---|
1
|
Directors Company may appoint a director
| 224C
|
| 2
| Alternate directors
|
225A
|
| 3
| Powers of directors
| 226A
|
| 4
| Executing negotiable instruments
|
226B
|
| 5
| Managing director
| 226C
|
| 6
| Delegation to committees
| 226D
|
| 7
| Proprietary company may remove director
| 226E
|
| 8
| Director may resign by
giving written notice to company
| 227A
|
| 9
| Director interested in contract
with proprietary company
| 231(1A)
|
| 10
| Remuneration of directors
| 236A
|
11
| Directors' meetings Circulating resolutions
| 248A
|
| 12
| Calling
directors' meetings
| 248C
|
| 13
| Chairing directors' meetings
| 248E
|
| 14
|
Quorum at directors' meetings
| 248F
|
| 15
| Passing of directors' resolutions
| 248G
|
16
| Meetings of members Calling of meetings of members by a director
| 249C
|
| 17
| Notice to joint members
| 249J(2)
|
| 18
| When notice by post or
fax is given
| 249J(4)
|
| 19
| Notice of adjourned meetings
| 249M
|
| 20
|
Quorum
| 249T
|
| 21
| Chairing meetings of members
| 249U
|
| 22
| Business at
adjourned meetings
| 249W(2)
|
| 23
| Who can appoint a proxy [replaceable rule for proprietary companies only]
| 249X
|
| 24
| Proxy vote valid even if member
dies, revokes appointment etc.
| 250C(2)
|
| 25
| How many votes a member has
|
250E
|
| 26
| Jointly held shares
| 250F
|
| 27
| Objection to right to vote
|
250G
|
| 28
| How voting is carried out
| 250J
|
| 29
| When and how polls must be
taken
| 250M
|
30
| Company secretary Terms of office determined by directors | 240(4A)
|
| 31
| Inspection of books Company or directors may allow member to inspect books
| 247D
|
32
| Shares Pre-emption for existing shareholders on issue of shares in proprietary company
| 254D
|
| 33
| Other provisions about
paying dividends
| 254U
|
| 34
| Dividend rights for shares in proprietary
companies
| 254W(2)
|
35
| Transfer of shares Transmission of shares on death | 1091AA
|
| 36
| Transmission of shares on bankruptcy
| 1091AB
|
| 37
|
Transmission of shares on mental incapacity
| 1091B
|
| 38
| Registration of
transfers
| 1091D
|
| 39
| Additional general discretion for directors of
proprietary companies to refuse to register transfers
| 1091E
|
40
| Share
capital Capitalisation of profits
| 254S
|
Part 2B.5--Registered office and places of business
SECT 142 Registered office (1) A company must have a registered office in Australia. Communications and notices to the company may be addressed to its registered office.
(b) a later day specified in the notice as the date from which the change is to take effect.
(b) has withdrawn the consent;
(3) If the ASC is not notified of the address of the company's proposed new registered office under subsection 142(2) within 14 days after the notice under subsection (2) is sent, the ASC may change the address of the company's registered office to the director's address.
SECT 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.
SECT 145 Opening hours of registered office of public company (1) The registered office of a public company must be open to the public:
(b) at least 3 hours chosen by the company between 9 am and 5 pm each business day.
(b) if the company changes its opening hours after its registration--in the most recent notice of change of opening hours lodged with the ASC under subsection (3).
SECT 146 Change of address of principal place of business A company must lodge with the ASC notice of a change of the address of its principal place of business not later than 14 days after the date on which the change occurs. The notice must be in the prescribed form.
Part 2B.6--Names Division 1--Selecting and using a name SECT 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:
(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.
(2) The Minister may consent in writing to a name being available to a company even if the name is:
(b) unacceptable for registration under the regulations.
(1) A company may have as its name:
(b) the expression "Australian Company Number" followed by the company's ACN.
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:
(b) the word "Proprietary" (or an abbreviation of it) was included in its name before that commencement.
(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
|
SECT 150 Exception to requirement for using "Limited" in name (1) The ASC 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:
(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.
SECT 151 Exception to requirement for using "Limited" in name--pre-existing licences (1) A licence in force immediately before the commencement of this section that allowed a company to omit "Limited" from its name continues in force subject to subsection (3).
(2) The company must notify the ASC as soon as practicable if it:
(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).
SECT 152 Reserving a name (1) A person may lodge an application in the prescribed form with the ASC to reserve a name for a company. If the name is available, the ASC must reserve it.
(3) The ASC must cancel a reservation if the applicant asks the ASC in writing to do so.
SECT 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, the expression "Australian Company Number" followed by its ACN. 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 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".
SECT 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.
SECT 156 Carrying on business using "Limited", "No Liability" or "Proprietary" in name A person must not carry on business under a name or title that:
(b) includes the word "Proprietary" (or an abbreviation of it);
Division 2--Changing a company's name SECT 157 Company changing its name (1) If a company wants to change its name, it must:
(b) lodge an application in the prescribed form with the ASC.
(3) If the proposed name is available, the ASC 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 the ASC alters the details of the company's registration.
(b) the company has breached a condition under subsection 147(3) on the availability of the name.
(3) If the company does not comply with subsection (2), the ASC 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 the ASC alters the details of the company's registration.
SECT 159 ASC's power to include "Limited" in company's name (1) The ASC 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:
(b) the company modifies its constitution to remove any of those requirements or prohibitions; or
(c) the ASC revokes a licence referred to in section 151 that applies to the company.
SECT 160 ASC must issue new certificate if company's name changes If the ASC 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.
(b) affect the company's existing property, rights or obligations; or
(c) render defective any legal proceedings by or against the company.
Part 2B.7 Changing company type
SECT 162 Changing company type (1) A company may change to a company of a different type as set out in the following table by:
(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 2: Other types of companies that were previously allowed can change type under section 1416.
(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.
Unlimited company changing to limited company--resolution may deal with uncalled share capital and nominal value
(4) A special resolution to change an unlimited company that has share capital to a company limited by shares may also do either or both of the following:
(b) increase the nominal value of each of its shares.
SECT 163 Applying for change of type Lodging application
(1) To change its type, a company must lodge an application with the ASC.
Contents of the application
(2) The application must be accompanied by the following:
(ii) any other special resolution passed in connection with the change of type
(ii) any special resolution dealing with an issue of shares according to section 167
(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
(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 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).
(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:
(ii) the number, class and nominal value of the shares the person will take up
(iii) the amount (if any) paid, taken to be paid or due and payable on the issue of the shares; and
(c) the amount (if any) paid, taken to be paid or due and payable on the issue of the shares
(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).
(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.
SECT 164 ASC changes type of company (1) The ASC must give notice under subsection (3) that it intends to alter the details of the company's registration if:
(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) invite those creditors to make submissions to the ASC.
(b) published in the Gazette .
(4) Subject to an order made by a court or the Administrative Appeals Tribunal within that month, after that month has passed the ASC 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 the ASC 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 the ASC alters the details of the company's registration.
(6) The ASC 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.
(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.
(3) If a proprietary company does not comply with subsection (2), the ASC 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 the ASC alters the details of the company's registration.
(5) The ASC 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.
(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.
(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):
(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.
(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;
(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 Part 3.1
3 Part 3.3
4 Before Part 3.5
Chapter 2F--Members' rights and remedies
SECT 246A Membership of a company A person is a member of a company if they:
(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).
SECT 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:
(b) for a company without a share capital--rights of members in a class of members;
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:
(b) for a company without a share capital--rights of members in a class of members;
(ii) for a company without a share capital of the class of members whose rights are being varied or cancelled; or
SECT 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:
(b) members who hold shares to which the same rights are attached after the division form a separate class.
(b) members who hold shares to which the same rights are attached after the variation form a separate class.
(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:
(b) members who have the same rights after the division form a separate class.
(b) members who have the same rights after the variation form a separate class.
(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:
(b) those rights are not provided for in:
(ii) a notice, document or resolution that is lodged with the ASC.
(b) the company's constitution (if any) as in force when the existing preference shares were issued.
(b) a modification of the company's constitution (if any) to allow their rights to be varied or cancelled;
(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:
(b) if an application is made to the Court to have it set aside--when the application is withdrawn or finally determined.
(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 the ASC.
SECT 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:
(b) a conversion of shares in a class of shares in the company into shares in another class.
(3) A public company must lodge with the ASC a copy of each document (including an agreement or consent) or resolution that:
(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
(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.
SECT 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.
(2) If the company requires the member to pay for the copy, the company must send it:
(b) within any longer period approved by the ASC.
(4) If the company does not require payment for the copy, the company must send it:
(b) within any longer period approved by the ASC.
Part 2F.3--Inspection of books
SECT 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:
(b) authorising another person (whether a member or not) to inspect books of the company or scheme on the applicant's behalf.
(2) A person authorised to inspect books may make copies of the books unless the Court orders otherwise.
SECT 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:
(b) an order limiting the right of a person who inspects books to make copies in accordance with subsection 247A(2).
SECT 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.
Chapter 2G--Meetings Part 2G.1--Directors' meetings Division 1--Resolutions and declarations without meetings SECT 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.
(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 Law that the declaration be made at a directors' meeting.
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).
SECT 248E Chairing directors' meetings (replaceable rule see section SECT 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:
(b) a previously elected chair is not available or declines to act, for the meeting or the part of the meeting.
Note 2: For resolutions of 1 director proprietary companies without meetings, see section 248B.
(2) The chair has a casting vote if necessary in addition to any vote they have in their capacity as a director.
Part 2G.2--Meetings of members of companies Division 1--Resolutions without meetings SECT 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 Law 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. If a share is held jointly, each of the joint members 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 Law:
(b) to lodge with the ASC 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).
(7) This section does not affect any rule of law relating to the assent of members not given at a general meeting.
Note 2: Passage of a resolution under this section must be recorded in the company's minute books (see section 251A).
(2) If this Law requires information or a document relating to the resolution to be lodged with the ASC, that requirement is satisfied by lodging the information or document with the resolution that is passed.
Note 2: Passage of a resolution under this section must be recorded in the company's minute books (see section 251A).
SECT 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 applies only to a company that is:
(b) included in an official list of the Exchange.
SECT 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:
(b) at least 100 members who are entitled to vote at the general meeting.
(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.
(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.
SECT 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.
(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.
SECT 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.
SECT 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:
(b) any member who would be entitled to vote at the meeting.
(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:
(b) any other general meeting, if members with at least 95% of the votes that may be cast at the meeting agree beforehand.
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:
(b) appoint a director in place of a director removed under that section; or
(c) to appoint or reappoint as a director under subsection 228(7) or (8)--a person who has attained the age of 72 years.
(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.
SECT 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 applies only to a company that is:
(b) included in an official list of the Exchange.
SECT 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. If a share is held jointly, notice need only be given to 1 of the members.
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:
(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
(d) by any other means that the company's constitution (if any) permits.
(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.
SECT 249K Auditor entitled to notice and other communications A company must give its auditor:
(b) any other communications relating to the general meeting that a member of the company is entitled to receive.
Note 2: An auditor may appoint a representative to attend a meeting (see subsection 249V(4)).
(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:
(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.
Division 4--Members' rights to put resolutions etc. at general meetings SECT 249N Members' resolutions (1) The following members may give a company notice of a resolution that they propose to move at a general meeting:
(b) at least 100 members who are entitled to vote at a general meeting.
(b) set out the wording of the proposed resolution; and
(c) be signed by the members proposing to move the resolution.
(4) The percentage of votes that members have is to be worked out as at the midnight before the members give the notice.
SECT 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:
(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.
(b) any other matter that may be properly considered at a general meeting.
(b) at least 100 members who are entitled to vote at the meeting.
(b) signed by the members making the request; and
(c) given to the company.
(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:
(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.
SECT 249R Time and place for meetings of members A meeting of a company's members must be held at a reasonable time and place.
SECT 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 2: For body corporate representatives, see section 250D.
(b) if the time is not specified--the same time; and
(c) if the place is not specified--the same place.
SECT 249U Chairing meetings of members (replaceable rule--see section SECT 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:
(b) a previously elected chair is not available, or declines to act, for the meeting (or part of the meeting).
SECT 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.
(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:
(b) the meeting passes a resolution to remove the auditor from office.
Note 2: For when a company must have an auditor, see Part 2M.3.
(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 SECT 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.
(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).
SECT 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:
(b) to vote (but only to the extent allowed by the appointment); and
(c) join in a demand for a poll.
(2) If a company has a constitution, the constitution may provide that a proxy is not entitled to vote on a show of hands.
(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.
SECT 249Z Company sending appointment forms or lists of proxies must send to all members 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:
(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.
(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.
(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.
(4) An appointment may specify the way the proxy is to vote on a particular resolution. If it does:
(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.
(b) a proxy appointment form holding the person out as being willing to act as a proxy.
(7) A later appointment revokes an earlier one if both appointments could not be validly exercised at the meeting.
SECT 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:
(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.
(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 an appointment authority when it is received at any of the following:
(b) a fax number at the company's registered office
(c) a place, fax number or electronic address specified for the purpose in the notice of meeting.
(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).
SECT 250BA Proxy documents--listed companies (1) In a notice of meeting for a meeting of the members of a company, the company:
(b) may specify an electronic address;
(2) This section applies only to a company that is:
(b) included in an official list of the Exchange.
SECT 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:
(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.
(b) at meetings of creditors or debenture holders; or
(c) relating to resolutions to be passed without meetings.
(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.
(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:
(b) on a poll, each member has 1 vote for each share they hold.
(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.
SECT 250G Objections to right to vote (replaceable rule--see section SECT 135) A challenge to a right to vote at a meeting of a company's members:
(b) must be determined by the chair, whose decision is final.
(b) may cast their votes in different ways.
(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.
(2) If a company has a constitution, the constitution may provide that a poll cannot be demanded on any resolution concerning:
(b) the adjournment of a meeting.
SECT 250L When a poll is effectively demanded (1) At a meeting of a company's members, a poll may be demanded by:
(b) members with at least 5% of the votes that may be cast on the resolution on a poll; or
(c) the chair.
(3) The poll may be demanded:
(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.
SECT 250M When and how polls must be taken (replaceable rule--see section SECT 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 SECT 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 2: The rules in sections 249C-250M apply to an AGM.
SECT 250P Extension of time for holding AGM (1) A public company may lodge an application with the ASC 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, the ASC may extend the period in writing. The ASC 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) The ASC may impose conditions on the extension and the company must comply with those conditions.
SECT 250R Business of AGM The business of an AGM may include any of the following, even if not referred to in the notice of meeting:
(b) the election of directors
(c) the appointment of the auditor
SECT 250T Questions by members of auditors at AGM If the company's auditor or their representative is at the meeting, the chair of an AGM must allow a reasonable opportunity for the members as a whole at the meeting to ask the auditor or their representative questions relevant to the conduct of the audit and the preparation and content of the auditor's report.
Part 2G.3--Minutes and members' access to minutes
SECT 251A Minutes (1) A company must keep minute books in which it records within 1 month:
(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.
(b) the chair of the next meeting.
(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:
(b) its principal place of business in Australia; or
(c) another place approved by the ASC.
SECT 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:
(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
(ii) against the resolution; and
(iii) abstaining on the resolution.
(3) This section applies only to a company that is:
(b) included in an official list of the Exchange.
SECT 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:
(b) any minutes of a resolution passed by members without a meeting.
(b) within any longer period that the ASC approves.
(b) within any longer period that the ASC approves.
Part 2G.4--Meetings of members of registered managed investment schemes Division 1--Who may call meetings of members SECT 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.
SECT 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:
(b) at least 100 members who are entitled to vote on the resolution.
(b) state any resolution to be proposed at the meeting; and
(c) be signed by the members proposing to move the resolution.
(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.
SECT 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.
SECT 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.
SECT 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:
(b) any member of the scheme who would be entitled to vote at the meeting.
SECT 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:
(b) each director of the responsible entity; and
(c) the auditor of the scheme; and
(d) the auditor of the scheme compliance plan.
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:
(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.
(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.
SECT 252H Auditors entitled to other communications 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.
SECT 252J Contents of notice of meetings of members A notice of a meeting of a registered scheme's members must:
(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:
(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.
Division 3--Members' rights to put resolutions etc. at meetings of members SECT 252L Members' resolutions (1) The following members of a registered scheme may give the responsible entity notice of a special or extraordinary resolution that they propose to move at a meeting of the scheme's members:
(b) at least 100 members who are entitled to vote at a meeting of the scheme's members.
(b) set out the wording of the proposed resolution; and
(c) be signed by the members giving the notice.
(4) The percentage of the votes that members have is to be worked out as at the midnight before the members give the notice.
SECT 252M Responsible entity giving notice of members' resolutions (1) If a responsible entity has been given notice of a special or extraordinary 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:
(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.
(b) any other matter that may be properly considered at a meeting of the scheme's members.
(b) at least 100 members who are entitled to vote at the meeting.
(b) signed by the members making the request; and
(c) given to the responsible entity.
(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:
(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.
SECT 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.
(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 2: For body corporate representatives, see section 253B.
(b) if the time is not specified--the same time; and
(c) if the place is not specified--the same place.
SECT 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:
(b) a previously appointed chair is not available, or declines to act, for the meeting (or part of the meeting).
SECT 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.
SECT 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 SECT 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).
SECT 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:
(b) to vote (but only to the extent allowed by the appointment).
(2) A registered scheme's constitution (if any) may provide that a proxy is not entitled to vote on a show of hands.
(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.
SECT 252X Responsible entity sending appointment forms or lists of proxies must send to all members 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:
(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.
(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.
(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:
(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.
(b) a proxy appointment form holding the person out as being willing to act as a proxy.
(7) A later appointment revokes an earlier one if both appointments could not be validly exercised at the meeting.
SECT 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:
(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.
(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
(3) A responsible entity receives an appointment authority when it is received at any of the following:
(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.
(4) An appointment of a proxy is ineffective if:
(b) a requirement (if any) in the notice of meeting that:
(ii) the proxy produce the appointment and authority (if any) at the meeting;
(5) The scheme's constitution or the notice of meeting may reduce the period of 48 hours referred to in subsection (2) or (3).
SECT 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:
(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.
(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.
SECT 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 SECT 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 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).
SECT 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.
(b) if it is not quoted on a stock market of a stock exchange 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.
(b) must be determined by the chair, whose decision is final.
(b) may cast their votes in different ways.
(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.
(2) A registered scheme's constitution may provide that a poll cannot be demanded on any resolution concerning:
(b) the adjournment of a meeting.
SECT 253L When a poll is effectively demanded (1) At a meeting of a registered scheme's members, a poll may be demanded by:
(b) members present with at least 5% of the votes that may be cast on the resolution on a poll; or
(c) the chair.
(3) The poll may be demanded:
(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.
Division 7--Minutes and members' access to minutes SECT 253M Minutes (1) A responsible entity of a registered scheme must keep minute books in which it records within 1 month:
(b) resolutions of meetings of the scheme's members.
(3) The responsible entity must keep the minute books at:
(b) its principal place of business in Australia; or
(c) another place approved by the ASC.
SECT 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:
(b) within any longer period that the ASC approves.
(b) within any longer period that the ASC approves.
Chapter 2H--Shares
SECT 254AA Shares to have nominal value Shares of a company with share capital have a nominal value.
SECT 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:
(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 2: Partly-paid shares are dealt with in sections 254M-254N.
(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.
(b) at the company's option; or
(c) at the shareholder's option.
(b) the rights and restrictions attaching to the shares.
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 the ASC (see subsection 246F(3)).
Note 3: Sections 246B-246G provide safeguards in cases where class rights are cancelled or varied.
(2) A share in a no liability company is issued on the following terms:
(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.
(3) If a company:
(ii) was initially registered as a no liability company and has changed its status under section 162 to another type of company; and
(4) The holders of shares issued to vendors or promoters are not entitled to preference on the winding up of a company that:
(b) was initially registered as a no liability company and has changed its status under section 162 to another type of company.
SECT 254CA Nominal value of shares issued after registration On the issue of shares by a company after registration, the shares may only have:
(b) a nominal value provided for in the company's constitution (if any); or
(c) a nominal value approved by a resolution of the company passed at a general meeting.
(1) A company may issue a share at a premium.
(2) When the company receives a premium for the issue of a share, an amount equal to the amount or value of the premium is transferred to the company's share premium account.
Payments out of the share premium account
(3) The share premium account may be applied:
(b) in paying up in whole or in part the balance unpaid on shares previously issued to members of the company; or
(c) in paying dividends if those dividends are satisfied by the issue of shares to members of the company; or
(d) in the case of a company that carries on life insurance business--by appropriation or transfer to any statutory fund established and maintained under the Life Insurance Act 1995 ; or
(e) in writing off:
(ii) the expenses of, or the payment made in respect of or discount allowed on, any issue of shares in, or debentures of, the company; or
(g) in providing the premium payable on redemption of debentures or redeemable preference shares.
(2) A company other than a no liability company may only issue shares at a discount if:
(b) the issue of the shares at a discount is:
(ii) confirmed by order of the Court; and
(d) the shares are issued within:
(ii) that period as extended by the Court; and
(4) An offer made for the purposes of paragraph (2)(e) must be made in a notice that specifies:
(b) the period (ending not less than 21 days after the date of the notice) within which the offer may be accepted.
SECT 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:
(b) the period for which it will remain open.
(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).
SECT 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:
(b) the terms of the issue are inconsistent with or not authorised by:
(ii) another law of this jurisdiction; or
(iii) the company's constitution (if any).
SECT 254F Bearer shares and stock must not be issued A company does not have the power to:
(b) issue stock or convert shares into stock.
(b) convert a preference share into an ordinary share.
(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 or preference shares.
SECT 254H Resolution to convert shares into larger or smaller number (1) By resolution passed in general meeting, a company may:
(b) subdivide all or any of its shares into shares of smaller nominal value.
Note 2: An unlimited company converting to a company limited by shares can increase the nominal value of its shares under subsection 162(4).
(b) a later date specified in the resolution.
(4) The company must lodge a copy of the resolution with the ASC within 1 month after it is passed.
Part 2H.2--Redemption of redeemable preference shares
SECT 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.
SECT 254K Other requirements about redemption (1) A company may only redeem redeemable preference shares if the shares are fully paid-up and may only redeem them:
(b) out of the proceeds of a new issue of shares made for the purpose of the redemption.
SECT 254L Consequences of contravening section 254J or 254K (1) If a company redeems shares in contravention of section 254J or 254K:
(b) the company is not guilty of an offence.
SECT 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
(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:
(b) any contribution to the debts and liabilities of the company.
(2) The company must lodge with the ASC a copy of the special resolution within 14 days after it is passed.
SECT 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:
(b) the day when it is payable; and
(c) the place for payment.
(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.
SECT 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:
(b) the call is unpaid at the end of 14 days after it 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:
(b) the amount of the call; and
(c) the amount of any other calls becoming payable on or before the day of the sale;
Reserve price
(7) The directors may fix a reserve price for the share that does not exceed the sum of:
(b) the amount of any other calls that become payable on or before the date of the 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:
(b) the share is withdrawn from sale;
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:
(b) then, any expenses necessarily incurred in respect of the forfeiture; and
(c) then, the calls on the share that are due and unpaid.
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.
SECT 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:
(b) if the company so requires:
(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.
(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 Law required to be open and accessible to the public.
Part 2H.4--Capitalisation of profits
SECT 254S Capitalisation of profits (replaceable rule--see section SECT 135) A company may capitalise profits to:
(b) pay up shares to be issued to members as fully-paid bonus shares.
SECT 254T Dividends to be paid out of profits A dividend may only be paid:
(b) out of the share premium account if the dividend is satisfied by the issue of shares to members of the company.
Note 2: For the use of the share premium account to pay dividends, see paragraph 254CB(3)(c).
(b) the time for payment; and
(c) the method of payment.
(2) Interest is not payable on a dividend.
SECT 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.
SECT 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:
(b) different dividend rights are provided for by special resolution of the company.
(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:
(b) is due and unpaid.
Part 2H.6--Notice requirements
SECT 254X Notice to ASC of share issue (1) Within 1 month after issuing shares, a company must lodge with the ASC a notice in the prescribed form that sets out:
(b) if the company has different classes of shares--the class to which each of those shares belongs; and
(c) the nominal value of the shares; and
(d) the amount (if any) paid, taken to be paid or due and payable on the issue of the 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.
(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.
(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.
Chapter 2J--Transactions affecting share capital Part 2J.1--Share capital reductions and sharebuy-backs Division 1--Reductions in share capital not otherwise authorised by law SECT 256A Reductions in share capital Requirement for special resolution and Court confirmation
(1) A company must not reduce its share capital unless:
(b) the reduction is:
(ii) confirmed by the Court under section 256B.
_ cancelling paid-up share capital that is lost or is not represented by available assets
_ paying off any paid-up share capital that is in excess of the company's needs.
Note 3: Subsection 256B(2) provides that the Court will generally not confirm a reduction in share capital unless a creditor protection test in section 256C is satisfied
Note 4: If the nominal value of shares affected by the reduction is specified in the company's constitution, the company may amend its constitution by special resolution to make any necessary adjustments to the nominal value of those shares.
(2) If the reduction involves:
(b) paying a shareholder:
(ii) an amount out of the share premium account or capital redemption reserve;
(d) the Court is satisfied that the reduction does not need to satisfy the creditor protection test in section 256C because of the special circumstances of the case.
(4) The order confirming the reduction must specify:
(b) the amount (if any) that at the date of the order is taken to be paid up on each share.
(1) If a reduction in share capital has to satisfy the creditor protection test:
(b) the company must prepare a list of the company's creditors as at that date that shows the nature and amount of their debts or claims and present it to the Court; and
(c) the Court must:
(ii) ascertain (as far as possible) the nature and amount of their debts or claims.
(b) may publish notices fixing a day by which creditors whose names are not on the list may claim to be included on the list.
(b) would be able to prove the debt or claim against the company if a winding up of the company commenced on that date.
Satisfying the creditor protection test
(4) A reduction in share capital satisfies the creditor protection test if each creditor on the list settled by the Court:
(b) has their debt discharged or their claim determined; or
(c) has their debt or claim secured; or
(d) has their debt or claim provided for under subsection (5).
(ii) the company does not admit that amount but is willing to provide for it; or
(ii) the amount of the debt or claim is contingent or not ascertained.
(6) Having regard to any special circumstances of any case, the Court may direct that particular requirements of this section do not apply in respect of creditors included in a class of creditors.
Company officers not to conceal or misrepresent debts or claims
(7) An officer of a company must not:
(b) knowingly misrepresent to the company or the Court the nature or amount of the debt or claim of a creditor of the company.
(1) The company must lodge with the ASC copies of:
(b) the Court order confirming the reduction.
(2) A company must not act upon a resolution to reduce its share capital before the date on which the documents are lodged with the ASC under subsection (1). However, the resolution may specify as the date from which the reduction of capital is to have effect a date that is earlier than the lodgment date but not earlier than the date of the resolution.
SECT 256E Effect of reduction of share capital on members and former members Effect of reduction on liability of members and former members for calls and contributions
(1) The liability of a member or former member of a company for a call or contribution in respect of a share in the company is not to exceed the difference (if any) between:
(b) the amount paid, or the reduced amount (if any) that is taken to have been paid, on the share.
(2) A person who is a member of the company on the date on which the copy of the confirming order is lodged with the ASC under subsection 256D(1) is liable to contribute towards the payment of a creditor's debt or claim if:
(b) the creditor's name is not entered on the list of creditors settled under that section because they are not aware of:
(ii) the nature of the proceedings and the effect of the proceedings on their claim; and
Liability as contributory on winding up
(3) If:
(b) the creditor referred to in subsection (2) applies to the Court; and
(c) the creditor proves that they were not aware of:
(ii) the nature of the proceedings or effect of the proceedings on the debt or claim; and
(f) make and enforce calls and orders on the contributories whose names are included in the list as if they were ordinary contributories in a winding up.
SECT 256F Consequences of failing to comply with section 256A (1) A company must not make a reduction in share capital unless it complies with subsection 256A(1).
(2) If the company contravenes subsection (1):
(b) the company is not guilty of an offence.
(b) seeking to ensure fairness between the company's shareholders
(c) requiring the company to disclose all material information.
(b) the company follows the procedures laid down in this Division.
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.
SECT 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 ASC [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 ASC [254Y]
| yes
| yes
| yes
| yes
| yes
|
yes
| yes
| yes
|
(2) An equal access scheme is a scheme that satisfies all the following conditions:
(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.
(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.
(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:
(b) the voting shares that will be bought back if the proposed buy-back is made;
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 at an official meeting of a securities exchange in Australia in the ordinary course of trading on a stock market of that exchange.
(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 on a stock market of a body corporate that:
(b) the ASC declares in writing to be an approved overseas securities exchange for the purposes of this subsection.
(8) A declaration under paragraph (7)(b) may be subject to conditions. Notice of the making of the declaration must be published in the Gazette .
SECT 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 ASC
(3) Before the notice of the meeting is sent to shareholders, the company must lodge with the ASC a copy of:
(b) any document relating to the buy-back that will accompany the notice of the meeting sent to shareholders.
(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:
(b) a resolution agreed to, at a general meeting, by all ordinary shareholders;
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 ASC
(3) Before the notice of the meeting is sent to shareholders, the company must lodge with the ASC a copy of:
(b) any document relating to the buy-back that will accompany the notice of the meeting sent to shareholders.
(b) must be granted before the buy-back agreement is entered into; and
(b) if it is not--the agreement is entered into.
(b) a notice that the company intends to carry out the buy-back.
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:
_ as part of particular on-market buy-back activity.
SECT 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.
SECT 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 deal in 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.
Division 3--Other share capital reductions SECT 258A Unlimited companies An unlimited company may reduce its share capital in any way.
SECT 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.
SECT 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.
SECT 258E Other authorised reductions (1) This subsection authorises any reduction in share capital involved in:
(b) a company's buying-back of its own shares under sections 257AA to 257J; or
(c) the cancellation of a share under subsection 254H(1), 667(3) or 1024E(7).
(b) subsection 254K(2) (payment of premium payable on redemption of redeemable preference shares).
SECT 258F Reductions because of lost capital A company may reduce its share capital by cancelling any paid-up share capital that is lost or is not represented by available assets. This power does not apply if the company also cancels shares.
Part 2J.2--Self-acquisition and control of shares
SECT 259A Directly acquiring own shares A company must not acquire shares (or units of shares) in itself except:
(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
(2) A company may take security over shares in itself under an employee share scheme that has been approved by:
(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.
(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:
(b) the security is taken in the ordinary course of that business and on ordinary commercial terms.
(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.
SECT 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:
(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:
(ii) that transaction was not entered into with an associate of the company or an entity it controls; 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.
(b) may be granted subject to conditions.
SECT 259D Company controlling entity that holds shares in it (1) If any of the following occur:
(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);
(f) the company must cease to control the entity.
(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:
(b) the company must cease 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.
(5) This section does not apply to shares (or units of shares) if:
(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:
(ii) that transaction was not entered into with an associate of the company or an entity it controls.
SECT 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:
(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).
(4) A company is not to be 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.
(b) the company is not guilty of an offence.
Part 2J.3--Financial assistance
SECT 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:
(ii) the company's ability to pay its creditors; or
(c) the assistance is exempted under section 260C.
(b) take the form of paying a dividend.
SECT 260B Shareholder approval Approval by company's own shareholders
(1) Shareholder approval for financial assistance by a company must be given by:
(b) a resolution agreed to, at a general meeting, by all ordinary shareholders.
(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:
(b) is not itself a subsidiary of a domestic corporation;
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 ASC 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 the ASC a copy of:
(b) any document relating to the financial assistance that will accompany the notice of the meeting sent to the members.
Lodgment of special resolutions
(7) A special resolution passed for the purpose of subsection (1), (2) or (3) must be lodged with the ASC by the company, listed domestic corporation or holding company within 14 days after it is passed.
SECT 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:
(b) entering into an agreement with a person under which the person may make payments to the company on shares by instalments.
(2) Financial assistance is exempted from section 260A if:
(b) the financial assistance is given in the ordinary course of that business and on ordinary commercial terms.
(3) Financial assistance is exempted from section 260A if:
(b) the financial assistance is a guarantee or other security given by the company for the repayment by the borrowing corporation of money that it is or will be liable to repay; and
(c) the borrowing corporation is a borrowing corporation 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.
(4) Financial assistance is exempted from section 260A if it is given under an employee share scheme that has been approved by:
(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.
(5) The following types of financial assistance are exempted from section 260A:
(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.
(b) the company is not guilty of an offence.
Part 2J.4--Interaction with general directors' duties
SECT 260E General duties still apply A director is not relieved from any of their duties under this Law (including section 232), 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.
5 Part 3.6
Chapter 2M--Financial reports and audit Part 2M.1--Overview
SECT 285 Overview of obligations under this Chapter Obligations under this Chapter
(1) Under this Chapter, all companies, registered schemes and disclosing
entities must keep financial records (see sections
286-291)--and some must
prepare financial reports (see sections 292-323D). All those that have to
prepare financial reports have to prepare them annually; disclosing entities
have to prepare half-year financial reports as well. The following table sets
out what is involved in annual financial reporting:
| Annual financial
reporting
| |||
|---|---|---|---|
| steps
| sections
| comments
| |
| 1
| prepare financial report
| s.
295
| The financial report includes: * financial statements * disclosures and notes * directors' declaration.
|
| 2
| prepare directors' report
| s. 298
| The
report has both a general component (s. 299) and a specific component (s.
300).
|
| 3
| have the financial report audited and obtain auditor's report
| s.
301, 307, 308
| A small proprietary company preparing a financial report in
response to a shareholder direction under s. 293 only has to have an audit if
the direction asks for it. Under s. 312, officers must assist the auditor in the conduct of the audit. The ASC may use its exemption powers under s. 340 and 341 to relieve large proprietary companies from the audit requirements in appropriate cases (s. 342(2) and (3)).
|
| 4
| send the financial report,
directors' report and auditor's report to members
| s. 314
| A concise
financial report may be sent to members instead of the full financial
statements (s. 314(1)-(2)). For deadline see s. 315(1)-(4).
|
| 5
| lodge the
financial report, directors' report and auditor's report with the ASC
| s. 319 | For deadline see s. 319(3). Companies that have the benefit of the grandfathering in s. 319(4) do not have to lodge.
|
| 6
| [public companies
only] lay financial report, directors' report and auditor's report before AGM
| s. 317
| For the AGM deadline see s. 250N.
|
(2) This Chapter covers all disclosing entities incorporated or formed in this jurisdiction (whether or not they are companies or registered schemes).
Application to registered schemes
(3) For the purposes of applying this Chapter to a registered scheme:
(b) the directors and officers of the responsible entity are to be taken to be the directors and officers of the scheme; and
(c) the debts incurred in operating the scheme are to be taken to be the debts of the scheme.
SECT 286 Obligation to keep financial records (1) A company, registered scheme or disclosing entity must keep written financial records that:
(b) would enable true and fair financial statements to be prepared and audited.
(2) The financial records must be retained for 7 years after the transactions covered by the records are completed.
SECT 287 Language requirements (1) The financial records may be kept in any language.
(2) An English translation of financial records not kept in English must be made available within a reasonable time to a person who:
SECT 288 Physical format If financial records are kept in electronic form, they must be convertible into hard copy. Hard copy must be made available within a reasonable time to a person who is entitled to inspect the records.
SECT 289 Place where records are kept (1) A company, registered scheme or disclosing entity may decide where to keep the financial records.
Records kept outside Australia
(2) If financial records about particular matters are kept outside Australia, sufficient written information about those matters must be kept in Australia to enable true and fair financial statements to be prepared. The company, registered scheme or disclosing entity must give the ASC written notice in the prescribed form of the place where the information is kept.
(3) The ASC may direct a company, registered scheme or disclosing entity to produce specified financial records that are kept outside Australia.
(4) The direction must:
(b) specify a place in Australia where the records are to be produced (the place must be reasonable in the circumstances); and
(c) specify a day (at least 14 days after the direction is given) by which the records are to be produced.
(1) A director of a company, registered scheme or disclosing entity has a right of access to the financial records at all reasonable times.
Court order for inspection on director's behalf
(2) On application by a director, the Court may authorise a person to inspect the financial records on the director's behalf.
(3) A person authorised to inspect records may make copies of the records unless the Court orders otherwise.
(4) The Court may make any other orders it consider appropriate, including either or both of the following:
(b) an order limiting the right of a person who inspects the records to make copies in accordance with subsection (3).
| Other provisions relevant to access to financial records
| ||
|---|---|---|
1
| section 247A
| members A member may apply to the Court for an order to inspect the records.
|
2
| section 310
| auditor The auditor has a right of access to the records.
|
3
| section 431
| controllers A controller of a corporation's property (for example, a receiver or receiver and manager) has a right of access to the records.
|
4
| sections 28 to 39 of the Australian Securities Commission Act 1989
| ASC The ASC has power to inspect the records. It also has power under subsection 289(3) of this Law to call for the production of financial records kept outside Australia.
|
Part 2M.3--Financial reporting Division 1--Annual financial reports and directors' reports SECT 292 Who has to prepare annual financial reports and directors' reports (1) A financial report and a directors' report must be prepared for each financial year by:
(b) all public companies; and
(c) all large proprietary companies; and
(d) all registered schemes.
(b) it was controlled by a foreign company for all or part of the year and it is not consolidated for that period in financial statements for that year lodged with the ASC by:
(ii) a company, registered scheme or disclosing entity.
SECT 293 Small proprietary company--shareholder direction (1) Shareholders with at least 5% of the votes in a small proprietary company may give the company a direction to:
(b) send them to all shareholders.
(b) made no later than 12 months after the end of the financial year concerned.
(b) that a directors' report or a part of that report need not be prepared
(2) The direction may be general or may specify the particular requirements that the company is to comply with.
(3) The direction must specify the date by which the documents have to be prepared, sent or lodged. The date must be a reasonable one in view of the nature of the direction.
(4) The direction must:
(b) specify the financial year concerned; and
(c) be made no later than 6 years after the end of that financial year.
(1) The financial report for a financial year consists of:
(b) the notes to the financial statements; and
(c) the directors' declaration about the statements and notes.
(2) The financial statements for the year are:
(b) a balance sheet as at the end of the year; and
(c) a statement of cash flows for the year; and
(d) if required by the accounting standards--a consolidated profit and loss statement, balance sheet and statement of cash flows.
(3) The notes to the financial statements are:
(b) notes required by the accounting standards; and
(c) any other information necessary to give a true and fair view (see section 297).
(4) The directors' declaration is a declaration by the directors:
(b) that the financial statements and notes give a true and fair view (see section 297); and
(c) whether, in the directors' opinion, there are reasonable grounds to believe that the company, registered scheme or disclosing entity will be able to pay its debts as and when they become due and payable; and
(d) whether, in the directors' opinion, the financial statement and notes are in accordance with this law, including:
(ii) section 297 (true and fair view).
(b) specify the date on which the declaration is made; and
(b) the direction specifies that the report does not have to comply with those accounting standards.
SECT 297 True and fair view The financial statements and notes for a financial year must give a true and fair view of:
(b) if consolidated financial statements are required--the financial position and performance of the consolidated entity.
(b) the specific information required by section 300.
(b) specify the date on which the report is made; and
(c) be signed by a director.
(b) the direction specified that a directors' report need not be prepared.
(1) The directors' report for a financial year must:
(b) give details of any significant changes in the entity's state of affairs during the year; and
(c) state the entity's principal activities during the year and any significant changes in the nature of those activities during the year; and
(d) give details of any matter or circumstance that has arisen since the end of the year that has significantly affected, or may significantly affect:
(ii) the results of those operations in future financial years; or
(iii) the entity's state of affairs in future financial years; and
(f) if the entity's operations are subject to any particular and significant environmental regulation under a law of the Commonwealth or of a State or Territory--details of the entity's performance in relation to environmental regulation.
(b) the consolidated entity (if consolidated financial statements are required).
(3) The report may omit material that would otherwise be included under paragraph (1)(e) if it is likely to result in unreasonable prejudice to:
(b) if consolidated financial statements are required--the consolidated entity or any entity (including the company, registered scheme or disclosing entity) that is part of the consolidated entity.
SECT 300 Annual directors' report--specific information (1) The directors' report for a financial year must include details of:
(b) dividends or distributions recommended or declared for payment to members, but not paid, during the year; and
(c) the name of each person who has been a director of the company, registered scheme or disclosing entity at any time during or since the end of the year and the period for which they were a director; and
(d) options that are:
(ii) granted to any of the directors or any of the 5 most highly remunerated officers of the company; and
(iii) granted to them as part of their remuneration;
(e) unissued shares or interests under option as at the day the report is made (see subsections (3) and (6)); and
(f) shares or interests issued during or since the end of the year as a result of the exercise of an option over unissued shares or interests (see subsections (3) and (7)); and
(g) indemnities given and insurance premiums paid during or since the end of the year for a person who is or has been an officer or auditor (see subsections (8) and (9)).
(2) Details do not have to be included in the directors' report under this section if they are included in the company's financial report for the financial year.
(3) Paragraphs (1)(d), (e) and (f) cover:
(b) if consolidated financial statements are required--options over unissued shares and interests of any controlled entity that is a company, registered scheme or disclosing entity.
(5) The details of an option granted are:
(b) the name of the person to whom the option is granted; and
(c) the number and class of shares or interests over which the option is granted.
(b) the number and classes of those shares or interests; and
(c) the issue price, or the method of determining the issue price, of those shares or interests; and
(d) the expiry date of the options; and
(e) any rights that option holders have under the options to participate in any share issue or interest issue of the company, registered scheme or disclosing entity or of any other body corporate or registered scheme.
(7) The details of shares or interests issued as a result of the exercise of an option are:
(b) the number of shares or interests issued; and
(c) if the company, registered scheme or disclosing entity has different classes of shares or interests--the class to which each of those shares or interests belongs; and
(d) the amount unpaid on each of those shares or interests; and
(e) the amount paid, or agreed to be considered as paid, on each of those shares or interests.
(8) The report for a company must include details of:
(b) any premium that is paid, or agreed to be paid, for insurance against a current or former officer's or auditor's liability and that is covered by subsection 241A(3).
(b) for an auditor--their name; and
(c) the nature of the liability; and
(d) for an indemnity given--the amount the company paid and any other action the company took to indemnify the officer or auditor; and
(e) for an agreement to indemnify--the amount that the relevant agreement requires the company to pay and any other action the relevant agreement requires the company to take to indemnify the officer or auditor; and
(f) for an insurance premium--the amount of the premium.
Special rules for public companies
(10) The report for a public company that is not a wholly-owned subsidiary of another company or of a recognised company must also include details of:
(b) the number of meetings of the board of directors held during the year and each director's attendance at those meetings; and
(c) the number of meetings of each board committee held during the year and each director's attendance at those meetings.
(11) The report for a listed company must also include the following details for each director:
(b) their relevant interests in debentures of, or interests in a registered scheme made available by, the company or a related body corporate
(c) their rights or options over shares in, debentures of or interests in a registered scheme made available by, the company or a related body corporate
(d) contracts:
(ii) that confer a right to call for or deliver shares in, or debentures of or interests in a registered scheme made available by the company or a related body corporate.
(12) The report for a registered scheme whose interests are quoted on a stock market of a securities exchange must also include the following details for each director of the company that is the responsible entity for the scheme:
(b) their rights or options over interests in the scheme
(c) contracts to which the director is a party or under which the director is entitled to a benefit and that confer a right to call for or deliver interests in the scheme.
(13) The report for a registered scheme must also include details of:
(b) the number of interests in the scheme held by the responsible entity or its associates as at the end of the financial year; and
(c) interests in the scheme issued during the financial year; and
(d) withdrawals from the scheme during the financial year; and
(e) the value of the scheme's assets as at the end of the financial year, and the basis for the valuation; and
(f) the number of interests in the scheme as at the end of the financial year.
(b) discussion of the relationship between such policy and the company's performance; and
(c) details of the nature and amount of each element of the emolument of each director and each of the 5 named officers of the company receiving the highest emolument.
(b) included in an official list of the Exchange.
SECT 301 Audit of annual financial report (1) A company, registered scheme or disclosing entity must have the financial report for a financial year audited in accordance with Division 3 and obtain an auditor's report.
(2) A small proprietary company's financial report for a financial year does not have to be audited if:
(b) the direction did not ask for the financial report to be audited.
(b) have the financial report audited or reviewed in accordance with Division 3 and obtain an auditor's report; and
(c) lodge the financial report, the directors' report and the auditor's report on the financial report with the ASC;
Note 2: See section 320 for the time for lodgment with the ASC.
Note 3: Subsection 318(4) requires disclosing entities that are borrowing corporations to also report to the trustee for debenture holders.
(1) The financial report for a half-year consists of:
(b) the notes to the financial statements; and
(c) the directors' declaration about the statements and notes.
(2) The financial statements for the half-year are:
(ii) a balance sheet as at the end of the half-year; and
(iii) a statement of cash flows for the half-year; and
(3) The notes to the financial statements are:
(b) notes required by the accounting standards; and
(c) any other information necessary to give a true and fair view (see section 305).
(4) The directors' declaration is a declaration by the directors:
(b) that the financial statements and notes give a true and fair view (see section 305); and
(c) whether, in the directors' opinion, there are reasonable grounds to believe that the disclosing entity will be able to pay its debts as and when they become due and payable.
(b) specify the day on which the declaration is made; and
SECT 305 True and fair view The financial statements and notes for a half-year must give a true and fair view of:
(b) if consolidated financial statements are required--the financial position and performance of the consolidated entity.
(b) the name of each person who has been a director of the disclosing entity at any time during or since the end of the half-year and the period for which they were a director.
Division 3--Audit and auditor's report SECT 307 Audit An auditor who conducts an audit of the financial report for a financial year or half-year must form an opinion about:
(ii) section 297 or 305 (true and fair view); and
(c) whether the company, registered scheme or disclosing entity has kept financial records sufficient to enable a financial report to be prepared and audited; and
(d) whether the company, registered scheme or disclosing entity has kept other records and registers as required by this Law.
(b) section 297 (true and fair view).
(2) If the auditor is of the opinion that the financial report does not comply with an accounting standard, the auditor's report must, to the extent it is practicable to do so, quantify the effect that non-compliance has on the financial report. If it is not practicable to quantify the effect fully, the report must say why.
(3) The auditor's report must describe:
(b) any deficiency, failure or shortcoming in respect of the matters referred to in paragraph 307(b), (c) or (d).
SECT 309 Auditor's report on half-year financial report Audit of financial report
(1) An auditor who audits the financial report for a half-year must report to members on whether the auditor is of the opinion that the financial report is in accordance with this Law, including:
(b) section 305 (true and fair view).
(2) If the auditor is of the opinion that the financial report does not comply with an accounting standard, the auditor's report must, to the extent that it is practicable to do so, quantify the effect that non-compliance has on the financial report. If it is not practicable to quantify the effect fully, the report must say why.
(3) The auditor's report must describe:
(b) any deficiency, failure or shortcoming in respect of the matters referred to in paragraph 307(d), (e) or (f).
(4) An auditor who reviews the financial report for a half-year must report to members on whether the auditor became aware of any matter in the course of the review that makes the auditor believe that the financial report does not comply with Division 2.
(5) A report under subsection (4) must:
(b) say why that matter makes the auditor believe that the financial report does not comply with Division 2.
(6) A report under subsection (1) or (4) must specify the date on which it is made.
SECT 310 Auditor's power to obtain information The auditor:
(b) may require any officer to give the auditor information, explanations or other assistance for the purposes of the audit or review.
SECT 311 Reporting to ASC The auditor conducting an audit or review must, as soon as possible, notify the ASC in writing if the auditor:
(b) believes that the contravention has not been or will not be adequately dealt with by commenting on it in the auditor's report or bringing it to the attention of the directors.
(b) give the auditor any information, explanation or assistance required under section 310.
(1) A borrowing corporation's auditor must give the trustee for debenture holders:
(b) a copy of any document that accompanies it.
Auditor to report on matters prejudicial to debenture holders' interests
(2) The auditor of a borrowing corporation or guarantor body must give the borrowing corporation or guarantor body a written report about any matter that:
(b) in the auditor's opinion, is or is likely to be prejudicial to the interests of debenture holders; and
(c) in the auditor's opinion, is relevant to the exercise of the powers of the trustee for debenture holders, or the performance of the trustee's duties, under this Law or the trust deed.
Division 4--Annual financial reporting to members SECT 314 Annual financial reporting to members Full or concise report to members
(1) A company, registered scheme or disclosing entity must report to members for a financial year by either:
(ii) the directors' report for the year (see sections 298-300); and
(iii) the auditor's report on the financial report; or
(2) A concise report for a financial year consists of:
(b) the directors' report for the year (see sections 298-300); and
(c) a statement by the auditor:
(ii) whether, in the auditor's opinion, the concise financial report complies with the accounting standards made for the purposes of paragraph (a); and
(e) a statement that the report is a concise report and that the full financial report and auditor's report will be sent to the member free of charge if the member asks for them.
(1) A public company, or a disclosing entity that is not a registered scheme, must report to members under section 314 by the earlier of:
(b) 4 months after the end of the financial year.
(2) If a shareholder direction is given to a small proprietary company under section 293 after the end of the financial year, the company must report to members under section 314 by the later of:
(b) 4 months after the end of the financial year.
(3) A registered scheme must report to members under section 314 within 3 months after the end of the financial year.
Other proprietary companies
(4) A proprietary company that is not covered by subsection (1) or (2) must report to members under section 314 within 4 months after the end of the financial year.
SECT 316 Member's choices for annual financial information (1) A member may request the company, registered scheme or disclosing entity:
(b) to send them a full financial report and the directors' report and auditor's report.
(2) The time for complying with a request under paragraph (1)(b) is:
(b) the deadline for reporting under section 315;
(3) A full financial report, directors' report and auditor's report are to be sent free of charge unless the member has already received a copy of them free of charge.
SECT 317 Consideration of reports at AGM The directors of a public company that is required to hold an AGM must lay before the AGM:
(b) the directors' report; and
(c) the auditor's report;
Note 2: A public company that has only 1 member is not required to hold an AGM (see section 250N).
(2) A debenture holder may ask the company or disclosing entity that issued the debenture for copies of:
(b) the full financial report and the directors' report and auditor's report for the last financial year.
(4) A disclosing entity that was a borrowing corporation at the end of a half-year must give a copy of the half-year financial report, directors' report and auditor's report to the trustee for debenture holders within 75 days after the end of the half-year.
Division 5--Lodging reports with the ASC SECT 319 Lodgment of annual reports with the ASC (1) A company, registered scheme or disclosing entity that has to prepare or obtain a report for a financial year under Division 1 must lodge the report with the ASC. This obligation extends to a concise report sent to members under section 314.
(2) Subsection (1) does not apply to a small proprietary company that prepares a report in response to a shareholder direction under section 293 or an ASC direction under section 294.
(3) The time for lodgment is:
(b) within 4 months after the end of the financial year for anyone else.
(b) the company has continued to meet the definition of exempt proprietary company (as in force at 30 June 1994) at all times since that date; and
(c) the company was a large proprietary company at the end of the first financial year that ended after 9 December 1995; and
(d) the company's financial statements and financial reports for the financial year ending during 1993 and each later financial year have been audited before the deadline for reporting to members for that year; and
(e) within 4 months after the end of the first financial year that ended after 9 December 1995, the company lodged with the ASC a notice that the company wanted subsection 317B(3), as in force at that time, to apply to the company. (The ASC may extend this period.)
(b) the appointment of a new auditor (including details of the new auditor).
(6) For the purposes of paragraph (4)(d), the deadline for reporting to members is:
(b) for an earlier financial year--the deadline for that year within the meaning of this Law as in force immediately before the commencement of this Part.
SECT 321 ASC power to require lodgment (1) The ASC may give a company, registered scheme or disclosing entity a direction to lodge with the ASC a copy of reports prepared or obtained by it under Division 1 or 2.
(2) The direction must:
(b) specify the period or periods concerned; and
(c) be made no later than 6 years after the end of the period or periods; and
(d) specify the date by which the documents have to be lodged.
SECT 322 Relodgment if financial statements or directors' reports amended after lodgment (1) If a financial report or directors' report is amended after it is lodged with the ASC, the company, registered scheme or disclosing entity must:
(b) give a copy of the amended report free of charge to any member who asks for it.
(b) their right to obtain a copy of the amended report under subsection (1).
SECT 323A Auditor's power to obtain information from controlled entity (1) An auditor who audits or reviews a financial report that includes consolidated financial statements:
(b) may require any officer of the entity to give the auditor information, explanations or other assistance for the purposes of the audit or review.
(2) The information, explanations or other assistance required under paragraph (1)(b) is to be given at the expense of the company, registered scheme or disclosing entity whose financial report is being audited or reviewed.
SECT 323B Controlled entity to assist auditor If a company, registered scheme or disclosing entity has to prepare a financial report that includes consolidated financial statements, an officer or auditor of a controlled entity must:
(b) give the auditor any information, explanation or assistance required under section 323A.
Division 7--Financial years and half-years SECT 323D Financial years and half-years First financial year
(1) The first financial year for a company, registered scheme or disclosing entity starts on the day on which it is registered or incorporated. It lasts for 12 months or the period (not longer than 18 months) determined by the directors.
Financial years after first year
(2) Subject to subsection (4), subsequent financial years must:
(b) be 12 months long.
Synchronisation of financial years where consolidated financial statements are required
(3) A company, registered scheme or disclosing entity that has to prepare consolidated financial statements must do whatever is necessary to ensure that the financial years of the consolidated entities are synchronised with its own financial years. It must achieve this synchronisation by the end of 12 months after the situation that calls for consolidation arises.
(4) To facilitate this synchronisation, the financial year for a controlled entity may be extended or shortened. The extended financial year cannot be longer than 18 months.
Half-years
(5) A half-year for a company, registered scheme or disclosing entity is the first 6 months of a financial year. The directors may determine that the half-year is to be shorter or longer (but not by more than 7 days).
Division 8--Disclosure by listed companies of information filed overseas SECT 323DA Listed companies to disclose information filed overseas (1) A company that discloses information to, or as required by:
(b) the New York Stock Exchange; or
(c) a prescribed securities exchange in a foreign country;
(2) This section applies only to a company that is:
(b) included in an official list of the Exchange.
6 Divisions 2 and 3 of Part 3.7 and Part 3.8
Repeal the Divisions and Part, substitute:
Part 2M.5--Accounting standards
SECT 334 Accounting standards AASB's power to make accounting standards
(1) The AASB may make accounting standards for the purposes of this Law. The standards must be in writing and must not be inconsistent with this law or the Regulations.
(2) Section 46A of the Acts Interpretation Act 1901 of the Commonwealth applies to a standard made under subsection (1) as if it were a disallowable instrument for the purposes of that section.
Application of standards
(3) Accounting standards may:
(b) differ according to differences in time, place or circumstance.
(b) periods ending on or after a later date specified in the standard.
SECT 335 Equity accounting This Chapter (and, in particular, the provisions on consolidation of financial statements) does not prevent accounting standards from incorporating equity accounting principles.
SECT 336 Comparative amounts The accounting standards for the preparation of financial reports for a period may require the inclusion in those reports of comparative amounts for earlier periods.
SECT 337 Interpretation of accounting standards In interpreting an accounting standard, unless the contrary intention appears:
(b) the provisions of Part 1.2 apply as if the standard's provisions were provisions of this Chapter.
SECT 339 Evidence of text of accounting standard (1) This section applies to a document that purports to be published by or on behalf of the AASB or ASC and to set out the text of:
(b) a specified provision of a standard of that kind.
(2) In the absence of evidence to the contrary, a document to which this section applies is proof in proceedings under the Corporations Law of this jurisdiction that:
(b) the text set out in the document is the text of the standard referred to in paragraph (1)(a) or the provision referred to in paragraph (1)(b).
Part 2M.6--Exemptions and modifications
SECT 340 ASC's power to make specific exemption orders (1) On an application made in accordance with subsection (3) in relation to a company, registered scheme or disclosing entity, the ASC may make an order in writing relieving any of the following from all or specified requirements of Parts 2M.2 and 2M.3:
(b) the company, scheme or entity
(c) the auditor.
(b) be indefinite or limited to a specified period.
(b) in writing and signed by a director; and
(c) lodged with the ASC.
SECT 341 ASC's power to make class orders (1) The ASC may make an order in writing in respect of a specified class of companies, registered schemes or disclosing entities, relieving any of the following from all or specified requirements of Parts 2M.2 and 2M.3:
(b) the companies, registered schemes or disclosing entities themselves
(c) auditors of the companies, registered schemes or disclosing entities.
(b) be indefinite or limited to a specified period.
SECT 342 Criteria for specific exemption orders and class orders (1) To make an order under section 340 or 341, the ASC must be satisfied that complying with the relevant requirements of Parts 2M.2 and 2M.3 would:
(b) be inappropriate in the circumstances; or
(c) impose unreasonable burdens.
(b) the expected benefits of having the company or companies comply with the audit requirements; and
(c) any practical difficulties that the company or companies face in complying effectively with the audit requirements (in particular, any difficulties that arise because a financial year is the first one for which the audit requirements apply or because the company or companies are likely to move frequently between the small and large proprietary company categories from one financial year to another); and
(d) any unusual aspects of the operation of the company or companies during the financial year concerned; and
(e) any other matters that the ASC considers relevant.
(b) the position of creditors and potential creditors (in particular, their ability to independently obtain financial information about the company or companies); and
(c) the nature and extent of the liabilities of the company or companies.
(b) all companies, registered schemes or disclosing entities of a specified kind.
Part 2M.7--Sanctions for contraventions of Chapter
SECT 344 Contravention of Part 2M.2 or 2M.3 (1) A director of a company, registered scheme or disclosing entity contravenes this section if they fail to take all reasonable steps to comply with, or to secure compliance with, Part 2M.2 or 2M.3.
(3) This section does not affect the application of the provisions of Part 2M.2 or 2M.3 to a director as an officer.
Chapter 2N--Annual returns and lodgments with the ASC Part 2N.1--Annual returns
SECT 345 Deadline for lodging annual return Companies
(1) A company must lodge an annual return with the ASC by
31 January each
year, unless the ASC and the company agree to a different lodgment date (see
subsection (3)).
Responsible entities of registered schemes
(2) The responsible entity of a registered scheme must lodge an annual return for the scheme with the ASC. The return for a scheme must be lodged within 3 months after the end of the scheme's financial year unless the ASC and the responsible entity agree to a different lodgment date (see subsection (3)).
Agreed lodgment date
(3) The ASC and the company or the ASC and the responsible entity may agree to a different lodgment date. The agreement must be in writing and may cover 1 or more years. The annual return must be lodged by the agreed date.
Company's obligation to lodge some notices ceases on lodgment of annual return
(4) A company's obligation to lodge a notice under section 142, 146, 242 or 254X, ceases when:
(b) the annual return sets out the information required by the notice.
(2) Subsection (1) does not apply to a company that has lodged a financial
report of the company with the ASC under
Chapter 2M within 12 months before
the annual return is lodged.
SECT 347 Lodging annual return with ASC An annual return may be lodged with the ASC:
| Contents of annual return--companies
| [operative table]
| |
|---|---|---|
| 1
|
ACN
| |
| 2
| name
| |
| 3
| address of registered office
| |
| 4
| address of
principal place of business
| |
| 5
| each director and company secretary
| *
name and address * date and place of birth. The address must be the person's usual residential address. However, if the person is entitled to have an alternative address under subsection 242AA(2), the annual return may contain that address.
|
| 6
|
issued shares
| The classes into which the shares are divided and for each
class of share issued: * the number and nominal value of shares in the class * the amount (if any) paid, taken to be paid or due and payable on each share in the class.
|
| 7
| options granted
| The number of unissued shares in each
class that are subject to options.
|
| 8
| all members (if company has 20 or
fewer members) OR the top 20 members in each class (if company has more than 20 members) The requirement to list the top 20 members does not apply to a company limited only by guarantee.
| * the names and addresses of the members If the company has a share capital: * the total number of shares in each class held by each of them * whether or not the shares are fully paid * unless the company is a listed corporation--whether or not the shares are beneficially owned. If 2 or more members in the top 20 members in a class of shares each hold the same number of shares, the company must include the details set out above for each of them.
|
| 9
| company solvency Not necessary if company lodged a financial report with ASC within last 12 months.
|
Statement whether the directors have resolved within the last month under
section 346 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.
|
| 10
| ultimate holding company
| * name either: * its ACN or ARBN if registered in Australia OR * the place at which it was incorporated or formed if not registered in Australia.
|
| Contents of annual return--registered schemes
|
[operative table]
| |
|---|---|---|
| 1
| registration number of scheme
| |
| 2
| name of scheme
| |
| 3
| name and ACN of the responsible entity
| |
| 4
| issued interests in a
managed investment scheme Only if the scheme is a unit trust.
| The classes
into which the interests are divided and for each class of interest issued: * the number of interests in the class * the total amount paid up for the class * the total amount unpaid for the class.
|
| 5
| issued interests in a managed
investment scheme Only if 4 does not apply.
| * a description of the nature
of the interests (for example, interest in a limited partnership, right to
participate in a timesharing scheme) * the number of those interests * the total amount paid for those interests * the total amount unpaid for those interests.
|
| 6
| options granted
| * the
number of unissued managed investment interests that are subject to options * for each of the classes of interests that is subject to options--the average exercise price.
|
| 7
| all interest holders (if scheme has 20 or fewer interest
holders) OR the top 20 interest holders in each class (if scheme has more than 20 interest holders)
| * the names and addresses of the interest holders * the total number of interests in each class held by each of them * whether or not the interests are fully paid. If 2 or more interest holders in the top 20 interest holders in a class each hold the same number of interests, the responsible entity must include the details set out above for each of them.
|
SECT 350 Forms for documents to be lodged with ASC A document that this Law requires to be lodged with the ASC in a prescribed form must be:
(b) if a form for the document is not prescribed in regulations but the ASC has approved a form for the document--in the approved form.
(b) if the local agent is a corporation--a director or secretary of the agent.
(3) The person's name must be printed next to the signature.
SECT 352 Documents lodged with ASIC electronically (1) A document may be lodged with ASIC electronically only if:
(b) ASIC has approved, in writing, the electronic lodgment of documents of that kind.
(2) Any agreement or approval must provide for a signed copy of the document to be held by the person lodging the document and for the person to make the signed copy of the document available to the ASIC if required.
7 Division 4 of Part 4.1
8 Parts 4.2, 4.3, 4.4 and 4.5
9 After Chapter 5
Chapter 5A--Deregistration of companies
SECT 601AA Deregistration--voluntary Who may apply for deregistration
(1) An application to deregister a company may be lodged with the ASC by:
(b) a director or member of the company; or
(c) a liquidator of the company.
Circumstances in which application can be made
(2) A person may apply only if:
(b) the company is not carrying on business; and
(c) the company's assets are worth less than $1,000; and
(d) the company has paid all fees and penalties payable under this Law; and
(e) the company has no outstanding liabilities; and
(f) the company is not a party to any legal proceedings.
(3) The applicant must give the ASC any information that the ASC requests about the current and former officers of the company.
Deregistration procedure
(4) If the ASC is not aware of any failure to comply with subsections (1) to (3), it must give notice of the proposed deregistration:
(b) in the Gazette .
(5) The ASC must give notice of the deregistration to:
SECT 601AB Deregistration--ASC initiated Circumstances in which the ASC may deregister
(1) The ASC may decide to deregister a company if:
(b) the company has not lodged any other documents under this Law in the last 18 months; and
(c) the ASC has no reason to believe that the company is carrying on business.
(b) the company's affairs have been fully wound up and a return that the liquidator should have lodged is at least 6 months late; or
(c) the company's affairs have been fully wound up under Part 5.4 and the company has no property or not enough property to cover the costs of obtaining a Court order for the company's deregistration.
(3) If the ASC decides to deregister a company under this section, it must give notice of the proposed deregistration:
(b) to the company's liquidator (if any); and
(c) to the company's directors; and
(d) on the ASC database; and
(e) in the Gazette .
(4) The ASC does not have to give a person notice under subsection (3) if the ASC does not have the necessary information about the person's identity or address.
(5) The ASC must give notice of the deregistration to everyone who was notified of the proposed deregistration under paragraph (3)(b) or (c).
SECT 601AC Deregistration--following amalgamation or winding up (1) The ASC must deregister a company if the Court orders the deregistration of the company under:
(b) paragraph 481(5)(b) (release of liquidator); or
(c) subsection 509(6) (liquidator's return following winding up).
(b) no order under subsection 509(6) has been made during that period.
(1) A company ceases to exist on deregistration.
(2) On deregistration, all the company's property vests in the ASC. If company property is vested in a liquidator immediately before deregistration, that property vests in the ASC. This subsection extends to property situated outside this jurisdiction.
(3) Under subsection (2), the ASC takes only the same property rights that the company itself held. If the company held particular property subject to a security or other interest or claim, the ASC takes the property subject to that interest or claim.
(5) The directors of the company immediately before deregistration must keep the company's books for 3 years after the deregistration. This does not apply to books that a liquidator has to keep under subsection 542(2).
SECT 601AE What the ASC does with the property (1) If property vested in the ASC under subsection 601AD(2) was held by the company on trust, the ASC may:
(b) apply to a court for the appointment of a new trustee.
(b) apply any money it receives to:
(ii) make payments authorised by subsection (3).
Obligations attaching to property
(3) The property remains subject to all liabilities imposed on the property under a law and does not have the benefit of any exemption that the property might otherwise have because it is vested in the ASC. These liabilities include a liability that:
(b) arises under a law that imposes rates, taxes or other charges.
Accounts
(5) The ASC must keep:
(b) a record of its dealings with that property; and
(c) accounts of all money received from those dealings; and
(d) all accounts, vouchers, receipts and papers relating to the property and that money.
(b) the insurance contract covered that liability immediately before deregistration.
(1) The ASC may reinstate the registration of a company if the ASC is satisfied that the company should not have been deregistered.
Reinstatement by Court
(2) The Court may make an order that the ASC reinstate the registration of a company if:
(ii) a former liquidator of the company; and
(b) make any other order it considers appropriate.
(4) The ASC must give notice of a reinstatement in the Gazette . If the ASC exercises its power under subsection (1) in response to an application by a person, the ASC must also give notice of the reinstatement to the applicant.
Effect of reinstatement
(5) If a company is reinstated, the company is taken to have continued in existence as if it had not been deregistered. A person who was a director of the company immediately before deregistration becomes a director again as from the time when the ASC or the Court reinstates the company. Any property of the company that is still vested in the ASC revests in the company. If the company held particular property subject to a security or other interest or claim, the company takes the property subject to that interest or claim.
Chapter 5B--Bodies corporate registered as companies, and registrable bodies Part 5B.1--Registering a body corporate as a company Division 1--Registration SECT 601BA Bodies corporate may be registered as certain types of companies (1) A body corporate that is not a company, recognised company or corporation sole may be registered under this Law as a company of one of the following types:
(b) an unlimited proprietary company with share capital
(c) a public company limited by shares
(d) a company limited by guarantee
(e) an unlimited public company with share capital
(f) a no liability company.
(b) the body's constitution states that its sole objects are mining purposes; and
(c) under the constitution the body has no contractual right to recover calls made on its shares from a member who fails to pay them.
(2) In applying subsection (1):
(b) an employee shareholder is:
Note 2: A name may be reserved for a company to be registered under this Part before the application is lodged (see Part 2B.6).
(b) the name of the body
(c) if the body is a registered body under the Corporations Law of any jurisdiction--its ARBN
(d) the proposed name under which the body is to be registered (unless the ACN is to be used)
(e) the name and address of each member of the body
(f) 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
(g) 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
(h) the address of each person who consents in writing to become a director or company secretary
(i) the address of the body's proposed registered office
(j) for a body proposed to be registered as a public company--the proposed opening hours of its registered office (if they are not the standard opening hours)
(k) the address of the body's proposed principal place of business (if it is not the address of the proposed registered office)
(l) for a body proposed to be registered as a company limited by shares or an unlimited company--the following:
(ii) the amount each member has already paid or agreed, in writing, to pay for each share
(iii) the amount unpaid on each share
(n) for a body proposed to be registered as a company limited by guarantee--the amount of the guarantee that each member has agreed to in writing.
Note 2: Paragraph (i)--if the body when it is registered under this Part 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).
(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 body is registered as a company, the applicant must give the consents and agreements to the company. The company must keep the consents and agreements.
(6) The following documents must be lodged with the application:
(b) a certified printed copy of the body's constitution (if any)
(c) for a body that is not a registered body under the Corporations Law of any jurisdiction--the documents required by subsection 263(3)--in relation to existing charges on the property of the body
(d) any other documents that are prescribed
(e) any other documents that the ASC requires by written notice given to the body.
(b) no application to wind up the body has been made to a court (in Australia or elsewhere) that has not been dealt with; and
(c) no application to approve a compromise or arrangement between the body and another person has been made to a court (in Australia or elsewhere) that has not been dealt with.
(b) if the members of the body have limited liability--the body's constitution defines how and to what extent that liability is limited; and
(c) if the body has a share capital and the members of the body have limited liability--its capital is of a fixed amount and it is divided into shares of a fixed amount; and
(d) the transfer of the body's incorporation is authorised; and
(e) the body has complied with the requirements (if any) of that law for the transfer of its incorporation; and
(f) if those requirements do not include consent to the transfer by the members of the body--the members:
(ii) were given at least 21 days notice of the meeting and the proposed resolution.
(1) If an application is lodged under section 601BC, the ASC may:
(b) register the body as a company of the proposed type specified in the application; and
(c) issue a certificate that states:
(ii) the company's ACN; and
(iii) the company's type; and
(iv) that the company is registered as a company under the Corporations Law of this jurisdiction; and
(v) the date of registration.
(2) The ASC must keep a record of the registration. Subsections 1274(2) and (5) apply to the record as if it were a document lodged with the ASC.
SECT 601BE Registered office The address specified in the application as the body's proposed registered office becomes the address of its registered office as a company on registration.
SECT 601BF Name A company registered under this Part has a name on registration that is:
(b) the expression "Australian Company Number" followed by the company's ACN.
SECT 601BG Constitution (1) The constitution on registration (if any) of a company registered under this Part is the constitution lodged with the application.
(2) If any text in a constitution lodged with the application is not in English, the English translation of that text lodged with the application for registration is taken to be the relevant text in the constitution on registration.
SECT 601BH Modifications of constitution (1) A company registered under this Part must modify its constitution within 3 months after registration to give effect to this Part.
(2) If the constitution specifies amounts of money expressed in foreign currency, the company must:
(b) modify its constitution by special resolution to convert those amounts into Australian currency using that rate.
(3) An amendment of a company's constitution under this section does not affect the number and class of shares held by each member.
SECT 601BJ ASC may direct company to apply for Court approval for modifications of constitution (1) The ASC may give the company a written direction to apply to the Court within a specified period for an order approving the modified constitution.
(2) The Court may make an order:
(b) declaring that the company will comply with section 601BH if it makes further modifications of its constitution as specified in the order.
SECT 601BK Establishing registers and minute books (1) A company registered under this Part must, within 14 days after registration:
(b) include in those registers the information that is required to be included in those registers and that is available to the company on registration; and
(c) set up the minute books required by section 251A.
(b) a minute of a general meeting.
SECT 601BL Registration of registered bodies (1) If a registered body becomes registered as a company under this Part or a corresponding law, it ceases to be a registered body. The ASC must remove the body's name from the appropriate register kept for the purposes of Division 1 or 2 of Part 5B.2.
(2) The ASC may keep any of the documents relating to the company that were lodged because the company used to be a registered body.
Division 2--Operation of the Corporations Law SECT 601BM Effect of registration under this Part (1) Registration under this Part does not:
(b) affect the body's existing property, rights or obligations (except as against the members of the body in their capacity as members); or
(c) render defective any legal proceedings by or against the body or its members.
SECT 601BN Liability of members on winding up A person who stopped being a member of the body before it was registered as a company under this Part is to be treated as a past member of the company in applying Division 2 of Part 5.6 to a winding up of the company. However, the person's liability to contribute to the company's property is further limited by this section to an amount sufficient for the following:
(b) payment of the costs, charges and expenses of winding up the company, so far as those costs, charges and expenses relate to those debts and liabilities
(c) the adjustment of the rights between the contributories, so far as the adjustment relates to those debts and liabilities.
(b) include the bearer's name in the company's register of members.
(b) the company failed to cancel the share.
SECT 601BS Modification by regulations The regulations may modify the operation of this Part in relation to a company registered under this Part.
Part 5B.3--Names of registrable Australian bodies and foreign companies
SECT 601DA Reserving a name (1) A person may lodge an application in the prescribed form with the ASC to reserve a name for a registrable Australian body or a foreign company. If the name is available, the ASC must reserve it.
(3) The ASC must cancel a reservation if the applicant asks the ASC in writing to do so.
SECT 601DB Acceptable abbreviations (1) The abbreviations set out in the following table may be used:
(b) instead of words that are part of a registrable Australian body's or foreign 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
| Australian
| Aust
|
| 5
|
Number
| No
|
| 6
| and
| &
|
| 7
| Australian Registered Body Number
| ARBN
|
| 8
| Registered
| Regd
|
SECT 601DC When a name is available Name is available unless identical or unacceptable
(1) A name is available to a registrable Australian body or a foreign company unless the name is:
(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.
(2) The Minister may consent in writing to a name being available to a registrable Australian body or foreign company even if the name is:
(b) unacceptable for registration under the regulations.
(b) the name is registered for it under the law of this jurisdiction dealing with business names.
(1) Subject to sections 601DF and 601DG, a registered Australian body or registered foreign company must set out the following on all its public documents and negotiable instruments published or signed in this jurisdiction:
(b) the expression "Australian Registered Body Number" followed by its ARBN
(c) its place of origin
(d) if the liability of its members is limited and this is not apparent from its name--notice of the limited liability of its members.
Where information to be set out
(2) Subject to sections 601DF and 601DG, the information required by paragraph (1)(b) must be set out with the company's or body's name, or 1 of the references to its name in the document or instrument. If the name appears on 2 or more pages of the document or instrument, this must be done on the first of those pages.
SECT 601DF Exception to requirement to have ARBN on receipts A registered Australian body or a registered foreign company does not have to set out the expression "Australian Registered Body Number" followed by its ARBN on a receipt (for example, a cash register receipt) that sets out information recorded in the machine that produced the receipt.
SECT 601DG Regulations may exempt from requirement to set out information on documents The regulations may exempt a specified registered Australian body or registered foreign company, or a class of those bodies or companies, from the requirement in paragraphs 601DE(1)(b), (c) and (d) 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.
SECT 601DH Notice of name change must be given to the ASC (1) A registered Australian body or a registered foreign company must give the ASC written notice of a change to its name within 14 days after the date the change occurred.
(2) If the proposed name is available, the ASC must alter the details of the body's or foreign company's registration to reflect the change. For the purposes of this Law (other than subsection (1)), the change of name takes effect when the ASC alters the details of the body's or foreign company's registration.
Note 2: For available names, see section 601DC.
Note 3: The ASC must issue a new certificate reflecting the name change (see section 601CU).
(b) the body or company has breached a condition under subsection 601DC(3) on the availability of the name.
(3) If the body or company does not comply with subsection (2), the ASC may change the body's or company's name to a name that includes its ARBN by altering the details of the body's or company's registration to reflect the change.
(4) For the purposes of this Law, a change of name under subsection (3) takes effect when the ASC alters the details of the body's or foreign company's registration.
10 After Part 9.10
Chapter 10--National scheme provisions
SECT 1362A Recognition of companies from other jurisdictions (1) A company registered under the Corporations Law of another jurisdiction has in this jurisdiction the same legal personality, capacity, attributes, power and type as if it were a company registered under the Corporations Law of this jurisdiction. Its powers include the power to hold land in this jurisdiction.
(2) Subsection (1) does not impose on the company an obligation that it would not have if that subsection had not been enacted.
SECT 1362B Transfer of registration (1) A company registered under the Corporations Law of another jurisdiction may transfer its registration to become registered as a company under the Corporations Law of this jurisdiction if:
(b) both the Minister and the Minister for the jurisdiction in which the company is currently registered have consented to the transfer.
(b) affect the company's existing property, rights or obligations; or
(c) render defective any legal proceedings by or against the company and its members.
SECT 1362BA Compensation for compulsory acquisition (1) If:
(b) the acquisition would be invalid because of paragraph 51(xxxi) of the Constitution;
(2) If the 2 people do not agree on the amount of the compensation, the person to whom compensation is payable may institute proceedings in the Court for the recovery of such reasonable amount as the court determines from the other person.
(3) Any damages or compensation recovered or other remedy given in a proceeding that is commenced otherwise than under this section is to be taken into account in assessing compensation payable in a proceeding that is commenced under this section and that arises out of the same event or transaction.
(4) In this section:
acquisition of property has the same meaning as in paragraph 51(xxxi) of the Constitution.
just terms has the same meaning as in paragraph 51(xxxi) of the Constitution
Chapter 11--Application and transitional provisions Part 11.1--Introduction of the Corporations Law
SECT 1362CA Existing company
This Part applies to a body corporate that was incorporated, immediately
before Division 2 of Part 2.2 commenced
(1 January 1991), under a previous law
of this jurisdiction that corresponded to Chapter 2 (as in force immediately
after that Division commenced).
SECT 1362CB Existing company taken to be registered under the Corporations Law (1) The body corporate was taken to have been registered as a company under Division 2 of Part 2.2 as from the commencement of that Division.
(2) The company was taken to have been registered as the type of company that most nearly corresponded to the company's type under the corresponding previous law.
(3) The company was taken to have been registered as:
(b) a public company in any other case.
(b) all matters related to the registration of the company under that legislation have been complied with; and
(c) the company was duly registered as a company under that legislation and was taken to be a company duly incorporated under that legislation on the date (if any) specified in the certificate.
(b) the company's registered memorandum in any other case.
(2) The provisions that formed part of the body corporate's articles immediately before the commencement of Division 2 of Part 2.2 were taken to become on the commencement of that Division:
(b) the company's registered articles;
SECT 1362CD Application of Law to existing companies (1) Subject to this Law, a provision of this Law that applies to the body corporate as a company applies to the body corporate in relation to:
(b) acts, things or matters including such an act, thing or matter;
(d) the act would, if the body corporate had been a company, and this Law had been in operation, when the act was done, have constituted compliance with that provision as so applying.
(b) with any other modifications that the circumstances require.
(2) On and after the commencement of that Division, this Law (other than this Division) applies to the body corporate as if:
(b) the act or thing had been validly done at that time under or for the purposes of that provision of that Chapter.
(3) Nothing in this section makes a person guilty of a contravention of this Law in respect of an act or thing done, or an omission made, before the commencement of Division 2 of Part 2.2.
SECT 1362CF Appointments of receivers Nothing in section 418 prevents a person from acting as a receiver of property of the body corporate under an appointment validly made before commencement.
SECT 1362CG Application of Division 2 of Part 5.6 Division 2 of Part 5.6 applies to the body corporate as if:
(b) references to becoming a limited company included a reference to becoming a limited company within the meaning of a previous law corresponding to section 164.
(b) was deregistered before commencement.
SECT 1362CJ Registrable Australian bodies and foreign companies (1) This section applies to each registrable body that was, immediately before commencement, registered under a previous law of this jurisdiction relating to foreign companies within the meaning of that law.
(2) If the body was a registrable Australian body, the ASC was taken to have registered it under Division 1 of Part 4.1 at commencement.
(3) If the body was a foreign company, the ASC was taken to have registered it under Division 2 of Part 4.1 at the commencement.
(4) At commencement, the body's registered office for the purposes of section 359 was taken to be the place that, immediately before commencement, was taken by a previous law of this jurisdiction corresponding to subsection 601CX(2) to be the situation of the body's registered office for the purposes of a previous law of this jurisdiction corresponding to subsection 601CX(1).
(5) Subsections 601CT(1) and (4) and 601CX(1) and (2) apply in relation to the body as if a reference in them to a provision of this Law included a reference to a previous law of this jurisdiction corresponding to that provision of this Law.
(6) If the body is a registrable body under a law corresponding to Division 1 or 2 of Part 5B.2 but is not registered under that Division:
(b) instead, each place that is taken by a law corresponding to subsection 601CX(2) to be the situation of the body's registered office for the purposes of a law corresponding to subsection 601CX(1) is taken to be the situation of a registered office of the body for the purposes of subsection 601CX(1).
Division 10--Changes resulting from the Company Law Review Act 1998 SECT 1412 Meaning of commencement, new Law and old Law In this Division:
commencement means the commencement of section 3 of the Company Law Review Act 1998 .
new Law means this Law as in force after commencement.
old Law means this Law as in force immediately before commencement.
SECT 1413 Registration--existing companies continue to be registered A company that was registered or taken to be registered before commencement under Part 2.2 of the old Law continues to be registered as a company of whichever of the following types corresponds to its previous class and type:
(b) an unlimited proprietary company
(c) a proprietary company limited both by shares and by guarantee
(d) a public company limited by shares
(e) an unlimited public company
(f) a company limited by guarantee
(g) a public company limited both by shares and by guarantee
SECT 1415 Basic features of a company--memorandum and articles are taken to be constitution The memorandum and articles of a company immediately before commencement are taken together to make up the company's constitution after commencement.
(b) sections 516, 517 and 518.
(3) The company may change to one of the following types of companies under Part 2B.7 of the new Law:
(b) a public company limited by shares
(c) a company limited by guarantee.
SECT 1417 Basic features of a company--acts before external administration of existing company (1) This section applies to an act or thing done by or in relation to a company that section 132 of the old Law applied to.
(2) The new Law applies in relation to the company as if:
(b) that action had been validly taken under, or for the purposes of, Chapter 5.
(3) Nothing in this section makes a person guilty of a contravention of this Law in respect of anything done or not done before 1 January 1991.
SECT 1418 Basic features of a company--registered office The registered office of a company immediately before commencement continues to be the company's registered office after commencement.
SECT 1419 Basic features of a company--opening hours of registered office of public company A notice lodged under subsection 218(2) or (4) of the old Law has effect after commencement as if it were lodged under subsection 145(3) of the new Law.
SECT 1420 Basic features of a company--name, reservation of name and ACN continues (1) The name of a company or body immediately before commencement continues to be the company's or body's name after commencement.
(2) A name that was reserved in respect of a company or body immediately before commencement is taken after commencement to be reserved under section 152 or 601DA of the new Law, as applicable.
(3) The registration number of a company registered before commencement is taken to be the company's ACN after commencement.
SECT 1421 Members' rights and remedies--applications for inspection orders under repealed provisions An application made before commencement under section 317 of the old Law, but not decided, has effect as if it were an application for an order under section 247A of the new Law.
SECT 1422 Meetings--AGM before commencement An AGM held before commencement can be taken into account for the purpose of deciding whether the requirements of section 250N of the new Law have been satisfied for a public company holding an AGM.
SECT 1423 Meetings--first AGM for companies incorporated before commencement (1) A company that was incorporated less than 18 months before commencement and that did not hold its first AGM by commencement must hold it within 18 months after its incorporation.
(2) A company that was incorporated 18 months or more before commencement and that did not hold its first AGM by commencement must hold it within 7 days after commencement.
SECT 1424 Meetings--general transitional arrangements The following table sets out how things that have been done before commencement under the old Law are to be dealt with after commencement--either under the old Law or the new Law.
SECT 1426 Share capital--calls on partly-paid shares A resolution to which subsection 188(2) applied immediately before commencement continues to have effect after commencement as if it were a special resolution under section 254N of the new Law.
SECT 1427 Share capital--provisions in constitution about amount of share capital and division into shares (1) Any provisions in a company's constitution stating the amount of the company's share capital, and dividing that share capital into shares of a fixed amount, are repealed on commencement.
(2) If, before commencement (or within 3 months after commencement), a company receives a notice stating that this subsection is to apply to the company and that satisfies subsections (3) to (5), the following provision is inserted in the company's constitution on commencement (or when the notice is received if it is received after commencement) in place of the provision repealed by subsection (1):
"The company must not issue shares if the issue would make the total number of the company's issued shares in a particular class exceed the total number of shares of that class into which the company's authorised share capital was divided immediately before the commencement of Chapter 2H of the Corporations Law.".
The provision has effect as a provision of the company's constitution and may be amended accordingly.
(3) A notice for the purpose of subsection (2) must be:
(b) signed by:
(ii) 100 members entitled to vote at a general meeting of the company.
(5) The percentage of votes members hold is to be worked out as at the close of business on the day before the notice was given to the company.
(6) If subsection (2) applies to insert the provision into a public company's constitution, within 14 days after the insertion of the provision the company must lodge a notice with the ASC in the prescribed form that states that subsection (2) applies.
SECT 1428 Share capital--conversion of stock into shares A company must convert stock in the company into shares within 5 months after the end of the first financial year to end after commencement. The conversion is to be by resolution passed in a general meeting. The company may disregard any stock that could only be converted into a fraction of a share. Until all the stock is converted, the register of members must continue to show the amount of stock, or the number of stock units, held by each member who holds stock and indicate any stock that a member does not hold beneficially.
SECT 1429 Share capital--previous Law continues to apply to capital reductions initiated before commencement If a company has called a meeting before commencement for the purpose of section 195 of the old Law to consider a special resolution for a reduction of its share capital, the old Law continues to apply to the reduction of capital.
SECT 1430 Share capital--continued operation of other repealed provisions The old Law continues to apply to:
(b) an application for an order, or an order made, under section 194 of the old Law; and
(c) an application for an order, or an order made, under section 202 of the old Law.
(2) In relation to financial years and half-years that end on or before commencement, the provisions of Parts 3.6, 3.7, 4.4 and 4.5 of the old Law, and the provisions amended by Part 4 of Schedule 2 to the Company Law Review Act 1998 , continue to apply as if they had not been repealed, relocated or amended.
SECT 1432 Financial reports and audit--lodgment of accounts by public companies that are not disclosing entities (1) This section applies to a public company that is not a disclosing entity at the end of the last financial year to which the old Law applies.
(2) The company must lodge a copy of the following documents with the ASC for the last financial year to which the old Law applies:
(b) the statement or statements that Division 5 of Part 3.6 of the old Law required; and
(c) the report that Division 6 of Part 3.6 of the old Law required; and
(d) the report about the financial statements that section 331A of the old Law required from the company's auditor.
(b) the last day on which the company should have held its next AGM after commencement under sections 250N and 250P.
(b) also has effect after commencement, with any necessary modifications, as if it were an accounting standard made for the purposes of Chapter 2M.
SECT 1434 Financial reports and audit--continued operation of exemption orders (1) An order in force immediately before commencement under section 290, 291, 313 or 314 continues to have effect after commencement, with any necessary modifications, in relation to financial years and half-years ending after commencement as if it were an order under:
(b) if it relates to a class of companies--section 341 of the new Law.
SECT 1435 Annual returns--solvency resolution The directors of a company are not required to make a resolution under subsection 346(1) of the new Law in relation to the company's first annual return lodged under subsection 345(1) of the new Law if the company has lodged accounts with the ASC under Chapter 3 of the old Law within 12 months before the annual return is lodged.
SECT 1436 Annual returns--application of annual return provisions (1) A public company does not have to lodge an annual return under section 335 of the old Law if the date for lodgment occurs after commencement.
(2) A public company that lodges an annual return under section 335 of the old Law:
(b) within the 6 months before the first 31 January after commencement;
SECT 1437 Deregistration--previous Law continues to apply to deregistrations initiated before commencement If, before commencement, a person has started a procedure under Division 8 of Part 5.6 (including section 574A) to have a company deregistered, the old Law continues to apply in relation to the procedure.
SECT 1438 Deregistration--property vested in ASC under previous laws (1) If property vested in the ASC before commencement under Division 8 of Part 5.6, the ASC may deal with the property under Chapter 5A as if the property were vested in it under section 601AD.
(2) If:
(b) the property was previously vested in the NCSC:
(ii) not under section 43 of the National Companies and Securities Commission Act 1979 ;
(3) If property vested, or vests, in the ASC under section 601, the ASC may deal with the property under Chapter 5A as if the property were vested in it under section 601AD.
(4) This section has effect despite section 601.
SECT 1439 Deregistration--reinstatement of registration where application under section 571 or subsection 574(3) made before commencement An application made under section 571 or subsection 574(3) of the old Law that has not been determined by commencement has effect after commencement as if it were an application for an order for reinstatement of the registration of the company under section 601AH of the new Law.
SECT 1440 Deregistration--deregistration of companies dissolved under the State Bank (Corporatisation) Act 1994 of South Australia ASC to deregister company on notice from South Australian Minister
(1) The ASC must deregister a company if the Minister of the Crown of South Australia responsible for the administration of the State Bank (Corporatisation) Act 1994 of South Australia notifies the ASC in writing that a company has been dissolved under section 23 of that Act.
ASC to give notice of deregistration
(2) The ASC must give notice of the deregistration on the ASC database and in the Gazette.
Law applies as if deregistration were under section 601AB
(3) Subject to subsection (4), this Law (other than section 601AB) applies to the deregistration of the company as if the deregistration were under section 601AB.
(4) Subsection 601AD(2) only applies to property of the company to the extent (if any) that the property is not vested in the State Bank of South Australia under subsection 23(2) of the State Bank (Corporatisation) Act 1994 of South Australia.
SECT 1441 Accounting standards made under section 32 of the Corporations Act SECT 1989 An accounting standard that is in force under section 32 of the Corporations Act 1989 immediately before the commencement of item 7 of Schedule 4 to the Company Law Review Act 1998 continues in force after that commencement as if it were made under section 334 of this Law.
SECT 1442 References in State laws and other documents (1) A reference in any law of the Commonwealth or of a State or Territory, or in any document, to a provision of the old Law is to be read after commencement as a reference to the corresponding provision of the new Law except so far as the contrary intention appears in the law or document.
(2) Without limiting subsection (1), the following table sets out provisions of the old Law that correspond to particular provisions of the new Law:
| Old
Law provision
| New Law provision
| |
|---|---|---|
| 1
| subsection 195(13)
| section 258B
|
| 2
| Division 3 Part 2.4
| Part 2F.2
|
| 3
| section 208
| section 1096A
|
| 4
|
section 213
| section 1091C
|
| 5
| Part 2.5
| Chapter 2C
|
| 6
| Part 3.2
|
Chapter 2D
|
| 7
| Part 3.2A
| Chapter 2E
|
| 8
| Part 3.4
| Part 2F.1
|
| 9
|
section 260
| section 246AA
|
| 10
| Part 3.5
| Chapter 2K
|
| 11
| Part 3.6
|
Chapter 2M
|
| 12
| Part 3.7
| Chapter 2M
|
| 13
| Part 4.1
| Part 5B.2
|
| 14
|
Part 9.11
| Part 11.2
|