Corporate Law

Shareholder’s inspection allowed despite distrust

The case of Rasley (Singapore) Pte Ltd v Financial & Energy Exchange Ltd [2020] FCA 1462 involved an application to the Federal Court by a shareholder (Rasley (Singapore) Pte Ltd) (Rasley/Plaintiff) to inspect the books of the defendant (Financial & Energy Exchange Ltd) (Financial/Defendant) pursuant to section 247A of the Corporations Act 2001(Cth) and at common law because of its standing as a shareholder. Section 247A provides that the Court may only make orders if it is satisfied that an applicant is acting in good faith and for a proper purpose. [Read more…]

Shareholder oppression – the early warning signs

The usual definition of shareholder oppression (Oppression) is something that occurs when a majority of shareholders in a company misuse their power to oppress minority shareholders.  That said oppression is not limited to situations of majority and minority, it can occur when the disputants have equal shareholding  but there is an imbalance of control (or power) caused by a variety of statutory and contractual controls that were agreed to at the start of the relationship. [Read more…]

Deal fatigue in business transactions

Deal fatigue is very common in commercial transactions in Australia because of the complexity of the law and the sheer volume of documentation that’s often required.  An unfortunate consequence can be that benefit of entering into the deal in the first place can be watered down to the extent that the deal becomes unpalatable.   This article will discuss the symptoms of deal fatigue and offer some tips on avoiding it. [Read more…]

Changes to monetary threshold for consumer contracts

For businesses that provide goods or services to non-consumers, the recent Treasury Laws Amendment (Acquisition as Consumer – Financial Thresholds) Regulations 2020 (Amendment) has the effect of widening the scope of the consumer guarantees regime under the Australian Consumer Law (ACL).  This means that, as of 1 July 2021, contracts that were not previously subject to the consumer guarantee protections (because the value of goods or services was less than $40,000) will be captured under the new regime. [Read more…]

Just and equitable winding up for shareholder oppression

In matters involving the oppression of minority shareholders by the majority the usual legal remedy is to pursue relief for oppression as contained in sections 232 and 233 of the Corporations Act 2001 (Cth)(Act). However section 233(2) of the act also allows for an aggrieved party to seek an order winding up the company on just and equitable ground as if the order were made under section 461.  Section 233(2) represents the intersection of the just and equitable winding up and shareholder oppression. [Read more…]

Software patent allowed for tracking user action

In the recent case of Facebook, Inc. [2020] APO 19 (Facebook Inc.), the Patent’s office considered whether software that tracks the installation of applications on mobile devices following interactions with advertisements qualifies as a manner of manufacture and is therefore patentable subject matter. [Read more…]

Director’s identification numbers to become a reality

On 12th June 2020, the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 introduced the requirement for all Australian company directors to have a “Director Identification Number” (DIN).  The DIN will become a single identifier for each director across all of their office holdings with the true identity of each director is verified and is consistent across of ASIC’s corporate records.   The scheme will ultimately applies to Australian body corporates, Aboriginal and Torres Strait Islander corporations, and registered foreign companies. [Read more…]

Division 7A ITTA 1936 (Cth) – compliance & consequences

Division 7 (sections 102V to 109ZE) of the Income Tax Assessment Act 1936 (Cth) (Tax Act) contains specific requirements for advances of moneys and loans between private companies and its shareholders or associates.  Section 109B of the Act describes three (3) classes of payments which will be deemed to be dividends: [Read more…]

What is a section 293 direction?

There are several reasons why a shareholder may require financial information, primarily they are denied access to the ‘accounts’ so as to make informed decision about the company.  The Corporations Act 2001 (Cth) (Act) provides various mechanisms for shareholders to obtain financial and accounting information about a company, to allow them to access full and complete information about the financial circumstances of the company that they hold shares in.  One such mechanism is referred to as a section 293 shareholder direction, which compels companies to provide requested financial reports as defined by section 293. [Read more…]

Director misappropriating funds found to be oppressive

Shareholder oppression usually occurs when a majority shareholder(s) misuses their power to oppress the minority shareholder(s).   The test for “oppression” is an objective one and is contained in Section 232 of the Corporations Act 2001 (Cth) (Act).   For instance, where a director is found to have breached their fiduciary duty because they have misappropriated funds or assets this can be considered as being oppressive conduct.  This was the case in Martin v Australian Squash Club Pty Ltd (1996) 14 ACLC 452 (Martin) when an executive director misappropriated and misused company funds and assets and was held to have breached his fiduciary duties. [Read more…]

Send this to a friend