Corporations Act 2001

Shareholder oppression in equal ownership situations

When a company with two (2) or more directors who are equal shareholders with equal voting rights have a dispute, it often leaves the company in a deadlock.  It is common in these situations for one (1) director to attempt to assert that the other director has engaged in oppressive conduct under section 232 of the Corporations Act 2001 (Cth) (Act).  This article discusses shareholder oppression when both directors own equal share portions. [Read more…]

Tortious interference with contract – what must be proven?

Unlawful interference with contractual relations (Interference) is a tort that allows  damages to be claimed against a Defendant who has induced or procured a third party to breach their contractual obligations to the Plaintiff in the proceedings.  In essence, a Defendant’s intention to induce or procure an entity to act or refrain from acting whilst being aware that such an action would result in said entity breach its contractual obligations to the Plaintiff gives rise to the Interference.[1]  This article outlines the elements needed to be proven in order to establish an Interference. [Read more…]

Shareholder oppression – a taxonomy of corporate wrongs

Shareholder oppression (Oppression) is the business battleground where equity holders fight for their share of the business’ equity value.  Unfortunately, it is all too common.  Oppressive conduct (Conduct) is broadly defined in section 232 of the Corporations Act 2001 (Cth) (Act) as when: [Read more…]

Are fiduciary duties owed by former directors?

Company directors owe various duties to their company and its shareholders.  For example, sections 180, 181, 182, 183 and 184 of the Corporations Act 2001 (Cth)(Act) impose statutory duties to exercise care and diligence, maintain good faith and refrain from using their position or information to gain an advantage for themselves.  However, the legislation, barring section 183, does not clearly express the extent to which these duties, as well as similar common law duties, continue to apply after a director has ceased being the director of a company.  Addressing this shortfall, the Court in Advanced Fuels Technology Pty Ltd v Blythe & Ors [2018] VSC 286 (Advanced Fuels) found that whether or not these duties endure after the cessation of a directorship depends on the facts and circumstances of each case. [Read more…]

Companies can no longer e-sign documents

Note: this regulatory relief has expired.  Please see Dundas Lawyers article: Covid imposed e-signing to remain.

As of 21 March 2021, the Corporations (Coronavirus Economic Response) Determination (No 3) 2020 (Cth) (Determination) lapsed because it reached the end of its six (6) month period as prescribed by section 9(3) of the Determination.  This means that the ability for companies to execute documents electronically, or e-signing, is no longer acceptable under subsection 127(1) of the Corporations Act 2001 (Cth) (Act).  Section 6(3)-(4) of the Determination authorised e-signing in response to the COVID-19 restrictions, as stated in the Explanatory Statement:  [Read more…]

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…]

Who is an “officer” in business dealings?

The term “officer” (Officer) is used in various statutory contexts including (but not limited to) the Corporations Act 2001 (Cth) (Act) and also in the Franchising Code of Conduct (Code) located in Schedule 1 of the Competition and Consumer (Industry Codes-Franchising) Regulation 2014 (Cth) (Regulation).   It is also often referred to in the context of liability of “Officers” of corporations.   Given the statutory use of this term, the question is just who is an Officer as defined in the Corporations Act? [Read more…]

Shareholders’ agreements & deadlock clauses

One of the most important issues to be addressed by a Shareholders’ Agreement is what happens where the directors or shareholders cannot agree and a deadlock arises.  In cases where voting of Directors of a board is proportional to the shareholding represented by the appointed director, or there can be a deadlock caused by “one vote, one director” care needs to be taken to ensure that control can be exercised by addressing the deadlock issue.  Of course the deadlock can also be between shareholders. [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…]

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…]

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