✅ HD APPROVED - CORPORATE LAW (UPDATED FOR 2026) - MLP331

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These comprehensive 167-page notes earned me an HD in Corporate Law and are now fully updated for 2026. This is the only resource you need to master the Corporations Act and excel in both the assignment and the exam. These notes cover: 1 REGULATORY FRAMEWORK - History of company law - Section 51(xx) of the Australian Constitution - Corporations Act 2001 (Cth) - REGULATORS - 1) The Australian Securities & Investments Commission (ASIC) - 2) Australian Stock Exchange - 3) Takeovers Panel 2 REGISTRATION & ITS EFFECTS - WHAT IS A COMPANY? - 1) SEPARATE LEGAL ENTITY - Consequences of treating the company as a separate legal entity - 2) LIMITED LIABILITY - 3) PERPETUAL SUCCESSION - PIERCING THE CORPORATE VEIL - 1) Where company used to avoid existing legal duty - 2) Where company used to perpetrate a fraud - 3) Insolvent trading - Lifting the corporate veil for group companies - CORPORATE LIABILITY FOR CRIMES AND TORTS - Direct liability: Organic theory - Tesco Supermarkets Ltd v Nattrass [1972] AC 153 - COMPANY VS OTHER FORMS OF BUSINESS ORGANISATIONS 3 TYPES OF COMPANIES - 1) MEMBERS LIABILITY - i) Company limited by shares - ii) Company limited by guarantee - iii) Unlimited company - iv) No liability company - v) Company limited both by shares and guarantee - 2) PUBLIC & PROPRIETARY COMPANIES - i) Small vs Large proprietary companies - Test: Small/Large Pty Co: s 45A - ii) Conversion from Proprietary to Public Company - 3) ASX LISTED COMPANIES - i) Listing requirements - ii) Listing rules - iii) Listing requirements - 4) HOLDING & SUBSIDIARY COMPANIES - i) Controlled entities - ii) Ultimate Holding Company - iii) Wholly-Owned Subsidiary - iv) Related Bodies Corporate - 5) OTHER BODIES - Foreign companies: s 601CD - Registrable Australian Bodies: s 601CA - 6) TYPE OF BUSINESS: TRUSTEE COMPANIES - i) Types of Trustee Companies - ii) Trustees’ Right of Indemnity - iii) Liability of Directors of Trustee Companies 4 CONSTITUTION & REPLACEABLE RULES - A COMPANY’S INTERNAL GOVERNANCE RULES - REPLACEABLE RULES - After 1 July 1998 (Current) - Table of replaceable rules - THE COMPANY'S CONSTITUTION - Adoption & alteration of the constitution - EFFECT OF CONSTITUTION & REPLACEABLE RULES - Contractual Effect - i) Contract between Company and Members - ii) Contract between Members - iii) Contract between the Company and its Directors and Secretary - Non-compliance with internal governance rules - Limitations on enforcement of the statutory contract - Eley v Positive Government Security Life Assurance Co Ltd - LIMITS ON THE RIGHT TO ALTER A CONSTITUTION & REPLACEABLE RULES - 1) Statutory requirements: Corporations Act - Corporations Act: Entrenching provisions - Variation of Class Rights - Oppression remedy - 2) Common law - Expropriation of Shares: Gambotto - Gambotto v. WCP Ltd (1995) - Significance of Gambotto 5 THE COMPANY’S RELATIONS WITH OUTSIDERS - COMPANY CONTRACTS - 1) CONTRACTING DIRECTLY - With a company seal: s 127(2) - Without a company seal: s 127(1) - Transaction Authorised - 2) CONTRACTING THROUGH AN AGENT - Actual authority - Implied actual authority - i) Implied actual authority arising from appointing a person to a particular office - Panorama Developments (Guildford) Ltd v Fidelis Furnishing Fabrics Ltd [1971] - ii) Implied actual authority arising from conduct - Apparent authority - CORPORATE LIABILITY FOR DEFECTIVE CONTRACTS MADE BY AGENTS - Defective contracts - What can a TP do to argue the contract is valid? - Indoor management rule: Turquand’s case - Royal British Bank v Turquand (1856) - Indoor management rule: Exceptions - Northside Developments Pty Ltd v Registrar-General - Statutory assumptions - s 129(1): Statutory indoor management rule - s 129(2): Assumptions about authority of officers - s 129(3): Assumptions about apparent authority - s 129(5)&(6): Documents properly executed - s 128: When can assumptions be made? - Limitations on statutory assumptions 6 PROMOTERS & PRE-REGISTRATION CONTRACTS - SUMMARY - PROMOTERS & THEIR DUTIES - Tracy v Mandalay - Duties of promoters - Duty: Conflict of interest & disclosure - Remedies for breach - PRE-REGISTRATION CONTRACTS - Ratification - Person’s liability in absence of ratification - Person’s liability even with ratification - Release & indemnity 7 FUNDRAISING - CORPORATE FINANCE: Debt and equity - FUNDRAISING BY ISSUING SHARES - 1) MEMBER APPROVAL - 2) RESTRICTIONS ON THE PEOPLE TO WHOM THE SHARES CAN BE OFFERED - 3) CHAPTER 6D - Purpose of the Ch 6D fundraising provisions: Why is disclosure needed? - Ch 6D: Disclosure requirements - Exceptions: Do not need disclosure - Types of disclosure documents - Disclosure requirement - Consequences of breach of disclosure requirements - Who is liable? - Defences - SHARES - What is a share? - Pilmer v The Duke Group [2001] HC - Choses in action - What rights do shares confer? - Rights conferred by a constitution - Rights conferred by the Corps Act - Issue of shares - Classes of shares - Preference shares - Variation of class rights - Procedure to vary and cancel class rights - Challenging a variation of class rights - Other remedies 8 SHARE CAPITAL - Maintenance of share capital: Common law rule in Trevor v Whitworth - Maintenance of share capital: Modern statutory rules - Purpose of the Corps Act rules - Permitted share buy backs: s 257A - Permitted share capital reductions: s 256B - (a) Fair & reasonable to shareholders as a whole - (b) Ability to pay creditors - (c) Shareholder approval - Shareholder approval: Is reduction equal or selective? - Shareholder approval: What vote is required? - Shareholder approval: Notice requirements - Winpar Holdings Ltd v Goldfields Kalgoorlie Ltd (2000) - Permitted financial assistance: s 209A - (a) No material prejudice - (b) OR shareholder approval - (c) OR financial assistance exemptions - Consequences of breaching s 260A - Asic v Adler [2002] - 9 MEMBERSHIP - Significance of being a member - Becoming a member: s 231 - Register of members - Significance of the register - Use of information on register: s 177 - EVIDENCE OF SHAREHOLDING - 1) Share certificates - unlisted companies - 2) CHESS - Companies listed on ASX - TRANSFER OF SHARES - Liability of members - 10 DIVIDENDS - Procedure for payment - Can shareholders force payment? - Effect of declaring a dividend: When does a debt arise? - Declaration of interim dividend: When does a debt arise? - Old law - New law - Remedies for improper dividend payments - Dividend franking - DEBT FINANCE - Debt and equity - Debt capital - Borrowing company v other debtors - Security 11 DEBENTURES & PERSONAL PROPERTY SECURITIES - DEBENTURES - How do debentures work? - Personal Property Securities Act - PERSONAL PROPERTY SECURITY REFORMS - Personal Property Securities Act 2009 (Cth) - Registration of security interests - Scope of the PPSA - Personal property securities - Non-circulating security interest - Circulating security interest - Circulating charges: Crystallisation - Retention of title - ENFORCEABILITY OF SECURITY INTERESTS - Enforceability against grantor: s 19 - Enforceability against third parties: s 20 - REGISTRATION OF "PERFECTION" OF SECURITY INTERESTS: s 21 - Registration procedure - PRIORITY RULES - 1) First default priority rule - 2) Second default priority rule - 3) Third default priority rule - Super priority of PMSIs - Circumstances where security interests may be invalidated - Security interests in favour of company officers - 12 DIRECTORS - DECISION MAKING - Who makes decisions - Types of decisions - Division of responsibility - DIRECTORS’ DECISION MAKING POWERS - Can members override decisions of the board? - Automatic Self-Cleaning Filter Syndicate Co Ltd v Cunninghhame - John Shaw & Sons (Salford) Ltd v Shaw - What can members who disagree with board decisions do? - MEMBERS’ “RESERVED” DECISION MAKING POWERS - ROLE REQUIREMENTS - Requirements for company directors - Requirements for company secretary - Types of directors - Definition of a Director: s 9 - DIRECTOR APPOINTMENT - Who can be appointed as a director? - How are directors appointed? - DIRECTOR DISQUALIFICATION - How can a director be disqualified? - BOARD MEETINGS - Can boards delegate their powers? - Responsibility of directors for actions to delegate CORPORATE GOVERNANCE - Importance of CG - Corporations Act rules impacting on CG - ASX CG listing rule - CORPORATE GOVERNANCE PRINCIPLES AND GOOD PRACTICE - PRINCIPLE 1) ROLE & FUNCTIONS OF THE BOARD & MANAGEMENT - Responsibilities of the board - PRINCIPLE 2) STRUCTURE & COMPOSITION OF THE BOARD - Chair - Nomination committee - Diversity on boards - PRINCIPLE 3) CODE OF CONDUCT - PRINCIPLE 4) AUDIT COMMITTEE - PRINCIPLE 5) TIMELY DISCLOSURE - PRINCIPLE 6) RESPECT THE RIGHTS OF SHAREHOLDERS - PRINCIPLE 7) RISK MANAGEMENT AND INTERNAL CONTROL - PRINCIPLE 8) RENUMERATION DUTIES OF DIRECTORS - General law vs statutory duties - Who owes these duties? - Who are the duties owed to? - Duty to individual shareholder/s? - Who can enforce the duties? - Consequences of breaching a duty - DUTY OF CARE - Sources of duty of care - DUTY: CARE AND DILIGENCE - Who owes the duty? - Standard of care expected - Daniels v Anderson (1995) - The reasonable person standard - FACTORS IMPACTING THE STANDARD OF CARE, SKILL AND DILIGENCE - Company’s circumstances: s 180(1)(a) - Director’s office & responsibilities: s 180(1)(b) - EXECUTIVE V NON-EXECUTIVE DIRECTORS - Standard of care of executive directors - When appointed for particular skill - BREACH OF DUTY OF CARE - BUSINESS JUDGEMENT RULE: s 180(2) - Importance - Principle - DELEGATION & RELIANCE - Directors responsible - Defence - ASIC v Adler [2002] - DUTY: GOOD FAITH & PROPER PURPOSE: s 181 - FIDUCIARY OBLIGATIONS - Fiduciary relationships - Fiduciary obligation - A) Duty to act in good faith in the best interests of the company: s 181(1)(a) - ‘Good faith’ - Company interests: Members - Individual shareholders - Coleman v Myers [1977] - Brunninghausen v Glavanics (1999) - Company’s interests: Creditors - Company’s interests: Corporate groups - Company’s interests: Employees, customers, suppliers and the community - B) Duty to exercise powers for a proper purpose: s 181(1)(b) - What powers do directors have? Directors’ power of management - Proper purpose: TEST - Howard Smith Ltd v Ampol Petroleum Ltd [1974] - Mixed purpose and the ‘but for’ test - Other examples of improper purpose - Australian Metropolitan Life Assurance Co Ltd v Ure (1923) - CONSEQUENCES OF BREACH: Duty to act in good faith and for proper purpose - Remedies for breach of statutory duty - Remedies for breach of common law duty - DUTY TO RETAIN DISCRETION - DUTY TO AVOID CONFLICTS OF INTEREST + DISCLOSURE: Ch - COMMON LAW RULES: Duty to avoid conflicts of interest - Who owes the common law duties? - Transvaal Lands Co v New Belgium - Loss to company or profit to director not necessary - Taking corporate property, information & opportunities - Furs Ltd v Tomkies (1936) - Regal (Hastings) Ltd v Gulliver [1967] - Peso Silver Mines v Cropper (1966) - Confidential information: Factors to determine whether information is confidential - Examples of misuse of confidential information - CONSTITUTION: Duty to avoid conflicts of interest - CORPORATIONS ACT: Duty to avoid conflicts of interest - 1) Duty to disclose material personal interest: s 191 - Material personal interest - Exempt Interest - Standing notice: s 192 - Entitlement of interested director to vote - Consequence of breach - 2) Duty not to misuse information or position: ss 182 & 183 - Improper use of position or information - To gain advantage or benefit: Chew v R - Advantage even if no profit: R v Donald - ASIC v Vizard [2005] - 3) Related party transactions: Ch 2E - Financial benefits to directors of public companies - How to solve a ‘related party transaction’ problem - Exemptions - Arm’s length transaction - Member approval - Consequences of breach - DUTY TO PREVENT INSOLVENT TRADING: Ch - Four essential elements - 1) Person was a director when the company incurs a debt: ss 588G(1)(a) and (b) - s 588G(1)(a): Who owes the duty? - s 588G(1)(a): What types of debts can be incurred? - 2) The company must be insolvent: s 588(1)(b) - Rebuttable presumptions of insolvency - 3) There were reasonable grounds for suspecting insolvency: s 588G(1)(c) - Williams v Scholz [2007] - 4) Section 588G(2) - - DEFENCES - 1) Reasonable grounds to expect solvency: s 588H(2) - Hall v Poolman [2007] - 2) Reasonable reliance on information provided by others: s 588H(3) - 3) Absence from management: s 588H(4) - Deputy Commissioner of Taxation v Clark (2003) - 4) Reasonable steps to prevent incurring of debt: s 588H(5) - Consequences of breach of duty to prevent insolvent trading - REMEDIES & PENALTIES FOR BREACH OF DUTY: Ch - Enforcement of directors’ duties by ASIC - CONTRAVENTION OF THE CORPS ACT - 1) Prescribed offence - 2) Civil penalty provision - i) Pecuniary penalty order: s 1317G - ii) Disqualification order: s 206C - Compensation order: s 1317H - 3) Criminal penalty provision - The company’s civil remedies - 1) Civil remedies for breach of common law duty - 2) Civil remedies for breach of statutory duty - EXONERATION & RELIEF FROM LIABILITY FOR BREACH OF DUTY: Ch - When can relief from liability be given by the court? - When can breach of duty be ratified by the Company? - When can breach of duty NOT be ratified by the Company? - Indemnity and insurance - Insurance for breach of duty - Prohibition on indemnification for breach of duty 14 SHAREHOLDERS’ MEETINGS - MEMBERS’ MEETINGS - Requesting members’ meeting - Re Totex- Adon Pty Ltd and the Companies Act (1980) - Who decides the agenda? - Notice requirements - If proper notice not given: Procedural irregularities - Conducting meetings - Campbell v Jervios Mining Ltd (2009) - Corporate representatives - Minutes - Member voting - Irregularities: s 1322 - Bell Resources Ltd v Turnbridge Pty Ltd (1988) 17 MEMBERS’ STATUTORY RIGHTS & REMEDIES - Statutory member remedies - 1) STATUTORY DERIVATIVE ACTION: s 236 - Section 237: Elements - i) Inaction by the company - ii) Applicant’s good faith - iii) Best interests of the company - The Court in Swansson v RA Pratt Properties Pty Ltd considered the following factors: - Rebuttable presumption - iv) Serious question to be tried - v) Notice of proceedings to the company - Charlton v Baber [2003] - 2) OPPRESSIVE OR UNFAIR CONDUCT: s 232 - Remedies: s 233 - Main elements: - i) What types of companies can the oppression remedy apply to? - ii) Who can apply for the oppression remedy? - iii) What type of conduct may be oppressive? - iv) What is the meaning of oppressive and unfair? - v) Examples of oppressive conduct - Scottish Co-operative Wholesale Soc Ltd v Meyer (1959) - Sanford v Sanford Courier Services Pty Ltd (1986) - Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd [2001] - Mopeke Pty v Fine Foods Pty Ltd (2007) - Re Overton Holdings Pty Ltd [1985] - Hannes v MJH Pty Ltd (1992) - vi) Remedies for oppression - Re H R Harmer Ltd (1959) - 3) WINDING UP COMPANY: s 461 - Grounds for compulsory winding up - Who can apply to have company wound up? - 4) STATUTORY INJUNCTION: s 1324 - What is a statutory injunction? - Who can apply for a statutory injunction? - Section 1324 and directors’ duties - 5) RIGHT TO INSPECT BOOKS: s 247A - What are company books? - Other rights - 6) MEMBERS' PERSONAL RIGHT OF ACTION 21 ASIC INVESTIGATION POWERS - SOURCES OF ASIC INVESTIGATORY POWERS - POWERS TO QUESTION PERSONS - POWERS TO INSPECT COMPANY BOOKS - CONSEQUENCES OF INVESTIGATIONS 22 CORPORATE INSOLVENCY - Main forms of external administration - AIMS OF INSOLVENCY LAW 23 RECEIVERSHIP - RECEIVERSHIP: OVERVIEW - What is receivership? - Who may be a receiver? - WHO MAY APPOINT? - a) Appointment by secured creditor - What happens if appointment is defective? - What relief can receiver obtain that appointment is valid? - b) Appointment by Court - LEGAL EFFECT OF APPOINTMENT - SOURCES OF RECEIVERS’ POWERS - Statutory powers of receivers: s 420 - Power to obtain information - DUTIES OF A RECEIVER - Conflict between interests of secured creditor & debtor company - Reasonable care: Section 420A - Other statutory duties - When does receivership end? 24 VOLUNTARY ADMINISTRATION - VOLUNTARY ADMINISTRATION: OVERVIEW - Aim of voluntary administration: s 435A - ADMINISTRATION PROCESS - Who initiates voluntary administration? - ROLE OF VOLUNTARY ADMINISTRATOR - ADMINISTRATION ‘SAFETY ZONE’ - Exceptions to creditors moratorium on enforcing security - ADMINISTRATOR’S LIABILITIES - Outcomes of 2nd creditor’s meeting - 1) DEED OF COMPANY ARRANGEMENT - What can the deed say? - Effect of deed of company arrangement - Why would creditors agree to a deed of company arrangement? - How does the deed come to an end? 25 LIQUIDATION - LIQUIDATION / WINDING UP: OVERVIEW - TYPES OF LIQUIDATION - 1A) MEMBERS’ VOLUNTARY WINDING UP - a) Solvency statement: s 494 - b) Members resolution: s 491; ASIC Form 205 - c) Liquidator: (1) - d) Business ceases: s 493; s 493A - e) Directors power cease: s 495(2) - f) Deregistration - 2A) CREDITORS’ VOLUNTARY WINDING UP - a) Members resolution: s 491 - b) OR: Creditors vote: s 446 - 2A) COMPULSORY WINDING UP IN INSOLVENCY - a) Insolvent company: What is insolvency? - b) Application to court: Proof of insolvency - e) Statutory demands & Winding up - Timeline - c) Provisional liquidator - d) Application determined - 2B) COMPULSORY WINDING UP ON GROUND OTHER THAN INSOLVENCY - b) Grounds: s 461 - LIQUIDATOR’S FUNCTIONS & DUTIES - Liquidator’s powers: s 477 - Funds available for distribution by liquidator - RECOVERY OF ASSETS & VOIDABLE TRANSACTIONS - 1) Unfair preferences - TEST: s 588FA - 2) Uncommercial transactions - TEST: s 588FB - 3) Unfair loans - 4) Unreasonable director-related transactions - SUMMARY EXAMPLE - SECURITY INTERESTS IN FAVOUR OF COMPANY OFFICERS - How are funds distributed? - DEREGISTRATION - Effects of deregistration: s 601AD