THE CORPORATIONS LAW

CHAPTER 2J - TRANSACTIONS AFFECTING SHARE CAPITAL

PART 2J.1 - SHARE CAPITAL REDUCTIONS AND SHARE BUY-BACKS

Division 1 - Reductions in share capital not otherwise authorised by law

SECTION 256C   SHAREHOLDER APPROVAL  

256C(1)  Ordinary resolution required for equal reduction.  

If the reduction is an equal reduction, it must be approved by a resolution passed at a general meeting of the company.

256C(2)  Special shareholder approval for selective reduction.  

If the reduction is a selective reduction, it must be approved by either:

(a)  a special resolution passed at a general meeting of the company, with no votes being cast in favour of the resolution by any person who is to receive consideration as part of the reduction or whose liability to pay amounts unpaid on shares is to be reduced, or by their associates; or

(b)  a resolution agreed to, at a general meeting, by all ordinary shareholders.

If the reduction involves the cancellation of shares, the reduction must also be approved by a special resolution passed at a meeting of the shareholders whose shares are to be cancelled.

256C(3)  [Lodge with ASIC]  

The company must lodge with ASIC a copy of any resolution under subsection (2) within 14 days after it is passed. The company must not make the reduction until 14 days after lodgment.

256C(4)  Information to accompany the notice of meeting.  

The company must include with the notice of the meeting a statement setting out all information known to the company that is material to the decision on how to vote on the resolution. However, the company does not have to disclose information if it would be unreasonable to require the company to do so because the company had previously disclosed the information to its shareholders.

256C(5)  Documents to be lodged with ASIC.  

Before the notice of the meeting is sent to shareholders, the company must lodge with ASIC a copy of:

(a)  the notice of the meeting; and

(b)  any document relating to the reduction that will accompany the notice of the meeting sent to shareholders.