Company Law Review Act 1998 (61 of 1998)
Schedule 1 Main amendments of the Corporations Law
1 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.
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:
• own and dispose of property and other assets
• enter into contracts
• sue and be sued.
Once a company is registered, its separate legal status, property, rights and liabilities continue until the ASC (Australian Securities Commission) deregisters the company.
[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 a personal guarantee of the company's liabilities; and
• for some form of security over their house or personal assets to secure the performance by the company of its obligations.
The director of a company may, for example, be asked by a bank to give a mortgage over their house to secure the company's repayment of a loan. If the company does not repay the loan as agreed with the bank, the director may lose the house.
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 single shareholder/single director company; or
• a company that had a constitution before the introduction of the replaceable rules regime and has not repealed it.
A company does not need to have a separate constitution of its own; it can simply take advantage of the rules in the Law. The company will need a constitution only if it wants to displace, modify or add to the replaceable rules.
[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:
• at a meeting; or
• by having all of the directors record and sign their decision.
If a company has only 1 director, the sole director may also pass a resolution by recording and signing 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:
• at a meeting; or
• by having all of the shareholders record and sign their decision.
If a meeting is held, an ordinary resolution must be passed by a majority of the votes cast by shareholders of the company entitled to vote on the resolution at the meeting in person or by proxy (if proxies are allowed). A special resolution must be passed by at least 75% of the votes cast by shareholders of the company entitled to vote on the resolution and who vote at the meeting in person or by proxy (if proxies are allowed).
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 shown in a notice lodged with the ASC as being the director or company secretary of a company has been properly appointed and is authorised to act for the company; and
• 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.
[sections 128–130]
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.
[sections 112–113]
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 registered office; or
• 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.
A register may be kept either in a bound or looseleaf book or on computer.
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:
• the names and addresses of its shareholders; and
• details of shares held by individual shareholders.
[sections 168–169]
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.
[section 271]
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 some of its public documents; and
• on its cheques and negotiable instruments; and
• on all documents lodged with the ASC; and
• if it has one, on its common seal.
[sections 123, 144, 147–156,
Australian Securities Commission Practice Note 47]
4.2 Annual return
A company must lodge with the ASC an annual return which contains such information as:
• names and addresses of each director and company secretary; and
• 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).
An annual return may be lodged with the ASC on a printed form or, if an agreement is in place to lodge electronically, in accordance with the agreement.
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.
|
Notification requirements |
||||
|---|---|---|---|---|
|
If . . . |
the company must notify the ASC of the change . . . |
using
|
see
|
|
|
1. |
a company issues shares |
within 1 month after the issue |
207 |
254X |
|
2. |
a company changes the location of a register |
within 7 days after the change |
909 |
172, 1302 |
|
3. |
a company changes the address of its registered office or principal place of business |
within 14 days after the change |
203 |
142, 146 |
|
4. |
a company changes its directors or company secretary |
within 14 days after the change |
304 |
242 |
|
5. |
there is a change in the name or address of the company's directors or secretary |
within 14 days after the change |
304 |
242 |
|
6. |
a company creates certain kinds of charges |
within 45 days after the charge is created |
309 |
263 |
5 Company directors and company secretaries
5.1 Who can be a director
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 good faith
• 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).
A director who fails to perform their duties:
• may be guilty of a criminal offence with a penalty of $200,000 or imprisonment for up to 5 years, or both; and
• 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.
A director's obligations may continue even after the company has been deregistered.
[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]
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 person being listed as a shareholder of the company in the application for registration of the company
• the company issuing shares to the person
• the person buying shares in the company from an existing shareholder and the company registering the transfer.
Some of the ways in which a person ceases to be a shareholder are:
• the person sells all of their shares in the company and the company registers the transfer of the shares
• the company buys back all the person's shares
• the ASC cancels the company's registration.
[sections 117, 120, 601AA–601AD]
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.
[sections 1091D–1091E]
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:
• 2 directors of the company; or
• a director and the company secretary; or
• for a company with a sole director who is also the sole secretary - that director.
If the document is to have effect as a deed, it should be expressed to be a deed.
[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.
[sections 123, 127(2)]
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.
[sections 113, 124]
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:
• to pay compensation; and
• for criminal and civil penalties.
[sections 588G, 1317FA, 1317HA, 1317HB, 1317HD]
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.
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 operating revenue of less than $10 million for the year
• gross assets of less than $5 million at the end of the year
• fewer than 50 employees at the end of the year.
A company that does not satisfy at least 2 of these tests is classified as large.
[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 shareholders with at least 5% of the votes in the company direct it to do so; or
• the ASC directs it to do so.
Unless the shareholders' direction specifies otherwise, the company must prepare the annual financial report in accordance with the applicable accounting standards.
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.
[sections 286–301, 319–320]
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 unfair to that shareholder or to other shareholders of the company; or
• the affairs of the company are being conducted in a way that is against the interests of the company as a whole.
A Court may, for example, order the winding up of a company or the appointment of a receiver.
[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:
• under the replaceable rules the directors have a discretion to refuse to transfer the shares; and
• restrictions in the company's constitution (if any) on transferring shares.
[sections 995, 1018, 1091D–1091E]
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:
• when a Court orders a company to be wound up; or
• the shareholders of a company pass a resolution to wind up the company.
[Part 5.2, section 495]
12.4 Liquidators
A liquidator is appointed to administer the winding up of a company. The liquidator's main functions are:
• to take possession of the company's assets; and
• 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.
[Parts 5.4B, 5.5]
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.
[sections 601AA–601AB, 601AH]
Chapter 2A - Registering a company
Part 2A.1 - What companies can be registered
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 |
Note: Other types of companies that were previously allowed continue to exist under section 1413.
No liability companies
(2) A company may be registered as a no liability company only if:
(a) the company has a share capital; and
(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 1: Section 9 defines mining purposes and minerals .
Note 2: Special provisions on no liability companies are found in the sections referred to in the following table:
|
No liability company provisions |
||
|---|---|---|
|
item |
topic |
sections |
|
1 |
names |
148, 156, 162 |
|
2 |
terms of issue of shares |
254B |
|
3 |
liability on partly-paid shares |
254M |
|
4 |
calls |
254P-254R |
|
5 |
winding up |
477-478, 483, 514 |
|
6 |
registering a body as a company |
610BA |
|
7 |
transitional |
1413 |
|
(3) A no liability company must not engage in activities that are outside its mining purposes objects. (4) The directors of a no liability company must not: (a) let the whole or proportion of a mine or claim on tribute; or (b) make any contract for working any land on tribute; unless: (c) the letting or contract is approved by a special resolution; or (d) no such letting or contract has been made within the period of 2 years immediately preceding the proposed letting or contract. (5) An act or transaction is not invalid merely because of a contravention of subsection (3) or (4).
113 Proprietary companies(1) A company must have no more than 50 non–employee shareholders if it is to: (a) be registered as a proprietary company; or (b) change to a proprietary company; or (c) remain registered as a proprietary company. Note: Proprietary companies have different financial reporting obligations depending on whether they are small proprietary companies or large proprietary companies (see section 45A and Part 2M.3). (2) In applying subsection (1): (a) count joint holders of a particular parcel of shares as 1 person; and (b) an employee shareholder is: (i) a shareholder who is an employee of the company or of a subsidiary of the company; or (ii) a shareholder who was an employee of the company, or of a subsidiary of the company, when they became a shareholder. (3) A proprietary company must not engage in any activity that would require the lodgment with the ASC of a prospectus under Part 7.12, except for an offer of its shares to: (a) existing shareholders of the company; or (b) employees of the company or of a subsidiary of the company. (4) An act or transaction is not invalid merely because of a contravention of subsection (3). Note: If a proprietary company contravenes this section, the ASC may require it to change to a public company (see section 165).
114 Minimum of 1 memberA company needs to have at least 1 member.
115 Restrictions on size of partnerships and associationsA 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: (a) has more than 20 members; or (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; unless the partnership or association is incorporated or formed under an Australian law. Note: For the effect of a contravention of this section, see section 103.
116 Trade unions cannot be registeredA trade union cannot be registered under this Law.
Part 2A.2 - How a company is registered
117 Applying for registrationLodging application (1) To register a company, a person must lodge an application with the ASC. Note: For the types of companies that can be registered, see section 112. Contents of the application (2) The application must state the following: (a) the type of company that is proposed to be registered under the Corporations Law of this jurisdiction (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: (i) the number, class and nominal value of the shares that each member referred to in paragraph (c) agrees in writing to take up (ii) the amount (if any) paid, taken to be paid or due and payable on the issue of each share (l) for a public company that is limited by shares or is an unlimited company, if 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 (m) for a company limited by guarantee - the proposed amount of the guarantee that each member agrees to in writing. Note 1: Paragraph (b) - sections 147 and 152 deal with the availability and reservation of names. 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. (3) If the company is to be a public company and is to have a constitution on registration, a copy of the constitution must be lodged with the application. (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.
118 ASC gives company ACN, registers company and issues certificateRegistration (1) If an application is lodged under section 117, the ASC may: (a) give the company an ACN; and (b) register the company; and (c) issue a certificate that states: (i) the company's name; and (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. Note: For the evidentiary value of a certificate of registration, see subsection 1274(7A). ASC must keep record 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.
119 Company comes into existence on registrationA 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. Note: The company remains in existence until it is deregistered (see Chapter 5A).
120 Members, directors and company secretary of a company(1) A person becomes a member, director or company secretary of a company on registration if the person is specified in the application with their consent as a proposed member, director or company secretary of the company. (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. Note: A member's name must be entered in the register of members (see section 169).
121 Registered officeThe address specified in the application for registration for the company's proposed registered office becomes the address of the company's registered office on registration.
122 Expenses incurred in promoting and setting up companyThe expenses incurred before registration in promoting and setting up a company may be paid out of the company's assets.
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: (a) for a company that has its ACN in its name - the company's name; or (b) otherwise - the company's name, the expression “Australian Company Number” and the company's ACN. Note 1: A company may make contracts and execute documents without using a seal (see sections 126 and 127). Note 2: For abbreviations that can be used on a seal, see section 149. (2) A company may have a duplicate common seal. The duplicate must be a copy of the common seal with the words “duplicate seal”, “share seal” or “certificate seal” added. (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
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: (a) issue and cancel shares in the company (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). A company limited by guarantee does not have the power to issue shares. Note: For a company's power to issue bonus, partly–paid, preference and redeemable preference shares, see section 254A. (2) A company's legal capacity to do something is not affected by the fact that the company's interests are not, or would not be, served by doing it.
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.
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.
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: (a) 2 directors of the company; or (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. Note: If a company executes a document in this way, people will be able to rely on the assumptions in subsection 129(5) for dealings in relation to the company. (2) A company with a common seal may execute a document if the seal is fixed to the document and the fixing of the seal is witnessed by: (a) 2 directors of the company; or (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. Note: If a company executes a document in this way, people will be able to rely on the assumptions in subsection 129(6) for dealings in relation to the company. (3) A company may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with subsection (1) or (2). (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
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.
129 Assumptions that can be made under section 128Constitution 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: (a) has been duly appointed; and (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. Officer or agent (3) A person may assume that anyone who is held out by the company to be an officer or agent of the company: (a) has been duly appointed; and (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. Proper performance of duties (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: (a) the company's common seal appears to have been fixed to the document in accordance with subsection 127(2); and (b) the fixing of the common seal appears to have been witnessed in accordance with that subsection. For the purposes of making the assumption, a person may also assume that anyone who witnesses the fixing of the common seal and states next to their signature that they are the sole director and sole company secretary of the company occupies both offices. 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.
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
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: (a) within the time agreed to by the parties to the contract; or (b) if there is no agreed time - within a reasonable time after the contract is entered into. (2) The person is liable to pay damages to each other party to the pre-registration contract if the company is not registered, or the company is registered but does not ratify the contract or enter into a substitute for it: (a) within the time agreed to by the parties to the contract; or (b) if there is no agreed time - within a reasonable time after the contract is entered into. The amount that the person is liable to pay to a party is the amount the company would be liable to pay to the party if the company had ratified the contract and then did not perform it at all. (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: (a) pay all or part of the damages that the person is liable to pay (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. (4) If the company ratifies the pre–registration contract but fails to perform all or part of it, the court may order the person to pay all or part of the damages that the company is ordered to pay.
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.
133 This Part replaces other rights and liabilitiesThis Part replaces any rights or liabilities anyone would otherwise have on the pre–registration contract.
Part 2B.4 - Replaceable rules and constitution
134 Internal management of companiesA 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. Note: There are additional rules about internal management in ordinary provisions of this Law and also in the common law.
135 Replaceable rulesCompanies to which replaceable rules apply (1) A section or subsection (except subsection 129(1), this section and sections 140 and 141) whose heading contains the words: (a) replaceable rule - applies as a replaceable rule to: (i) each company that is registered after the commencement of this Part; and (ii) any company registered before that commencement that repeals its constitution after that commencement; and (b) replaceable rule for proprietary companies and mandatory rule for public companies - applies: (i) as a replaceable rule to any proprietary company that is registered after the commencement of this Part; 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. The section or subsection does not apply to a proprietary company while the same person is both its sole director and sole shareholder. Note 1: See section 224B for the special provisions that apply to a proprietary company while the same person is both its sole director and sole shareholder. Note 2: A company may include in its constitution (by reference or otherwise) a replaceable rule that does not otherwise apply to it. Company's constitution can displace or modify replaceable rules (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). Note: Replaceable rules that apply to a company have effect as a contract (see section 140).
136 Constitution of a company(1) A company adopts a constitution: (a) on registration - if each person specified in the application for the company's registration as a person who consents to become a member agrees in writing to the terms of a constitution before the application is lodged; or (b) after registration - if the company passes a special resolution adopting a constitution. Note: The memorandum and articles of a company immediately before the commencement of this Part are taken together to make up the company's constitution after commencement (see section 1414). (2) The company may modify or repeal its constitution, or a provision of its constitution, by special resolution. (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: (a) if the company adopts a constitution - a copy of that constitution; or (b) if the company modifies its constitution - a copy of that modification. This also applies to a proprietary company that has applied under Part 2B.7 to change to a public company, while its application has not yet been determined.
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: (a) if no later date is specified in the resolution - on the date on which the resolution is passed; or (b) on a later date specified in, or determined in accordance with, the resolution. (2) Subsection (1) does not apply to the date of effect of a special resolution passed in connection with a change of name, change of type or a variation or cancellation of class rights. Note: For the date of effect of these changes, see subsection 157(3) (name), subsection 164(5) (type) and subsection 246D(3) and section 246E (class rights).
138 ASC may direct company to lodge consolidated constitutionThe ASC may direct a company to lodge a consolidated copy of its constitution with the ASC.
139 Company must send copy of constitution to memberA company must send a copy of its constitution to a member of the company within 7 days if the member: (a) asks the company, in writing, for the copy; and (b) pays any fee (up to the prescribed amount) required by the company.
140 Effect of constitution and replaceable rules(1) A company's constitution (if any) and any replaceable rules that apply to the company have effect as a contract: (a) between the company and each member; and (b) between the company and each director and company secretary; and (c) between a member and each other member; under which each person agrees to observe and perform the constitution and rules so far as they apply to that person. (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: (a) requires the member to take up additional shares; or (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: (i) in connection with the company's change from a public company to a proprietary company under Part 2B.7; or (ii) to insert takeover approval provisions of a kind referred to in section 671.
141 Table of replaceable rulesThe following table sets out the provisions of this Law that apply as replaceable rules. Provisions that apply as replaceable rules |
||
|
|
Directors Company may appoint a director |
|
|
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 |
|
|
Directors' meetings Circulating resolutions |
|
|
12 |
Calling directors' meetings |
248C |
|
13 |
Chairing directors' meetings |
248E |
|
14 |
Quorum at directors' meetings |
248F |
|
15 |
Passing of directors' resolutions |
248G |
|
|
Meetings of members Calling of meetings of members by a director |
|
|
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 |
|
|
Company secretary Terms of office determined by directors |
|
|
31 |
Inspection of books Company or directors may allow member to inspect books |
|
|
|
Shares Pre–emption for existing shareholders on issue of shares in proprietary company |
|
|
33 |
Other provisions about paying dividends |
254U |
|
34 |
Dividend rights for shares in proprietary companies |
254W(2) |
|
|
Transfer of shares Transmission of shares on death |
|
|
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 |
|
|
Share capital Capitalisation of profits |
|
Part 2B.5 - Registered office and places of business
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.
Note: A document may be served on a company by leaving it at, or posting it to, the company's registered office (see subsection 109X(1)).
(2) A company must lodge notice of a change of address of its registered office with the ASC not later than 14 days after the date on which the change occurs. The notice must be in the prescribed form.
Note: If the company is not to be the occupier of premises at the address of its new registered office, the notice must state that the occupier has consented to the address being specified in the notice and has not withdrawn that consent (see section 100).
(3) A notice of change of address takes effect from the later of:
(a) the 7th day after the notice was lodged; or
(b) a later day specified in the notice as the date from which the change is to take effect.
143 ASC may change address of registered office to a director's address
(1) A company that does not occupy the premises at the address of its registered office must be able to show to the ASC the occupier's written consent to the company's use of those premises as its registered office.
Note: The ASC can require the company to produce the consent (see section 100).
(2) If the ASC becomes aware that the occupier of those premises:
(a) has not consented to the use of the premises as the address of the company's registered office; or
(b) has withdrawn the consent;
the ASC may give written notice to a director of the company who resides in Australia that the ASC intends to change the address of the company's registered office to the director's address.
(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.
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.
145 Opening hours of registered office of public company
(1) The registered office of a public company must be open to the public:
(a) each business day from at least 10 am to 12 noon and from at least 2 pm to 4 pm; or
(b) at least 3 hours chosen by the company between 9 am and 5 pm each business day.
(2) If the company chooses its own opening hours, the hours must be specified:
(a) if the company is to have its own opening hours from its registration - in the application for registration of the company under section 117; or
(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).
(3) The company must lodge notice of a change in the opening hours of its registered office with the ASC before the day on which a change occurs. The notice must be in the prescribed form.
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
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:
(a) identical (under rules set out in the regulations) to a name that is reserved or registered under this Law for another body; or
(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.
Minister may consent to a name being available to a company
(2) The Minister may consent in writing to a name being available to a company even if the name is:
(a) identical to a name that is reserved or registered under this Law for another body; or
(b) unacceptable for registration under the regulations.
(3) The Minister's consent may be given subject to conditions.
Note: If the company breaches a condition, the ASC may direct it to change its name under section 158.
148 A company's name
Company may use available name or ACN
(1) A company may have as its name:
(a) an available name; or
(b) the expression “Australian Company Number” followed by the company's ACN.
The name must also include the words required by subsection (2) or (3).
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:
(a) it was a public company before the commencement of this section; and
(b) the word “Proprietary” (or an abbreviation of it) was included in its name before that commencement.
149 Acceptable abbreviations
(1) The abbreviations set out in the following table may be used:
(a) instead of words that this Law requires to be part of a company's name or to be included in a document or on a company's common seal; and
(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 |
|
(2) If a company's name includes any of these abbreviations, the word corresponding to the abbreviation may be used instead.
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: (a) requires the company to pursue charitable purposes only and to apply its income in promoting those purposes; and (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. (2) The company must notify the ASC as soon as practicable if any of those requirements or prohibitions in its constitution are not complied with or if its constitution is modified to remove any of those requirements or prohibitions.
151
Exception to requirement for using “Limited” in name -
|
[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 1: A public company seeking to change to a proprietary company must comply with the requirements for proprietary companies set out in section 113.
Note 2: Other types of companies that were previously allowed can change type under section 1416.
(2) A public company limited by shares may only convert to a no liability company if:
(a) the company's constitution states that its sole objects are mining purposes; and
(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.
Note: Section 9 defines mining purposes and minerals .
(3) The company must lodge a copy of the special resolution with the ASC within 14 days after it is passed.
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:
(a) provide that a specified portion of its uncalled share capital may only be called up if the company is wound up
(b) increase the nominal value of each of its shares.
Any increase in nominal value may only be called up if the company is wound up.
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:
(a) a copy of:
(i) the special resolution that resolves to change the type of the company, specifies the new type and the company's new name (if a change of name is necessary); and
(ii) any other special resolution passed in connection with the change of type
(b) for a company limited by guarantee changing to a company limited by shares:
(i) a statement signed by the directors of the company that in their opinion the company's creditors are not likely to be materially prejudiced by the change of type and that sets out their reasons for that opinion; and
(ii) any special resolution dealing with an issue of shares according to section 167
(c) for a company limited by shares or a company limited by guarantee changing to an unlimited company:
(i) an assent to the change of type in the prescribed form signed by all the members of the company; and
(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
(d) for a proprietary company changing to a public company:
(i) a consolidated copy of the company's constitution (if any) as at the date of lodgment; and
(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 1: The company must lodge a copy of any special resolution modifying its constitution passed after the application is lodged (see subsection 136(5)).
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).
Company limited by guarantee to company limited by shares
(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:
(a) that the company has prepared a list that sets out the following details about each person to whom the shares will be issued and about the shares:
(i) name and address
(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
(b) the number, class and nominal value of the shares those persons will take up; 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).
The shares may be issued to existing members only, to new members only or to existing and new members.
Note: An offer of shares associated with a proposed change of type may be subject to the prospectus provisions (see section 1018).
(4) The application must be in the prescribed form.
(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.
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:
(a) the ASC is satisfied that:
(i) the application complies with section 163; and
(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) for an application by a company limited by guarantee to change to a company limited by shares that is accompanied by a copy of a special resolution dealing with an issue of shares according to section 167 - the ASC is not of the opinion that the obligations that would attach to the shares are unreasonable compared with the obligations that attach to membership of the company limited by guarantee.
(2) To make a decision under subparagraph (1)(a)(ii), the ASC may direct the company in writing to:
(a) notify some or all of its creditors of the proposed change in the way the ASC specifies; and
(b) invite those creditors to make submissions to the ASC.
(3) The notice that the ASC intends to alter the details of the company's registration must be:
(a) included on the ASC database; and
(b) published in the Gazette.
The notice must also state that the ASC will alter the details of the company's registration 1 month after the notice has been published in the Gazette unless an order by a court or the Administrative Appeals Tribunal prevents it from doing so.
(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.
Note: For the evidentiary value of a certificate of registration, see subsection 1274(7A).
(7) If the ASC alters the details of a company's registration under subsection (4), a court is not to make an order reversing the alteration of the details of the company's registration.
Note: The Administrative Appeals Tribunal cannot review the change of the company's type once the ASC has issued a new certificate of registration to the company (see subsection 1274(7A) and paragraph 1317C(b)).
165 ASC may direct a proprietary company to change to a public company in certain circumstances
(1) The ASC may direct a proprietary company in writing to change to a public company within 2 months if it is satisfied that the company has contravened section 113 (requirements for proprietary companies).
(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.
Note: For the evidentiary value of a certificate of registration, see subsection 1274(7A).
166 Effect of change of type
(1) A change of type does not:
(a) create a new legal entity; or
(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.
(2) On the change of type of a company from a company limited by guarantee to a company limited by shares:
(a) the liability of each member and past member as a guarantor on the winding up of the company is extinguished; and
(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):
(i) the shares are taken to be issued to that person; and
(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.
Note: The company must maintain a register of members that complies with subsection 169(3).
167 Issue of shares by company or holding company - company limited by guarantee changing to company limited by shares
(1) If:
(a) a company limited by guarantee changes type under this Part to a company limited by shares; and
(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;
the person becomes a member of the company issuing the shares if:
(c) the issue of the shares is in accordance with the special resolution that accompanied the application to change type under subparagraph 163(2)(a)(ii); and
(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) If shares are issued according to this section, a court is not to make an order reversing the issue of the shares.