LPC notes
Corporate Law
Summary Notes
2023
,Table of Contents
1 BODs’ Power of management 4
Corporate groups 6
Internal management of the company 6
2 Difference between Public and proprietary companies 7
Proprietary companies 7
Public Companies 7
Single director rules apply 8
3 Members’ decision making power 8
Composition of the board 9
4 Members’ meeting 9
Procedural irregularities: 11
(1)(b) 11
(i) Absence of a quorum 11
Restriction on majority voting power 12
5 Directors’ Duties 13
Duty of care 14
The business judgment rule: S180 (2) 15
Insolvent trading 15
When and how does S588G (1) apply? 16
What does incur a debt mean? 16
What is insolvency? 16
What defences available under S588H? 16
Consequences: 16
Duty to act in “Best interest” 16
6 Duty to avoid conflict of interest 18
General Law duty 18
Scenario 1: General law conflict rule 18
Scenario 2: another general law rule 19
Scenario 3: Co unable to take oppo 19
Scenario 4: Conflicting duties 19
Statutory regulation 19
2
, RPT 20
Is there a financial benefit? 20
7 Members' voting rights 22
8 Consequences of breach of duty 22
□ ASIC enforcement 22
Relief from liability for breach of duty 23
Ratification by the company 24
9 Company’s civil remedies (5 types) 24
10 Members’ remedies 25
The statutory remedies include 26
Who can apply to the court? 26
Affairs of the company 26
Tests apply here 26
Examples of oppressive conduct: (P332) 27
What orders does the court can make? – Remedies where there is oppression 27
Who can apply 28
Who can apply? 29
Statutory right to inspect book: 29
The general law remedies include 30
11 Members’ personal right and action 30
Personal rights in express contract 30
Personal rights in statutory contract 31
Personal rights under statute 31
Personal rights under general law 31
12 Members’ derivative actions 32
Who may apply? 32
Applying for and granting leave 32
14 Transactions by companies 32
15 Share issue and maintenance 32
Knowledge on Shares 32
Increasing share capital 33
Process of share issue 33
Is member approval required? 33
3
, Restrictions on share issue for Pty Ltd Co? 33
When is disclosure required? 34
Dividends: 34
Dividend Test: s254T 34
Dividend rights of shares 34
Maintenance of capital 34
I Self-acquisition 35
II Permitted share buy-back 35
III Reductions of capital 37
Statutory Injunction s1324 38
IV Financial assistance 38
Variation of class rights –VCR; S246 38
Minor point summary 40
Statutory right to inspect book: 40
Definition Summary 40
1 BODs’ Power of management
(1) The business of a company is to be managed by or under the direction of the
Director Power directors. (Management of business)
RR s198A *Extension in Note β below
(2) The directors may exercise all the powers of the company except any powers that
S198A this Act or the company’s constitution (if any) requires the company to exercise in
general meeting.
For example, directors may issue shares, borrow money or issue debentures
Majority vote and casting vote of the chair
S248G
Definition of directors and officers Note π
S9
Backgrounds to
directors
Execution of negotiable instrument
S198B (1)
(1)Conferral of powers on a managing director; (2)Power can be revoked or varied
RRS198C Generally delegate day-to-day management to the CEO/managing director
4
Corporate Law
Summary Notes
2023
,Table of Contents
1 BODs’ Power of management 4
Corporate groups 6
Internal management of the company 6
2 Difference between Public and proprietary companies 7
Proprietary companies 7
Public Companies 7
Single director rules apply 8
3 Members’ decision making power 8
Composition of the board 9
4 Members’ meeting 9
Procedural irregularities: 11
(1)(b) 11
(i) Absence of a quorum 11
Restriction on majority voting power 12
5 Directors’ Duties 13
Duty of care 14
The business judgment rule: S180 (2) 15
Insolvent trading 15
When and how does S588G (1) apply? 16
What does incur a debt mean? 16
What is insolvency? 16
What defences available under S588H? 16
Consequences: 16
Duty to act in “Best interest” 16
6 Duty to avoid conflict of interest 18
General Law duty 18
Scenario 1: General law conflict rule 18
Scenario 2: another general law rule 19
Scenario 3: Co unable to take oppo 19
Scenario 4: Conflicting duties 19
Statutory regulation 19
2
, RPT 20
Is there a financial benefit? 20
7 Members' voting rights 22
8 Consequences of breach of duty 22
□ ASIC enforcement 22
Relief from liability for breach of duty 23
Ratification by the company 24
9 Company’s civil remedies (5 types) 24
10 Members’ remedies 25
The statutory remedies include 26
Who can apply to the court? 26
Affairs of the company 26
Tests apply here 26
Examples of oppressive conduct: (P332) 27
What orders does the court can make? – Remedies where there is oppression 27
Who can apply 28
Who can apply? 29
Statutory right to inspect book: 29
The general law remedies include 30
11 Members’ personal right and action 30
Personal rights in express contract 30
Personal rights in statutory contract 31
Personal rights under statute 31
Personal rights under general law 31
12 Members’ derivative actions 32
Who may apply? 32
Applying for and granting leave 32
14 Transactions by companies 32
15 Share issue and maintenance 32
Knowledge on Shares 32
Increasing share capital 33
Process of share issue 33
Is member approval required? 33
3
, Restrictions on share issue for Pty Ltd Co? 33
When is disclosure required? 34
Dividends: 34
Dividend Test: s254T 34
Dividend rights of shares 34
Maintenance of capital 34
I Self-acquisition 35
II Permitted share buy-back 35
III Reductions of capital 37
Statutory Injunction s1324 38
IV Financial assistance 38
Variation of class rights –VCR; S246 38
Minor point summary 40
Statutory right to inspect book: 40
Definition Summary 40
1 BODs’ Power of management
(1) The business of a company is to be managed by or under the direction of the
Director Power directors. (Management of business)
RR s198A *Extension in Note β below
(2) The directors may exercise all the powers of the company except any powers that
S198A this Act or the company’s constitution (if any) requires the company to exercise in
general meeting.
For example, directors may issue shares, borrow money or issue debentures
Majority vote and casting vote of the chair
S248G
Definition of directors and officers Note π
S9
Backgrounds to
directors
Execution of negotiable instrument
S198B (1)
(1)Conferral of powers on a managing director; (2)Power can be revoked or varied
RRS198C Generally delegate day-to-day management to the CEO/managing director
4
