Contents

Chapter 1--Introductory                                                                                                      1

Part 1.1--Preliminary                                                                                                            1

1............ Short title [see Note 1] ....................................................................... 1

2............ Commencement [see Note 1] .............................................................. 1

3............ Constitutional basis for this Act ........................................................ 1

4............ Referring States ................................................................................... 2

5............ General territorial application of Act ................................................. 4

5A......... Application to the Crown .................................................................. 7

5B......... ASIC has general administration of this Act ...................................... 7

5C......... Application of the Acts Interpretation Act 1901 ................................. 7

Part 1.1A--Interaction between Corporations legislation and State and Territory laws    9

5D......... Coverage of Part ................................................................................. 9

5E.......... Concurrent operation intended ........................................................... 9

5F.......... Corporations legislation does not apply to matters declared by State or Territory law to be an excluded matter 10

5G......... Avoiding direct inconsistency arising between the Corporations legislation and State and Territory laws             12

5H......... Registration of body as company on basis of State or Territory law 19

5I........... Regulations may modify operation of the Corporations legislation to deal with interaction between that legislation and State and Territory laws ................................................................... 20

Part 1.2--Interpretation                                                                                                     23

Division 1--General                                                                                                     23

6............ Effect of this Part ............................................................................. 23

7............ Location of other interpretation provisions ..................................... 23

9............ Dictionary ......................................................................................... 24

9A......... Meaning of rights issue .................................................................... 86

Division 2--Associates                                                                                               88

10.......... Effect of Division ............................................................................. 88

11.......... Associates of bodies corporate ......................................................... 88

12.......... References in Chapters 6 to 6C, and other references relating to voting power and takeovers etc.         88

13.......... References in Chapter 7 .................................................................... 90

15.......... General .............................................................................................. 90

16.......... Exclusions ......................................................................................... 91

17.......... Associates of composite person that carries on a financial services business          92

Division 3--Carrying on business                                                                        93

18.......... Carrying on business: otherwise than for profit ............................... 93

19.......... Businesses of a particular kind ......................................................... 93

20.......... Carrying on a business: alone or together with others ...................... 93

21.......... Carrying on business in Australia or a State or Territory ................ 93

Division 5A--Types of company                                                                            95

45A....... Proprietary companies ..................................................................... 95

Division 6--Subsidiaries and related bodies corporate                            97

46.......... What is a subsidiary ......................................................................... 97

47.......... Control of a body corporate's board ................................................ 97

48.......... Matters to be disregarded ................................................................. 98

49.......... References in this Division to a subsidiary ...................................... 98

50.......... Related bodies corporate .................................................................. 99

50AAA. Associated entities ............................................................................ 99

50AA.... Control ............................................................................................ 100

Division 7--Interpretation of other expressions                                        101

52.......... Doing acts ....................................................................................... 101

52A....... Signing ............................................................................................. 101

53.......... Affairs of a body corporate ............................................................ 101

53AA.... Business affairs of a body corporate .............................................. 103

53AB.... Business affairs of a natural person ................................................ 103

53AC.... Business affairs of a partnership .................................................... 104

53AD.... Business affairs of a trust ............................................................... 104

57.......... Classes of shares or interests in managed investment schemes ...... 105

57A....... Meaning of corporation .................................................................. 105

58AA.... Meaning of court and Court ........................................................... 105

58B....... Discharge of obligations under this Act .......................................... 106

59.......... Debentures as consideration for acquisition of shares .................... 106

60.......... Declaration of relevant relationships .............................................. 106

64.......... Entering into a transaction in relation to shares or securities ......... 108

64A....... Entities ............................................................................................ 108

64B....... Entities connected with a corporation ............................................ 108

65.......... Eligible money market dealer .......................................................... 110

66A....... Exempt bodies ................................................................................ 110

70.......... Extension of period for doing an act ............................................... 110

73A....... When a court is taken to find a person guilty of an offence ........... 110

75.......... Inclusion in official list ................................................................... 110

79.......... Involvement in contraventions ....................................................... 111

80.......... Jervis Bay Territory taken to be part of the Australian Capital Territory              111

82.......... Offers and invitations to the public ................................................ 111

83.......... Officers, and other persons, in default ........................................... 112

86.......... Possession ...................................................................................... 112

88A....... Public document of a body corporate ............................................. 112

88B....... Qualified accountants ..................................................................... 113

89.......... Qualified privilege ........................................................................... 113

90.......... Receivers and managers .................................................................. 114

92.......... Securities ......................................................................................... 114

95A....... Solvency and insolvency ................................................................ 115

Division 8--Miscellaneous interpretation rules                                         117

5>100........ Address of registered office etc. ..................................................... 117

100A..... Operation of certain laws relating to instruments on which stamp duty has not been paid    117

101........ Amount of stock representing a number of shares ......................... 118

102........ Applications to be in writing .......................................................... 118

102B..... In Australia or elsewhere, in this jurisdiction or elsewhere etc. ..... 118

102C..... In Australia ..................................................................................... 118

103........ Effect of certain contraventions of this Act ................................... 118

104........ Effect of provisions empowering a person to require or prohibit conduct               119

105........ Calculation of time .......................................................................... 119

106........ Performance of functions by Commission delegate ........................ 119

107........ Notice in relation to top 20 members of a class ............................. 119

108........ Parts of dollar to be disregarded in determining majority in value of creditors etc. 120

109........ References to persons, things and matters ..................................... 120

109X..... Service of documents ...................................................................... 120

Part 1.2A--Disclosing entities                                                                                      122

Division 1--Object of Part                                                                                      122

111AA.. Object of Part ................................................................................. 122

Division 2--Definitions                                                                                             123

111AB.. Terms defined in Division .............................................................. 123

111AC.. Disclosing entity ............................................................................. 123

111AD.. ED securities ................................................................................... 123

111AE... Securities of body or undertaking that is included in a licensed market's official list               124

111AF... Securities (except debentures and managed investment products) held by 100 or more persons            125

111AFA Managed investment products held by 100 or more persons ........ 125

111AG.. Securities issued as consideration for an acquisition under an off‑market takeover bid or Part 5.1 compromise or arrangement ..................................................................................... 126

111AH.. When a person holds securities for the purposes of sections 111AF, 111AFA and 111AG 126

5>111AI.... Debentures ...................................................................................... 127

111AJ... Regulations may declare securities not to be ED securities ............ 127

111AK.. ED securities of a disclosing entity ................................................ 127

111AL... Listed or unlisted disclosing entity ................................................. 127

111AM. Quoted ED securities ...................................................................... 127

Division 3--Significance of being a disclosing entity                                128

111AN.. Division contains outline of significance of being a disclosing entity 128

111AO.. Accounting requirements ................................................................ 128

111AP... Continuous disclosure requirements ............................................... 128

111AQ.. Prospectus relief ............................................................................. 128

111AQA..................................................... Product Disclosure Statement relief   128

Division 4--Exemptions and modifications                                                   129

111AR.. Meaning of disclosing entity provisions ......................................... 129

111AS... Exemptions by regulations ............................................................. 129

111AT.. Exemptions by ASIC ...................................................................... 129

111AU.. Enforcing conditions of exemptions ............................................... 129

111AV.. Modifications by regulations .......................................................... 130

111AW. Exemptions and modifications have effect ..................................... 130

111AX.. Effect of Division ........................................................................... 130

Part 1.4--Technical provisions about aids for readers                                   131

111J...... Small business guide ....................................................................... 131

Part 1.5--Small business guide                                                                                    132

1............ What registration means ................................................................. 132

2............ The company structure for small business ..................................... 137

3............ Setting up a new company ............................................................. 137

4............ Continuing obligations after the company is set up ....................... 140

5............ Company directors and company secretaries ................................. 143

6............ Shares and shareholders .................................................................. 146

7............ Signing company documents .......................................................... 147

8............ Funding the company's operations ................................................ 148

9............ Returns to shareholders .................................................................. 148

10.......... Annual financial reports and audit .................................................. 149

11.......... Disagreements within the company ............................................... 151

12.......... Companies in financial trouble ....................................................... 152

Chapter 2A--Registering a company                                                                       154

Part 2A.1--What companies can be registered                                                  154

112........ Types of companies ....................................................................... 154

113........ Proprietary companies ................................................................... 155

114........ Minimum of 1 member ................................................................... 156

115........ Restrictions on size of partnerships and associations .................... 156

116........ Trade unions cannot be registered .................................................. 157

Part 2A.2--How a company is registered                                                              158

117........ Applying for registration ................................................................ 158

118........ ASIC gives company ACN, registers company and issues certificate 160

119........ Company comes into existence on registration .............................. 161

119A..... Jurisdiction of incorporation and jurisdiction of registration ......... 161

120........ Members, directors and company secretary of a company ........... 162

121........ Registered office ............................................................................. 162

122........ Expenses incurred in promoting and setting up company .............. 162

123........ Company may have common seal .................................................. 163

Chapter 2B--Basic features of a company                                                           164

Part 2B.1--Company powers and how they are exercised                           164

124........ Legal capacity and powers of a company ...................................... 164

125........ Constitution may limit powers and set out objects ....................... 165

126........ Agent exercising a company's power to make contracts ................ 165

127........ Execution of documents (including deeds) by the company itself . 165

Part 2B.2--Assumptions people dealing with companies are entitled to make        167

128........ Entitlement to make assumptions .................................................. 167

129........ Assumptions that can be made under section 128 ......................... 167

130........ Information available to the public from ASIC does not constitute constructive notice          169

Part 2B.3--Contracts before registration                                                              170

131........ Contracts before registration .......................................................... 170

132........ Person may be released from liability but is not entitled to indemnity 171

133........ This Part replaces other rights and liabilities .................................. 171

Part 2B.4--Replaceable rules and constitution                                                  172

134........ Internal management of companies ................................................. 172

135........ Replaceable rules ............................................................................ 172

136........ Constitution of a company ............................................................. 173

137........ Date of effect of adoption, modification or repeal of constitution . 174

138........ ASIC may direct company to lodge consolidated constitution ...... 175

139........ Company must send copy of constitution to member ................... 175

140........ Effect of constitution and replaceable rules .................................... 175

141........ Table of replaceable rules ............................................................... 176

Part 2B.5--Registered office and places of business                                     178

142........ Registered office ............................................................................. 178

143........ ASIC may change address of registered office to a director's address 178

144........ Company's name must be displayed at registered office etc. ........ 179

145........ Opening hours of registered office of public company .................. 179

146........ Change of address of principal place of business ........................... 180

146A..... Contact address .............................................................................. 180

Part 2B.6--Names                                                                                                               181

Division 1--Selecting and using a name                                                          181

147........ When a name is available ................................................................ 181

148........ A company's name ......................................................................... 182

149........ Acceptable abbreviations ................................................................ 183

150........ Exception to requirement for using "Limited" in name .................. 184

151........ Exception to requirement for using "Limited" in name--pre‑existing licences         184

152........ Reserving a name ............................................................................ 185

153........ Using a name and ACN on documents ........................................... 186

154........ Exception to requirement to have ACN on receipts ....................... 186

155........ Regulations may exempt from requirement to set out information on documents   187

156........ Carrying on business using "Limited", "No Liability" or "Proprietary" in name    187

Division 2--Changing a company's name                                                       188

157........ Company changing its name ........................................................... 188

157A..... Change of name of company under external administration ........... 188

158........ ASIC's power to direct company to change its name .................... 190

159........ ASIC's power to include "Limited" in company's name ............... 190

160........ ASIC must issue new certificate if company's name changes ........ 191

161........ Effect of name change ..................................................................... 191

161A..... Company under external administration--former name to be used on documents 191

Part 2B.7--Changing company type                                                                         194

162........ Changing company type ................................................................. 194

163........ Applying for change of type .......................................................... 196

164........ ASIC changes type of company ..................................................... 198

165........ ASIC may direct a proprietary company to change to a public company in certain circumstances        200

166........ Effect of change of type ................................................................. 200

167........ Issue of shares by company or holding company--company limited by guarantee changing to company limited by shares .............................................................................................. 201

167AA.. Application of Part to company limited both by shares and by guarantee              202

Chapter 2C--Registers                                                                                                    203

Part 2C.1--Registers generally                                                                                   203

167A..... Who is covered by this Chapter ..................................................... 203

168........ Registers to be maintained .............................................................. 203

169........ Register of members ....................................................................... 204

170........ Register of option holders and copies of options documents ........ 206

171........ Register of debenture holders ......................................................... 207

172........ Location of registers ....................................................................... 207

173........ Right to inspect and get copies ....................................................... 208

174........ Agent's obligations ......................................................................... 210

175........ Correction of registers .................................................................... 211

176........ Evidentiary value of registers ......................................................... 211

177........ Use of information on registers ...................................................... 211

178........ Overseas branch registers ............................................................... 212

Part 2C.2--Notice by proprietary companies of changes to member register          213

178A..... Notice of change to member register ............................................... 213

178B..... Top 20 only .................................................................................... 214

178C..... Notice of change to share structure ................................................ 214

178D..... Time within which ASIC must be notified ..................................... 214

Chapter 2D--Officers and employees                                                                     216

Part 2D.1--Duties and powers                                                                                     216

179........ Background to duties of directors, other officers and employees .. 216

Division 1--General duties                                                                                    217

180........ Care and diligence--civil obligation only ........................................ 217

181........ Good faith--civil obligations .......................................................... 218

182........ Use of position--civil obligations .................................................. 218

183........ Use of information--civil obligations ............................................. 219

184........ Good faith, use of position and use of information--criminal offences   219

185........ Interaction of sections 180 to 184 with other laws etc. ................. 220

186........ Territorial application of sections 180 to 184 ................................ 220

187........ Directors of wholly‑owned subsidiaries ......................................... 221

188........ Responsibility of secretaries and directors for certain contraventions 221

189........ Reliance on information or advice provided by others ................... 222

190........ Responsibility for actions of delegate ............................................ 223

190A..... Limited application of Division to registrable Australian bodies ... 223

190B..... Division does not apply to Aboriginal and Torres Strait Islander corporations      224

Division 2--Disclosure of, and voting on matters involving, material personal interests            225

191........ Material personal interest--director's duty to disclose ................. 225

192........ Director may give other directors standing notice about an interest 227

193........ Interaction of sections 191 and 192 with other laws etc. ............... 228

194........ Voting and completion of transactions--directors of proprietary companies (replaceable rule--see section 135) ........................................................................................................ 229

195........ Restrictions on voting--directors of public companies only ......... 229

196........ ASIC power to make declarations and class orders ........................ 231

Division 3--Duty to discharge certain trust liabilities                             232

197........ Directors liable for debts and other obligations incurred by corporation as trustee                 232

Division 4--Powers                                                                                                    233

198A..... Powers of directors (replaceable rule--see section 135) ................ 233

198B..... Negotiable instruments (replaceable rule--see section 135) .......... 233

198C..... Managing director (replaceable rule--see section 135) .................. 233

198D..... Delegation ....................................................................................... 233

198E...... Single director/shareholder proprietary companies ........................ 234

198F...... Right of access to company books ................................................. 234

Part 2D.2--Restrictions on indemnities, insurance and termination payments       236

Division 1--Indemnities and insurance for officers and auditors      236

199A..... Indemnification and exemption of officer or auditor ...................... 236

199B..... Insurance premiums for certain liabilities of director, secretary, other officer or auditor         237

199C..... Certain indemnities, exemptions, payments and agreements not authorised and certain documents void               238

Division 2--Termination payments                                                                    239

200A..... When benefit given in connection with retirement from office ....... 239

200B..... Retirement benefits generally need membership approval ............. 240

200C..... Benefits on transfer of undertaking or property need membership approval          241

200D..... Contravention to receive benefit without member approval .......... 242

200E...... Approval by members .................................................................... 242

200F...... Exempt benefits and benefits given in certain circumstances ......... 243

200G..... Genuine payments of pension and lump sum ................................ 245

200H..... Benefits required by law ................................................................. 247

200J...... Benefits to be held in trust for company ........................................ 247

Part 2D.3--Appointment, remuneration and cessation of appointment of directors             248

Division 1--Appointment of directors                                                              248

201A..... Minimum number of directors ........................................................ 248

201B..... Who can be a director ..................................................................... 248

201D..... Consent to act as director ............................................................... 248

201E...... Special rules for the appointment of public company directors .... 249

201F...... Special rules for the appointment of directors for single director/single shareholder proprietary companies          249

201G..... Company may appoint a director (replaceable rule--see section 135) .. 250

201H..... Directors may appoint other directors (replaceable rule--see section 135)            250

5>201J...... Appointment of managing directors (replaceable rule--see section 135)                251

5>201K..... Alternate directors (replaceable rule--see section 135) ................. 251

201L...... Signpost--ASIC to be notified of appointment ............................. 251

201M.... Effectiveness of acts by directors ................................................... 252

Division 2--Remuneration of directors                                                           253

202A..... Remuneration of directors (replaceable rule--see section 135) ..... 253

202B..... Members may obtain information about directors' remuneration .. 253

202C..... Special rule for single director/single shareholder proprietary companies                254

Division 3--Resignation, retirement or removal of directors             255

203A..... Director may resign by giving written notice to company (replaceable rule--see section 135)              255

5>203B..... Signpost to consequences of disqualification from managing corporations              255

203C..... Removal by members--proprietary companies (replaceable rule--see section 135)              255

5>203D..... Removal by members--public companies ..................................... 255

203E...... Director cannot be removed by other directors--public companies 257

203F...... Termination of appointment of managing director (replaceable rule--see section 135)          257

Part 2D.4--Appointment of secretaries                                                                  258

204A..... Minimum number of secretaries ..................................................... 258

204B..... Who can be a secretary ................................................................... 258

204C..... Consent to act as secretary ............................................................. 258

204D..... How a secretary is appointed ......................................................... 259

204E...... Effectiveness of acts by secretaries ................................................ 259

204F...... Terms and conditions of office for secretaries (replaceable rule--see section 135)                 259

204G..... Signpost to consequences of disqualification from managing corporations              259

Part 2D.5--Public information about directors and secretaries                260

205A..... Director, secretary or alternate director may notify ASIC of resignation or retirement           260

205B..... Notice of name and address of directors and secretaries to ASIC .. 260

205C..... Director and secretary must give information to company ............ 262

205D..... Address for officers ........................................................................ 262

205E...... ASIC's power to ask for information about person's position as director or secretary          263

205F...... Director must give information to company .................................. 263

205G..... Listed company--director to notify market operator of shareholdings etc.            264

Part 2D.6--Disqualification from managing corporations                            266

206A..... Disqualified person not to manage corporations ............................ 266

206B..... Automatic disqualification .............................................................. 267

206BA.. Extension of period of automatic disqualification .......................... 268

206C..... Court power of disqualification--contravention of civil penalty provision            269

206D..... Court power of disqualification--insolvency and non‑payment of debts               269

206E...... Court power of disqualification--repeated contraventions of Act 271

206EA... Disqualification under the Trade Practices Act 1974 ..................... 272

206F...... ASIC's power of disqualification ................................................... 272

206G..... Court power to grant leave ............................................................. 273

206GA.. Involvement of ACCC--leave orders under section 206G ............ 274

206H..... Territorial application of this Part .................................................. 275

206HA.. Limited application of Part to registrable Australian bodies .......... 275

206HB.. Part does not apply to Aboriginal and Torres Strait Islander corporations             275

Chapter 2E--Related party transactions                                                               277

207........ Purpose ........................................................................................... 277

Part 2E.1--Member approval needed for related party benefit               278

Division 1--Need for member approval                                                          278

208........ Need for member approval for financial benefit ............................. 278

209........ Consequences of breach .................................................................. 278

Division 2--Exceptions to the requirement for member approval   280

210........ Arm's length terms ......................................................................... 280

211........ Remuneration and reimbursement for officer or employee ............ 280

212........ Indemnities, exemptions, insurance premiums and payment for legal costs for officers          281

213........ Small amounts given to related entity ............................................. 282

214........ Benefit to or by closely‑held subsidiary ........................................ 283

215........ Benefits to members that do not discriminate unfairly .................. 283

216........ Court order ..................................................................................... 284

Division 3--Procedure for obtaining member approval                          285

217........ Resolution may specify matters by class or kind .......................... 285

218........ Company must lodge material that will be put to members with ASIC   285

219........ Requirements for explanatory statement to members .................... 286

220........ ASIC may comment on proposed resolution ................................. 287

221........ Requirements for notice of meeting ................................................ 287

222........ Other material put to members ....................................................... 287

223........ Proposed resolution cannot be varied ............................................. 288

224........ Voting by or on behalf of related party interested in proposed resolution              288

225........ Voting on the resolution ................................................................. 289

226........ Notice of resolution to be lodged .................................................... 290

227........ Declaration by court of substantial compliance ............................. 290

Part 2E.2--Related parties and financial benefits                                            291

228........ Related parties ................................................................................ 291

229........ Giving a financial benefit ................................................................ 292

Part 2E.3--Interaction with other rules                                                                   294

5>230........ General duties still apply ............................................................... 294

Chapter 2F--Members' rights and remedies                                                      295

231........ Membership of a company ............................................................ 295

Part 2F.1--Oppressive conduct of affairs                                                              296

232........ Grounds for Court order ................................................................. 296

233........ Orders the Court can make ............................................................. 296

234........ Who can apply for order ................................................................ 297

235........ Requirement for person to lodge order ........................................... 298

Part 2F.1A--Proceedings on behalf of a company by members and others               299

236........ Bringing, or intervening in, proceedings on behalf of a company ... 299

237........ Applying for and granting leave ..................................................... 299

238........ Substitution of another person for the person granted leave .......... 301

239........ Effect of ratification by members ................................................... 301

240........ Leave to discontinue, compromise or settle proceedings brought, or intervened in, with leave               302

241........ General powers of the Court .......................................................... 302

242........ Power of the Court to make costs orders ....................................... 303

Part 2F.2--Class rights                                                                                                     304

246B..... Varying and cancelling class rights .................................................. 304

246C..... Certain actions taken to vary rights etc. ......................................... 305

246D..... Variation, cancellation or modification without unanimous support of class           306

246E...... Variation, cancellation or modification with unanimous support of class                307

246F...... Company must lodge documents and resolutions with ASIC ........ 307

246G..... Member's copies of documents and resolutions ............................ 308

Part 2F.3--Inspection of books                                                                                    310

247A..... Order for inspection of books of company or registered managed investment scheme            310

247B..... Ancillary orders .............................................................................. 311

247C..... Disclosure of information acquired in inspection ........................... 311

247D..... Company or directors may allow member to inspect books (replaceable rule see section 135)              3