Corporate Law

division of powers within a company

Members

❖ S 231: A person is a member of a company if they:

➢ (a) are a member of the company on its registration;

➢ (b) agree to become a member of the company after its registration and their name is entered on the register of members; or

➢ (c) become a member of the company under s 167 (membership arising from conversion of a company from one limited by guarantee to one limited by shares).

❖ Leaney v Olmstead: An unregistered beneficial owner of shares is not a member.

❖ Norman Baker v Baker: Within a reasonable time of becoming an adult, the member may repudiate the membership contract – but remains liable for any obligations that accrued prior to the repudiation.

Number of members

❖ S 114: All companies must have at least 1 member.

❖ S 113: A proprietary company must have no more than 50 non-employee shareholders.

Powers of members

❖ Normally, members act collectively at general meetings to make binding decisions.

❖ S 201G [RR] & ASX LR 14.9: Members of a company may appoint a director by a resolution passed in general meeting.

❖ S 203C [RR]: Members of a proprietary company may remove or replace a director by resolution.

❖ S 203D(1): Members of a public company may remove a director by resolution.

❖ S 202A(1) [RR]: Directors’ remunerations are determined by resolutions passed in a general meeting.

❖ S 136(2): Members may modify or repeal a constitution by special resolution.

Limits on powers of general meeting over directors’ decisions

❖ John Shaw & Sons v Shaw: Where management powers are vested in the directors, members in a general meeting cannot override management decisions made by the board.

➢ Power to decide matters of litigation belongs solely to directors.

❖ NRMA v Parker: Resolutions passed by members in general meeting will not interfere with powers of directors conferred by s 198A or the constitution.

➢ *Board selected a returning officer, who decided...