After more than six months since the announcement by the Federal
Government of its intentions to cut red tape for businesses and the
subsequent release of exposure draft legislation, the
Corporations Legislation Amendment (Deregulatory and Other
Measures) Bill 2014 (Bill) has been
introduced into Parliament.
The Bill was introduced to Parliament last week and proposes to
streamline and improve certain aspects of the operation of business
and government processes under the Corporations Act 2001
(Cth) (Corporations Act). Although these
amendments aim to cut red tape, there are only two substantial
changes, and as such, companies which are not affected by these
provisions may be left scratching their heads as to the
In this Alert, Partner Nicole Radice and Trainee Solicitor
Kaitlyn Rafter explore the following major changes proposed by the
repeal of the 100 Member Rule; and
amendments to disclosure requirements of executive
Requesting a General Meeting
If the Bill is passed, the ability of 100 shareholders of a
company to have directors call a general meeting will be removed
(the 100 Member Rule). This will reduce the
onerous expenses involved in calling general meetings in
circumstances where the 100 Member Rule is being used vexatiously
or frivolously, for example where the 100 members are a relatively
small percentage of shareholders. This amendment seeks to better
balance the interests of minority shareholders with the interests
of the company as a whole.
No changes have been made to the rights of 100 shareholders to
propose resolutions for a meeting's agenda, or to circulate
material to other members. Further, shareholders (or groups of
shareholders) with at least five percent of a company's voting
entitlements are still able to request that directors hold a
general meeting, ensuring minority shareholder interests are still
able to be represented.
The Bill proposes to amend remuneration reporting so that
information which may be of limited use or value to shareholders
would not be required in a company's remuneration report.
Specifically, companies would no longer be required to disclose the
value of options held by executive personnel that have lapsed
during the financial year, however would still need to disclose the
number of lapsed options. Further, the requirement to disclose the
percentage value the options reflect of an individual's total
remuneration would not need to be reported by the company.
It is also proposed that an unlisted disclosing entity would not
need to prepare a remuneration report at all.
If passed, these amendments would take effect for the financial
year ending immediately after the commencement of the Bill.
Dividend Payments Test
On 10 April 2014, an exposure draft of the proposed legislation
was released for comment which included changes to the test for
when a company can pay dividends under section 245T of the
Corporations Act. These proposed amendments have not been included
in the Bill, and as a result, the current test for paying dividends
will remain – at least for now.
We discuss whether certain clauses commonly found in ordinary commercial contracts could be considered to be penalties.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).