Maintaining a company register is a key obligation placed on companies. It is important that companies, and their officers, are fully informed of the legal obligations governing this set out in the Corporations Act (Act), common law and the company's constitution and shareholders agreement.
- Corporations Act - A good working knowledge of the Act is essential as many of the actions taken and decisions made are prescribed or influenced by the Act. When interpreting the provisions make sure that you take the time to distinguish between obligatory and discretionary – the latter is subservient to the company's constitution – for example, replaceable rules.
- Common law - There are principles under general law that apply such as the notion that members in general meetings and the board of directors are organs of the company. That is, they are more than mere agents – an act of one is considered to be an act of the company itself.
- Company constitution - Section 140 of the Act states that clauses in the constitution serve as a statutory contract between the members and the company, between the directors, the company secretary and the company and between the members.
- Shareholders agreement - Shareholders agreements are supplemental to the constitution and the Act and are made between some or all of the members. They generally govern such things as share ownership and transfers, dividend policies and management participation. Although these agreements are subject to the terms of the Act and the constitution, they usually provide that they will override the constitution in the event of any inconsistency.
What else do I need to know?
General requirements for company books and registers
Section 9 of the Act defines 'books' to include registers, records of information, financial reports or financial records and other documents.
All companies must maintain certain books, and there are controls over how they must be maintained and who may be provided access to the information they contain. There are significant penalties if you fail to properly maintain a company's books, and/or destroy or falsify them. For example, fabrication of minutes can carry an $18,000 fine and/or two years jail.
Mandatory company books and their requirements are:
- The Constitution - If any exists, must be available for inspection at the company's registered office. Access is to be provided (at no charge) to ASIC, directors, the auditor, liquidators, receivers, administrators, debenture holders and anyone authorised by ASIC and (for a fee) to members.
- Financial Records – Must be kept for seven years and be available for inspection. If not kept at the company's registered office, ASIC should be notified. Access to these documents is to be provided to the same people set out above, although members shouldn't be charged a fee.
- Minute book of Directors' Meeting – Minutes must be recorded within the minute books within one month of the meeting. These must be kept available for inspection at the registered office, principal place of business or elsewhere as approved by ASIC. All of the people listed above, other than members, are entitled to access these documents.
- Minute book of Members' Meetings – As with Directors' meetings minutes must be recorded within one month of the members' meeting and must be available for inspection at the registered office, principal place of business or elsewhere approved by ASIC. All people listed above, as well as the members, are entitled to access these documents.
- Register of Members – Section 169 of the Act sets out the information required to be kept as up to date as possible in the register including the names, addresses, share certificate number, amount paid and number of shares held by individual members. There should be records going back seven years detailing any change in shareholdings and incoming and outgoing members. The register must be kept in Australia at either the registered office, principal place of business or at an ASIC approved share registry and must be available for inspection. Access to these documents should be provided to the people referred to above and to the general public for a fee.
Beyond this some companies require additional registers which also need to be updated as regularly as possible. For example, if the company has debenture holders or option holders these interests must be recorded.
Legal shortcuts for meetings
- Unanimous consent for members - If the consent of all of the members is obtained a resolution which is adopted other than at a duly convened general meeting is a valid resolution. This will overcome inadequate notice of a meeting but also recognises any agreements from all members given neither simultaneously nor at a meeting as binding.
- Short notice of meetings – Notice for general meetings is usually 21 days (28 for listed companies). However, shorter notice can be provided where all voting members consent, in the case of an AGM, and where one or more members with 95% of the possible votes consent, in the case of all other general meetings. It's unnecessary for members to attend the meeting to consent - provided it's obtained beforehand. Generally, it's acceptable for the consent to be given as the first item of business at the meeting. Although it should be noted that short notice can't be provided for the removal of a director or auditor, or for listed company meetings.
- Circulating resolutions of members for proprietary companies – Under section 249A of the Act all members entitled to vote on a resolution can, instead of having to hold a meeting, sign a document saying they are in favour of the resolution. The Act deems the resolution to be passed when the last member signs. It cannot be used to remove an auditor and must be placed in the company's minute book within one month.
- Circulating resolutions of directors for proprietary companies – If the constitution allows, all directors entitled to vote on a resolution can, instead of having to hold a meeting, sign a document saying they are in favour of the resolution. It must be placed in the company's minute book within one month. If the constitution does not allow, the directors must meet.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.