All company title stakeholders are bound by the memorandum and articles of the company Constitution.
What is the memorandum?
It sets out what the company can legally do.
What are the ‘articles of association’?
They are an essential guide as to how the company runs. Articles have a significant number of obsolete clauses, such as ‘Calls’ and ‘Forfeiture’.
How does the Corporations Act 2001 (Cth) impact company title buildings?
Directors’ duties
The Corporations Act 2001 (Cth) requires that a company director or other officer exercise their powers and discharge their duties with care and diligence [s 180]. This duty is subject to a business judgment rule that requires a director making a business judgment to:
- make judgments in good faith;
‘Good faith’ refers to a requirement to act honestly and to keep one’s promises without taking unfair advantage of others or holding others to an impossible standard. - make judgments for a proper purpose;
‘for a proper purpose’ refers to Directors exercising their corporate powers for the purposes for which they were granted the position of director.
- not to have a material personal interest in the subject matter of the judgment;
- to inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate;
- rationally believe that the judgment is in the best interests of the corporation, primarily identified as being for the benefit of shareholders.
They are prohibited from improperly using their position to gain an advantage for themselves or someone else or to cause detriment to the corporation [s 182] and are prohibited from using information obtained as a consequence of their role with the company to gain an advantage for themselves or someone else or to cause detriment to the corporation [s 183].
Directors have a duty to make full and frank disclosure of information within their knowledge to enable shareholders to make properly informed judgments on any matter [s 191].
What is not a proper purpose?
- Conflict of interest
- Discrimination: treating one group of shareholders differently
- Not for benefit of the company shareholders
What does the Corporations Act say about the following TOPICS?
- Keeping company research
- Keeping recordings of meeting minutes
- How company meetings are called
Record Keeping
What can go wrong if records and minutes are not properly kept?
How long do records have to be kept?
If you’d like to speak to one of our experienced lawyers about your Company Title obligations, call us on (02) 9199 8597 or email us.
The information contained in this post is current at the date of editing – 27 August 2024.