Limits on right to alter constitution Corporations Act Entrenching Provisions S136(3) Recognises that a companies constitution may contain provisions – (entrenched provisions) that restrict the companies ability to modify or repeal its constitution by imposing further requirements for special resolution. i.e. More than 75% of the voting required etc. Member Provisions s140(2) A member is not bound by a modification of the constitution made after – becoming a member so far that the modification: requires member to take more shares increases members liability towards share capital imposes or increases a restriction on the right to transfer shares already held Variation of Class Rights Shares/Debentures – Limitations on the power to alter a companies constitution when its share capital is divided into difference classes. Debentures A company can issue preference shares only if certain rights attached to – those shares are set out in the companies constitution or otherwise approved by special resolution. S246B-s246G Designed to restrict majority shareholders from varying or cancelling – class rights. Oppression Remedy - IMPORTANT Enables members to apply to the court for a remedy if the majority of votes in S232 – favour a resolution alter the constitution/replaceable rules contary to members interests and are as a whole, oppressive, unfairly prejudicial or unfairly discriminatory to members.
Limits on right to alter constitution Corporations Act Entrenching Provisions S136(3) – Recognises that a companies constitution may contain provisions (entrenched provisions) that restrict the companies ability to modify or repeal its constitution by imposing further requirements for special resolution. i.e. More than 75% of the voting required etc. Member Provisions s140(2) – A member is not bound by a modification of the constitution made after becoming a member so far that the modification: requires member to take more shares increases members liability towards share capital imposes or increases a restriction on the right to transfer shares already held Variation of Class Rights – Shares/Debentures Limitations on the power to alter a companies constitution when its share capital is divided into difference classes. Debentures – A company can issue preference shares only if certain rights attached to those shares are set out in the companies constitution or otherwise approved by special resolution. S246B-s246G – Designed to restrict majority shareholders from varying or cancelling class rights. Oppression Remedy - IMPORTANT S232 – Enables members to apply to the court for a remedy if the majority of votes in favour a resolution alter the constitution/replaceable rules contary to members interests and are as a whole, oppressive, unfairly prejudicial or unfairly discriminatory to members.
Company_Law_Summary.docx