First Corporate Law Simplification Act 1995
No. 115 of 1995
An Act to amend the Corporations Law, to repeal the Close Corporations legislation, and for related purposes
The Parliament of Australia enacts:
[Assented to 17 October 1995]
1 Short title etc.
(1) This Act may be cited as the First Corporate Law Simplification Act 1995.
(2) In this Act:
“Corporations Law” means the Corporations Law set out in section 82 of the Corporations Act 19891.
2 Commencement
(1) Sections 1 and 2 commence on the day on which this Act receives the Royal Assent.
(2) Subject to subsection (3), the rest of this Act commences on a day or days to be fixed by Proclamation. Different days may be fixed for sections, Schedules and items within Schedules.
(3) If a section, a Schedule or an item of a Schedule does not commence under subsection (2) within the period of 6 months beginning on the day on which this Act receives the Royal Assent, it commences on the first day after the end of that period.
3 Share buy-back amendments—Schedules 1 and 2
(1) New share buy-backs Division
Division 4B of Part 2.4 of the Corporations Law is repealed and the Division set out in Schedule 1 to this Act is substituted.
(2) Other share buy-back amendments
The Corporations Law is amended as set out in Schedule 2 to this Act.
4 Proprietary company amendments—Schedules 3 and 4
(1) Small business guide
After Part 1.3 of the Corporations Law the Parts set out in Schedule 3 to this Act are inserted in Chapter 1 of that Law.
(2) Other proprietary company amendments
The Corporations Law is amended as set out in Schedule 4 to this Act.
Formal parts of Act
5 Company registers amendments—Schedules 5, 6 and 7
(1) New company registers Division
After Part 2.4 of the Corporations Law the Part set out in Schedule 5 to this Act is inserted in Chapter 2 of that Law.
(2) Other company registers amendments
The Corporations Law is amended as set out in Schedule 6 to this Act.
(3) The Australian Securities Commission Act 19892 is amended as set out in Schedule 7 to this Act.
6 Repeals
The following Acts are repealed:
(a) Close Corporations Act 1989
(b) Close Corporations (Liquidators’ Recovery Trust Fund Contribution) Act 1989
(c) Close Corporations (Additional Liquidators’ Recovery Trust Fund Contribution) Act 1989
(d) Close Corporations (Fees) Act 1989.
Schedule 1
New share buy-backs Division
Division 4B—Share buy-backs
206A Purpose
206B The company’s power to buy back its own shares
206C Buy-back procedure—general
206D Buy-back procedure—shareholder approval if the 10% in 12 months limit exceeded
206E Buy-back procedure—special shareholder approval for selective buy-back
206F Buy-back procedure—lodgment of offer documents with the ASC
206G Notice of intended buy-back
206H Buy-back procedure—disclosure of relevant information when offer made
206I Acceptance of offer and transfer of shares to the company
206J Buy-back procedure—notice to ASC of cancellation of shares
206K Signposts to…
Overview
The First Corporate Law Simplification Act 1995 was enacted by the Parliament of Australia to streamline and simplify corporate law, particularly by amending the Corporations Law, repealing the Close Corporations legislation, and introducing new provisions related to company registers and share buy-backs. The Act addresses the need for more straightforward and accessible corporate law, particularly for small businesses and proprietary companies, by reducing the complexity and compliance burden associated with corporate activities such as share buy-backs and company registration. The policy objective was to facilitate easier and more efficient incorporation and operation of companies while maintaining necessary protections for shareholders and creditors. The Act introduced new rules for share buy-backs, including specific procedures for different types of buy-backs and requirements for disclosure and shareholder approval. It also updated the requirements for maintaining company registers and introduced new provisions for the operation of proprietary companies, including simplified requirements for small proprietary companies and changes to the definition and classification of proprietary companies.
Scope and Application
The First Corporate Law Simplification Act 1995 applies to companies and corporations registered in Australia and governed by the Corporations Law. This Act simplifies corporate law by amending the Corporations Law, specifically focusing on share buy-backs, proprietary companies, and company registers. It applies to all types of companies, including proprietary companies (private companies limited by shares) and public companies, and includes provisions for their formation, conversion, and operational requirements. The Act repeals the Close Corporations legislation and includes amendments to various sections of the Corporations Law, such as share buy-back procedures, company incorporation, and financial reporting obligations. The geographic reach of the Act is national, affecting all states and territories within Australia. There are no stated exclusions or exemptions, although certain conditions and thresholds apply, such as the 10% in 12 months limit for share buy-backs. The application of the Act may be extended or modified through subordinate instruments.
Key Provisions
- The First Corporate Law Simplification Act 1995 amends the Corporations Law and repeals the Close Corporations legislation. The Act introduces new provisions for share buy-backs, proprietary companies, and company registers, and imposes various obligations on companies and their directors and secretaries. The Act also sets out offences and penalties for non-compliance.
- The key provisions of the Act include new rules for share buy-backs, which are designed to protect the interests of shareholders and creditors by addressing the risk of insolvency, ensuring fairness between shareholders, and requiring disclosure of all material information. The Act specifies the procedures for different types of buy-backs, including ordinary resolutions, special or unanimous resolutions, and lodging offer documents with the Australian Securities Commission (ASC). Companies must also provide shareholders with information that is material to their decision whether to accept the offer. If a company fails to follow the procedures, it contravenes the Corporations Law and its officers may commit an offence. The Act also outlines the consequences for shareholders and directors if the company becomes insolvent as a result of the buy-back.
- The Act imposes several obligations on companies and their directors and secretaries. Companies must set up and maintain registers of members, option holders, and debenture holders, and provide access to these registers for inspection. Directors and secretaries must give the company a signed consent to act in their respective capacities, and provide the ASC with personal details and any changes to those details. Directors of listed companies must notify the relevant securities exchange of their interests in shares and debentures. The Act also sets out the requirements for the constitution of companies, including the number of directors and their residency requirements, as well as the rights and obligations of shareholders and directors.
- Breach of the provisions of the Act may result in civil or criminal penalties. For example, directors who fail to perform their duties may be subject to criminal penalties of up to $200,000 or imprisonment for up to 5 years, or both. Companies that fail to comply with the requirements for share buy-backs or company registers may also be subject to penalties. The Act specifies maximum penalties for various offences, such as 10 penalty units or imprisonment for 3 months, or both. Additionally, the Act provides for the appointment of liquidators, the winding up of companies, and the distribution of assets to creditors and shareholders.
- Area of Law
- Corporate Law & Governance
- Instrument
- Act
- Concepts
- Commencement Provisions
- Repeal & Amendment
- Share Buy-backs
- Registers to be maintained
- Enforcement Powers
