Phosphate Co-Operative Company of Australia Limited v Shears

The Phosphate Co-Operative Company of Australia Limited sought special leave to appeal to the High Court of Australia against a decision of the Full Court. The dispute concerned the validity of an article of association adopted by the company in February 1987, which had the effect of deeming certain non-members to be members for the purposes of the articles and disenfranchising certain existing members.

The primary legal issue before the High Court was whether a company's articles of association could validly confer voting rights upon persons who were not registered members of the company. This question involved considering the interpretation of the relevant companies legislation and the established principles of corporate law, particularly in light of differing views expressed in legal textbooks and a previous, albeit inconclusive, consideration by the High Court itself in *Kolotex Hosiery v Deputy Commissioner of Taxation*.

The applicant argued that the Full Court's finding that it was impermissible for a company to grant voting rights to non-members was an important and novel point of law. While leading textbooks had generally supported the permissibility of such provisions, the applicant highlighted that the *Kolotex* case, while not definitively ruling on the matter, had suggested arguments against it based on the *Companies Act 1961*. The applicant also noted that modern American jurisprudence, though dealing with different mechanisms like voting trusts, had moved away from earlier views that split beneficial ownership and voting rights were against public interest. The applicant submitted that this was a matter of general importance for corporate law, as many corporations may have structured their affairs on the assumption that non-members could be granted voting powers.