Gilbert + tobin - Gilbert and Tobin

5.2 Protection of minority shareholders
The Corporations Act contains some provisions to protect
minority shareholders. These statutory rights include:
+ + being able to bring legal proceedings in the name of the
company (e.g. against directors) with the court’s permission;
+ + being able to inspect the company’s books, with the court’s
permission;
+ + being able to seek court orders (including orders to wind up
the company or for a sale of a shareholder’s shares) where the
company has been run in a way which is unfairly prejudicial to a
member or not in the interest of all members as a whole;
+ + the right to approve some transactions between public
companies and their related parties (such as majority
shareholders and directors); and
+ + being able to call shareholder meetings or require the company
to put a resolution (e.g. to appoint or remove a director) to
shareholders for approval.
Did you know A minority shareholder in an Australian
company may have rights to require the directors to call a
meeting of shareholders. These rights need to be exercised
in accordance with strict legal requirements, so if you wish
to use these rights, make sure you understand the steps
required.
5.3 Financial reporting and access to information
Did you know ASIC stores information about all
Australian registered companies. This can be accessed (for a
fee) to get basic information about companies, including
details of shareholders and directors and the share
structure, and copies of documents lodged with ASIC.
Reporting obligations differ depending on whether a company is a
small proprietary company, a large proprietary company or a
public company. A company will be a small proprietary company if
it is a proprietary company (i.e. its name includes “Pty Ltd”) and
satisfies two of the following tests:
+ + its consolidated revenue for a financial year is less than
$25 million;
+ + its consolidated gross assets are less than $12.5 million at the
end of the financial year; and
+ + it and its controlled entities have less than 50 employees at the
end of the financial year.
If a company is a “small proprietary company”, it does not have to
lodge accounts unless:
+ + the company is directed by shareholders with 5% or more of
the voting shares to prepare and lodge accounts;
+ + ASIC directs the company to prepare and lodge accounts; or
+ + the company is controlled by a foreign company and its financial
results are not consolidated into financial statements that
another company or a registered foreign company has lodged
with ASIC.
Once a company has lodged accounts, the accounts are available to
the public through ASIC information brokers (for a fee). ASIC also
makes available basic information about the shareholders, share
structure, directors and company secretary. This can provide a way
of getting information about counterparties to contracts or
potential investors as part of a due diligence exercise.
5.4 Dividends and capital management
Australian companies are not limited by law to paying dividends
from the profits of the company – they can pay any amount as a
dividend, provided the company has a sufficient surplus of assets
over liabilities, the payment is fair and reasonable to the
shareholders as a whole and the payment does not prejudice the
company’s ability to pay its creditors.
Even though this provides substantial flexibility around the amount
of permitted dividend payments, a company may also wish to
return capital to its shareholders, given the different tax
treatments or the manner in which retained funds have been
characterised in the company’s balance sheet. In addition, the
profits of a company remain relevant to the ability to pass the
benefits of franking credits (which broadly represent corporate
tax imposed on the company) to shareholders.
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