Ebook PDF Corporations Legislation 2019 PDF

(eBook PDF) Corporations Legislation
2019
Visit to download the full and correct content document:
https://ebooksecure.com/download/ebook-pdf-corporations-legislation-2019/
Corporations Legislation 2019
User’s Guide
• Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Act 2018

– Act 106 of 2018
Corporations Regulations 2001
Amending Regulations
• Corporations Amendment (Client Money) Regulations 2017 – F2017L00455 of 2017
• Treasury Laws Amendment (Professional Standards Schemes) Regulations 2018 –
F2018L00096 of 2018
• Treasury Laws Amendment (Putting Consumers First - Establishment of the Australian
Financial Complaints Authority) Regulations 2018 – F2018L00515 of 2018
• Corporations Amendment (Client Money Reporting Rules Enforcement Powers)
Regulations 2018 – F2018L00743 of 2018
• Corporations Amendment (Stay on Enforcing Certain Rights) Regulations 2018 –
F2018L00835 of 2018
• Corporations Amendment (Stay on Enforcing Certain Rights) Regulations (No 2) 2018 –
F2018L00966 of 2018
• Corporations Amendment (Asia Region Funds Passport) Regulations 2018 – F2018L01144
of 2018
• Corporations Amendment (Crowd-sourced Funding) Regulations 2018 – F2018L01379 of
2018
• Treasury Laws Amendment (Professional Standards Schemes No 2) Regulations 2018 –
F2018L01393 of 2018
• Treasury Laws Amendment (Miscellaneous Amendments) Regulations 2018 – F2018L01691
of 2018
Insolvency Practice Rules (Corporations) 2016
Amending Rules
• Insolvency Practice Rules (Corporations) Amendment (Restricting Related Creditor Voting
Rights) Rules 2018 – F2018L01669 of 2018
Australian Securities and Investments Commission Act 2001
Amending Acts
• Statute Update (Smaller Government) Act 2018 – Act 4 of 2018
• Treasury Laws Amendment (Putting Consumers First - Establishment of the Australian
Financial Complaints Authority) Act 2018 – Act 13 of 2018
• Treasury Laws Amendment (ASIC Governance) Act 2018 – Act 42 of 2018
• Corporations Amendment (Asia Region Funds Passport) Act 2018 – Act 61 of 2018
• Treasury Laws Amendment (Enhancing ASIC’s Capabilities) Act 2018 – Act 122 of 2018
• Treasury Laws Amendment (Australian Consumer Law Review) Act 2018 – Act 132 of
2018
Australian Securities and Investments Commission Regulations 2001
• Treasury Laws Amendment (Professional Standards Schemes) Regulations 2018 –
F2018L00096 of 2018
of 2018
• Treasury Laws Amendment (Professional Standards Schemes No 2) Regulations 2018 –
F2018L01393 of 2018
viii Corporations Legislation 2019

User’s Guide
Corporations (Fees) Act 2001

Amending Acts
• Corporations (Fees) Amendment (ASIC Fees) Act 2018 – Act 55 of 2018
Corporations (Fees) Regulations 2001
• ASIC Supervisory Cost Recovery Levy Amendment (Enhancements) Regulations 2018 –
F2018L00963 of 2018
• Treasury Laws Amendment (ASIC Fees) Regulations 2018 – F2018L00965 of 2018
of 2018
HISTORY NOTES
The history notes have been entered into an abbreviated form using the number and year of the
amending Act or regulation and a descriptor (eg. “insrt”) to show the effect of the amending Act or
regulation. The abbreviations used in the historical notes are as follows:
• insrt – inserted
• am – amended
• subst – substituted
• rep – repealed
• exp – expired
• reinsrt – reinserted
• renum – renumbered
• reloc – relocated
Example: History note under subsection 766C(2A) of Corporations Act 2001:
[Subs (2A) insrt Act 17 of 2017, s 3 and Sch 1 item 26, with effect from 28 Sep 2017]
This note indicates that subsection (2A) in s 766C was inserted by Act 17 of 2017, Schedule 1 item
26. S 3 is a reference to the enacting provision.
Details of the short title of the amending Act or regulation, assent/gazettal/registration and
commencement dates are located in the Table of Amending Legislation following the Table of
Provisions. Commencement dates have also been included with each historical note (eg. 28 Sep
2017).
SIDE NOTES
Thomson Reuters authored subsection headings are inserted throughout the text of the
Corporations Act 2001 (Cth) and Australian Securities and Investments Commission Act 2001
(Cth). These “side notes” (displayed in bold type inside square brackets to the right of a subsection
number) are designed to aid in the interpretation of the relevant subsections, where no subsection
heading is contained within the actual text of the legislation.
Example: Side note to subs 5A(5) of the Corporations Act 2001 (Cth):
(5) [Crown immune to liability] Nothing in this Act makes the Crown in any right liable to a
pecuniary penalty or to be prosecuted for an offence.
EDITOR’S NOTES
Editor’s notes have been integrated into this publication to assist practitioners with identifying
information relevant to the interpretation of a particular section or regulation, including:
(1) amendments which have received assent but which commence on a future date;
(2) gaps in numbering in a particular Act or regulation; and
(3) misdescribed amendments or drafting errors.
Example: Editor’s note under s 440H of the Corporations Act 2001 (Cth):
[Editor’s Note: There is no s 440I in this Act.]
© 2019 THOMSON REUTERS ix
User’s Guide
CROSS-REFERENCES
Cross-references have been integrated into this publication to indicate where a particular regulation
affects a section of the Corporations Act 2001 (Cth) and the Australian Securities and Investments
Commission Act 2001 (Cth).
Example: Cross-reference under s 111AS of the Corporations Act 2001 (Cth):
[Cross-references: Corps Regs:
• reg 1.2A.02 specifies when a foreign company is exempt from disclosing entity
provisions in respect of ED securities under s 111AG for the purposes of s 111AS; and
• reg 1.2A.03 exempts a foreign company from the disclosing entity provisions in respect
of an offer of shares in a company for issue or sale for the purposes of s 111AS.]
There are cross-references to related ASIC Class Orders, Forms, Regulatory Guides and Legislative
Instruments and Takeovers Panel Guidance Notes, which are identified by the agency title and
abbreviations below:
Australian Securities and Investments Commission:
• CO – Class Orders
• Form – Forms
• LI – Legislative Instruments
• RG – Regulatory Guides
Takeovers Panel:
• GN – Guidance Notes
Example:Cross-reference under s 12DL of the Australian Securities and Investments Commission
Act 2001 (Cth):
[Cross-references: ASIC: RG 201: Unsolicited credit cards and debit cards.]
This publication also includes cross-references to accounting and auditing standards and
guidance statements made by the Australian Accounting Standards Board (AASB) and the
Auditing and Assurance Standards Board (AUASB).
Example: Cross-reference under s 336 of the Corporations Act 2001 (Cth):
[Cross-references: AUASB:
• ASA 100–102, 200, 210, 220, 230, 240, 250, 260, 265, 300, 315, 320, 330, 402, 450,
500-502, 505, 510, 520, 530, 540, 550, 560, 570, 580, 600, 610, 620, 700, 701, 705,
706, 710, 720, 800;
• ASQC 1;
• ASRE 2410, 2415.]
FUTURE COMMENCEMENTS
Corporations Act 2001 (Cth)
Amendments to the Corporations Act 2001 by the Treasury Laws Amendment (Enhancing ASIC’s
Capabilities) Act 2018 (No 122) which commence on 1 July 2019 have been included in the body
of the text and are identified and found in a box with the heading:
x Corporations Legislation 2019

User’s Guide
“EFFECTIVE 1 JULY 2019”

Future Commencements
Amending legislation Number Date of gazettal/assent/ Date of commencement

registration
Insolvency Law Reform Act 2016 11 of 2016 29 Feb 2016 Sch 2 item 94 commences on
the later of: (a) commence-
ment of provs covered by table
item 2 (1 Mar 2017); and (b)
immediately after commence-
ment of item 13 of Sch 3 to
the Treasury Legislation
Amendment (Repeal Day
2015) Act 2016 (not enacted)
(commencement was proposed
for the day after date of
assent). However, the provs do
not commence at all if the
event mentioned in para (b)
does not occur.
Treasury Laws Amendment 122 of 2018 3 Oct 2018 Sch 2 items 16 and 17
(Enhancing ASIC’s Capabilities) commence 1 Jul 2019.
Act 2018
Corporations Regulations 2001 (Cth)


registration
Corporations Amendment 101 of 2013 4 Jun 2013 Sch 3: 1 Jul 2019
Regulation 2013 (No 3)
Treasury Laws Amendment F2018L00515 of 2018 24 Apr 2018 Sch 3 items 3-5 commence on
(Putting Consumers First - the later of: (a) immediately
Establishment of the Australian after commencement of the
Financial Complaints Authority) provs covered by table item 4
(25 Apr 2018); and (b) the
Regulations 2018 commencement of Sch 3 to the
Treasury Laws Amendment
(Putting Consumers First -
Establishment of the Australian
Financial Complaints
Authority) Act 2018 (to be
proclaimed, or 5 Mar 2022).
However, the provs do not
commence at all if the event
mentioned in para (b) does not
occur.
Australian Securities and Investments Commission Act 2001 (Cth)

Amendments to the Australian Securities and Investments Commission Act 2001 by the Treasury
Laws Amendment (Enhancing ASIC’s Capabilities) Act 2018 (No 122) which commence on 1 July
2019 have been included in the body of the text and are identified and found in a box with the
heading:
© 2019 THOMSON REUTERS xi

User’s Guide

registration
Treasury Laws Amendment 13 of 2018 5 Mar 2018 Sch 3 items 3-5 commence on
(Putting Consumers First – proclamation or 5 Mar 2022.
Establishment of the Australian
Financial Complaints Authority)
Act 2018
Treasury Laws Amendment 122 of 2018 3 Oct 2018 Sch 2 items 1-13 commence 1
(Enhancing ASIC’s Capabilities) Jul 2019.
Act 2018
Corporations (Fees) Regulations 2001 (Cth)

Amendments to the Corporations (Fees) Regulations 2001 by the Treasury Laws Amendment
(ASIC Fees) Regulations 2018 which commence on 1 July 2019 have been included in the body of
the text and are identified and found in a box with the heading:

registration
Treasury Laws Amendment (ASIC F2018L00965 of 2018 29 Jun 2018 Sch 2 items 1 and 2
Fees) Regulations 2018 commence 1 Jul 2019.
PROPOSED AMENDMENTS
Corporations Act 2001
• Corporations Amendment (Modernisation of Members Registration) Bill 2017 – 2nd
reading speech Senate 15 Jun 2017. Report of Senate Economics Legislation Committee
tabled 11 Sep 2017. Sch 1 commences on a date to be proclaimed or 6 months after date
of assent.
• Corporations Amendment (Strengthening Protections for Employee Entitlements) Bill 2018
– passed House of Reps 24 Oct 2018; 2nd reading speech Senate 12 Nov 2018. Sch 1
items 1-31 and 33 commence day after date of assent.
• Fair Work Amendment (Protecting Australian Workers) Bill 2016 – 2nd reading speech
Senate 15 Mar 2016; restored to Notice Paper 31 Aug 2016. Sch 2 items 1-4 commence
day after date of assent.
• Federal Circuit and Family Court of Australia (Consequential Amendments and
Transitional Provisions) Bill 2018 – passed House of Reps 27 Nov 2018; 2nd reading
speech Senate 3 Dec 2018. Referred to Senate Legal and Constitutional Affairs Legislation
Committee for enquiry and report by 15 Apr 2019. Sch 2 items 253-270 commence at the
same time as the Federal Circuit and Family Court of Australia Act 2018 commences
(commencement for that Act is to be proclaimed or 6 months after date of assent).
However, the provs do not commence at all if that Act does not commence.
• Treasury Laws Amendment (2018 Measures No 2) Bill 2018 – passed House of Reps 25
Jun 2018; 2nd reading speech Senate 26 Jun 2018. Report of Senate Economics
Legislation Committee tabled 15 Mar 2018. Sch 1 items 1 and 2 commence day after date
of assent.
• Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention
Powers) Bill 2018 – debate House of Reps 24 Oct 2018. Report of Senate Economics
Legislation Committee published 9 Nov 2018; Corrigendum published 19 Nov 2018. Sch
1 items 1-9 commence 2 years after date of assent. Sch 2 items 1-12 commence day after
date of assent.
xii Corporations Legislation 2019
User’s Guide
• Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 – passed

Senate 6 Dec 2018. Report of Senate Economics Legislation Committee tabled 22 Mar
2018. Sch 1 items 1-7 and 9-13 commence on the first 1 January, 1 April, 1 July or 1
October to occur after the end of the period of 3 months beginning on the day this Act
receives assent; Sch 1 items 33-35 commence on the later of: (a) immediately after the
commencement of the provs covered by table item 2 (table item 2 is proposed to
commence on the first 1 January, 1 April, 1 July or 1 October to occur after the end of the
period of 3 months beginning on the day this Act receives assent); and (b) immediately
after the commencement of Sch 1 to the Treasury Laws Amendment (Strengthening
Corporate and Financial Sector Penalties) Act 2018 (Sch 1 is proposed to commence on
the day after that Act receives assent). However, the provs do not commence at all if the
event mentioned in para (b) does not occur.
• Treasury Laws Amendment (Improving Accountability and Member Outcomes in
Superannuation Measures No 1) Bill 2017 – debate Senate 4 Dec 2017. Report of Senate
Economics Legislation Committee published 23 Oct 2017. Sch 6 items 1-20 commence
day after date of assent.
• Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill
2018 passed House of Reps 29 Nov 2018; 2nd reading speech Senate 3 Dec 2018. Sch 1
items 1-146 commence day after date of assent.
Sch 5 items 1 and 2 commence on the later of: (a) immediately after the commencement
of the provs covered by table item 2 (this item is proposed to commence on the day after
date of assent); and (b) immediately after the commencement of the Corporations
Amendment (Strengthening Protections for Employee Entitlements) Act 2018 (proposed
commencement is the day after that Act receives assent). However, the provs do not
commence at all if the event mentioned in para (b) does not occur.
date of assent); and (b) immediately after the commencement of Sch 1 to the Treasury
Laws Amendment (Design and Distribution Obligations and Product Intervention Powers)
Act 2018 (proposed commencement for the Schedule is 2 years after that Act receives
assent). However, the provs do not commence at all if the event mentioned in para (b)
does not occur.
date of assent); and (b) immediately after the commencement of Sch 2 to the Treasury
Laws Amendment (Design and Distribution Obligations and Product Intervention Powers)
Act 2018 (proposed commencement for the Schedule is the day after that Act receives
assent). However, the provs do not commence at all if the event mentioned in para (b)
does not occur.
Sch 5 item 35 commences on the later of: (a) immediately after the commencement of the
provs covered by table item 2 (this item is proposed to commence on the day after date of
assent); and immediately after the commencement of Sch 6 to the Treasury Laws
Amendment (Improving Accountability and Member Outcomes in Superannuation
Measures No 1) Act 2018 (proposed commencement of the Schedule is the day after that
Act receives assent). However, the provs do not commence at all if the event mentioned in
para (b) does not occur.
Australian Securities and Investments Commission Act 2001
• Federal Circuit and Family Court of Australia (Consequential Amendments and
Transitional Provisions) Bill 2018 – passed House of Reps 27 Nov 2018; 2nd reading
speech Senate 3 Dec 2018. Referred to Senate Legal and Constitutional Affairs Legislation
Committee for enquiry and report by 15 Apr 2019. Sch 2 items 109-117 commence at the
same time as the Federal Circuit and Family Court of Australia Act 2018 commences
(commencement for that Act is to be proclaimed or 6 months after date of assent).
However, the provs do not commence at all if that Act does not commence.
• Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention
Powers) Bill 2018 – debate House of Reps 24 Oct 2018. Report of Senate Economics
© 2019 THOMSON REUTERS xiii
User’s Guide
Legislation Committee published 9 Nov 2018; Corrigendum published 19 Nov 2018. Sch
2 items 16-18 commence day after date of assent.
• Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill
2018 – passed House of Reps 29 Nov 2018; 2nd reading speech Senate 3 Dec 2018. Sch
2 items 1-51 commence day after date of assent.
ACKNOWLEDGMENTS
Extracts from the following reports have been reprinted with the kind permission of:
CCH Australia Limited
• Australian Company Law Cases (ACLC)
The Council of Law Reporting for New South Wales
• NSW Law Reports (NSWLR)
Incorporated Council of Law Reporting for England & Wales
• Appeal Cases (AC)
• Chancery (Ch)
• Chancery Division (ChD)
• Queen’s Bench (QB)
Incorporated Council of Law Reporting for the State of Queensland
• Queensland Reports (Qd R)
LexisNexis Australia
• Australian Corporations and Securities Reports (ACSR)
LexisNexis UK
• All England Law Reports (All ER)
Little William Bourke Pty Limited
• Victorian Reports (VR)
The Takeovers Panel
• Australian Takeovers Panel (ATP)
Thomson Reuters (Professional) Australia Limited
• Australian Criminal Reports (A CrimR)
• Commonwealth Law Reports (CLR)
• Federal Court Reports (FCR)
• Federal Law Reports (FLR)
Thomson Reuters (Professional) Australia Limited and the authors are thankful to the publishers,
agents and authors who have been considerate in allowing the reproduction of their work in this
book. Every effort has been made to contact copyright holders and/or their agents. While every care
has been taken to establish and acknowledge copyright, Thomson Reuters (Professional) Australia
Limited tenders its apology for any accidental infringement. The publisher would be pleased to
come to a suitable agreement with the rightful owners in each case.
xiv Corporations Legislation 2019

CONTRIBUTORS
Edmund Finnane
Edmund Finnane is a graduate of the Australian National University (Bachelor of Arts and
Bachelor of Laws) and the University of New South Wales (Master of Laws – Corporate and
Commercial). He has practised as a barrister in New South Wales since 1997, prior to which he was
a solicitor for two years.
Edmund has a wide-ranging practice in commercial law and equity. He is particularly interested in
corporate insolvency, mortgage law, equity, deceased estates, professional liability and contractual
and other commercial disputes.
Edmund has recently been appointed the General Editor of the Company and Securities Law
Journal, published by Thomson Reuters.
Edmund has published articles in the Commercial Law Quarterly and Law Society Journal. He is a
director of the Commercial Law Association.
Edmund has delivered seminars to members of the legal profession on areas including commercial
damages, equity, insolvency law and de facto relationships law.
He is co-author of two books:
• Finnane, Newton and Wood, Equity Practice and Precedents (2nd edition), Thomson
Reuters, due for publication in February 2019.
• Azize, El Khoury and Finnane, Pleading Precedents (6th edition), Thomson Reuters,
2009.
Jason Harris
Jason Harris is Professor of Corporate Law in the Sydney Law School at The University of Sydney
where he teaches and researches in corporate law, corporate insolvency law and contract law. Jason
has been teaching corporate law for 19 years and has taught previously at UTS, UNSW and the
ANU and in 2017 served as President of the Corporate Law Teachers Association.
Jason is an active researcher in the corporate and commercial law fields having published 13 books,
including Keay’s Insolvency (with Michael Murray, published by Thomson Reuters), the Annotated
Personal Property Securities Act (with Nicholas Mirzai, published by Wolters Kluwer), Australian
Corporate Law (with Anil Hargovan and Michael Adams, published by LexisNexis) and Company
Law: Theories, Principles and Applications (published by LexisNexis). Jason has published over
90 articles in scholarly and professional journals. His research has been cited in more than 25
Supreme Court and Federal Court decisions, as well as in parliamentary inquiries and by the
Productivity Commission and CAMAC. Jason is the company and securities law section editor for
the Australian Law Journal, the co-editor of the insolvency law section of the Journal of Banking
and Finance Law and Practice and sits on the editorial board of the Australian Journal of
Corporate Law and the Insolvency Law Bulletin.
Jason is a fellow of the Governance Institute of Australia, a member of the Corporations and
Insolvency Law Committees of the Business Law Section of the Law Council of Australia, a
member of the Law Committee of the Australian Institute of Company Directors and an academic
member of ARITA and INSOL International. Jason is the chair of the academic committee of the
Banking and Financial Services Law Association.
From 2004-2009, Jason wrote the case law annotations to the legislation contained in this book.
© 2019 THOMSON REUTERS xv

ANNUAL REVIEW OF CORPORATIONS LAW
by
Jason Harris
Professor of Corporate Law
Sydney Law School (from 2019)
INTRODUCTION
Welcome to the Corporations Legislation 2019. The past 12 months have been a significant year in the
development of Australian corporate law and in the economy more generally. Before discussing recent
legislative changes and case law developments, I’d like to acknowledge the sad passing during 2018 of Bob
Baxt who wrote this annual review from the first edition of the Corporations Annual in 2004. Bob was a
significant figure in Australian corporate and commercial law over many decades. He was a renowned author
of multiple scholarly and practical legal works, including writing the annual review for the Corporations
Annual from the book’s inception in 2004 until 2017. It was an honour to work with Bob as I compiled the
case law annotations for this work from the 2004 edition until 2009 and my work benefited greatly from his
guidance and support. He was a colleague and mentor and will be missed, by readers of this work and so many
others. I don’t step into the role of writing the annual review for this work with the intention of taking over
from Bob, because they are impossibly large shoes to fill and Bob had his own unique and authoritative style
that few can emulate. My goal is to provide a concise summary of the important developments in Australian
corporate law over the past 12 months and to make some critical comments on where the law might be
heading.
Corporate law has dominated the media headlines in the past 12 months, like few years in recent memory. The
events disclosed in the Royal Commission into Misconduct in the Banking, Superannuation and Financial
Services Industry (“the Royal Commission”) has generated public attention on the governance and operation
of some of Australia’s largest companies. In particular, the Royal Commission has focused attention on how
companies in the broad financial services industry make profits, sometimes to the detriment of customers. The
shareholder primacy norm, which argues that directors should be primarily focused on making profit for
shareholders rather than balancing stakeholder interests, has come under intense scrutiny, with NAB Chair Dr
Ken Henry questioning during his testimony to the Royal Commission whether the whole system is broken
and needs replacing. In the interim report (at p 55), the Commissioner explained:
The duty to pursue profit is one that has a significant temporal dimension. The duty is to pursue the
long-term advantage of the enterprise. Pursuit of long-term advantage (as distinct from short-term gain)
entails preserving and enhancing the reputation of the enterprise as engaging in the activities it pursues
efficiently, honestly and fairly. And, lest there be any doubt, it also entails obeying the law. But to preserve
and enhance a reputation for engaging in the enterprise’s activities efficiently, honestly and fairly, the
enterprise must do more than not break the law. It must seek to do “the right thing”.
The interim report went on to suggest (also at p 55) that entities covered by the Royal Commission
investigations appeared to pursue profit above all else, and treated compliance with the law (and at times
penalties from non-compliance with the law) merely as a cost of doing business.
The duties and accountability of company directors and officers, and the liability and responsibility of those
working within companies (large and small) are likely to focus legislative review in the near future as the
public outrage at conduct revealed during the Royal Commission will demand government and parliamentary
action. We are already seeing this in recent legislative proposals to increase ASIC powers and to increase
penalties. There is also talk of extending the Banking Executive Accountability Regime (BEAR) regulations
beyond their current banking focus to cover more companies.
It is to be hoped that any legislative response to the Royal Commission will involve a considered and
consultative approach. Changing the Corporations Act 2001 (Cth) is often a blunt tool and wholesale change
of corporate law is unlikely and unnecessary. As the Commissioner said in his interim report issued in
September 2018, conduct that fell below community standards did not occur because of the absence of laws
that prohibited conduct such as charging for services that were not provided, giving inappropriate financial
advice and misleading customers and regulators. One area that will certainly see change will be the
enforcement approach of ASIC and APRA, which have been criticised by both the Royal Commission and by
the media. Negotiated outcomes are likely to be less common and there will no doubt be an increase in court
action, although the initial suggestion of the Royal Commissioner that regulators should start with court
enforcement and then ask whether it is in the public interest not to take action would overturn decades of
responsible regulation theory and turn the enforcement pyramid (with court action at the apex) on its head.
There is clearly tremendous value in negotiation in avoiding costly, complex and time-consuming litigation,
provided that appropriate enforcement outcomes are still obtained. A consultative corporate regulator can
encourage compliance in the regulated population and produce regulatory guidance that meets the needs of the
community and the economy. It seems certain that a rebalancing of the enforcement approaches of ASIC and
APRA will be coming in 2019.
© 2019 THOMSON REUTERS xvii
Annual Review of Corporations Law
LEGISLATION
Despite periods of turmoil in Federal Parliament in 2018, the past year has produced some significant
legislative amendments to our corporate laws.
Major legislation passed
Treasury Laws Amendment (2017 Enterprise Incentives No 2) Act 2017
Although this was passed in 2017, introducing the safe harbour for company directors against insolvent
trading from September 2017 as noted in the previous annual review, the Act also introduced protection for
companies in administration, receivership or schemes of arrangement against ipso facto clauses, which
commenced on 1 July 2018. The ipso facto protections are subject to more than 60 exceptions, most
importantly for rights in contracts that pre-date 1 July 2018. Given the breadth and range of exceptions it must
seriously be questioned whether this reform will make restructuring companies in distress easier or more
difficult.
Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Act 2018
This is a significant change to the law allowing proprietary companies to access crowd-sourced equity funding
(CSF) without changing to a public company. Crowd-sourced equity funding provisions were made available
for public companies in 2017 through the introduction of a new Pt 6D.3A into the Corporations Act 2001. The
amendments focused on simplified disclosure documents and licensing of crowd-sourced fundraising
intermediaries together with protections for investors through fundraising caps. The 2017 amendments also
allowed for a transitional period, during which time proprietary companies could convert to a public company
without complying with certain compliance obligations that public companies usually have for a period of five
years. The introduction of CSF for proprietary companies will remove those transitional concessions (with
limited grandfathering rules for existing companies that converted from proprietary to public to take advantage
of the concessions).
The 2018 amendments extend Pt 6D.3A to proprietary companies, with some important additions. Proprietary
companies that wish to issue CSF offers will need to have at least two directors (other than Pty Ltd companies
may have only one director) and will be subject to Chapter 2E related party transaction laws. The
50-shareholder limit will remain but employees and shareholders connected with a crowd-sourced funding
offer will not count for the limit following changes to s 113. Furthermore, the takeover laws in Chapter 6 will
not apply to proprietary companies with shareholders who acquire shares through a CSF offer. Proprietary
companies that make CSF offers will need to maintain a register of CSF shares and include details of members
holding CSF shares. ASIC has released RG 261 (to guide issuers) and RG 262 (to guide intermediaries).
Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints
Authority) Act 2018
This Act establishes a new external dispute resolution body to replace the prior Financial Ombudsman Service,
the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal.
Modern Slavery Act 2018
This Act requires certain Australian entities or entities carrying on a business in Australia, as well as statutory
entities, to provide a “modern slavery statement” to the Minister. This will only be required for entities with
consolidated revenue of $100 million or more, although voluntary reporting is also permitted under the
scheme. Although there is no specific penalty for failing to comply, the Minister can name and shame entities
that do not comply. The Act will commence on 1 January 2019.
Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018
This Act makes minor amendments to the Corporations Act 2001 to assist with implementing new and
improved powers for APRA to deal with financially distressed ADIs and insurers. The insolvency of such
entities is dealt with under special provisions in other legislation such as the Banking Act 1959, Insurance Act
1973, Life Insurance Act 1995 and the Financial Sector (Business Transfer and Group Restructure) Act 1999.
The powers include a broad directions power given to APRA that may involve capital restructuring and
changes to equity holdings.
Treasury Laws Amendment (2017 Measures No 5) Act 2018
This Act introduces new requirements in the Corporations Act 2001 for administrators of designated
significant financial benchmarks to obtain a licence from ASIC, as well as giving ASIC new powers in relation
to designated financial benchmarks and creating new criminal offences for manipulation of financial
benchmarks.
Corporations Amendment (Asia Region Funds Passport) Act 2018
This Act implements the Government’s commitment to the establishment of the Asia Region Funds Passport
initiative which is the subject of a memorandum of cooperation between the governments of Japan, Korea,
New Zealand, Thailand and Australia. The passport allows eligible funds to be offered across multiple
participating jurisdictions under a common set of rules.
xviii Corporations Legislation 2019

Treasury Laws Amendment (Enhancing ASIC’s Capabilities) Act 2018

This Act adds to ASIC’s mandate to consider how the performance of its functions and exercise of powers will
affect competition in the financial system. The Act also implements recommendations from the ASIC
capability review to allow ASIC (from 1 July 2019) to employ staff otherwise than under the Public Service
Act 1999.
Pending legislation
Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018
This Bill would amend the Corporations Act 2001, Australian Securities and Investments Commission Act
2001 as well as other related statutes to strengthen the existing penalty framework. This would make
significant changes to the penalty framework in the Corporations Act 2001, including increasing penalties (and
standardising the method for calculating penalties); expanding the civil penalty regime and infringement notice
regime; introducing new court divestment powers; new attempt and accessorial liability provisions and
requiring the court to prefer compensating victims rather than imposing penalties. While these changes stem
from the recommendations of the ASIC Enforcement Review Taskforce report (December 2017), the changes
will not achieve their goal unless they are accompanied by a greater willingness of ASIC to take enforcement
action.
Corporations Amendment (Strengthening Protections for Employee Entitlements) Bill 2018
This Bill proposes significant reforms to protect and enhance the recovery of employee entitlements. the Bill
will rewrite large portions of Pt 5.8A of the Corporations Act 2001, which deals with liability for
arrangements to avoid paying employee entitlements. The provisions were introduced following the Patricks
waterfront dispute in the late 1990s, which saw employees engaged by entities with little or no assets losing
their entitlements. Part 5.8A currently includes both civil and criminal sanctions, but is widely regarded as
being ineffective and has generated no successful prosecutions. The Bill will expand the scope of both the
criminal and civil penalty provisions by making it easier to establish contraventions and against a wider
category of persons. The Bill will also include a new civil compensation provision and provide broader
standing rules to allow enforcement. Apart from amendments to Pt 5.8A, the Bill will introduce a new
contribution order that will allow the court to order compensation to cover certain unpaid entitlements within
corporate groups, but the definition of a “contribution order group” is very broad and could have wide
reaching consequences. The bill also includes new disqualification powers for the court and ASIC against
persons who have been involved with multiple instances of companies failing to pay for employee
entitlements within the last seven years.
Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018
This Bill would amend the Corporations Act 2001 by imposing further duties and obligations on issuers and
distributors of financial products that require a PDS and securities that are regulated by Chapter 6D. The
primary obligation is to require a “target market determination” to be formulated and regularly reviewed by
the issuer. The issuer must not issue securities or financial products that are no longer consistent with the target
market determination. ASIC will be given new stop order powers in relation to these new provisions. The Bill
will also give ASIC the power to make orders in relation to financial and credit products (the intervention
power).
Treasury Laws Amendment (2018 Measures No 2) Bill 2018
This Bill would amend the Corporations Act 2001 to give regulation making powers to allow for exemptions
from AFS licensing obligations in relation to activities involving the FinTech Regulatory Sandbox maintained
by ASIC.
Treasury Laws Amendment (Whistleblowers Protections) Bill 2017
This Bill consolidates and broadens the existing protections and remedies for corporate and financial sector
whistleblowers. This includes expanding the range of laws that can be subject to protected disclosures by
whistleblowers, expanding who can receive protected disclosure, allowing former employees to act as
whistleblowers and providing greater confidentiality and stronger immunities and protections against
victimisation of whistleblowers.
SIGNIFICANT CASES
DIRECTORS’ AND OFFICERS’ DUTIES
Gunasegaram v Blue Visions Management Pty Ltd [2018] NSWCA 179
This case concerned a company providing services as part of the Perth Children’s Hospital project. Two of the
senior employees (though not directors) of the company resigned from the company and were serving out their
notice periods. One of the employees (Chidiac) was the third most senior employee of the company but did
not have general management power. While informing a government senior official involved in managing the
hospital project (Hamilton) that he was leaving the company, he was asked if he had a desire to continue
working on the project after he left the company to which Chidiac replied yes and Hamilton responded that he
would “look into it”. Hamilton then proposed several options to the company (Blue Visions) and it was agreed
(between the Department and Blue Visions) that the section of the project that Chidiac was working on would
be subject to a novation of contract. Shortly after this was agreed, the employees formed a new company
© 2019 THOMSON REUTERS xix
(Aspire) to perform the continued work and the novation of contract was executed and performed. Chidiac had
no post-employment restraints in his contract of employment. When the contract came up for renewal, Aspire
was successful in its tender. Blue Visions then commenced proceedings for breach of statutory and fiduciary
duties against the former employees and Aspire. Interestingly the case was run only on the basis of a breach of
the conflict rule and not of the profit rule.
The Court of Appeal (by majority) held that the conversation with Hamilton presented no concrete opportunity
that could be exploited and hence no “real or sensible possibility of conflict” arising with Blue Visions.
Furthermore, any potential work on the project at the time of the conversation with Hamilton depended on the
approval of Blue Visions in granting the novation, so there was no conflict caused by the conversation.
Meagher JA placed importance on the fact that Chidiac had no role or responsibility for surrendering some or
all of the contract and this distinguished the case from other decisions such as Cook v Deeks [1916] AC 555
and Industrial Development Consultants Ltd v Cooley [1972] 1 WLR 443 where the employees were involved
in management decisions about the projects, whereas Mr Chidiac was merely responsible for performing and
supervising the work on the Hospital project not in the management of the contract for the company. Gleeson
JA (also in the majority) drew a distinction between misuse of company property for a private benefit and
diverting a business opportunity, the latter of which his Honour held was properly addressed by the conflict
and profit rules (at [187]). In summary, a general statement by Hamilton to “look into” seeing if Chidiac could
continue working after his employment expired did not amount to a real or sensible possibility of conflict, nor
a breach of s 182 of the Corporations Act 2001.
ASIC v Geary [2018] VSCA 103
This case finally brings to a conclusion the AWB litigation that has played out over the past 11 years since
ASIC first took action about former directors and officers of AWB. While ASIC has had limited success in this
litigation, with penalties and disqualification periods against several defendants, it lost its case against Geary,
the former group general manager of trading for AWB with the Court of Appeal dismissing ASIC’s appeal
against the finding of the trial judge which dismissed ASIC’s case against Geary. The case demonstrates the
difficulties that plaintiffs face when trying to establish actual knowledge of wrongdoing by senior company
officers, particularly by reference to the rule in Jones v Dunkel. As the Court said at [253]:
After all, Geary may have been the recipient of literally thousands of emails over the years, spread out over
significant periods of time. Any attempt to reconstruct, by inference, what he may or may not have read at
any given time would have to be fraught.
United Petroleum Pty Ltd v Herbert Smith Freehills [2018] VSC 347
This case concerned the consequences of a failed IPO by United. The IPO was terminated after problems with
the relevant documents were discovered and the company’s independent directors decided to discontinue the
IPO. The bulk of the case involves the question of whether the defendant firm was entitled to its full fees
(which the Court upheld), but the case also involves some interesting issues relating to directors’ duties against
the former non-executive chair of the company. Although these claims were dismissed, the Court undertook a
detailed examination of directors’ duties. The court considered whether the interests of the company were to
be equated with the interests of the shareholders as a whole (applying the decision in Greenhalgh v Arderne
Cinemas Ltd [1951] Ch 286) and stated that this proposition was open to doubt due to recent cases. In more
recent times, the view has been expressed that the general body of shareholders does not always, and for all
purposes, embody “the company as a whole” (at [749], relying on Australasian Annuities Pty Ltd (in liq) v
Rowley Super Fund Pty Ltd (2015) 104 ACSR 312; [2015] VSCA 9 at [57] per Warren CJ (Neave JA
agreeing); at [221] per Garde AJA (Neave JA agreeing)).
The issue of whether the interests of the company consist solely of shareholder interests and directors should
focus their attention on benefitting shareholders alone (the so-called “shareholder primacy norm”) has been
hotly debated throughout 2018 due to revelations in the Banking and Financial Services Royal Commission.
Indeed, in the final round of evidence the chair of the NAB went so far as to state that in his view shareholder
primacy had failed as an ideal to guide boards. Decisions such as United Petroleum, Australasian Annuities
and The Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) (2008) 39 WAR 1; 225 FLR 1; [2008] WASC
239 make it clear that the interests of the company is not limited only to shareholders and can incorporate a
longer-term view that aims for sustained success of the company and not merely short-term shareholder
returns.
Matter Technology Ltd v Mrakas [2018] NSWSC 507
This is one of the first cases to consider director and officer liability relating to cryptocurrency issues. Mrakas
was the CEO and director of Matter Technology, a company involved in monitoring and commoditising power
generated from solar panels. The company was heavily involved in innovation and undertook several projects
to develop new business concepts. Mrakas had entered an employment contract that provided ownership of
intellectual property developed by him to his employer, Matter Technology. During his employment, Mrakas
discussed selling the company’s business to an energy company with one of the other directors (Barnes).
Mrakas and other employees then developed a project to issue cryptocoins through an initial coin offering
(ICO – a form of fundraising where electronic tokens are issued in exchange for widely used cryptocurrency
such as Bitcoin or Ethereum, which can then be converted into fiat currency through crypto exchanges).
xx Corporations Legislation 2019
Mrakas claimed that he told Barnes that any intellectual property developed in the project would be his
beneficially because of the plan to sell the company’s business (the Court rejected this evidence) and then
issued a draft discussion paper setting out the project details and noting his ownership of the intellectual
property. A subsequent board meeting considered the ICO proposal and it was noted that the company had
insufficient funds to proceed, and a comment was made that if the project was to proceed Mrakas would need
to fund it, although Barnes noted that new potential investors may be found. The Court held that this was not
ratification for Mrakas to proceed with the project in his own beneficial interest. Subsequent correspondence
between directors made it clear that they wished to further consider the matter after Christmas, but Mrakas
proceeded to work on the project over the Christmas break by using company resources and staff to further
develop the ICO project materials. Shortly afterwards, Mrakas launched a pre-sale of the ICO which included
setting up a website with documentation, establishing a foundation to run the project, setting up a bank
account and collecting money from interested investors (some of which was paid directly to him). The bank
put a hold on the funds deposited into the account and eventually the ICO failed and did not proceed further,
with funds being returned to investors. A board meeting shortly thereafter terminated Mrakas’ employment.
The Court held that Mrakas had breached his employment contract and had contravened ss 182 and 183 of the
Corporations Act 2001 by proceeding with the unauthorised project, concealing the development of the
project, publicly claiming ownership of the project and associated IP and reducing any role or benefit that the
company may have in the ICO to less than what was originally discussed at the previous board meeting. The
decision is a timely reminder of the importance of well-drafted contracts and policies for companies to manage
the development of intellectual property by their employees. One interesting argument, rejected by the Court,
was that because the ICO would operate on a blockchain Mrakas and his foundation were not the vendors of
the cryptocurrency but rather “the computer was”. This was rejected by the Court because the structure of the
project and the payments from investors were directed to Mrakas’ benefit.
MEMBERS’ REMEDIES
Asia Pacific Joint Mining Pty Ltd v Allways Resources Holdings Pty Ltd [2018] QCA 48
This case involved a coal exploration company that was majority-owned and controlled by a state-sponsored
Chinese company. Disputes between the minority shareholders and the controlling shareholder involved the
minority being excluded from certain members’ meetings and they made an application for relief against
oppression either to be bought out or to wind up the company. The Court at first instance determined that a
winding up was appropriate and the Court of Appeal agreed, finding that the wording of s 467(4) required a
winding up order unless the applicant was acting unreasonably in seeking a winding up instead of some other
remedy. The Court held that there was some doubt about whether a buyout order would be complied with by
the majority shareholders and so a winding up order was just and equitable in the circumstances. The decision
gives useful guidance as to how the court may determine the appropriate remedy in cases involving minority
oppression and conduct that may fall within s 461(1)(k).
Re Innovateq Pty Ltd [2018] VSC 124
This is a case where the principal controllers suffered an irreconcilable breakdown in their business
relationship and thereafter began working in competing businesses, leaving the company’s operations dormant
for several years while the principals were involved in litigation. One of the principals sought leave to bring a
statutory derivative action (SDA) against the other principal and associated entities which were competing
against his own competing business. The Court held that as the company had ceased trading and the principals
could no longer work together it was not in the best interests of the company that leave to bring an SDA be
granted. Furthermore, the fact that the company was not trading and that any successful court action arising
out of the SDA would benefit the applicant’s separate business demonstrated a lack of good faith by the
applicant.
INSOLVENCY CASES
Mighty River International Ltd v Hughes [2018] HCA 38
The voluntary administration process has a tight time frame, with the standard period of administration usually
being no more than 35 business days, although court extensions of time or adjournments of the final creditors’
meeting may extend this period. The end of administration usually results in either liquidation or a deed of
company arrangement (DOCA), although time limitations for administration may make it difficult to conduct
a full investigation and negotiate a commercially feasible DOCA within the standard time frame (at least
without one or more court extensions). Administrators have developed a practice of proposing a “holding
DOCA” for approval by creditors, which is a DOCA that gives the administrators more time to negotiate a
commercial outcome for the company and its creditors. Usually the holding DOCA will not provide for a
distribution of property to creditors, because the point of it is allow the administrator to seek a better deal, so
the DOCA simply gives the administrator time to do that (which may take a year or longer) and will usually
build in monitoring mechanisms so that the conduct of the holding DOCA by the administrator remains
accountable to creditors. Holding DOCAs are widely used in administrations in Australia, including the recent
successful restructuring of large steel maker Arrium. This case upheld the validity of holding DOCAs under Pt
5.3A of the Corporations Act 2001.
This case concerned a challenge by a minority shareholder and creditor (Mighty River) of a mining company
(Mesa) that had been taken over by Mineral Resources (which was also a joint venture partner in Mesa’s major
© 2019 THOMSON REUTERS xxi
assets). Mighty River unsuccessfully argued that a DOCA that failed to make any property available to
creditors (that is, as part of a holding DOCA) did not comply with the content requirements for DOCAs under
s 444A and that merely seeking to extend time through a holding DOCA was inconsistent with the purposes of
Pt 5.3A and improperly sought to sidestep the court’s jurisdiction in granting extensions of time. The Court
rejected all of these arguments, finding (by majority) that holding DOCAs are consistent with the purpose of
Pt 5.3A because they seek to save the company or provide a better return. Furthermore, the Court held that s
444A did not require property to be available for distribution to creditors. This is a good commercial result for
corporate restructuring efforts in Australia. A contrary finding would have made voluntary administrations
more time-consuming, complex and expensive due to the need to seek one or more court extensions of time.
Banerjee v Commissioner of Police [2018] NSWCA 283
This case involved a company losing its licence to carry on a business providing security services in New
South Wales due to State law provisions requiring termination of a security provider’s licence when it enters
administration. The termination of the licence effectively ended the company’s business and the administrators
sought court orders that the state law provision was inconsistent with Pt 5.3A of the Corporations Act 2001
because it prevented the company’s affairs being carried on with a view to executing a deed of company
arrangement. This argument was rejected by the Court of Appeal, which held in a unanimous decision that
there was no inconsistency between the State law and voluntary administration and nothing in Pt 5.3A
supported an immunity against such a State law. It may be noted that the recent protection against ipso facto
clauses that commenced on 1 July 2018 would not have assisted the company because statutory licences are
expressly exempted from their operation. The decision is another example of where State licensing laws can
make trying to save a struggling company’s business by entering voluntary administration difficult if not
impossible. There is a long-running issue in NSW with restrictions for companies that operate registered clubs
needing statutory permission to appoint an administrator (see for example, Correa v Whittingham [2013]
NSWCA 263).
White v Robertson [2018] FCAFC 63
This case dealt with the significant issue of who should pay for the costs associated with dealing with property
held by a company when it enters external administration. A trend has developed over recent years where
insolvency practitioners have sought court orders to allow for costs to be recovered by levying a fee against
persons with claims over property that has needed to be dealt with by the insolvency practitioner during the
period of the company’s external administration, so that the fee must be paid before the goods are transferred
to the claimants (see for example, Re Arcabi Pty Ltd; Ex part Theobald (2014) 288 FLR 236; [2014] WASC
310; Re Renovation Boys Pty Ltd [2014] NSWSC 340). In this case, administrators were appointed over an
auction house, which held (as consignee under bailment) numerous artworks and other items for sale at
auction. The appointment of administrators meant that no further auctions would take place and the company
therefore had a legal obligation to return the goods to the consignors. The auction house had poor internal
inventory systems (which consisted of a mix of electronic and manual systems, that operated across locations
in multiple states and was incomplete and sometimes inaccurate) and the administrators estimated that there
were between 8,000 and 12,000 items to be returned to consignors. The administrators determined to conduct
a comprehensive stocktake of the consigned items, which generated extensive costs and professional fees. The
administrators sent letters to consignors claiming a levy of more than $350 per item and claimed a lien over
the assets pending payment. The Full Court recognised that an equitable lien can be claimed by administrators
for necessary work done in relation to property in which the company does not claim an interest, but rejected
the administrators’ claim for the lien in this matter. This was because a full stocktake was not necessary to
enable many of the goods to be returned and because the company had breached its duties as bailee by failing
to properly track items consigned to it and the cost of this should not fall on consignors. The Court noted that
the administrators could have sought directions as to how to proceed before undertaking such a large and
expensive stocktake.
Longley v Chief Executive, Department of Environment and Heritage Protection [2018] QCA 32
This decision was a significant win for insolvency practitioners appointed over companies with environmental
remediation liabilities. This is an important issue for State and Territory governments around Australia as falls
in commodity prices push mining and resources companies into external administration. The first instance
decision had held that liquidators could be personally liable under State environmental clean-up laws based on
an inconsistency between those laws and the provisions which allow liquidators to disclaim onerous property,
which it was said engaged the operation of s 5G of the Corporations Act 2001. The Queensland Court of
Appeal overturned this decision and held that there was no inconsistency between the laws and so s 5G was
not engaged, and a liquidators’ disclaimer need not impose personal liability for environmental clean-up costs
on the liquidator themselves. This is a welcome decision for creditors in liquidation, although a concern for
State and Territory governments left with the clean-up costs when companies become insolvent. It is not too
far-fetched to believe that this may be a matter for COAG in the future with the goal of law reform to give
better protection for local communities affected by environmental harm. The High Court refused special leave
in September 2018.
xxii Corporations Legislation 2019

Chief Commissioner of State Revenue (NSW) v Boss Constructions (NSW) Pty Ltd [2018] NSWCA 270
The 21-day time limit to seek to have a statutory demand set aside has been interpreted in a very literal way
by appellate courts going back at least to the High Court’s decision in David Grant & Co Pty Ltd v Westpac
Banking Corporation (1995) 184 CLR 265. Nonetheless, companies seeking to avoid the consequences of
failing to challenge a demand within 21 days of service continue to try novel arguments. In this recent case,
the NSW Court of Appeal overturned a first instance decision that held that a challenge could be made to a
demand despite the 21-day period having expired due to conduct by the Commissioner of State Revenue that
justified an estoppel. The Court of Appeal reaffirmed that the 21-day period must be interpreted strictly and
estoppel cannot be used to overturn the strict requirements of the statute.
Hosking v Extend N Build Pty Ltd [2018] NSWCA 149
This case considered whether payments made by a builder to secondary subcontractors following the inability
of the head subcontractor to pay them were unfair preferences under s 588FA. Both the Court at first instance
and the Court of Appeal held that they were not, because there was no obligation to pay owed between the
company that subsequently went into liquidation (the head subcontractor) and the builder to pay the debts
owed to the secondary subcontractors. Although the company in liquidation had requested payment, there was
no legal obligation to make the payment because the subcontract had been terminated by the builder, and the
builder had also been requested to make the payment by the a union. Bathurst CJ stated that seeking to
establish that the payments were part of a transaction of the company in liquidation by reference to a “chain of
causation” was not helpful in cases under s 588FA (at [94]).
Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (in liq) [2018] WASCA 163
The collapse of the Forge Group in 2014 has generated extensive litigation giving rise to a range of insolvency
and secured transactions issues in multiple courts across Australia. In this case, a dispute arose as to the effect
of a security interest being granted over the assets of Forge on the rights of Hamersley to assert set-off in
insolvency under s 553C of the Corporations Act 2001. The Court at first instance held that granting a security
interest under the PPSA resulted in a loss of mutuality due to the fixed nature of a PPSA security interest. This
caused considerable consternation among insolvency, banking and construction lawyers given the general
assumption that statutory set-off will be available (assuming the terms of s 553C apply). The Court of Appeal
allowed the appeal and held that statutory set-off could apply because mutuality was not extinguished by Forge
granting a security interest in its assets as Forge was still able to use its property for its own benefit and the
assets were circulating as the bank with the security interest did not control them. The Court also held that
contractual and equitable set-off may continue where s 553C statutory set-off does not apply due to the lack of
mutuality. Given the large sums of money involved in this dispute, it is likely that special leave to appeal to
the High Court will be sought, which if granted would create an opportunity for the High Court to comment
on the nature and scope of PPSA security interests for the first time.
Stone v Melrose Cranes & Rigging Pty Ltd (No 2) [2018] FCA 530
This case adds to the line of authorities that recognise the ability of creditors facing unfair preference claims
brought by liquidators to assert a right of set off under s 553C, even though in this case statutory set-off was
not available due to the creditor having notice of the company’s insolvency.
Re SurfStitch Group Ltd [2018] NSWSC 164
This case considers the position of subordinated creditors under ss 563A and 600H. The subordinated creditors
were shareholders who formed part of class actions against the company, and were prohibited from voting at
creditor meetings without court permission or receiving payment in a deed of company without all
unsubordinated creditors being paid in full. The administrators believed there would be likely to be a surplus
in the administration and so sought court orders to allow the subordinated creditors to vote at the creditors’
meeting but also to allow the chair of the meeting to admit the claims for a nominal amount for voting
purposes to try to save costs. The Court granted these orders except for the request to allow a ruling on the
proofs of debt for a nominal amount as the Court was not satisfied that the complexity and difficulty of
adjudicating on proofs by the subordinated creditors justified ruling for a nominal amount.
INSOLVENCY AND TRUSTS
The widespread use of trusts administered by corporate trustees to conduct commercial activities has produced
a number of complex problems when the trustee enters insolvency. There has been a long debate regarding the
divergent appellate authorities in Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99 and Re Enhill Pty Ltd
[1983] 1 VR 561, and courts around Australia continue to grapple with the proper meaning of the High Court’s
ruling in Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360. A key issue in this debate is how trust
property is to be distributed among creditors when the corporate trustee has a right of indemnity (usually a
right of exoneration) for outstanding debts properly incurred in administering the trust. On one view, trust
property can only be used to pay trust creditors (the Suco Gold view), while on another view (the Enhill view)
a trustee’s right of indemnity is property of the company and can be used beneficially by the trustee company
to pay all of its creditors (assuming the right of indemnity remains intact). In recent years, the
Commonwealth’s funding of employee entitlements in insolvency through the Fair Entitlements Guarantee
Act 2012 (which then allows for subrogation of the Commonwealth into the shoes of the employees who have
their entitlements covered where they have lost employment due to liquidation) has produced an active and
well-funded creditor who stands in a priority position and is prepared to enforce its priority through litigation
© 2019 THOMSON REUTERS xxiii
to test the operation of the law. This has resulted in several decisions that have considered whether distribution
of trust property for corporate trustees that enter external administration should be according to the priority
ranking in s 556 of the Corporations Act 2001. The High Court has granted special leave in the Amerind
litigation and it is to be hoped that the Court will provide further clarity to the area in its ruling.
Commonwealth of Australia v Byrnes [2018] VSCA 41 (the Amerind appeal)
This case involved a situation where a corporate trustee had only acted as trustee and had not been removed by
the terms of the trust deed or by the beneficiaries at the time that the company entered receivership. The
receivers sold the secured assets and then sought court directions as to how to distribute the funds. The Court
of Appeal (a unanimous five-judge bench) held that the weight of authority (including High Court authorities)
determined that the right of indemnity was property of the company and, as such, the s 556 distribution
priority ranking must be applied.
Jones v Matrix Partners Pty Ltd [2018] FCAFC 40
Although this case involved a three-judge bench, the decision was not an appeal, but rather a referral for
determination of an issue. The case concerned a corporate trustee that was removed as trustee (but not
replaced) when the company entered external administration. The Court (by majority) applied (the Amerind
appeal) in finding that the right of indemnity was property of the company and that the s 556 priority ranking
should apply. However, the Court also held that the “property of the company” was not simply the trust
property itself but rather the right of indemnity over the property. The corporate trustee entering liquidation
did not change the character of trust property into company property, and so the use of the property for the
purposes of satisfying the right of indemnity needed to be consistent with trust law principles. This meant that
it should be used to satisfy trust creditors. The Court also held that in applying the s 556 priority ranking, a
liquidator would need to make a careful assessment of whether the debts incurred could be paid out of trust
property (for example, general liquidation expenses that bear no relationship to the administration of the trust).
There is ample authority that if the corporate trustee only acted in a trustee capacity for a single trust then the
costs and expenses of the liquidator of the company should be given priority either under the statute or in
equity.
While the decision in the Amerind appeal provides clarity and greater certainty for insolvency practitioners,
the Jones v Matrix Partners case raises several unresolved questions, while still applying the s 556 priority
ranking and protecting the priority of liquidator fees and expenses. The lingering uncertainty in this area will
hopefully be addressed by the High Court. If it is not (and it should be noted that Jones v Matrix Partners has
not been appealed) then a legislative solution will need to be found.
Pleash v Tucker [2018] FCAFC 144
One of the difficulties thrown up by the use of trusts is how to characterise the nature of the interests held by
different participants in the trust arrangement. Beneficiaries may have fixed or variable entitlements to
proceeds from the operation of the trust, or may simply have a mere expectancy as a discretionary beneficiary.
Characterising the legal rights of persons who can remove and replace the trustee also pose difficulties. The
Richstar decision (ASIC v Carey (No 6) (2006) 153 FCR 509; [2006] FCA 814) is one notable example where
the court held that a person who had effective control over the trustee (where the person was a beneficiary,
original holder of a power of appointment and husband of the current holder of the power of appointment and
the director and secretary of the trustee company administering the trust) could be said to hold a form of
property for the purposes of s 9 of the Corporations Act 2001. In this case, liquidators sought production of
documents relating to a trust in which an examinee was both beneficiary and director of a corporate trustee
that administered the trust. The goal of the liquidators was to determine whether the examinee had resources
that justified further litigation. The liquidators relied on the Richstar case to justify their request for documents
relating to the trust, but the Full Federal Court noted that in numerous subsequent cases the Richstar case had
not been applied or had been rejected. The Full Court held that a “beneficiary’s legal or de facto control of the
trustee of a discretionary trust [does not] alter the character of the interest of the beneficiary such that it will
constitute property” at [45] (relying on Fordyce v Ryan [2017] 2 Qd R 240; [2016] QSC 307). The Court held
at [53] that:
The ability of a prospective defendant to satisfy a judgment debt in the event that litigation is pursued by
a liquidator is within the scope of such examinable affairs but we do not consider there is a proper basis to
extend the scope of “examinable affairs” to a consideration of what assets outside of those that comprise a
prospective defendant’s property might voluntarily be directed to payment of such debt.
FINANCIAL ASSISTANCE
Slea Pty Ltd v Connective Services Pty Ltd [2018] VSCA 180
This decision significantly expands the potential breadth in the meaning of “financial assistance”. The case
involved a prolonged dispute between the shareholders of a closely held company that operated a mortgage
aggregation business. The principals involved in the business were involved in various court proceedings
against each other and their associated companies. The company’s constitution included a pre-emptive right to
restrict transfer of shares to an outsider. Slea (which held approximately 30% of the shares) sought to sell its
shares to an outsider and terminated the sale agreement in settlement of a dispute with the other shareholders.
Slea then sought again to sell its shares to the same outsider (the sale agreement was discovered in other
proceedings involving the company) and the company sought to enforce the constitutional right of pre-emption
xxiv Corporations Legislation 2019

by seeking orders compelling Slea to offer its shares to the other shareholders. Slea sought a court order to stay
the company’s action on the basis that the agreement to sell the shares was identified during discovery and it
would breach an implied undertaking not to use the discovered document for collateral purposes (which was
upheld by the trial decision) and on the basis that court orders enforcing the pre-emption right would breach s
260A of the Corporations Act 2001. The Court of Appeal overturned the trial decision and held that an
injunction under s 1324 was appropriate as orders in the pre-emption proceedings could be characterised as
financial assistance by the company for the benefit of its non-Slea shareholders. The financial assistance
consisted of detriment to the company involving the costs of the proceedings to enforce the pre-emption rights.
The reasoning for this curious result is based on s 1324(1B) which requires the court to presume a breach of
s 260A if one is alleged in proceedings seeking an injunction under s 1324(1) unless the company proves
otherwise, which in this case it did not do. However, it must be difficult for the company to prove this as
enforcing its contractual rights to enforce its own constitution will always consume financial resources.
Although an odd result, with all due respect, the decision is useful as a summary of the law of financial
assistance. It must be questioned whether the Court of Appeal’s rejection of the need for a transaction to found
financial assistance will prove a productive addition to the jurisprudence on s 260A. The decision also raises
questions of what a company can do to enforce constitutional rights of pre-emption in such circumstances, if
seeking court orders to enforce may constitute financial assistance. Shareholder approval under s 260B is
impractical in cases of disputes such as in Slea. Perhaps we will see more boards using their discretion to
refuse to register share transfers where s 1072G is not replaced. Of course one may also point to the
pragmatism of the result in terms of the court not wanting to allow the majority shareholders to use the
company’s resources to force a transfer of shares for their own personal benefit.
REGULATORY MATTERS
ROYAL COMMISSION
The Royal Commission was mentioned in the introduction to this year in review. At the time of writing
(December 2018) the final report had not yet been released. The Interim Report revealed widespread
compliance failures, misconduct and dishonesty. It also revealed a failure of regulatory action to deter or stop
such conduct. The final report will no doubt contain a number of areas for potential law reform, many of
which may come within the Corporations Act 2001, particular Chapter 7, and the ASIC Act. The Interim
Report cautions against kneejerk legislative responses noting that increased regulatory change brings further
complexity without necessarily better compliance outcomes. The conduct revealed in the Royal Commission
did not occur because of a lack of legislative statements prohibiting the conduct.
ASIC has taken enforcement action against various financial firms for matters and practices highlighted by the
Royal Commission, such as fees for no service, failing to comply with responsible lending obligations and
giving unsuitable financial advice and there will no doubt be further enforcement activity over the next year.
ASIC
ASIC’s new Chairman, James Shipton, began his term in February 2018. The Commission also appointed
three new commissioners during 2018 – Daniel Crennan; Danielle Press and Sean Hughes – to a have total of
five commissioners, although Peter Kell is finishing at the end of 2018.
Karen Chester was recently announced as the replacement for Peter Kell as Deputy Chair from January 2019.
Ms Chester is currently the Deputy Chair of the Productivity Commission and also chaired the ASIC
Capability Review Task Force in 2015.
Recent major enforcement activity by ASIC include commencing civil proceedings against several directors of
Tennis Australia relating to the granting of rights to broadcast the Australian Open without a tender process
(18-346MR). ASIC concluded long-running civil cases against CBA and Westpac relating to setting the BBSW
(with cases against ANZ and NAB concluding in 2017). ASIC also commenced proceedings against the
former CEO and CFO of Rio Tinto relating to disclosure by the company of asset impairments (18-061MR;
18-119MR).
The ASIC Capability Review Report was handed down in January 2018 and ASIC has responded to the report
on its website and has undertaken a number of recommended changes. ASIC’s Corporate Plan 2018–2022 was
released in August 2018, where the new Chairman wrote about the important role that ASIC has in “driving
behaviours that will build and restore trust”. The Plan focuses on four core strategies: “being agile”;
“accelerating enforcement outcomes”; “implementing new supervisory approaches” and “promoting regtech”.
These strategies may be viewed as a partial response to the criticism made of the regulator in the Royal
Commission interim report, which questioned ASIC’s heavy use of administrative enforcement tools,
negotiated enforcement outcomes (including enforceable undertakings) and the overall time taken to complete
enforcement action. In October 2018, ASIC released the report of a detailed study undertaken by academics at
University of NSW Law School, “The general deterrent effect of Enforceable Undertakings (EUs) on peer
financial services and credit providers”. ASIC is to be credited with seeking out empirical evidence of the
effectiveness of its enforcement strategies and encouraged to undertake further research of this kind in the
future.
© 2019 THOMSON REUTERS xxv
Another random document with
no related content on Scribd:
revolution as the duty of honest men. The Free-Soilers soon after
renominated Dr. John Gorham Palfrey for a seat in Congress, and in
his campaign Mr. Emerson delivered this speech in several
Middlesex towns. In Cambridge he was interrupted by young men
from the college, Southerners, it was said, but it appears that the
disturbance was quite as much due to “Northern men who were
eager to keep up a show of fidelity to the interest of the South,” as a
Southern student said in a dignified disclaimer. Mr. Cabot in his
Memoir gives an interesting account by Professor James B. Thayer
of Mr. Emerson’s calm ignoring of the rude and hostile
demonstration.
Writing to Carlyle, in the end of July, 1857, Mr. Emerson said: “In
the spring, the abomination of our Fugitive Slave Bill drove me to
some writing and speech-making, without hope of effect, but to clear
my own skirts.”
This was the reaction which could not but be felt by him where he
had been forced to descend into the dust and conflict of the arena
from the serene heights. He wrote in his journal next year:—
“Philip Randolph [a valued friend] was surprised to find me
speaking to the politics of anti-slavery in Philadelphia. I suppose
because he thought me a believer in general laws and that it was a
kind of distrust of my own general teachings to appear in active
sympathy with these temporary heats. He is right so far as it is
becoming in the scholar to insist on central soundness rather than on
superficial applications. I am to give a wise and just ballot, though no
man else in the republic doth. I am to demand the absolute right,
affirm that, and do that; but not push Boston into a showy and
theatrical attitude, endeavoring to persuade her she is more virtuous
than she is. Thereby I am robbing myself more than I am enriching
the public. After twenty, fifty, a hundred years, it will be quite easy to
discriminate who stood for the right, and who for the expedient.”
Yet however hard the duty of the hour might be, Mr. Emerson
never failed in his duty as a good citizen to come to the front in dark
days.
“In spite of all his gracefulness and reserve and love of the
unbroken tranquillity of serene thought, he was by the right of
heredity a belligerent in the cause of Freedom.”
Page 181, note 1. Shadrach was hurried to Concord after his
rescue, and by curious coincidence Edwin Bigelow, the good village
blacksmith who there harbored him and drove him to the New
Hampshire line, was one of the jurors in the trial of another rescue
case.
Page 183, note 1. Mr. Emerson wrote in his journal, after Mr.
Hoar’s return:—
“The position of Massachusetts seems to me to be better for Mr.
Hoar’s visit to South Carolina in this point, that one illusion is
dispelled. Massachusetts was dishonored before, but she was
credulous in the protection of the Constitution, and either did not
believe, or affected not to believe in that she was dishonored. Now
all doubt on that subject is removed, and every Carolina boy will not
fail to tell every Massachusetts boy whenever they meet how the fact
stands. The Boston merchants would willingly salve the matter over,
but they cannot hereafter receive Southern gentlemen at their tables
without a consciousness of shame.”
Page 192, note 1. Apparently from Vattel, book i., ch. i., p. 79.
Page 201, note 1.
But there was chaff within the flour,

And one was false in ten,
And reckless clerks in lust of power
Forgot the rights of men;
Cruel and blind did file their mind,
And sell the blood of human kind.
Your town is full of gentle names

By patriots once were watchwords made;
Those war-cry names are muffled shames
On recreant sons mislaid.
What slave shall dare a name to wear
Once Freedom’s passport everywhere?
See note to poem “Boston.”
Mr. Charles Francis Adams’s Life of Richard H. Dana gives light

on the phrase used in the first of these verses. The following
passage is from Mr. Dana’s journal during the trial of Anthony Burns,
the fugitive:—
“Choate, I had an amusing interview with. I asked him to make one
effort in favor of freedom, and told him that the 1850 delusion was
dispelled and all men were coming round, the Board of Brokers and
Board of Aldermen were talking treason, and that he must come and
act. He said he should be glad to make an effort on our side, but that
he had given written opinions against us in the Sims case on every
point, and that he could not go against them.
“‘You corrupted your mind in 1850.’

“‘Yes. Filed my mind.’
“‘I wish you would file it in court for our benefit.’”
Shakspeare said,—
“For Banquo’s issue have I filed my mind.”
Page 202, note 1. Mr. F. B. Sanborn, in his Life of Thoreau, says

that Webster gave, as a reason for not visiting Concord in his later
years, that “Many of those whom I so highly esteemed in your
beautiful and quiet village have become a good deal estranged, to
my great grief, by abolitionism, free-soilism, transcendentalism and
other notions which I cannot but regard as so many vagaries of the
imagination.”
Page 204, note 1.
Or who, with accent bolder,

Dare praise the freedom-loving mountaineer?
I found by thee, O rushing Contoocook!
And in thy valleys, Agiochook!
The jackals of the negro-holder.
...
Virtue palters; Right is hence;
Freedom praised, but hid;
Funeral eloquence
Rattles the coffin-lid.
Poems, “Ode,” inscribed to W. H. Channing.
See also what is said of “the treachery of scholars” in the last

pages of “The Man of Letters,” Lectures and Biographical Sketches.
Page 209, note 1. This appeal for a general movement in the free
states to free the slaves and to recompense the planters, unhappily
brought up to the institution, for their loss, was so much better in an
anti-slavery address in New York, in 1855, than in the Concord
speech four years earlier, that I have substituted the later version
here. In Mr. Cabot’s Memoir, pp. 558-593, a portion of the New York
speech, including this paragraph, is given.
THE FUGITIVE SLAVE LAW, NEW YORK, 1854

Writing to his friend Carlyle on March 11, 1854, Mr. Emerson said:
—
“One good word closed your letter in September ... namely, that
you might come westward when Frederic was disposed of. Speed
Frederic, then, for all reasons and for this! America is growing
furiously, town and state; new Kansas, new Nebraska looming up in
these days, vicious politicians seething a wretched destiny for them
already at Washington. The politicians shall be sodden, the States
escape, please God! The fight of slave and freeman drawing nearer,
the question is sharply, whether slavery or whether freedom shall be
abolished. Come and see.”
Four days before thus writing, he had given this address, to a fairly
large audience, in the “Tabernacle” in New York City, for, however
dark the horizon looked, the very success of the slave power was
working its ruin. Encouraged by the submission of the North to the
passage of the evil law to pacify them, they had resolved to repeal
the Missouri Compromise, which confined slavery to a certain
latitude. It was repealed within a few days of the time Mr. Emerson
made this address. During the debate, Charles Sumner said to
Douglas, “Sir, the bill you are about to pass is at once the worst and
the best on which Congress has ever acted.... It is the worst bill
because it is a present victory for slavery.... Sir, it is the best bill on
which Congress has ever acted, for it annuls all past compromises
with slavery and makes any future compromises impossible. Thus it
puts Freedom and Slavery face to face and bids them grapple. Who
can doubt the result?” The rendition to slavery of Anthony Burns
from Boston in May wrought a great change in public feeling there.
Even the commercial element in the North felt the shame.
Though not a worker in the anti-slavery organization, Mr. Emerson
had always been the outspoken friend of freedom for the negroes.
Witness his tribute in 1837 to Elijah Lovejoy, the martyr in their cause
(see “Heroism,” Essays, First Series, p. 262, and note). But the
narrow and uncharitable speech and demeanor of many
“philanthropists” led him to such reproofs as the one quoted by Dr.
Bartol, “Let them first be anthropic,” or that in “Self-Reliance” to the
angry bigot: “Go love thy infant; love thy wood-chopper; be good-
natured and modest; have that grace; and never varnish your hard,
uncharitable ambition with this incredible tenderness for black folk a
thousand miles off.”
But now the foe was at the very gate. The duty to resist was
instant and commanding. Mr. Emerson wrote in his journal, soon
after:—
“Why do we not say, We are abolitionists of the most absolute
abolition, as every man that is a man must be?... We do not try to
alter your laws in Alabama, nor yours in Japan, or in the Feejee
Islands; but we do not admit them, or permit a trace of them here.
Nor shall we suffer you to carry your Thuggism, north, south, east or
west into a single rod of territory which we control. We intend to set
and keep a cordon sanitaire all around the infected district, and by
no means suffer the pestilence to spread.
“It is impossible to be a gentleman, and not be an abolitionist, for a
gentleman is one who is fulfilled with all nobleness, and imparts it; is
the natural defender and raiser of the weak and oppressed.”
With Mr. Emerson’s indignation at Webster’s fall was mingled
great sorrow. From his youth he had admired and revered him. The
verses about him printed in the Appendix to the Poems show the
change of feeling. He used to quote Browning’s “Lost Leader” as
applying to him, and admired Whittier’s fine poem “Ichabod” (“The
glory is departed,” I. Samuel, iv., 21, 22) on his apostasy.
Mr. Emerson’s faithfulness to his sense of duty, leading him,
against his native instincts, into the turmoil of politics, striving to undo
the mischief that a leader once revered had wrought in the minds of
Americans, is shown in the extract from his journal with regard to this
lecture:—
“At New York Tabernacle, on the 7th March, I saw the great
audience with dismay, and told the bragging secretary that I was
most thankful to those that staid at home; every auditor was a new
affliction, and if all had staid away, by rain or preoccupation, I had
been best pleased.”
Page 217, note 1. In Lectures and Biographical Sketches, in the
essay on Aristocracy, and also in that on The Man of Letters, the
duty of loyalty to his thought and his order is urged as a trait of the
gentleman and the scholar, and in the latter essay, the scholar’s duty
to stand for what is generous and free.
Page 219, note 1. Mr. Emerson in his early youth did come near
slavery for a short time. His diary at St. Augustine, quoted by Mr.
Cabot in his Memoir, mentions that, while he was attending a
meeting of the Bible Society, a slave-auction was going on outside,
but it does not appear that he actually saw it.
Page 221, note 1. Carlyle described Webster as “a magnificent
specimen.... As a Logic-fencer, Advocate, or Parliamentary Hercules,
one would incline to back him at first sight against all the extant
world. The tanned complexion, that amorphous, crag-like face, the
dull black eyes under their precipice of brows, like dull anthracite
furnaces needing only to be blown, the mastiff-mouth, accurately
closed:—I have not traced as much of silent Berserkir-rage, that I
remember of, in any other man.”[D]
Page 225, note 1. Mr. James S. Gibbons (of the New York
Tribune) in a letter written to his son two days after this speech was
delivered, says, referring evidently to this passage:—
“Emerson gave us a fine lecture on Webster. He made him stand
before us in the proportions of a giant; and then with one word
crushed him to powder.”
Page 226, note 1. Professor John H. Wright of Harvard University
has kindly furnished me with the passage from Dio Cassius, xlvii. 49,
where it is said of Brutus:—
Καὶ ἀναβοήσας τοῦτο δὴ Ἡράκλειον

ὦ τλῆμον ἀρετή, λόγος ἄρ’ ἦσθ’, ἐγὼ δέ σε
ὡς ἔργον ἤσκουν· σὺ δ’ ἄρ’ ἐδούλευες τύχῃ,—
παρακάλεσέ τινα τῶν συνόντων, ἵν’ αὐτὸν ἀποκτείνῃ,—
which he renders, “He cried out this sentiment of Heracles, ‘O

wretched Virtue, after all, thou art a name, but I cherished thee as a
fact. Fortune’s slave wast thou;’ and called upon one of those with
him to slay him.”
Professor Wright adds that Theodorus Prodromus, a Byzantine
poet of the twelfth century, said, “What Brutus says (O Virtue, etc.) I
pronounce to be ignoble and unworthy of Brutus’s soul.” It seems
very doubtful whence the Greek verses came.
Page 233, note 1. Just ten years earlier, Hon. Samuel Hoar, the
Commissioner of Massachusetts, sent to Charleston, South
Carolina, in the interests of our colored citizens there constantly
imprisoned and ill used, had been expelled from that state with a
show of force. See Lectures and Biographical Sketches.
Page 234, note 1. The sending back of Onesimus by Paul was a
precedent precious in the eyes of pro-slavery preachers, North and
South, in those days, ignoring, however, Paul’s message, “Not now
as a servant, but above a servant, a brother beloved, specially to
me, but how much more unto thee, both in the flesh and in the Lord.
If thou count me therefore a partner, receive him as myself.”[E]
Page 235, note 1. The hydrostatic paradox has been before
alluded to as one of Mr. Emerson’s favorite symbols, the balancing of
the ocean by a few drops of water. In many places he dwells on the
power of minorities—a minority of one. In “Character” (Lectures and
Biographical Sketches) he says, “There was a time when Christianity
existed in one child.” For the value and duty of minorities, see
Conduct of Life, pp. 249 ff., Letters and Social Aims, pp. 219, 220.
Page 236, note 1. This was a saying of Mahomet. What follows,
with regard to the divine sentiments always soliciting us, is thus
rendered in “My Garden:”
Ever the words of the gods resound;

But the porches of man’s ear
Seldom in this low life’s round
Are unsealed, that he may hear.
Page 236, note 2. This is the important key to the essay on Self-
Reliance.
Page 238, note 1. In the “Sovereignty of Ethics” Mr. Emerson
quotes an Oriental poet describing the Golden Age as saying that
God had made justice so dear to the heart of Nature that, if any
injustice lurked anywhere under the sky, the blue vault would shrivel
to a snake-skin, and cast it out by spasms.
Page 240, note 1. There seems to be some break in the
construction here probably due to the imperfect adjustment of
lecture-sheets. It would seem that the passage should read: “Liberty
is never cheap. It is made difficult because freedom is the
accomplishment and perfectness of man—the finished man; earning
and bestowing good;” etc.
Page 241, note 1. See Lectures and Biographical Sketches, pp.
246 and 251.
Page 242, note 1. The occasion alluded to was Hon. Robert C.
Winthrop’s speech to the alumni of Harvard College on
Commencement Day in 1852. What follows is not an abstract, but
Mr. Emerson’s rendering of the spirit of his address.
THE ASSAULT UPON MR. SUMNER

One evening in May, Judge Hoar came to Mr. Emerson’s house,
evidently deeply stirred, and told in a few words the startling news
that the great Senator from Massachusetts had been struck down at
his desk by a Representative from South Carolina, and was
dangerously hurt. The news was heard with indignant grief in
Concord, and a public meeting was held four days later in which Mr.
Emerson and others gave vent to this feeling.
Among Mr. Emerson’s papers are the fragmentary notes on
Sumner, given below, without indication as to when they were used.
CHARLES SUMNER
Clean, self-poised, great-hearted man, noble in person,
incorruptible in life, the friend of the poor, the champion of the
oppressed.
Of course Congress must draw from every part of the
country swarms of individuals eager only for private interests,
who could not love his stern justice. But if they gave him no
high employment, he made low work high by the dignity of
honesty and truth. But men cannot long do without faculty and
perseverance, and he rose, step by step, to the mastery of all
affairs intrusted to him, and by those lights and upliftings with
which the spirit that makes the Universe rewards labor and
brave truth. He became learned, and adequate to the highest
questions, and the counsellor of every correction of old errors,
and of every noble reform. How nobly he bore himself in
disastrous times. Every reform he led or assisted. In the
shock of the war his patriotism never failed. A man of varied
learning and accomplishments.
He held that every man is to be judged by the horizon of his
mind, and Fame he defined as the shadow of excellence, but
that which follows him, not which he follows after.
Tragic character, like Algernon Sydney, man of conscience
and courage, but without humor. Fear did not exist for him. In
his mind the American idea is no crab, but a man incessantly
advancing, as the shadow of the dial or the heavenly body
that casts it. The American idea is emancipation, to abolish
kingcraft, feudalism, black-letter monopoly, it pulls down the
gallows, explodes priestcraft, opens the doors of the sea to all
emigrants, extemporizes government in new country.
Sumner has been collecting his works. They will be the
history of the Republic for the last twenty-five years, as told by
a brave, perfectly honest and well instructed man, with social
culture and relation to all eminent persons. Diligent and able
workman, with rare ability, without genius, without humor, but
with persevering study, wide reading, excellent memory, high
stand of honor (and pure devotion to his country), disdaining
any bribe, any compliances, and incapable of falsehood. His
singular advantages of person, of manners, and a
statesman’s conversation impress every one favorably. He
has the foible of most public men, the egotism which seems
almost unavoidable at Washington. I sat in his room once at
Washington whilst he wrote a weary procession of letters,—
he writing without pause as fast as if he were copying. He
outshines all his mates in historical conversation, and is so
public in his regards that he cannot be relied on to push an
office-seeker, so that he is no favorite with politicians. But
wherever I have met with a dear lover of the country and its
moral interests, he is sure to be a supporter of Sumner.
It characterizes a man for me that he hates Charles
Sumner: for it shows that he cannot discriminate between a
foible and a vice. Sumner’s moral instinct and character are
so exceptionally pure that he must have perpetual magnetism
for honest men; his ability and working energy such, that
every good friend of the Republic must stand by him. Those
who come near him and are offended by his egotism, or his
foible (if you please) of using classic quotations, or other bad
tastes, easily forgive these whims, if themselves are good, or
magnify them into disgust, if they themselves are incapable of
his virtue.
And when he read one night in Concord a lecture on
Lafayette we felt that of all Americans he was best entitled by
his own character and fortunes to read that eulogy.
Every Pericles must have his Cleon: Sumner had his
adversaries, his wasps and back-biters. We almost wished
that he had not stooped to answer them. But he
condescended to give them truth and patriotism, without
asking whether they could appreciate the instruction or not.
A man of such truth that he can be truly described: he
needs no exaggerated praise. Not a man of extraordinary
genius, but a man of great heart, of a perpetual youth, with
the highest sense of honor, incapable of any fraud, little or
large; loving his friend and loving his country, with perfect
steadiness to his purpose, shunning no labor that his aim
required, and his works justified him by their scope and
thoroughness.
He had good masters, who quickly found that they had a
good scholar. He read law with Judge Story, who was at the
head of the Law School at Harvard University, and who
speedily discovered the value of his pupil, and called him to
his assistance in the Law School. He had a great talent for
labor, and spared no time and no research to make himself
master of his subject. His treatment of every question was
faithful and exhaustive, and marked always by the noble
sentiment.
Page 252, note 1. With this message of comfort to Sumner, struck

down for his defence of Liberty, may be contrasted what is said of
Webster when he abandoned her cause:—
“Those to whom his name was once dear and honored, as the
manly statesman to whom the choicest gifts of Nature had been
accorded, disown him: ... he who was their pride in the woods and
mountains of New England is now their mortification,—they have
torn his picture from the wall, they have thrust his speeches into the
chimney,” etc.—“Address on the Fugitive Slave Law,” at Concord,
1851.
SPEECH ON AFFAIRS IN KANSAS

By an act of Congress, passed in May, 1854, the territories of
Kansas and Nebraska were organized, and in a section of that act it
was declared that the Constitution and all the laws of the United
States should be in force in these territories, except the Missouri
Compromise Act of 1820, which was declared inoperative and void.
The act thereby repealed had confined slavery to the region of the
Louisiana Purchase south of latitude 36°, 30´ North. Foreseeing the
probable success of this measure to increase the area of slavery,
Emigrant Aid Societies had been formed in Massachusetts first, and
later, in Connecticut, which assisted Northern emigrants to the
settlement of this fertile region. Settlers from the Northwestern
States also poured in, and also from Missouri, the latter bringing
slaves with them. A fierce struggle, lasting for some years and
attended with bloodshed and barbarities, began at once, hordes of
armed men from the border state of Missouri constantly voting at
Kansas elections and intimidating the free state settlers, and even
driving parties of immigrants out of the state. Franklin Pierce was
then President, and threw the influence and power of the
administration on the side of the pro-slavery party in Kansas.
Despairing of redress from Washington, the settlers from the free
states appealed in their distress to their friends at home, and sent
Mr. Whitman, Rev. Mr. Nute, and later, John Brown, to make known
to them their wrongs, and ask moral and material aid, especially
arms to defend their rights, and reinforcements of brave settlers.
Meetings were held, not only in the cities, but in the country towns,
and, certainly in the latter, were well attended by earnest people who
gave, a few from their wealth, but many from their poverty, large
sums to help “bleeding Kansas.” In response to the petitions of the
friends of Freedom, who urged the Legislature of Massachusetts to
come to the rescue, a joint committee was appointed by the General
Court to consider the petitions for a state appropriation of ten
thousand dollars to protect the interests of the North and the rights of
her citizens in Kansas, should they be again invaded by Southern
marauders. John Brown addressed this committee in February,
1856. He made a clear and startling statement of the outrages he
had witnessed and the brave struggles of the settlers, and told of the
murder and imprisonment and maltreatment of his sons, seven of
whom were in Kansas with him during the struggle.[F]
Mr. Emerson always attended the meetings in aid of Kansas in
Concord, gave liberally to the cause, and spoke there and elsewhere
when called upon.
Page 263, note 1. George Bancroft, the historian, said of the
conclusion of this speech:—
“Emerson as clearly as any one, perhaps more clearly than any
one at the time, saw the enormous dangers that were gathering over
the Constitution.... It would certainly be difficult, perhaps impossible,
to find any speech made in the same year that is marked with so
much courage and foresight as this of Emerson.... Even after the
inauguration of Lincoln several months passed away before his
Secretary of State or he himself saw the future so clearly as
Emerson had foreshadowed it in 1856.”[G]
JOHN BROWN: SPEECH AT BOSTON

Mr. F. B. Sanborn, in his Familiar Letters of Thoreau, says that he
introduced John Brown to Thoreau in March, 1857, and Thoreau
introduced him to Emerson. This was at the time when Brown came
on to awaken the people of Massachusetts to the outrages which the
settlers and their families were suffering, and procure aid for them.
His clear-cut face, smooth-shaven and bronzed, his firmly shut
mouth and mild but steady blue eyes, gave him the appearance of
the best type of old New England farmers; indeed he might well have
passed for a rustic brother of Squire Hoar. Mr. Emerson was at once
interested in him and the story of the gallant fight that the Free-State
men in Kansas were making, though Brown was very modest about
his own part and leadership. Indeed he claimed only to be a fellow
worker and adviser. I think that soon after this time, on one of his
visits to Concord, he stayed at Mr. Emerson’s house; certainly he
spent the evening there. The last time he came to Concord he was a
changed man; all the pleasant look was gone. His gray hair, longer
and brushed upright, his great gray beard and the sharpening of his
features by exposure and rude experiences gave him a wild, fierce
expression. His speech in the Town Hall was excited, and when he
drew a huge sheath-knife from under his coat and showed it as a
symbol of Missouri civilization, and last drew from his bosom a
horse-chain and clanked it in air, telling that his son had been bound
with this and led bareheaded under a burning sun beside their
horses, by United States dragoons, and in the mania brought on by
this inhuman treatment had worn the rusty chain bright,—the old
man recalled the fierce Balfour of Burley in Scott’s Old Mortality. It
was a startling sight and sent a thrill through his hearers. Yet on
earlier occasions his speech had been really more effective, when a
quiet farmer of mature years, evidently self-contained, intelligent,
truthful and humane, simply told in New England towns what was
going on in Kansas, the outrages committed upon the settlers, the
violation of their elementary rights under the Constitution,—and all
this connived at by the general government. He opened the eyes of
his hearers, even against their wills, to the alarming pass into which
the slave power had brought the affairs of the country.
But now wrong and outrage, not only on others but terribly
suffered in his own family, had made Brown feel that not he but
“Slavery was an outlaw” against which he “held a commission direct
from God Almighty” to act. A friend quoted him as having said, “The
loss of my family and the troubles in Kansas have shattered my
constitution, and I am nothing to the world but to defend the right,
and that, by God’s help, I have done and will do.”
The people were not ready to follow him in revolutionary
measures, but when on his own responsibility he had precipitated
the inevitable conflict by breaking with a government, then so
unrighteous, and offered his life as a sacrifice for humanity, they
could not but do homage to him as a hero, who was technically a
traitor. He had cut the Gordian knot which they had suffered to be
tied tighter.
Of course Mr. Emerson had known nothing of John Brown’s plan
for a raid into the slave states. It was the motive and courage he
honored, not the means. He wrote: “I wish we should have health
enough to know virtue when we see it, and not cry with the fools and
the newspapers, ‘Madman!’ when a hero passes.”
On the first day of November, John Brown had been sentenced to
death. This meeting in Boston, to give aid to his family, was held on
the eighteenth, just two weeks before his execution.
The verses which serve as motto are from Mr. Edmund Clarence
Stedman’s poem written at the time, which Mr. Emerson used to
read aloud to his family and friends with much pleasure.
Page 269, note 1. “This court acknowledges, I suppose, the
validity of the Law of God. I see a book kissed here which I suppose
to be the Bible, or, at least, the New Testament. That teaches me
that all things ‘whatsoever I would that men should do unto me, I
should do even so to them.’ It teaches me further to ‘remember them
which are in bonds as bound with them.’ I endeavored to act up to
that instruction. I say I am yet too young to understand that God is
any respecter of persons. I believe that to have interfered as I have
done, as I have always freely admitted that I have done, in behalf of
His despised poor, was not wrong, but right. Now, if it is deemed
necessary that I should forfeit my life for the furtherance of the ends
of justice, and mingle my blood further with the blood of my children,
and with the blood of millions in this slave country whose rights are
disregarded by wicked, cruel and unjust enactments—I submit: so let
it be done.” From the Speech of John Brown to the Court.
Page 270, note 1. Among the sheets of the lecture “Courage” is
one which seems to have been used at that time:—
“Governor Wise and Mr. Mason no doubt have some right to their
places. It is some superiority of working brain that put them there,
and the aristocrats in every society. But when they come to deal with
Brown, they find that he speaks their own speech,—has whatever
courage and directness they have, and a great deal more of the
same; so that they feel themselves timorous little fellows in his hand;
he outsees, outthinks, outacts them, and they are forced to shuffle
and stammer in their turn.
“They painfully feel this, that he is their governor and superior, and
the only alternative is to kneel to him if they are truly noble, or else (if
they wish to keep their places), to put this fact which they know, out
of sight of other people, as fast as they can. Quick, drums and
trumpets strike up! Quick, judges and juries, silence him, by
sentence and execution of sentence, and hide in the ground this
alarming fact. For, if everything comes to its right place, he goes up,
and we down.”
Page 271, note 1. Commodore Hiram Paulding, in 1857, had
broken up Walker’s filibustering expedition at Nicaragua. The arrest
of Walker on foreign soil the government did not think it wise wholly
to approve.
Page 272, note 1. The allusion is to the trials of the fugitives
Shadrach, Sims and Burns in Boston. The story of these humiliations
is told in full and in a most interesting manner in the diary of Richard
H. Dana,[H] whose zeal in the cause of these poor men did him great
honor.
During the trial of Sims, a chain was put up, as a barrier against
the crowd, around the United States Court-House, and the stooping
of the judges to creep under this chain in order to enter the court-
house was considered symbolic of their abject attitude towards the
aggressive slave power.
JOHN BROWN: SPEECH AT SALEM

The second of December, on which day John Brown was executed
at Charlestown, Virginia, was bright in that State, but in New England
was of a strange sultriness with a wind from the south and a lowering
sky. At noon, the hour appointed for his death, in Concord (as in
many New England towns) the men and women who honored his
character and motives gathered and made solemn observance of a
day and event which seemed laden with omens. There was a prayer,
I think offered by the Rev. Edmund Sears of Wayland,[I] Mr. Emerson
read William Allingham’s beautiful poem “The Touchstone” which is
used as the motto to this speech, Thoreau read with sad bitterness
Sir Walter Raleigh’s “The Soule’s Errand.” Hon. John S. Keyes read
some appropriate verses from Aytoun’s “Execution of Montrose” and
Mr. Sanborn a poem which he had written for the occasion.
Page 279, note 1. Here, as often in Mr. Emerson’s speech and
writing, is shown his respect for the old religion of New England and
its effect on the thought and character of her people. As Lowell said
of them in his Concord Ode in 1875:—
“And yet the enduring half they chose,

Whose choice decides a man life’s slave or king,
The invisible things of God before the seen and known.”
Page 279, note 2. I well remember the evening, in my school-boy

days, when John Brown, in my father’s house, told of his
experiences as a sheep-farmer, and his eye for animals and power
over them. He said he knew at once a strange sheep in his flock of
many hundred, and that he could always make a dog or cat so
uncomfortable as to wish to leave the room, simply by fixing his eyes
on it.
Page 281, note 1. “Heroism feels and never reasons, and
therefore is always right; and although a different breeding, different
religion and greater intellectual activity would have modified or even
reversed the particular action, yet, for the hero, that thing he does is
the highest deed, and is not open to the censure of philosophers and
divines.”—“Heroism,” Essays, First Series.
“I can leave to God the time and means of my death, for I believe
now that the sealing of my testimony before God and man with my
blood will do far more to further the cause to which I have earnestly
devoted myself than anything else I have done in my life.”—Letter of
John Brown to a friend.
THEODORE PARKER
Theodore Parker, worn by his great work in defence of liberal
religion and in every cause of suffering humanity, had succumbed to
disease and died in Florence in May, 1860, not quite fifty years of
age. Born in the neighbor town of Lexington when Emerson was
seven years old, they had been friends probably from the time when
the latter, soon after settling in Concord, preached for the society at
East Lexington, from 1836 for two years. Parker was, during this
period, studying divinity, and was settled as pastor of the West
Roxbury church in 1837. In that year he is mentioned by Mr. Alcott as
a member of the Transcendental Club and attending its meetings in
Boston. When, in June, 1838, Mr. Emerson fluttered the conservative
and the timid by his Divinity School Address, the young Parker went
home and wrote, “It was the most inspiring strain I ever listened to....
My soul is roused, and this week I shall write the long-meditated
sermons on the state of the church and the duties of these times.”
Mr. Parker was one of those who attended the gathering in Boston
which gave birth to the Dial, to which he was a strong contributor.
Three years after its death, he, with the help of Mr. James Elliot
Cabot and Mr. Emerson, founded the Massachusetts Quarterly
Review, vigorous though short-lived, of which he was the editor.
Parker frequently visited Emerson, and the two, unlike in their
method, worked best apart in the same great causes. Rev. William
Gannett says, “What Emerson uttered without plot or plan, Theodore
Parker elaborated to a system. Parker was the Paul of
transcendentalism.”
Mr. Edwin D. Mead, in his chapter on Emerson and Theodore
Parker,[J] gives the following pleasant anecdote:—
“At one of Emerson’s lectures in Boston, when the storm against
Parker was fiercest, a lecture at which a score of the religious and
literary leaders of the city were present, Emerson, as he laid his
manuscript upon the desk and looked over the audience, after his
wont, observed Parker; and immediately he stepped from the
platform to the seat near the front where Parker sat, grasping his
hand and standing for a moment’s conversation with him. It was not
ostentation, and it was not patronage: it was admiring friendship,—
and that fortification and stimulus Parker in those times never failed
to feel. It was Emerson who fed his lamp, he said; and Emerson said
that, be the lamp fed as it might, it was Parker whom the time to
come would have to thank for finding the light burning.”
Parker dedicated to Emerson his Ten Sermons on Religion. In
acknowledging this tribute, Mr. Emerson thus paid tribute to Parker’s
brave service:—
“We shall all thank the right soldier whom God gave strength to
fight for him the battle of the day.”
When Mr. Parker’s failing forces made it necessary for him to drop
his arduous work and go abroad for rest, Mr. Emerson was
frequently called to take his place in the Music Hall on Sundays. I
think that this was the only pulpit he went into to conduct Sunday
services after 1838.
It is told that Parker, sitting, on Sunday morning, on the deck of the
vessel that was bearing him away, never to return, smiled and said:
“Emerson is preaching at Music Hall to-day.”
Page 286, note 1. Mr. Emerson wrote in his journal:—
“The Duc de Brancas said, ‘Why need I read the Encyclopédie?
Rivarol visits me.’ I may well say it of Theodore Parker.”
Page 290, note 1. Richard H. Dana wrote in his diary, November
3, 1853:—
“It is now ten days since Webster’s death.... Strange that the best
commendation that has appeared yet, the most touching, elevated,
meaning eulogy, with all its censure, should have come from
Theodore Parker! Were I Daniel Webster, I would not have that
sermon destroyed for all that had been said in my favor as yet.”
Page 293, note 1. I copy from Mr. Emerson’s journal at the time of
Mr. Parker’s death these sentences which precede some of those
included in this address:—
“Theodore Parker has filled up all his years and days and hours. A
son of the energy of New England; restless, eager, manly, brave,
early old, contumacious, clever. I can well praise him at a spectator’s
distance, for our minds and methods were unlike,—few people more
unlike. All the virtues are solitaires. Each man is related to persons
who are not related to each other, and I saw with pleasure that men
whom I could not approach, were drawn through him to the
admiration of that which I admire.”
AMERICAN CIVILIZATION
On January 31, 1862, Mr. Emerson lectured at the Smithsonian
Institution in Washington on American Civilization. Just after the
outbreak of war in the April preceding, he had given a lecture, in a
course in Boston on Life and Literature, which he called “Civilization
at a Pinch,” the title suggesting how it had been modified by the
crisis which had suddenly come to pass. In the course of the year
the flocking of slaves to the Union camps, and the opening vista of a
long and bitter struggle, with slavery now acknowledged as its root,
had brought the question of Emancipation as a war-measure to the
front. Of course Mr. Emerson saw hope in this situation of affairs,
and when he went to Washington with the chance of being heard by

Ebook PDF Corporations Legislation 2019 PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Ebook PDF Corporations Legislation 2019 PDF

Uploaded by

Copyright:

Available Formats

(eBook PDF) Corporations Legislation

• Corporations Amendment (Crowd-sourced Funding for Proprietary Companies) Act 2018

viii Corporations Legislation 2019

Corporations (Fees) Act 2001

x Corporations Legislation 2019

“EFFECTIVE 1 JULY 2019”

Amending legislation Number Date of gazettal/assent/ Date of commencement

Corporations Regulations 2001 (Cth)

Amending legislation Number Date of gazettal/assent/ Date of commencement

Australian Securities and Investments Commission Act 2001 (Cth)

© 2019 THOMSON REUTERS xi

Amending legislation Number Date of gazettal/assent/ Date of commencement

Corporations (Fees) Regulations 2001 (Cth)

Amending legislation Number Date of gazettal/assent/ Date of commencement

• Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 – passed

xiv Corporations Legislation 2019

© 2019 THOMSON REUTERS xv

xviii Corporations Legislation 2019

Treasury Laws Amendment (Enhancing ASIC’s Capabilities) Act 2018

xxii Corporations Legislation 2019

xxiv Corporations Legislation 2019

But there was chaff within the flour,

Your town is full of gentle names

See note to poem “Boston.”

Mr. Charles Francis Adams’s Life of Richard H. Dana gives light

“‘You corrupted your mind in 1850.’

“For Banquo’s issue have I filed my mind.”

Page 202, note 1. Mr. F. B. Sanborn, in his Life of Thoreau, says

Or who, with accent bolder,

Poems, “Ode,” inscribed to W. H. Channing.

See also what is said of “the treachery of scholars” in the last

THE FUGITIVE SLAVE LAW, NEW YORK, 1854

Καὶ ἀναβοήσας τοῦτο δὴ Ἡράκλειον

which he renders, “He cried out this sentiment of Heracles, ‘O

Ever the words of the gods resound;

THE ASSAULT UPON MR. SUMNER

Page 252, note 1. With this message of comfort to Sumner, struck

SPEECH ON AFFAIRS IN KANSAS

JOHN BROWN: SPEECH AT BOSTON

JOHN BROWN: SPEECH AT SALEM

“And yet the enduring half they chose,

Page 279, note 2. I well remember the evening, in my school-boy

You might also like