Corporate Law

University of Melbourne
Internal Rules

Constitution

Board of
Members
Directors

Company
The important of Constitution
• Constitution: company’s internal rules
• If not constitution, replicable rules will automatically
apply s.135(2)
• Amendment must past special resolution s.136(2):75%,
s136(3) eg 80%
• What is constitution:
• S.140(1)
• A statutory contract
• “Elley’s case
Restriction on the change
• Restriction on the change of constitution 75%:
• Common law Gambottle case
• S.140(2) : not unfairly harming shareholders !!
• S.246 B-G : protect specific share class: doubble
• S. 232: oppressive conduct
• S.1322: Procedural irregularity 75%
• There is a irregularity
• Which caused substantial injustice
Question 1
Gambotto v WCP Ltd (1995) 182 CLR 432; 13 ACLC 342; 16
ACSR 1

• Gambotto v WCP Ltd considered the issue of the

powers to amend the constitution of a company
and whether or not a resolution to amend the
articles of a company with a view to allow the
compulsory acquisition of minority shareholdings
was valid.
• S.136(2) : 75%

• 2 tests
• Fair
• Substantially ** - fair value
• Procedurally** -
• Proprietary nature of shares (not sufficient) **
• Proper purpose*****: The acquisition is necessary to
promote or protect the interest of the company and
the alteration is not oppressive to those shareholders
• Protect the significant interest of shareholders as a whole
( not necessary)
• Willingness ( minority ) / Minority shareholding is
detrimental to the company
• Burden of Prof:
Audio Research References

• https://
www.studentlawnotes.com/company-law-gambott
o-v-wcp-ltd-1995-182-clr-432-13-aclc-342-16-acsr-1

• S140(2) : restrict members rights to transfer shares

 IRAC 答题
• Issues: whether expropriation of shares are valid
according to statutory law /common law

• Relevant Law
• S. 136(2)
• Gambotto cases

• Application :

• Conclusion :
 Question 2: Variation of share
class rights
•A:

•B:

• s246B: 75% ( all) / 75% (B)

• s136

• S246C, S 246B: double 75%

• S140(2)
• Common law test** (Greenhalgh v Arderne
Cinemas)
• effect on enjoyment is not variation of class right; strict
legal rights must be varied substantially ( voting right)
s. 246B
 IRAC 答题
• Issues: variation of class right / procedures s246

• Relevant Law
• s246C ,s246B
• Common law test

• Application

• Conclusion
Question 3
 Removal of Directors
• How directors can be removed?
• Proprietary company: s.203C (RR)
• Public Company: s.203D (law, must comply)
• S.203D:
• Ordinary resolution (50%) by members is required
• Notice must be given 2 months in advance
• Directors should been given opportunity to make
statement in the GM
• MUST COMPLY (Not a replaceable rule)

You are the owners of the Future---

www.2future.org
 IRAC 答题
• Issues: public , remove director by members resolution under
s.203

• Relevant Law
• S249 : one director
• S.203E
• S.203D

• Application

• Conclusion