Corporate Law: Regulations and Amendments to the Constitution

Corporate Law 1
CORPORATE LAW
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Corporate Law 2
The key companies which are registered under the corporations act are primarily two,that
is proprietary and public companies. Under the Corporations Act 2001, the key document
governing the internal management of a registered company is the constitution. Such a document
usually regulates the internal operations of a company. The constitution contains certain rules
called the replaceable rules which are contained in section 134 of the Corporations Act 2001
(Hannigan, 2015 p.23). The provisions of the section are the rules which provide that the rules
can govern the internal management of the company. However, the replaceable rules can be
replaced by other provisions.
According to Collison et al. (2014 p.10), the rules also do not apply to those companies
which are propriety. The section 141 of the constitution document outlines the some of the
replaceable rules which could be adopted by a particular company to help in the regulation of
some of its internal procedures. Some of the rules relate to the member of the company, company
and each of the member and those relating to the company secretary, the director, and the
company itself. Before the constitution, there are certain documents which were used to govern
the operations of a company. Such documents included, memorandum of association and the
articles of association. However, they have been replaced by the constitution whose primary
purpose is to govern the internal operations of a company (Bottomley, 2016 p.400).
According to Johnson and Millon (2014 p.1), the constitution of a company can be
amended, and this is contained in section 136 of the document. However the amendments to the
constitution are only valid under the following circumstances such as Ramsay and Stapledon,
2017 p. 1008);
 When the minority shareholders are treated fairly and hence not oppressed
 If it is done for a proper purpose

Corporate Law 3
The section outlines the various procedures involved when amending or repealing the
constitution. The constitution, however, may be amended or repealed by a special resolution in
regards to the legislation. The alterations which may be made in the constitution can a subject
which is based on the requirement specified in the constitution.The shareholders can also agree
to amend the constitution and this in non-compliance with the formal meeting requirement
The alterations to the constitution previously were based on the common law requirement
which had to be made for the benefit of the company as a whole.’ Such a requirement has been
displayed in the Allen v.Gold Reefs of West Africa Ltd (1900). Based on the case, there was a
shareholder who had both fully paid and partly paid shares, however he could not pay for the
calls for the partly paid shares due to lack of adequate assets to pay for the calls. A lien on the
partly paid shares was conferred by an article in the constitution.A special resolution, however,
was passed to alter such an article (Johnson and Millon, 2014 p.1). The alteration to the article
was typically made to enable the company a lien on the fully paid shares to be in a position to
pay for the liabilities and debt of the shareholders.
The court of appeal ruled on the case that the company had every power to make the
changes to the article through a special resolution and this depended on the legislation of the
Australian constitution under section 136(2). The alteration of the constitution in regards to the
bine fide for the benefit of a company has become difficult to resolve, and this is due to the
reluctance of the courts in imposing the law on a company. Based on the context bone fide for
the benefit of the company, the courts have taken into account the objective and subjective
criteria. The alteration of the constitution can be considered valid based on the effective and
actual expropriation of shares and the valuable proprietary rights attached to the share. It can also
be made valid through a special resolution, but certain other considerations may also be applied