Company Law: Analysis of Corporations Act Regulations in Australia

This report examines the Corporations Act 2001 (Cth) and its application to business entities in Australia, focusing on the distinctions between public and proprietary companies. It explores the Act's purpose in regulating business conduct, protecting stakeholders, and establishing a fair financial system. The discussion highlights key differences, including size, listing status on the ASX, director and secretary requirements, and disclosure obligations. The report emphasizes that public companies are subject to more stringent regulations due to their larger scale, access to public funds through share offerings, and increased responsibility to stakeholders. It analyzes specific sections of the Act, such as section 45A, and references case studies like Australian Securities and Investments Commission v Flugge & Anor and Commonwealth Director of Public Prosecutions v Sigalla to illustrate director's duties and breaches. The conclusion reinforces the greater regulatory burden on public companies and suggests potential reforms for proprietary companies to enhance the efficiency of the financial system. The report also provides recommendations related to regulation and compliance.

Running head: COMPANY LAW
Company Law
Name of the Student
Name of the University
Author Note

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Table of Contents
Executive Summary...................................................................................................................2
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Case Study..................................................................................................................................5
Conclusion..................................................................................................................................5
Recommendation........................................................................................................................5
References..................................................................................................................................6

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Executive Summary
The Corporations Act 2001 (Cth) has been enacted for the purpose of regulating the
conduct of all the business entities operating in Australia. These regulations has been enacted
to extend protection to the interested parties from the misleading acts, fraud and misconduct
that might result in the loss of capital. This listing of shares in the ASX enables them to
collect funds from the public and several investors by extending shares to them. This
handling of public money requires in huge quantity requires the public companies to be
subjected to more regulations under this Act than the proprietary companies.

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Introduction
The Corporations Act 2001 (Cth) has been enacted for the purpose of regulating the
conduct of all the business entities operating in Australia. These regulations has been enacted
to extend protection to the interested parties from the misleading acts, fraud and misconduct
that might result in the loss of capital. These interested parties includes the company itself,
the investors, the market and the consumers. The objective of this statute is the establishment
of an efficient, fair and strong financial system in all the entities and operating in Australia.
This paper will strive to provide a discussion on the issue that whether public companies are
subject to more Corporations Act regulation than proprietary companies.
Discussion
The proprietary companies are generally smaller business entities as defined under section
45A of the Corporations Act 2001 (Cth). These companies are not listed in the Australian
Securities Exchange (ASX). Section 1.5.5 of the Act requires these companies to have a
minimum of one director. However, employing a secretary is not mandatory in these
companies. No external auditors are needed to be consulted by these companies and under
section 113 of the Act, these companies are not under an obligation to comply with the
disclosure requirements.
On the other hand, Public Companies are somewhat larger entities. These companies may
be listed in the Australian Securities Exchange (ASX). However, such a listing is not
mandatory. Under section 1.5.5 of the Corporations Act 2001 (Cth), public companies are
required to have a minimum of three directors. This section also requires these companies to
employ a secretary. It also requires these companies to have an external auditor. All the
disclosure requirements of these companies needs to be made available to the public by
releasing the same under section 113 of the Act.

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The Corporations Act 2001 (Cth) has been enacted for the purpose of regulating the
conduct of all the business entities operating in Australia. These includes both the Public
Companies and the Private Companies. However, the public companies are subject to more
Corporations Act regulation than proprietary companies. This claim can be examined by
analysing the provisions of the Act applicable to both the proprietary companies and the
public companies.
Firstly, the Act under section 45A requires the proprietary companies to satisfy two
conditions. These conditions requires a proprietary company to have a consolidated revenue
of less than $25 million or an asset of less than $12.5 million. The other condition requires
the proprietary company to have less than fifty shareholders who are not the employees of the
company. This requires more regulations for the public companies as owing to its huge size it
becomes prone to violations.
Secondly, the proprietary companies are not listed in the Australian Securities Exchange
(ASX) but the public companies may be listed in the Australian Securities Exchange (ASX)
or may not be listed. This listing of shares in the ASX enables them to collect funds from the
public and several investors by extending shares to them. This handling of public money
requires in huge quantity requires the public companies to be subjected to more regulations
under this Act than the proprietary companies. The listing of the shares confers the public
companies with more responsibility and they are more prone to fraud and evasions.
Thirdly, public companies are required to appoint an external auditor and requires more
compliance to the disclosure requirements. As they are more answerable to the public than
proprietary companies. Hence, the public companies requires more regulations. This is
because the public companies are more prone to breach the requirements of disclosure.

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Case Study
In the case of Australian Securities and Investments Commission v Flugge & Anor [2016]
VSC 779, the director of the company has been violative of the section 180, 181, 182, 183
and section 260A of the Act and has been found liable to pay compensation.
In the case of Commonwealth Director of Public Prosecutions v Sigalla [2017] NSWSC
52, the director has been found to have transferred funds for personal benefit and has been
held liable under the Act.
Conclusion
Hence, it can be concluded that, the Corporations Act 2001 (Cth) has been enacted for the
purpose of regulating the conduct of all the business entities operating in Australia. These
regulations has been enacted to extend protection to the interested parties from the misleading
acts, fraud and misconduct that might result in the loss of capital. This listing of shares in the
ASX enables them to collect funds from the public and several investors by extending shares
to them. This handling of public money requires in huge quantity requires the public
companies to be subjected to more regulations under this Act than the proprietary companies.
Recommendation
This listing of shares in the ASX enables them to collect funds from the public and several
investors by extending shares to them. This handling of public money requires in huge
quantity requires the public companies to be subjected to more regulations under this Act
than the proprietary companies. This makes the corporations Act to be more applicable to the
public companies than the proprietary companies. However, it can be contended that the
proprietary companies might also need a reform in its regulations. Although the same is not
more significant than the public companies but a more regulation will ensure more efficiency
of the financial system of the country.

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References
Australian Securities and Investments Commission v Flugge & Anor [2016] VSC 779
Commonwealth Director of Public Prosecutions v Sigalla [2017] NSWSC 52