Question 1

Do I need a company constitution or can I rely on the replaceable rules?

Accepted Answer

The replaceable rules under the Corporations Act provide a basic governance framework but were not designed for private companies with specific arrangements between founders, investors or family members. A tailored constitution gives you control over decision-making, share transfers and other matters that the replaceable rules either do not address or handle in a way that does not suit your business.

Question 2

What are a director's duties under the Corporations Act?

Accepted Answer

Directors of Australian companies owe several duties under the Corporations Act 2001 (Cth) and at general law. These include: the duty to act in good faith in the best interests of the company; the duty to exercise care and diligence; the duty not to improperly use their position or information for personal gain; the duty to disclose conflicts of interest; and the duty to prevent insolvent trading. Breach of these duties can result in personal liability and, in serious cases, civil or criminal penalties.

Question 3

What happens when shareholders cannot agree?

Accepted Answer

Shareholder disputes range from disagreements about business direction to allegations of oppressive conduct or exclusion from management. A well-drafted shareholder agreement includes a dispute resolution mechanism — such as a compulsory buy-sell provision or mediation clause — that provides a clear exit path. Where disputes have escalated, our commercial litigation team can assist with court and VCAT proceedings.

Question 4

When should I restructure my company?

Accepted Answer

Common triggers for corporate restructuring include bringing in a new investor, separating business units, preparing for a sale, asset protection planning, retiring from the business, or dealing with the departure of a co-director or shareholder. Restructuring should be carefully planned from both a legal and tax perspective — we work alongside your accountant to ensure the restructure achieves its intended outcome.

Question 5

Can I set up a company specifically for a project or joint venture?

Accepted Answer

Yes. Incorporating a special purpose company for a project, investment or joint venture is common practice. It provides a separate legal entity, limits liability exposure and creates a clear structure for documenting the arrangement between the parties. We advise on the appropriate structure, draft the shareholders agreement and JV documentation, and handle ASIC registration.

Question 6

What protections do minority shareholders have?

Accepted Answer

Minority shareholders have several protections under the Corporations Act 2001 (Cth). Section 232 allows a shareholder to apply to the court where the conduct of the company's affairs is oppressive, unfairly prejudicial or contrary to the shareholders' interests as a whole. Remedies can include a court-ordered buyout of shares, winding up of the company, or injunctions. A well-drafted shareholder agreement will also include specific minority protections such as reserved matters, tag-along rights and information rights.

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