Government and the Community
Corporations Act 2001
What is the Corporations Act 2001?
In general, the Corporations Act 2001 is the main legislation concerning companies. It's crucial role includes defining companies as a legal entity and the types of companies that can exist under the act. It also defines the regulation standards, such as reporting entities requiring to follow AASB standards and requiring external audits.
In addition, it defines the duties of directors and sets out the role of the director as to manage the company on behalf of shareholder's best interests. It also sets out regulation for directors such as inability to continue operating when the company is insolvent, which could lead to the criminal charges.
Powers and Duties of a Director
A company director is someone who manages a company. In public companies, company directors often senior employees to manage the company on behalf of shareholders. In proprietary company, the sole company director can also be the sole shareholders.
Duties of a Director
Manage the day to day operations of a company
Ensure books and financial reports represent a true and fair view of the company's financial position and performance
Duty to act on the shareholder's best interests to grow the company
Duty not to trade while insolvent
Duty not to exploit their position to benefit themselves or another person
Oversee large capital investments
Powers of a Director
The powers of directors are outlined in the Company Constitutions. The powers can include a range of items such as voting rights, appointment and dismissal of senior employees, ability to own shares and to borrow money.
A written constitution is a legal document that outlines the relationship between shareholders, company directors and senior employees. The written constitution can include parts or none of the generic replaceable rules.
A written constitution can cover areas such as voting rights, powers of directors and procedures at annual general meetings.
A written constitution is only required for public companies and other special purpose companies.