[ESTABLISHING A BUSINESS ENTITY IN AUSTRALIA]
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control and influence over the company in a way that is unfairly prejudicial to minority shareholders. Shareholder’s rights under the Corporation Act The rights and protections that apply to shareholders under the Corporations Act will depend on the nature of the relevant company, as well as the provisions of the company’s constitution and other constituent documents (such as a shareholders agreement). Examples of shareholder rights which are contained in the Corporations Act (and will apply to private companies, despite any contrary provision within a company’s constituent documents) are set out below: • Amending the Constitution: A company may only amend its constitution by passing a special resolution of members. In order to pass a special resolution, at least 75 percent of the company’s shareholders must vote in favour of the proposed resolution.
shares with voting rights in a company may call a meeting of shareholders themselves by following the notice and timing requirements set out in the Corporations Act. • Right to Notice of Meetings of Shareholders: Subject to any restrictions on the rights attached to a shareholder’s shares , shareholders generally have the right to receive written notice of, and attend and vote at, meetings of shareholders. The Corporations Act provides that, as a general rule, at least 21 days’ written notice of a shareholder’s meeting must be provided for private companies. FOREIGN INVESTMENT, THIN CAPITALIZATION, RESIDENCY AND MATERIAL VISA RESTRICTIONS Australia’s Foreign Investment Framework Relevant Legislation Australia’s foreign investment framework is set out within the Foreign Acquisitions and Takeovers Act 1975 (Cth) ( FATA ), the Foreign Acquisitions and Takeovers Regulations 2015 (Cth) ( Regulations ), and the Australian Federal Government’s specified Foreign Investment Policy from time to time. The FATA requires “foreign persons” or foreign government investors who propose to acquire interests in Australian real property, or certain interests in Australian companies or businesses, to obtain FIRB approval prior to such acquisition taking place. Who is considered a Foreign Person? The concept of a “foreign person” as set out in the FATA is far reaching and includes not only individuals who are not ordinarily resident in Australia, but will also include:
Capital Alterations: Companies are required to obtain shareholder approval before undertaking alterations to the company’s share capital. These alterations include capital reductions, selective buybacks and share buy-backs. The percentage of shareholders who must approve a proposed capital alteration will depend on the nature of the proposed alteration, and in some circumstances, may require the passing of a special resolution.
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• Right to Call Meetings of Shareholders: Shareholders who hold at least 5% of the shares with voting rights in a company may, by written notice to the directors, demand that the directors call a meeting of shareholders. Alternatively, shareholders who hold at least 5% of the
ILN Corporate Group – Establishing a Business Entity Series
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