- Inspection of company books by former directors
- Postponing meetings convened by members
- Disclosure of soft information
Inspection of company books by former directors - a Catch 22?
The author of this case note contends that the decision of Burley J in Stewart v Normandy NFM Limited which is the first reported decision concerning s198F(2) of the Corporations Law (a provision dealing with access rights of former directors), has the potential to nullify the benefits conferred by that section. (Eds: this case was examined in ITM 2).
In the Stewart decision, the Court held that the plaintiff director had the onus of establishing that he required access to company documents because he was proposing in good faith to bring relevant proceedings against the company. This required an establishment of the necessary facts to found the action. According to the author, because access to the company's books is dependent on substantiated assertions, the director will find it impossible to substantiate his/ her allegations without first having access to the books in order to determine whether there is sufficient evidence to bring an action against the company.
The author argues that courts should adopt a liberal approach to interpreting the provision in the interest of enhancing corporate accountability. This view is supported by the meaning of the word "proposes" which suggest that the plaintiff is merely contemplating an action at that stage. A plaintiff will be acting in good faith if the outcome of the action is also beneficial to the company.
(Source: T Noble, "Former Directors' Rights to Inspect Company Books - Catch 22?" (2001) 19 Co & S LJ 202)
Postponing meetings convened by members under s249F of the Corporations Law
Can the directors of a company postpone a meeting convened by the members of that company under s249F of the Corporations Law where the constitution of the company gives the directors such powers?
In Pinnacle VRB Ltd v Ronay Investments Pty Ltd, the Supreme Court of Victoria held that the directors could postpone a meeting convened by members pursuant to s249F if authorised by the company's constitution and that such postponement did not affect the right of members to call the meeting. The author criticises the decision and argues that meetings convened by members under s249F cannot be postponed by directors even if the constitution authorises such postponement for the following reasons:
- the history of the provision. The Explanatory Memorandum makes it clear that this right could no longer be displaced by a contrary provision in a company's constitution; and
- statutory interpretation principles on the basis that:
- section 249F confers a right to members and as such the provision should be construed beneficially so as to give the fullest relief permissible based on the language of the section. Further it cannot be implied that s249F is subject to an implication that it is subject to the postponement provisions in the constitution;
- a postponement provision deprives a member the right to vote on the day nominated by the member and this defeats the purpose of the provision; and
- on a broader examination of the other provisions dealing with the calling of meetings, persons calling the meeting under s249F are personally liable for the costs of calling and holding the meeting unlike the other provisions.
(Source: MW Shand, "The Postponement by the Directors of Meetings Convened by a Member under s249F of the Corporations Law" (2001) 19 Co & S LJ 160)
Disclosure of soft information - when is it required?
This article examines the vexed issue of when soft information is required to be disclosed in the context of a takeover and fundraising exercise. Soft information is information which cannot be objectively verified and includes economic projections, statement of management's future plans, objectives and opinions, and statements involving subjective evaluation.
The authors argue that despite the different test applicable in relation to the disclosure of soft information (whether disclosure is warranted under the "material information" test or the "reasonably informed investor" test), the content of the disclosure obligations are very similar. As such the authors submit that in determining whether information is material or reasonably required, one should utilise a 3 factor test of:
- relevance of the information to the decisions of end users of the document;
- reliability of the information; and
- availability of soft information or facts upon which it may be based.
The authors also argue against the inclusion of soft information purely on the grounds of commercial practice. In certain circumstances it is submitted that the basis of the subjective evaluation made in the gathering and the assumptions underlying the information may have to be disclosed such as in the case of an earnings forecast.
(Source: C Callum & L Law "Soft Information Disclosure Requirements under the Corporations Law" (2001) 29 Australian Business Law Review 149)
