Introduction

1. Introduction • Types of directors • Board of directors • Appointment of directors • Removal of directors • Company secretary • The indoor management rule

2. Corporate Directors and Officers • Definition of directors: s 9 • Properly appointed directors: s 9(a) • Persons treated as directors • De facto director: s9(b)(i); Corporate Affairs Commission v Drysdale (1978) 141 CLR 236 • Shadow director: s9(b)(ii); Standard Charted Bank of Australia Ltd v Antico (1995) 13 ACLC 1381 • Definition of officers: s 9

3. Types of Directors • Managing director • Appointed by directors: s 201J • May be conferred with any of the powers that directors can exercise: s 198C(1) • Chair of directors • Elected by directors: s 248E • Power of casting vote: s 248G(2) • Minutes must be signed by the chair: s251A(2) • Executive & non-executive directors • Alternate director • With the approval of the board, appointed by a director: s 201K • AISC must be notified: s 205B(2) • Nominee director

4. Board of Directors • Meaning • Powers of the board: ASX‘s Principles of Good Corporate Governance and Best Practice Recommendations • Separation of ownership and management • Directors exercising all powers of the company unless otherwise provided: s 198A(2); • Shareholders cannot override management decisions: Automatic Self-Cleaning Filter Syndicate Co v Cuninghame [1906] 2 Ch 34

5. Automatic Self-Cleaning Filter Syndicate Co v Cuninghame [1906] 2 Ch 34 Facts: The co constitution conferred on the board the powers of management and the specific power to sell the co property on such terms as it thought fit. Relying on these provisions, the board refused to comply with a general meeting resolution that certain properties be sold, asserting that the sale was not in the co’s best interests. The members argued that the constitution was subject to the overriding rule that the directors, as agents of the co, were obliged to follow the instructions of their principal, the co; the will of the co being a resolution of the GM. Held: The Court of Appeal held that the directions of the GM were a nullity that could be ignored by the directors. The members could not interfere with the directors in this respect as they were contractually bound by the constitution.

6. Appointment of Directors • Who can be a director: s201B • Consent to act as director: s 201D • Appointment • By shareholders’ resolution at general meeting: s 201G • Special rules for public companies: s 201E(1) • Special rules for 1 director/shareholder companies: s 201F(1) • Casual vacancies: s 201H • Notice to ASIC:s205B(1)

7. Disqualification from Managing a Corporation • Automatic disqualification: s 206B • Convicted persons: s 206B(1) • Undischarged bankrupt: s 206B(3)&(4) • Disqualification by court order • Contravention of civil penalty provision: s 206C; ASIC v Adler (2002) 20 ACLC 1146 • Failed companies: s 206D(1) • Repeated contravention of the CA: s 206E; ASIC v Starnex Securities Pty Ltd [2003] FCA 1375 • ASIC’s power of disqualification: s 206F(1) • Leave to manage: s 206G; Re Zim Metal Products Pty Ltd [1977] ACLC 29, 556

8. ASIC v Starnex Securities Pty Ltd [2003] FCA 1375 Icorp Technology Ltd Contech Australia Ltd Starnex Capital Ltd Starnex Securities Pty Ltd All insolvent Mr Camiolo Director of the four co The companies committed many offences, contravened ss 201A, 201D, 327, 292, etc. The court disqualified Camiolo from managing corporations for two years under s 206E.

9. Re Zim Metal Products Pty Ltd [1977] ACLC 29, 556 In Mar 1977, M & P were each convicted of an offence of having dishonestly received stolen goods. In accordance with predecessor to s 206B(1)(b), they resigned for their position as directors, and subsequently applied to the Court for leave to be a director or to take part in the management of the company. The Court granted leave to them to take part in the management of the company, but did not grant either of them leave to act as a director, taking into account the nature of the offence, the applicants’ general character, the structure of the company, the risk of injury to the public and the shareholders and the fact that the offences did not arise out of the management or the conduct of the company. Robert McKissack & Kenneth Paxton were directors of Z Pty Ltd, which was a family business owned by them and their wives and the company secretary.

10. Termination of Appointment • Term expires • Resignation: s 203A • Directors may give the notice to ASIC: s 205A • Removal of directors • Proprietary companies • Procedures specified in the constitution strictly adhered to: Nibaldi v RM Fitzroy & Associates Pty (1996) ACSR 330 • By resolution: s 203C • Public companies: • By general meeting s 203D • Directors cannot be removed by directors: s 203E

11. Company Secretary • Legal requirement: s 204A • Appointed by directors: s 204D • ASIC to be notified: s 205B(1) • Who can be appointed? s 204B • Statutory responsibilities: s 188(1)

12. The Indoor Management Rule • Law of agency under corporate context: s126 • ‘IMR” under the CA • General position:s128 • Assumptions that can be made: s129 • Royal British Bank v Turquand (1856) 6 E & B 327; 119 ER 886

13. Royal British Bank v Turquand (1856)119 ER 886 Facts: The bank lent money to the defendant on the security of a bond signed by two directors on which the seal of the company was affixed. The deed of settlement (the company’s constitution) empowered the board of directors to borrow in that way only when by a resolution of a general meeting. The defendant refused to repay the loan and argued that no such resolution had been passed and the bank should have constructive notice of the provision in the constitution. The Court of Exchequer Chamber held that the company was bound by the contract since the bank had “a right to presume that there had been a [such] resolution at general meeting”