Following the ALRC’s work on Ch 7 of the Corporations Act, attention has already been given to legislative changes tidying up the Act across a range of sections. There are consequential changes made in other laws, but not those that fall outside the Treasury portfolio. See the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Act 2023.
The following addresses only some of the changes, as to new and renumbered definitions of director, officer, and asset, and with a comment on property. Also to briefly mention, that Act serves to ‘unfreeze’ the Acts Interpretation Act 1901 from its frozen 2005 state, a sad product of Australia Commonwealth and state federal structure. The version of the AIA that is in force at the relevant point in time will now apply to both the Corporations Act and the ASIC Act 2001.
Definitions of ‘director’ and ‘officer’, and ‘asset’, and see also ‘property’
There are new definitions of ‘director’ and ‘officer’ in the Corporations Act and a new definition of ‘asset’ but the definition of ‘property’ in s 9 remains.
According to the Explanatory Memorandum to the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Bill 2023, by which these changes were made:
1.78 In some cases, the Corporations Act uses identical labels for terms that have different meanings. The Bill combines the different definitions so they all sit under a single label. The label then outlines the different meanings that label carries in different contexts. This reduces complexity for readers who may not know how to apply a definition when one label has more than one meaning. … s 9AB, 9AD …
1.104 The Bill repeals the four separate definitions of ‘officer’ located in section 9 and combines them into a new standalone provision titled ‘meaning of officer’.
This new provision incorporates the four definitions of ‘officer’ into different subsections. Combining all the definitions of ‘officer’ into one provision improves navigability as readers are required to only refer to one location for all definitions that relate to ‘officer’. The Bill also creates a standalone provision titled ‘meaning of director’ to incorporate the different definitions of ‘director’ in the Corporations Act. … ss 9AB, 9AC and 9AD of the Corporations Act].
Asset – s 9AB
Under s 9AB, the “meaning of asset” is any interest in real or personal property of any kind, and any chose in action. Under s 9, “property” continues to mean any interest in real or personal property of any description and includes a thing in action – if that’s helpful. That is:
(1) An asset (except in relation to a sub-fund of a CCIV) is property, or a right, of any kind, and includes:
(a) any legal or equitable estate or interest (whether present or future, vested or contingent, tangible or intangible, in real or personal property) of any kind; and
(b) any chose in action; and
(c) any right, interest or claim of any kind including rights, interests or claims in or in relation to property (whether arising under an instrument or otherwise, and whether liquidated or unliquidated, certain or contingent, accrued or accruing); and
(d) any CGT asset within the meaning of the Income Tax Assessment Act 1997.
(2) The assets of a financial services licensee are all the licensee’s assets (as defined in subsection (1)), whether or not the assets are used in connection with the licensee’s Australian financial services licence.
(3) An asset of a sub-fund of a CCIV has the meaning given by section 1233H.
So, the object of Part 5.7B Subdivision B is, by section 588GAA, “to deter the practice (which may form part of the activity sometimes called phoenixing) of disposing of a company’s assets to avoid the company’s obligations to its creditors”; if that helps.
Section 9 – property
In s 9, “property” means any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description and includes a thing in action, and:
(aaa) in Part 5.2 (receivers, and other controllers, of property of corporations)–has a meaning affected by section 416; and
(a) in Part 5.3A (administration)–has a meaning affected by section 435B; and
(aa) in Part 5.3B (restructuring)–has a meaning affected by section 452B; and
(b) in Part 5.4B (winding up in insolvency or by the Court)–has a meaning affected by section 465; and
(c) in Part 5.5 (voluntary winding up)–has a meaning affected by section 489F; and
(d) in Part 5.6 (winding up generally)–has a meaning affected by section 513AA; and
(e) in Part 5.7B (recovering property or compensation for creditors of insolvent company)–has a meaning affected by section 588C; and
(f) in Part 5.8 (offences relating to external administration)–has a meaning affected by subsection 589(5); and
(g) in Part 5A.1 (deregistration, and transfer of registration, of companies)–has a meaning affected by section 601; and
(h) in Part 5B.2 (registrable bodies)–has a meaning affected by section 601C; and
(i) in Part 8B.5 (operation of a CCIV)–has a meaning affected by section 1233; and
(j) in Part 8B.6 (external administration and deregistration of CCIVs)–has a meaning affected by section 1 236A .
Note: A reference in this Act to the property of a corporation does not include a reference to any PPSA retention of title property of the corporation, unless provided otherwise expressly or by necessary implication (see section 51F). The sections mentioned in paragraphs (a) to (i) extend references to property of a corporation in Parts of this Act to PPSA retention of title property (or to certain PPSA retention of title property).
One hopes that these definitions somewhere include property overseas, as property is defined in the Bankruptcy Act, s 5 “real or personal property of every description, whether situate in Australia or elsewhere …”.
As to director and officer, s 9AC provides:
Section 9AC – Meaning of director
(1) A director of a company or other body is:
(a) a person who:
(i) is appointed to the position of a director; or
(ii) is appointed to the position of an alternate director and is acting in that capacity;
regardless of the name that is given to their position; and
(b) unless the contrary intention appears, a person who is not validly appointed as a director if:
(i) they act in the position of a director; or
(ii) the directors of the company or body are accustomed to act in accordance with the person’s instructions or wishes (excluding advice given by the person in the proper performance of functions attaching to the person’s professional capacity or their business relationship with the directors or the corporation).
Note: Examples of provisions for which a person would not be a director because of paragraph (b) of this subsection include:
(a) section 205B (notice to ASIC of change of address); and
(b) section 249C (power to call meetings of a company’s members); and
(c) subsection 251A(3) (signing minutes of meetings).
(2) In Part 5.1 (arrangements and reconstructions), the meaning of directors (as defined in subsection (1)) is affected by section 410.
(3) For the purposes of Chapter 2M, a director of a registrable superannuation entity is:
(a) if the RSE licensee for the entity is a constitutional corporation (within the meaning of the Superannuation Industry (Supervision) Act 1993 ) or a body corporate–a director of the constitutional corporation or body corporate; or
(b) if the RSE licensee for the entity is a group of individual trustees–each of those trustees.
Officer – section 9AD
Officer is defined as follows. It includes a “liquidator of the corporation”. Liquidator is defined, as is registered liquidator. That is, s 9AD provides:
Meaning of officer
(1) An officer of a corporation (other than a CCIV) is:
(a) a director or secretary of the corporation; or
(b) a person:
(i) who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or
(ii) who has the capacity to affect significantly the corporation’s financial standing; or
(iii) in accordance with whose instructions or wishes the directors of the corporation are accustomed to act (excluding advice given by the person in the proper performance of functions attaching to the person’s professional capacity or their business relationship with the directors or the corporation); or
(c) a receiver, or receiver and manager, of the property of the corporation; or
(d) an administrator of the corporation; or
(e) an administrator of a deed of company arrangement executed by the corporation; or
(f) a restructuring practitioner for the corporation; or
(g) a restructuring practitioner for a restructuring plan made by the corporation; or
(h) a liquidator of the corporation; or
(i) a trustee or other person administering a compromise or arrangement made between the corporation and someone else.
Note: Section 201B contains rules about who can be a director of a corporation.
(2) An officer of a corporation that is a CCIV has the meaning given by section 1224B.
(3) Subject to subsection (4), an officer of an entity that is neither an individual nor a corporation is:
(a) if the entity is a partnership–a partner in the partnership; or
(b) if the entity is an unincorporated association–an office holder of the unincorporated association; or
(c) in any case–a person:
(i) who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the entity; or
(ii) who has the capacity to affect significantly the entity’s financial standing.
(4) For the purposes of Chapter 2M, an officer of a registrable superannuation entity is:
(a) if the RSE licensee for the entity is a constitutional corporation (within the meaning of the Superannuation Industry (Supervision) Act 1993 ) or a body corporate–an officer of the constitutional corporation or body corporate; or
(b) if the RSE licensee for the entity is a group of individual trustees:
(i) each of those trustees; or
(ii) a person who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the entity; or
(iii) a person who has the capacity to affect significantly the entity’s financial standing.
For information.
