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Division 3—Close corporations ceasing to be trading corporations

27. Commission to take action

28. Presumptions about loss of trading corporation status

29. Close corporation to take action

PART 3—NAMES

30. Names available for registration

31. Words or abbreviations to be included in names

32. Close corporation may have number as its name

33. Reservation of name not required in certain circumstances

34. Registration of name without reservation

35. Reservation and registration of name of a proposed close corporation

36. Reservation and registration of proposed new name of close corporation

37. Extension of reservation

38. Cancellation of registration where close corporation is dissolved or converted into a company

39. Change of name

40. Restriction on use of name “close corporation”

41. Publication of close corporation’s name

PART 4—LEGAL CAPACITY AND POWERS

42. Interpretation

43. Object of section 44

44. Legal capacity

45. Application of certain State and Territory laws

46. Close corporation not to act as trustee

47. Persons having dealings with close corporations

48. Lodgment of documents etc. not to constitute constructive notice

49. Effect of fraud

50. Close corporation not to be a holding company

51. Close corporation not to make or issue offers or invitations to the public in respect of its shares

PART 5—MEMBERSHIP

52. Capacity of shareholding or membership

53. Membership register

54. Subscribers to become members

55. Persons becoming members after registration

TABLE OF PROVISIONS—continued

Section

56. Change in shareholding

57. Members holding shares otherwise than beneficially

58. Members holding shares in different capacities

59. Unregistered members

60. Maximum number of members

61. Only natural persons to be members

62. Majority of members to be residents

63. Disqualification

64. Effect of death of sole member

PART 6—TITLE TO AND TRANSFER OF SECURITIES

65. Transfer of shares

66. Application of Part 7.13 of Corporations Act

PART 7—INTERNAL ADMINISTRATION

Division 1—Mutual rights of members

67. Association agreement

68. Model association agreement

69. This Division subject to contrary agreement

70. Indemnity

71. Loans by members

72. Participation in management

73. Allotment of shares

74. Members not to be remunerated

75. Resolution of differences

Division 2—Meetings

76. Convening of meeting of members

Division 3—Obligations of members

77. Members to render accounts

78. Accountability of members for benefits

79. Members not to compete with corporation

80. Member to compensate corporation for loss resulting from conduct of member

Division 4—Oppressive conduct of affairs

81. Application of Part 3.4 of Corporations Act

PART 8—ACCOUNTS AND CERTIFICATES OF COMPLIANCE

82. Duty to keep accounts

83. Annual certificate of compliance

84. Annual activities statement

PART 9—TRANSACTIONS ON BEHALF OF CLOSE CORPORATION

85. Members to be agents of corporation

86. Ratification of contracts made before formation of corporation

PART 10—PROVISIONS RELATING TO SHARES

Division 1—Acquisition by close corporation of its shares

87. Restriction on acquisition by corporation of its shares or units of its shares

88. Corporation may acquire shares in accordance with this Division

89. Consent and declaration of solvency by members

90. Withdrawal from participation in declaration of solvency

91. Publication of notice of proposed acquisition of shares

92. Corporation to cancel shares acquired

TABLE OF PROVISIONS—continued

Section

Division 2—Close corporation financing dealings in its shares etc.

93. Interpretation

94. Prohibition

95. Order for compensation

96. Power to grant relief

97. Exceptions

98. Authorisation

99. Powers of Court

100. Members’ duties not affected

101. Consequences of corporation financing dealings in its shares etc.

PART 11—CHARGES

102. Application of Part 3.5 of Corporations Act

PART 12—ARRANGEMENTS AND RECONSTRUCTIONS

103. Application of Part 5.1 of Corporations Act

PART 13—RECEIVERS AND MANAGERS

104. Application of Part 5.2 of Corporations Act

PART 14—OFFICIAL MANAGEMENT

105. Application of Part 5.3 of Corporations Act

PART 15—LIABILITY OF MEMBERS FOR CORPORATION’S DEBTS AND LIABILITIES

106. Members generally not liable

107. Liability if number of members exceeds 10

108. Liability where proper accounting records not kept

109. Liability if corporation becomes a holding company

110. Liability for unreasonable delay in taking action where corporation insolvent

111. Liability of signatories to declaration of solvency if corporation insolvent

112. Liability where insolvency resulted from unlawful acquisition of shares

113. Corporation not liable to member who pays debt of corporation

PART 16—WINDING UP

114. Application of Parts 5.4, 5.5 and 5.6 of Corporations Act

115. Replacement of sections 459, 460, 461 and 462

116. Voluntary winding up

117. Decision or notice to constitute special resolution

118. Priority of Commission’s costs

119. Ranking of claims

120. Provisional liquidator

121. Financial assistance to liquidator from recovery trust fund

PART 17—LIQUIDATORS’ RECOVERY TRUST FUND

122. Definition

123. Establishment of fund

124. Money constituting fund

125. Investment of fund

126. Fund to be kept in separate bank account

127. Registration of corporation subject to corporation contributing to fund

128. Additional contributions to fund

129. Payments out of the fund

130. Contributions not payable unless imposed by another Act

TABLE OF PROVISIONS—continued

Section

PART 18—GENERAL

Division 1a—Review by Administrative Appeals Tribunal of certain decisions

130a. Interpretation

130b. Applications for review

130c. Excluded decisions

Division 1—Powers of courts

131. Power to grant relief

132. Injunctions

133. Other orders

134. Power to prohibit payment or transfer of money or property

135. Power to punish for contempts

136. Power to give directions with respect to meetings

137. Appeals from decisions of receivers, liquidators etc.

138. Irregularities

139. Power to compel compliance

Division 2—Legal proceedings

141. Power of Commission to intervene in proceedings

142. Proceedings, how taken

143. Time for instituting criminal proceedings

144. Standard of proof

145. Evidence of convictions

146. Costs

147. Civil proceedings not to be stayed

148. Form and evidentiary value of books

149. Admissibility of books in evidence

150. Admissions and representations by members

Division 3—Offences and civil liability for contraventions

152. Interpretation

153. Offences relating to property, books etc.

154. Offence where proper accounts not kept

155. Incurring of debts or fraudulent conduct

156. Court may impose personal liability

157. Certain rights not affected

158. Inducement to be appointed liquidator or official manager

159. Falsification of books

160. Frauds by officers

161. False or misleading statements

162. False information etc.

163. General penalty provisions

164. Penalty notices

165. Continuing offences

Division 4—Miscellaneous

166. Dividends

167. Service of documents

168. Vesting of property

Division 5—Rules and regulations

169. Rules

170. Regulations

SCHEDULE

PENALTIES FOR OFFENCES COMMITTED BY NATURAL PERSONS

Close Corporations Act 1989

No. 120 of 1989

An Act to enact a national law about closely held corporations, and for related purposes

[Assented to 14 July 1989]

BE IT ENACTED by the Queen, and the Senate and the House of Representatives of the Commonwealth of Australia, as follows:

PART 1—PRELIMINARY

Division 1—Introductory

Short title

1. This Act may be cited as the Close Corporations Act 1989.

Commencement

2. (1) Subject to this section, the provisions of this Act commence on a day or days to be fixed by Proclamation.

(2) Sections 1 and 2 commence on the day on which this Act receives the Royal Assent.

Application to the Crown

3. Parts 12, 13, 14 and 16 bind the Crown in right of the Commonwealth, of each of the States, of the Northern Territory and of Norfolk Island.

Extension to external Territories

4. This Act extends to such external Territories (if any) as are prescribed.

Administration

5. Subject to the Commission Act, the Commission has the general administration of this Act.

Division 2—Miscellaneous interpretation provisions

General dictionary

6. (1) In this Act, unless the contrary intention appears:

“accounting records” includes:

(a) invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes, vouchers and other documents of prime entry; and

(b) such working papers and other documents as are necessary to explain the methods and calculations by which accounts are made up;

“association agreement” means an agreement entered into in accordance with subsection 67 (1) that is in force or, if such an agreement has been varied by a supplementary association agreement, the agreement as varied and in force;

“Australia” includes the external Territories to which this Act extends;

“books” includes:

(a) a register;

(b) any other record of information;

(c) accounts or accounting records, however compiled, recorded or stored; and

(d) a document;

“certificate of compliance” means a certificate referred to in section 83;

“close corporation” means a close corporation registered under this Act;

“Commission” means the Australian Securities Commission;

“Commission Act” means the Australian Securities Commission Act 1989;

“Commission delegate” has the same meaning as in the Commission Act;

“company” means a company incorporated under Division 1 of Part 2.2 of the Corporations Act;

“contributory”, in relation to a close corporation, means:

(a) a person liable as a member or past member to contribute to the property of the corporation if it is wound up;

(b) a member of the corporation; and

(c) before the final determination of the persons who are contributories by virtue of paragraphs (a) and (b)—a person alleged to be such a contributory;

“Corporations Act” means the Corporations Act 1989;

“Court” means the Federal Court of Australia or the Supreme Court of a State or Territory;

“decisive number of members”, in relation to a close corporation, means:

(a) where there is only one member—that member;

(b) where there are 2 members—both of those members; or

(c) where there are more than 2 members—not fewer than:

(i) if there are 3 members—2 members;

(ii) if there are 4 members—3 members;

(iii) if there are 5 members—4 members;

(iv) if there are 6 members—5 members;

(v) if there are 7 or 8 members—6 members;

(vi) if there are 9 members—7 members; or

(vii) if there are 10 members—8 members;

“declaration of solvency” means a declaration, referred to in paragraph 89 (1) (b);

“dormant”, in relation to a close corporation, has the meaning given by section 7;

“eligible negotiable instrument”, in relation to a close corporation, means:

(a) a bill of exchange, promissory note, cheque or other negotiable instrument;

(b) an indorsement on, or order in, a bill of exchange, promissory note, cheque or other negotiable instrument; or

(c) a letter of credit;

of, or purporting to be issued or signed by or on behalf of, the corporation;

“financial year”, in relation to a close corporation, means either of the following, whether ending before, at or after the commencement of this section:

(a) a period of 12 months, or such other period (whether longer or shorter than 12 months) of not more than 18 months as a majority of the members decide, beginning:

(i) if there has been no previous financial year of the corporation—on the day of the corporation’s incorporation; or

(ii) otherwise—at the end of the previous financial year of the corporation;

(b) if the close corporation was a company immediately before it became a close corporation—a period that was a financial year in relation to the company for the purposes of the Corporations Act;

“founding statement”, in relation to a close corporation or proposed close corporation, means a statement relating to the corporation or proposed corporation that is referred to in paragraph 18 (1) (a);

“holder”, in relation to shares in a close corporation, means the person who is the legal owner of the shares, whether or not the person’s name and the number of shares are entered in the corporation’s membership register;

“holding company” has the meaning given by section 9;

“information” includes complaint;

“involved”, in relation to a contravention, has the meaning given by section 13;

“issue” includes circulate, distribute and disseminate;

“lodge” means lodge with the Commission;

“majority of the members”, in relation to a close corporation that has only 1 member or 2 members, means that member or both of those members, as the case may be;

“member”, in relation to a close corporation, means a person who is a member of the corporation as provided by Part 5;

“new close corporation” has the meaning given by section 8;

“officer”, in relation to a close corporation, includes:

(a) a member or employee of the corporation;

(b) a receiver and manager, appointed under a power contained in an instrument, of property of the corporation;

(c) an official manager, or deputy official manager, of the corporation;

(d) a liquidator of the corporation appointed in a voluntary winding up of the corporation; and

(e) a trustee or other person administering a compromise or arrangement made between the corporation and any other person or persons;

but does not include:

(f) a receiver who is not also a manager;

(g) a receiver and manager appointed by a court; or

(h) a liquidator appointed by a court;

“prescribed” means prescribed by this Act, by the regulations or by the rules;

“prove” includes establish in any way;

“receiver and manager” has a meaning affected by section 14;

“registered office” means the premises the address of which is specified in the founding statement in accordance with paragraph 19 (b) or, if an address of other premises has been specified in a notice lodged under section 20, the premises the address of which is specified in that notice or the last such notice;

“registration number” in relation to a close corporation, means the number allotted to it under subsection 18 (1);

“rules” means rules of the Court;

“securities”, in relation to a close corporation, means shares in, or debentures of, the corporation;

“share”, in relation to a close corporation, means a share

This is an opening excerpt, not the complete document.