#6945 - Corporations Power Summary - Constitutional Law

POWER OF COMMONWEALTH: CORPORATIONS POWER

S 51 (xx)/20 confers power upon the Commonwealth Parliament to ‘make laws with respect to…foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth

Is the Corporations a “Constitutional Corporation”

• Foreign Corporations

  • Any entity formed under the law of a foreign country and given a corporate legal personality either by the foreign law, or by Australian law.

  • If the entity is a foreign corporation it does not need to be a trading or financial one Incorporations Case

• Trading Corporations

  • Current activities test: It will be a trading corporation if a ‘substantial or sufficiently significant (broad) proportion of its activities compromise ‘trading’ activities’ Adamson

    • Will not be considered a trading corporation ‘if the trading is so slight and trivial’ (Mason J, Adamson)

    • Extends to all activities that earn revenue, not necessarily profit

  • Even if the primary purpose is to achieve something else if the corporations engages in trade sufficiently it is a trading corporation.

• Financial Corporations

  • Current activities test: It will be a financial corporation if a ‘substantial or sufficiently significant proportion of its activities compromise ‘financial activities’ State Superannuation Board v Trade Practices

  • Financial activities = subject of the transaction is financial exchange (i.e. lending, borrowing or investing money, currency or funds) NOT goods and services (trading) State Superannuation Board

• Inactive/Shelf Corporations

  • A shelf corporation is an inactive company which can be used as a legal vehicle for a variety of transactions.

  • Can still be regulated by need to apply ‘purpose’ test – look at purpose for which the corporation was set up to determine if it can be described as trading/financial corporation - Majority in Fencott v Muller

Do the activities that are being regulated fall within the scope of power?

• CORE power - applying to constitutional corporations

  • Once the Constitutional Corporation is established as the “object of statutory command” the Commonwealth can regulate on its activities, functions, relationships and business (Majority in Work choices, adopting Gaudron J in Re Pacific Coal: The power under Section 51 (xx) extends to the regulation of:

    • the activities

    • functions

    • relationships

    • business

    • creation of rights and privileges belonging to such a corporation, the imposition of obligations on it

  • Object of Command Test: Commonwealth is entitled to regulate any activity of a CC. That is, once the Commonwealth is looking at the right type of corporation, it can regulate any activities of the corporation.

    • Dual characterisation is acceptable

    • Motivation is irrelevant Workchoices

  • May also apply to employees: Regulating a natural person is ‘incidental to’ the regulating of a CC. You need people in order to make a decision, thus in order to regulate a CC you have to regulate the people inside the corporation Fencott v Muller This view is still a bit unclear.

• INCIDENTAL POWER – Apply to employees, shareholder, third parties etc

  • Every constitutional HoP carries with it the authority to legislate in relation to matters that are incidental or ancillary to the subject matter, in order to achieve the main purpose of the law.

  • Extends to a law which regulates the conduct of those people whose conduct affects or is capable of affecting the activities, functions, relationships or business of a CC Workchoices (adopting Gaudron J in Re Pacific Coal)

    • People through who the CC acts (contractors)

      • Premises that are “occupied or otherwise controlled” by a contractor to a constitutional corporation is held to be a sufficient connection to section 51(xx) Workchoices

    • Employees

    • Shareholders

    • Those whose conduct is capable of affecting the activities,...