Corporations Power Summary Notes

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...

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