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Corporations Power Notes

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This is an extract of our Corporations Power document, which we sell as part of our Constitutional Law Notes collection written by the top tier of Monash University students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Constitutional Law Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Corporations power

1. Introduction Under CC s 51(20), the Cth has the power to make laws with respect to foreign corporations and trading or financial corporations ('constitutional corporations') formed within the limits of the Commonwealth.
[where relevant] The corporations power cannot be used to regulate the formation (incorporation) of companies (Incorporations Case).?

Cth will argue [the law] is valid under the corporations power.
[Corporation X] will argue o it is not valid o that [corporation] is not itself a constitutional corporation

A law will be valid enacted under s 51(20) if it applies to constitutional corporations and regulates activities within the scope of the corporations power.Additionally, even if valid, if the affected corporation, here
[corporation] is not a constitutional corporation, the law will not apply to it.

2. Does the law apply to constitutional corporations?
The law must apply to foreign, trading or financial corporations to be valid under s 51(20). o-

While financial corporations may also be trading corporations in most cases, s 51(20) does not need a corporation to be designated as one or the other (Fencott v Muller).

If the law applies to a class of corporation generally: Here, the law clearly applies to [type of corporation], as [part of legislation referring to type of corp]. o [X] may seek to argue that it is not a [type of corp] and so avoid the effect of the law. If the law applies to a particular corporation: Here, the law is expressed to apply to [X]. For the law to be valid, [X] must be a constitutional corporation. i.

Is [X] a foreign corporation?

A foreign corporation is any corporation incorporated overseas. [Note if X incorp overseas]

ii. Is [X] a trading corporation?

This will depend on the current activities test, under which a corporation is a trading corporation if a substantial or sufficiently significant proportion of its activities are trading activities (Adamson/Tasmanian Dams).

??The fact that a corporation is not-for-profit does not mean it is not a trading corporation (Adamson) Statutory corporations (created by legislation) can still be trading corporations (Tasmanian Dams) Test is presumed to cover corporate bodies incl schools, universities, child care centres, hospitals, charities, no-profit organisations and various other incorporated State statutory bodies. POLICY: Note criticisms of the current activities test: it is very broad and potentially includes most Australian corporations in the definition of trading or financial corporations (Tas Dams, SSB, Adamson). Inactive corporations will largely be included also (Fencott). In the recent case of Australian Workers' Union of Employees Queensland v Etheridge Shire Council (2008), a single Federal Court judge, Spender J, found that the correct test was that a corporation is a trading/financial corporation if its 'predominant and characteristic' activity was trading or financial activity (per Barwick CJ in St George County Council). While this is only a single judge, this case shows it is not out of the question that such test may be applied here.

Test a) Does the corporation engage in trading activities?
- Trading activities are revenue generating activities (Adamson) b) Is the proportion of trading activities substantial or sufficiently significant?
- This is a question of degree; however, the HCA has never clarified the precise meaning of substantial or sufficient significance (unsure etc if 20-30%
significant?)
- A corporation that engages in slight trading activities or trading activities incidental to some other purpose (such as religion (churches) or education (schools)) will not be a trading corp (Mason J in Adamson). iii.

Is [X] a financial corporation?

This will depend on the current activities test: a corporation will be a financial corporation if a substantial or sufficiently significant proportion of its activities are financial activities (State Superannuation Board v Trade Practices Commission).Note criticisms of the current activities test: it is very broad and potentially includes most Australian corporations in the definition of trading or financial corporations (Tas Dams, SSB, Adamson). Inactive corporations will largely be included also (Fencott). In the recent case of Australian Workers' Union of Employees Queensland v Etheridge Shire Council (2008), a single Federal Court judge, Spender J, found that the correct test was that a corporation is a trading/financial corporation if its 'predominant and characteristic' activity was trading or financial activity(per Barwick CJ in St George County Council). While this is only a single judge, this case shows it is not out of the question that such test may be applied here.

Test a) Does the corporation engage in financial activities?

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