Types of Directors Board of Directors Appointment of Directors Removal of Directors Company Secretary The Indoor Management Rule

Introduction
1. Types of directors
2. Board of directors
3. Appointment of directors
4. Removal of directors
5. Company secretary
6. The indoor management rule
Corporate Directors and Officers
1. Definition of directors: s 9
 Properly appointed directors: s 9(a)
 Persons treated as directors
 De facto director: s9(b)(i); Corporate
Affairs Commission v Drysdale (1978) 141
CLR 236
 Shadow director: s9(b)(ii); Standard
Charted Bank of Australia Ltd v Antico
(1995) 13 ACLC 1381
2. Definition of officers: s 9
Types of Directors
1. Managing director
 Appointed by directors: s 201J
 May be conferred with any of the powers that
directors can exercise: s 198C(1)
2. Chair of directors
 Elected by directors: s 248E
 Power of casting vote: s 248G(2)
 Minutes must be signed by the chair: s251A(2)
3. Executive & non-executive directors
4. Alternate director
 With the approval of the board, appointed by a
director: s 201K
 AISC must be notified: s 205B(2)
5. Nominee director
Board of Directors
1. Meaning
2. Powers of the board: ASX‘
s Principles of Good Corporate Governance and Best Practic
e Recommendations
3. Separation of ownership and management

 Directors exercising all powers of the
company unless otherwise provided: s 198
A(2);
 Shareholders cannot override management
decisions: Automatic Self-Cleaning Filter
Syndicate Co v Cuninghame [1906] 2 Ch 34
Automatic Self-Cleaning Filter Syndicate Co v
Cuninghame [1906] 2 Ch 34
Facts: The co constitution conferred on the board the powers of management

and the specific power to sell the co property on such terms as it thought fit.
Relying on these provisions, the board refused to comply with a general
meeting resolution that certain properties be sold, asserting that the sale was
not in the co’s best interests.
The members argued that the constitution was subject to the overriding rule
that the directors, as agents of the co, were obliged to follow the instructions
of their principal, the co; the will of the co being a resolution of the GM.
Held: The Court of Appeal held that the directions of the GM were a nullity that
could be ignored by the directors. The members could not interfere with the
directors in this respect as they were contractually bound by the constitution.
Appointment of Directors
1. Who can be a director: s 201B
2. Consent to act as director: s 201D
3. Appointment
 By shareholders’ resolution at general
meeting: s 201G
 Special rules for public companies: s 201E(1)
 Special rules for 1 director/shareholder
companies: s 201F(1)
4. Casual vacancies: s 201H
5. Notice to ASIC: s 205B(1)
Disqualification from Managing a
Corporation
1. Automatic disqualification: s 206B
 Convicted persons: s 206B(1)
 Undischarged bankrupt: s 206B(3)&(4)
2. Disqualification by court order
 Contravention of civil penalty provision:
s 206C; ASIC v Adler (2002) 20 ACLC 1146
 Failed companies: s 206D(1)
 Repeated contravention of the CA: s 206E;
ASIC v Starnex Securities Pty Ltd [2003] FCA
1375
3. ASIC’s power of disqualification: s 206F(1)
4. Leave to manage: s 206G; Re Zim Metal
Products Pty Ltd [1977] ACLC 29, 556
ASIC v Starnex Securities Pty Ltd
[2003] FCA 1375
Icorp Technology Ltd

Contech Australia Ltd
Starnex Capital Ltd
Starnex Securities Pty
Ltd
All insolvent Mr Camiolo
Director of the four co
The companies committed The court disqualified Camiolo

many offences, from managing corporations for
contravened ss 201A, two years under s 206E.
201D, 327, 292, etc.
Re Zim Metal Products Pty Ltd
[1977] ACLC 29, 556
In Mar 1977, M & P were each convicted of an

offence of having dishonestly received stolen goods.
In accordance with predecessor to s 206B(1)(b), they
resigned for their position as directors, and
subsequently applied to the Court for leave to be a
director or to take part in the management of the
company.
The Court granted leave to them to take part in the

management of the company, but did not grant
either of them leave to act as a director, taking into Robert McKissack &
account the nature of the offence, the applicants’ Kenneth Paxton were
general character, the structure of the company, the directors of Z Pty Ltd, which
risk of injury to the public and the shareholders and was a family business owned
the fact that the offences did not arise out of the by them and their wives and
management or the conduct of the company. the company secretary.
Termination of Appointment
1. Term expires
2. Resignation: s 203A
 Directors may give the notice to ASIC:
s 205A
3. Removal of directors
 Proprietary companies
 Procedures specified in the constitution strictly
adhered to: Nibaldi v RM Fitzroy & Associates Pty
(1996) ACSR 330
 By resolution: s 203C
 Public companies:
 By general meeting s 203D
 Directors cannot be removed by directors: s 203E
Company Secretary
1. Legal requirement: s 204A
2. Appointed by directors:
s 204D
3. ASIC to be notified: s 205B(1)
4. Who can be appointed? s
204B
5. Statutory responsibilities: s
188(1)
The Indoor Management Rule
1. Law of agency under corporate
context: s126
2. ‘IMR” under the CA
• General position: s128
• Assumptions that can be made: s129
3. Royal British Bank v Turquand
(1856) 6 E & B 327; 119 ER 886
Royal British Bank v Turquand
(1856) 119 ER 886
Facts: The bank lent money to the defendant on the security of a bond signed by two
directors on which the seal of the company was affixed. The deed of settlement
(the company’s constitution) empowered the board of directors to borrow
in that way only when by a resolution of a general meeting. The defendant
refused to repay the loan and argued that no such resolution had been passed
and the bank should have constructive notice of the provision in the constitution.
The Court of Exchequer Chamber held that the company was bound
by the contract since the bank had “a right to presume that there had
been a [such] resolution at general meeting”

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Introduction

3. Separation of ownership and management

Facts: The co constitution conferred on the board the powers of management

Icorp Technology Ltd

The companies committed The court disqualified Camiolo

In Mar 1977, M & P were each convicted of an

The Court granted leave to them to take part in the

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