Corporations Act 2001

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The Corporations Act 2001 (Cth), sometimes referred to just as the Corporations Act (or informally as the 'Corps' Act), is an act of the Commonwealth of Australia that sets out the laws dealing with business entities in Australia at federal and interstate level. It focuses primarily on companies, although it also covers some laws relating to other entities such as partnerships and managed investment schemes.

It is presently the largest corporations statute in the world [citation needed]. The CLERP reforms (currently at CLERP 9) are simplifying the statute. At several thousand pages long, the statute dwarfs those of other nations such as Sweden, whose corporations statute, comparatively, is less than 200 pages long.

The Corporations Act is the principal legislation regulating companies in Australia. It regulates matters such as the formation and operation of companies (in conjunction with a constitution that may be adopted by a company), duties of officers, takeovers and fundraising.

[edit] Constitutional basis for the Act

The Commonwealth corporations law was the subject of a successful High Court of Australia challenge in New South Wales v Commonwealth (1990) 169 CLR 482 ('The Corporations Act Case'). In that case the Commonwealth was found to have insufficient power to legislate in relation to the formation of companies. Section 51(xx) of the Australian Constitution was found to only provide sufficient power for legislation applicable to foreign corporations and corporations already formed within the Commonwealth. This decision led to the creation of a co-operative scheme, involving a referral of power from the Australian States. All Australian States have adopted the Corporations Act 2001 (Cth).

Under the Corporations Agreement between the States and the Commonwealth, all changes to the Act must be referred to the Ministerial Council for Corporations (MINCO) for approval. The co-operative scheme has come under pressure in recent times as the Commonwealth Government has sought to rely on the corporations power to legislate for its Industrial Relations reform agenda. This has led to some Labor States threatening to withdraw from the Corporations Agreement.

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