Opting out of shareholder governance rights: a new perspective on contractual freedom in Australian corporate law

One of the classic debates in corporate law relates to whether the rules of corporate law are ar should be 'mandatory', in that companies must comply, or 'enabling' - meaning a set of default rules which companies have the choice of adopting or 'opting out' of through alternative contractual arrangements. The so-called 'mandatory/enabling' debate has been especially prominent in the United States fro numerous reasons, yet has also received some attention in Australia. That said, the extent to which companies can 'opt out' of corporate law has rarely been considered as a practical issue in Australia - particularly whether Australian companies can 'opt out' of provisions under the Corporations Act ("the Act"). However, just recently, two high-profile events in Australia have made 'opting out' of corporate law a relevant issue, especially the question of whether companies are free to 'opt out' of provisions of the Corporations Act  which provide express governance rights to shareholders. These events were Boral's constitutional amendment in 2003 to restrict the ability of shreholders to propose amendments to the company's constitution, and the contemplation and introduction of so-called 'pre-nuptial' agreements- designed to by-pass the right of shreholders to vote on removing directors in public companies. In the light of these two recent events, in this article the authors revisit the mandatory/enabling debate. However, rather than going over old ground as to whether a mandatory or enabling approach to corporate regulation is desirable, the authors approach the issue from a fresh perspective: that Australian Securitiesand Investments Commission's ("ASIC") existing relief powers under the Act should be extended to provide a means for companies to opt out of provisions containing shareholder governance rights.

Contractual thinking and responsible government in China: A constructivist framework for analysis*

Responsible government is often seen as contingent on democracy. Yet despite China's continued lack of notable progress in democratization, recent years have witnessed some limited moves towards responsible governance. In the absence of free elections and other institutional arrangements, how can an authoritarian regime become responsible? This paper turns to the role of ideas and culture in general and contractual thinking in particular for an explanation. Contractual thinking, defined as a particular kind of intersubjective understanding between the government and citizens with regard to their mutual interests, is present in both China's contemporary official discourse on "responsible government" and traditional Chinese culture. Taking a constructivist approach, the paper focuses on two interrelated aspects of the role of contractual thinking in the construction of responsible government. First, it examines how contractual thinking, by helping redefine the identity and interest of the government in line with citizens' loyalty, could allow more responsible government behaviour. It then illustrates that in the case of government irresponsibility, contractual thinking sets the discursive context for rightful resistance from citizens as well as for a more sympathetic reading of such resistance by the government, both of which, the paper argues, could facilitate the development of responsible governance.

A shareholder’s contractual right to a dividend and a company’s oppressive conduct in withholding dividend payments: Sumiseki Materials Co Ltd v Wambo Coal Pty Ltd

Traditionally, a shareholder’s expectation of receiving a dividend has been limited by the discretion the board of directors has to recommend the appropriate amount of payment as a dividend. As a general rule, shareholders will only be entitled to a dividend after the dividend is declared (normally, at the general meeting), or when the actual date arrives for the dividend to be paid. Because courts were traditionally reluctant to interfere with the internal management of companies, the remedies available to shareholders to compel a company to declare a dividend were very limited. As a result, if the directors have decided to withhold dividend payment, courts will only make an order requiring dividends to be paid under very exceptional circumstances. In this article, the authors discuss the case of Sumiseki Materials Co Ltd v Wambo Coal Pty Ltd [2013] NSWSC 235, which is exceptional for the court’s recognition of a shareholder’s contractual right to a dividend. The article analyses the court’s approach, which found that withholding dividend payments was oppressive and unfairly prejudicial conduct of the company. It also discusses the significance of shareh9olders entrenching their rights in a company’s constitution, irrespective of the fact that a company has a statutory right to alter its constitution by way of a special resolution.

Contractual thinking and responsible government in China : a constructivist framework for analysis

Responsible government is often seen as contingent on democracy. Yet despite China's continued lack of notable progress in democratization, recent years have witnessed some limited moves towards responsible governance. In the absence of free elections and other institutional arrangements, how can an authoritarian regime become responsible? This paper turns to the role of ideas and culture in general and contractual thinking in particular for an explanation. Contractual thinking, defined as a particular kind of intersubjective understanding between the government and citizens with regard to their mutual interests, is present in both China's contemporary official discourse on "responsible government" and traditional Chinese culture. Taking a constructivist approach, the paper focuses on two interrelated aspects of the role of contractual thinking in the construction of responsible government. First, it examines how contractual thinking, by helping redefine the identity and interest of the government in line with citizens' loyalty, could allow more responsible government behaviour. It then illustrates that in the case of government irresponsibility, contractual thinking sets the discursive context for rightful resistance from citizens as well as for a more sympathetic reading of such resistance by the government, both of which, the paper argues, could facilitate the development of responsible governance.