Section 6 — Corporations Act 2001: Shares and shareholders

A proprietary company limited by shares must have a share capital and at least 1 shareholder. ASIC may apply to a Court to have a company wound up if it does not have any shareholders. [sections 461—462] 6.1 Becoming a shareholder and ceasing to be a shareholder A person may become a shareholder of a company in several ways, including the following: • the person being listed as a shareholder of the company in the application for registration of the company • the company issuing shares to the person • the person buying shares in the company from an existing shareholder and the company registering the transfer. Some of the ways in which a person ceases to be a shareholder are: • the person sells all of their shares in the company and the company registers the transfer of the shares • the company buys back all the person’s shares • ASIC cancels the company’s registration. [sections 117, 120, 601AA—601AD] 6.2 Classes of shares A company may have different classes of shares. The rights and restrictions attached to the shares in a class distinguish it from other classes of shares. [sections 254A—254B] 6.3 Meetings of shareholders Directors have the power to call meetings of all shareholders or meetings of only those shareholders who hold a particular class of shares. Shareholders who hold at least 5% of the votes which may be cast at a general meeting of a company have the power to call and hold a meeting themselves or to require the directors to call and hold a meeting. Meetings may be held regularly or to resolve specific questions about the management or business of the company. The Corporations Act sets out rules dealing with shareholders’ meetings. A shareholder of a company may ask the company for a copy of the record of a meeting or of a decision of shareholders taken without a meeting. [sections 249A—251B] 6.4 Voting rights Different rights to vote at meetings of shareholders may attach to different classes of shares. It is a replaceable rule (see 1.6) that, subject to those different rights, each shareholder has 1 vote on a show of hands and, on a poll, 1 vote for each share held. [sections 250E, 254A—254B] 6.5 Buying and selling shares A shareholder may sell their shares but only if the sale would not breach the company’s constitution (if any). It is a replaceable rule (see 1.6) that the directors have a discretion to refuse to register a transfer of shares. [sections 1091D—1091E]