Australian Journal of Corporate Law (AJCL)
Volume 36 Part 1
(editorial, articles, regulatory update and insolvency law update included in this part are linked
to the LexisNexis platform)
CONTENTS
Editorial 1
Articles
‘Legitimate expectations’ and the oppression remedy
— Stephanie CB Brenker and Ian Ramsay 3
Should a shareholder’s legitimate expectations form part of the test employed by courts to decide if
the shareholder has been oppressed? The term ‘legitimate expectations’ was first used by an
Australian court in an oppression claim more than 40 years ago. Yet there remains disagreement
among courts regarding whether the use of the term assists or impedes them in deciding oppression
claims. This is an important issue given that the oppression remedy is widely used by shareholders.
To advance the debate, the authors examined the 51 Australian judgments in which there is
substantive discussion of the term. The analysis undertaken reveals five different approaches to the
use of the term in these judgments and no consistent approach adopted by the courts. The evaluation
by the authors leads to the conclusion that use of the term ‘legitimate expectations’ has not aided the
analysis by courts of whether oppression has occur red, its use has been inconsistent, and therefore
it should not be used in cases where oppressive conduct is alleged.
The corporate constitution as a statutory contract: Ar tifice or
anachronism?
— Jason Harris 25
A company’s constitution provides the legal foundation for the relationship between a company and its
directors and members. That relationship is deemed by statute to have effect as a contract between
the company and the directors and between the company and its members, and amongst members
between themselves. This statutory deeming of the constitution as a contract has been a feature of
company law across the common law world since the 1850s, but the application of contract law to the
construction and operation of the constitution raises difficult conceptual problems. In this article, it is
argued that the deeming of the constitution as a contract is an anachronism based on a 19th century
conception of a company as the embodiment of a group of incorporators. It is argued that changes in
1998 in Australia have removed this conceptual foundation and now formally recognise the company
as a distinct legal entity arising from registration, rather than the legal embodiment of the collective
members. It is argued that the constitution should be recognised as having statutory force, rather than
continuing to deem it to have contractual force.
