Legislative Note: Curbing Self-Dealing in Corporations
AbstractA concern of regulators of corporations world-wide is transactions involving corporate assets with those controlling the corporation or with their intimates. The traditional approach in countries like Australia has been to rely on the common law fiduciary duties, augmented by specific statutory requirements for particular sorts of transactions perceived to carry a high risk of abuse. The latest in the line of these requirements is contained in Corporations Law, Part 3.2A, in force on 1 February 1993, but subject to a delaying provision, for some cases at least, until 1 February 1994. Part 3.2A is distinguished by the breadth of its application, particularly in relation to transactions in corporate groups. Its greatest novelty lies in its basic rule prohibiting the giving of financial benefits to related parties unless approval by a majority of disinterested shareholders is secured. This note explores the contours of the basic rule, and its exceptions, against the backdrop of prior law. |