Hello all.
I am not an investor and know nothing about company or commercial law. I am, however, a member of an Australian Wide Breed Society with around 3500 members. As only one body is recognised by the world governing body, the Society is an Australian monopoly. The Company Articles clearly describe an organisation that exists to provide services with no requirement to make or attempt to make a profit (although financial responsibility to stay viable is, of course, implied) and there haven't been any proposed changes to these Articles since their inception in the 1970s.
The current (elected) Board of the Society has informed members it is considering creating two spin off companies but has not provided the details of their proposed structure. Between them, these companies would have responsibility for action of the majority of the requirements laid down by the Company Articles which are broad enough to encompass any business that needs conducting by the Society as a society. The Society is only a small employer by definition of the Fair Work Act, 2009 and there would be no requirement for the spin off companies to operate in a separate location.
Some members have concerns with this proposal as we cannot see how such a move would be beneficial to the membership. As things stand if the Board fails to meet the Company Articles members can take action but I am wondering if these companies can be created in a way that removes this possibility. I have read that if businesses create spin offs shareholders receive a compensatory share interest in the new company but am unsure of the effect on membership and members’ rights.
So I am seeking help on the following should these companies be created:
What, if any, cost or benefit would there be to members?
Will members remain solely members of the parent company with little or no influence on the spin offs?
Will members have a say in the election/appointment of Directors of the spin offs?
Is there a maximum term Directors of the spin offs can be appointed for or can an unlimited tenure be assigned?
Will the parent company be seen to be meeting its Company Article obligations by contracting the spin offs to undertake those responsibilities?
Will the spin offs be subject to the parent Company Articles?
If the spin offs don’t act in such a way that company articles are met what action is available to the membership of the parent company (if they are not members of the spin off company)?
If a rival company is created to provide the same service as a spin off, will the parent company have to go through a tender/contract process under the Competition and Consumer Amendment (Competition Policy Reform) Act, 2017?
If members believe the creation or configuration of these companies is a disadvantage, what action is available to them?
And finally: There is a Board election taking place after which the majority of the Board may not wish to create these companies. Is there a way to stay their creation until after this election?
I realise there is a lot here but any help would be much appreciated and for which I thank you in advance.
I am not an investor and know nothing about company or commercial law. I am, however, a member of an Australian Wide Breed Society with around 3500 members. As only one body is recognised by the world governing body, the Society is an Australian monopoly. The Company Articles clearly describe an organisation that exists to provide services with no requirement to make or attempt to make a profit (although financial responsibility to stay viable is, of course, implied) and there haven't been any proposed changes to these Articles since their inception in the 1970s.
The current (elected) Board of the Society has informed members it is considering creating two spin off companies but has not provided the details of their proposed structure. Between them, these companies would have responsibility for action of the majority of the requirements laid down by the Company Articles which are broad enough to encompass any business that needs conducting by the Society as a society. The Society is only a small employer by definition of the Fair Work Act, 2009 and there would be no requirement for the spin off companies to operate in a separate location.
Some members have concerns with this proposal as we cannot see how such a move would be beneficial to the membership. As things stand if the Board fails to meet the Company Articles members can take action but I am wondering if these companies can be created in a way that removes this possibility. I have read that if businesses create spin offs shareholders receive a compensatory share interest in the new company but am unsure of the effect on membership and members’ rights.
So I am seeking help on the following should these companies be created:
What, if any, cost or benefit would there be to members?
Will members remain solely members of the parent company with little or no influence on the spin offs?
Will members have a say in the election/appointment of Directors of the spin offs?
Is there a maximum term Directors of the spin offs can be appointed for or can an unlimited tenure be assigned?
Will the parent company be seen to be meeting its Company Article obligations by contracting the spin offs to undertake those responsibilities?
Will the spin offs be subject to the parent Company Articles?
If the spin offs don’t act in such a way that company articles are met what action is available to the membership of the parent company (if they are not members of the spin off company)?
If a rival company is created to provide the same service as a spin off, will the parent company have to go through a tender/contract process under the Competition and Consumer Amendment (Competition Policy Reform) Act, 2017?
If members believe the creation or configuration of these companies is a disadvantage, what action is available to them?
And finally: There is a Board election taking place after which the majority of the Board may not wish to create these companies. Is there a way to stay their creation until after this election?
I realise there is a lot here but any help would be much appreciated and for which I thank you in advance.