Eleanor Finch
The Australian Constitution grants the Parliament the power to make laws for the peace, order, and good government of the Commonwealth. This includes the power to regulate foreign, trading, and financial corporations formed within the Commonwealth, referred to as constitutional corporations. The scope of this power has been the subject of much debate and court rulings, with a focus on the type of corporation and the nature of their activities. The regulation of these corporations extends to their transactions with, or impact on, the public, and the conduct of individuals associated with them, such as company directors and employees. The validity of the WorkChoices Act, which aimed to determine employment conditions for a majority of the Australian workforce, is an example of the ongoing discussion surrounding the corporations power in the Australian Constitution.
| Characteristics | Values |
|---|---|
| Scope | Extends to foreign, trading, and financial corporations that have already been formed |
| Formation | Does not include the power to create or dissolve corporations |
| Regulation | Focuses on the conduct of corporations in their transactions with or affecting the public |
| Trading Corporation | Includes corporations that have not yet commenced trading (shelf companies) |
| Financial Corporation | Includes corporations engaging in substantial financial activities or intending to do so |
| Legislative Powers | Trade, commerce, taxation, borrowing money, postal services, military defense, etc. |
| Conciliation and Arbitration | Addressing industrial disputes extending beyond a single state |
| Matrimonial Causes | Divorce, parental rights, and custody of infants |
| Natural Persons | Regulation must have a rational connection to the valid operation of legislation on constitutional corporations |
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What You'll Learn
Foreign, trading, and financial corporations
The Australian Constitution's corporations power, outlined in Section 51(xx), pertains specifically to foreign, trading, and financial corporations. This power does not encompass the creation or dissolution of corporations but is focused on regulating the conduct of these corporations in their interactions with the public.
The scope of the corporations power has been a subject of debate, particularly regarding the classification of "trading or financial corporations." A corporation can be classified as both a "trading corporation" and a "financial corporation" simultaneously. A "financial corporation," as defined by case law, is one that engages in substantial financial activities or intends to do so, even if these activities are not its primary focus. On the other hand, a "trading corporation" is distinct from a municipal corporation, as clarified by the High Court, despite the latter engaging in trading activities.
The corporations power applies to corporations that have already been formed, including domestic trading and financial corporations, as well as all corporations formed outside Australia. These collectively fall under the term "constitutional corporations." This distinction was confirmed in the New South Wales v Commonwealth case (also known as the Incorporation Case) in 1990.
The regulation of constitutional corporations under Section 51(xx) can also indirectly regulate the conduct of individuals associated with these corporations, such as company directors. This aspect was clarified in the case of R v Australian Industrial Court; Ex parte CLM Holdings Pty Ltd.
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Conciliation and arbitration
The Australian Constitution grants the Parliament the power to make laws for the "peace, order, and good government of the Commonwealth". This includes laws relating to trade and commerce, taxation, postal services, defence, and other areas.
One specific power of the Parliament under Section 51(xx) of the Constitution is the corporations power, which relates to foreign, trading, and financial corporations. This power allows the regulation of the conduct of these corporations in their transactions with or affecting the public. However, it is important to note that this power does not include the ability to create or dissolve corporations.
The scope of the corporations power has been the subject of much debate, particularly around what constitutes a "trading or financial corporation". The High Court has clarified that the power extends only to corporations that have already been formed and does not include the power to incorporate them.
The WorkChoices Act, which aimed to utilise the corporations power to determine employment conditions for a majority of the Australian workforce, has been a significant development in this area. The Act's constitutional significance lies in its attempt to establish an exclusive regime for employment relations through the corporations power.
In conclusion, the corporations power in the Australian Constitution is a significant aspect of the country's legislative framework, impacting the regulation of foreign, trading, and financial corporations. The scope of this power has been refined through court cases and legislation, such as the WorkChoices Act. Conciliation and arbitration, as outlined in Section 51(xxxv), provide an essential mechanism for preventing and settling industrial disputes that fall within the scope of the corporations power.
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Federalism and constitutional validity
The Australian Constitution grants the Parliament the power to make laws for the "peace, order, and good government" of the Commonwealth in a range of areas, including trade and commerce, taxation, and defence. Section 51(xx) of the Constitution outlines the "corporations power," which allows the regulation of foreign, trading, and financial corporations. However, it does not extend to creating or dissolving corporations or internal company regulation. The scope of this power has been the subject of debate and clarification through various court cases.
The High Court plays a crucial role in interpreting and upholding the Constitution. In the Incorporation Case (New South Wales v Commonwealth, 1990), the High Court confirmed that the corporations power only extends to already-formed corporations and does not include the power to incorporate them. This ruling clarified that the power applies to domestic trading or financial corporations and all foreign corporations. Additionally, the High Court has addressed the distinction between municipal corporations and trading corporations, even when the former engages in trading activities.
The constitutional validity of legislation under the corporations power is scrutinised by the High Court. The court considers whether the legislation has a sufficient connection with the corporations power and if it regulates the activities of constitutional corporations. In the case of Dingjan, the court held that a federal law seeking to vary contracts between natural persons must have a direct connection to the rights, liabilities, or activities of a constitutional corporation to be valid under the corporations power. This decision highlights the court's role in upholding the constitutional validity of laws related to corporations.
Overall, federalism and constitutional validity are integral aspects of understanding the corporations power in the Australian Constitution. The interplay between federal and state legislation in industrial relations and the role of the High Court in interpreting and upholding the Constitution are key factors in ensuring the valid exercise of the corporations power. The WorkChoices Act and court cases such as Dingjan illustrate the dynamic nature of federalism and constitutional validity in the context of corporations law in Australia.
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The regulation of natural persons
The Corporations Power, as outlined in Section 51(xx) of the Australian Constitution, grants the Parliament the authority to make laws regarding foreign, trading, and financial corporations formed within the Commonwealth. However, it is important to note that this power does not extend to creating or dissolving corporations but rather focuses on regulating their conduct in transactions with or affecting the public.
The WorkChoices Act, a significant piece of legislation in Australia, attempted to utilise corporations' power to establish employment conditions for a large portion of the Australian workforce. The Act's constitutional significance lies in its attempt to regulate the activities of constitutional corporations and, incidentally, the employment relationships within them. However, the High Court's interpretation of the Act's validity remains crucial, as it may uphold or strike down specific provisions based on established principles of constitutional interpretation.
Overall, the regulation of natural persons in the context of corporations' power in Australia involves navigating the complexities of federalism and the boundaries between state and federal legislation. The decisions made in this area significantly impact workplace relations and the rights of employees within constitutional corporations.
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The ambit of corporations power
The "corporations power", as outlined in Section 51(00) of the Australian Constitution, gives the Commonwealth Parliament the power to legislate with respect to "foreign corporations, and trading or financial corporations formed within the limits of the Commonwealth". This power extends only to corporations that have already been formed and does not include the authority to incorporate, dissolve, or internally regulate them.
The scope of "trading or financial corporations" has been a subject of much debate, with the High Court distinguishing between trading corporations and municipal corporations, even when the latter engages in trading activities. A "financial corporation" is defined as one that engages in substantial financial activities or intends to do so, and a corporation carrying out substantial financial activities in the course of its primary business will be classified as such.
The ambit of the corporations power includes the regulation of the activities, functions, relationships, and business of these specified types of corporations, as well as the creation of rights and privileges belonging to them. It also includes the regulation of the conduct of those through whom the corporation acts, including employees and shareholders, as well as those whose conduct can affect the corporation's activities, such as company directors.
The Actors and Announcers Equity Association v Fontana Films Pty Ltd case further demonstrated the extent of the corporations power, where the Court upheld a section that protected a corporation against a secondary boycott, thus upholding the legislative purpose of protecting corporations.
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Frequently asked questions
The Australian Constitution grants the Parliament the power to regulate the conduct of foreign, trading, and financial corporations formed within the Commonwealth. This power, known as the corporations power, is outlined in Section 51(xx) of the Constitution.
The corporations power in Australia has several limitations. Firstly, it does not include the power to create or dissolve corporations. Secondly, it only applies to corporations that have already been formed and are of a trading or financial character, including all foreign corporations. Finally, the regulation of natural persons, such as employees, must have a rational connection to the valid operation of the legislation on constitutional corporations.
The corporations power enables the Australian Parliament to make laws governing the conduct of the specified corporations in their transactions with, or as affecting, the public. This includes laws related to trade, commerce, taxation, and industrial relations, among other areas outlined in Section 51 of the Constitution.
