Glossary of Australian Commercial and Corporate Law Terms
Introduction
Australian commercial and corporate law is primarily governed by a single national statute, the Corporations Act 2001 (Cth), together with the Australian Securities and Investments Commission Act 2001 (Cth) and the common law. The regime regulates the formation, governance, financing, and external administration of companies, as well as market conduct and consumer protection in commercial transactions. This glossary defines the key terms in this area.
A
ACCC — The Australian Competition and Consumer Commission, the independent statutory authority established under Part II of the Competition and Consumer Act 2010 (Cth). The ACCC enforces the competition (Part IV) and consumer protection (the Australian Consumer Law) provisions of the Act. Its functions include merger clearance, authorisation of anti-competitive conduct, enforcement action against cartels and misuse of market power, and consumer protection enforcement.
ASIC — The Australian Securities and Investments Commission, the national corporate regulator established under the Australian Securities and Investments Commission Act 2001 (Cth). ASIC is responsible for the regulation of companies, financial markets, financial services, and consumer credit. Its powers include registration and licensing, surveillance and investigation, enforcement (including civil penalty proceedings and criminal prosecution), and consumer education.
Authorisation — A process under Part VII of the Competition and Consumer Act 2010 (Cth) by which the ACCC may grant immunity from legal action for conduct that would otherwise contravene the competition provisions (e.g., anti-competitive agreements or mergers). The ACCC grants authorisation where it is satisfied that the public benefit from the conduct outweighs the public detriment. The Australian Competition Tribunal may review the ACCC’s decisions.
B
Business Judgment Rule — The statutory protection provided by s 180(2) of the Corporations Act 2001 (Cth): a director who makes a business judgment is taken to have satisfied the duty of care (s 180(1)) if the director: (a) makes the judgment in good faith for a proper purpose; (b) does not have a material personal interest; (c) informs themselves about the subject matter to the extent they reasonably believe appropriate; and (d) rationally believes the judgment is in the best interests of the corporation. The rule is a defence that protects directors who make honest, informed, and rational commercial decisions from liability for breach of duty.
C
Cartel Conduct — Conduct prohibited under Part IV, Division 1 of the Competition and Consumer Act 2010 (Cth) (ss 44ZZRF–44ZZRG), which criminalises contracts, arrangements, or understandings between competitors that involve: (a) price-fixing; (b) restricting output or limiting production; (c) allocating customers, suppliers, or territories; or (d) bid-rigging. Cartel conduct carries criminal penalties for individuals (imprisonment up to 10 years) and civil pecuniary penalties for corporations. The cartel provisions apply extraterritorially to conduct engaged in outside Australia by Australian citizens or bodies corporate.
Corporations Act 2001 (Cth) — The principal statute regulating corporations in Australia, enacted pursuant to the referral of powers from the states under s 51(xxxvii) of the Constitution. The Act covers the full life cycle of a company: registration (Chapter 2A), corporate governance and directors’ duties (Chapter 2D–2E), members’ rights and remedies (Chapter 2F), financial reporting (Chapter 2M), fundraising (Chapter 6D), takeovers (Chapter 6), financial services (Chapter 7), and external administration (Chapter 5). The Act has been amended frequently.
D
Deed of Company Arrangement (DOCA) — A binding arrangement between a company in voluntary administration and its creditors, governing the administration and distribution of the company’s affairs (Part 5.3A of the Corporations Act). A DOCA is proposed by the administrator and approved by a majority of creditors. It may provide for a moratorium on debts, the payment of a dividend to creditors, and the restructuring of the company’s affairs. A DOCA binds all unsecured creditors once approved.
Director — An officer of a company who is responsible for its governance and management. Under s 9 of the Corporations Act, a director includes any person appointed as a director or alternate director, and any person who acts in the position of a director (a de facto director) or whose instructions the other directors are accustomed to follow (a shadow director). Directors owe statutory and fiduciary duties to the company.
Duty of Care — The statutory duty of a director or officer to exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise in the same position (s 180(1) of the Corporations Act). The duty is both objective (the reasonable person standard) and subjective (having regard to the director’s responsibilities and the company’s circumstances). The business judgment rule provides a defence to liability for honest, informed commercial decisions.
Duty of Good Faith — The statutory duty of a director or officer to exercise their powers and discharge their duties in good faith in the best interests of the corporation and for a proper purpose (s 181 of the Corporations Act). The duty is fiduciary in character and is enforced by civil penalty provisions. The duty of good faith encompasses the duty to avoid conflicts of interest and the duty not to misuse the director’s position (s 182) or information (s 183).
I
Insolvent Trading — The prohibition under s 588G of the Corporations Act on a director allowing a company to incur a debt when the company is insolvent or there are reasonable grounds for suspecting insolvency. The provision imposes personal liability on directors for debts incurred in contravention. A director may have a defence if they: (a) had reasonable grounds to expect solvency; (b) relied on competent and reliable information; or (c) took steps to prevent the debt. The safe harbour provisions (s 588GA) protect directors who take steps to restructure the company’s affairs from liability for insolvent trading incurred in the course of developing a restructuring plan.
L
Liquidation — The process by which a company’s affairs are wound up and its assets realised and distributed to creditors (Chapter 5, Part 5.4–5.6 of the Corporations Act). A liquidator is appointed to take control of the company’s assets, investigate its affairs, and distribute the proceeds to creditors in the order of priority established by s 556 of the Act. Liquidation may be voluntary (by resolution of members or creditors) or compulsory (by court order). The company is dissolved upon completion of the winding-up process.
Ltd — The suffix required for a public limited company under s 148(2) of the Corporations Act. A public company (as distinct from a proprietary company) may raise capital from the public, is required to hold an annual general meeting, and must have at least three directors. Public companies may be listed on the Australian Securities Exchange (ASX) or unlisted.
M
Merger Clearance — The process by which the ACCC reviews proposed acquisitions to determine whether they would be likely to result in a substantial lessening of competition in a market (s 50 of the Competition and Consumer Act). The ACCC may oppose a merger through formal clearance, informal clearance, or authorisation (Part VII). Since 2025, Australia has introduced a mandatory and suspensory merger clearance regime (the Competition and Consumer Amendment (Mergers) Act 2025), replacing the previous voluntary notification system.
Misuse of Market Power — The prohibition under s 46 of the Competition and Consumer Act 2010 (Cth) on a corporation with substantial market power engaging in conduct that has the purpose, effect, or likely effect of substantially lessening competition in a market. The provision was amended in 2017 following the Harper Review to introduce an “effects test” (replacing the previous “purpose” test), aligning Australian law with international approaches. The provision does not prohibit a corporation from having market power; it prohibits the anti-competitive use of that power.
N
No Liability Company (NL) — A type of company limited by shares where the members have no liability to contribute to the company’s debts beyond any unpaid amount on their shares (s 112(2) of the Corporations Act). NL companies are permitted only for mining purposes and are unique to Australia. The “no liability” regime reflects the speculative nature of mining ventures and protects shareholders from calls beyond their share capital.
O
Officer — Defined broadly under s 9 of the Corporations Act to include: directors, the secretary, a person who makes or participates in making decisions that affect the whole or a substantial part of the company’s business, a person who has the capacity to affect significantly the company’s financial standing, and (in relation to a corporate trustee) a person who is an officer of the trust. Officers owe the same statutory duties as directors under ss 180–184 of the Act.
Oppression Remedy — The statutory remedy under s 232 of the Corporations Act for a member who complains that the affairs of the company are being conducted in a manner that is: (a) contrary to the interests of the members as a whole; or (b) oppressive, unfairly prejudicial, or unfairly discriminatory against a member. The remedy is broad and flexible, defined by reference to “commercial unfairness” rather than a strict legal test. The court may make any order it considers appropriate, including the purchase of the complainant’s shares, the regulation of the company’s affairs, or the appointment of a receiver.
P
PMSI (Purchase Money Security Interest) — A special category of security interest under the Personal Property Securities Act 2009 (Cth) (PPSA) that arises where a seller or financier provides credit to enable the acquisition of collateral. A PMSI enjoys super-priority over competing security interests in the same collateral, provided it is perfected by registration on the PPSR within the prescribed timeframe. The PMSI regime facilitates the provision of acquisition finance.
PPSR (Personal Property Securities Register) — The national online register of security interests in personal property, established under the Personal Property Securities Act 2009 (Cth). The PPSR replaced more than 30 separate registers of company charges, bills of sale, and other security interests. A security interest must be registered on the PPSR to be perfected; an unperfected interest may be defeated by a competing perfected interest or by the grantor’s insolvency.
Pty Ltd — The suffix for a proprietary limited company (s 148(1) of the Corporations Act), the most common form of company in Australia. A proprietary company must have no more than 50 non-employee shareholders, cannot raise capital from the public, and must have a share capital. The “Ltd” suffix indicates that the company is limited by shares (members’ liability is limited to the unpaid amount on their shares).
R
Receivership — The process by which a receiver (or receiver and manager) is appointed over some or all of a company’s assets, typically by a secured creditor under the terms of a security instrument (s 420A of the Corporations Act). The receiver takes control of the charged assets, realises them, and applies the proceeds to discharge the debt owed to the appointing creditor. Receivership is a remedy for the secured creditor and may operate alongside external administration (voluntary administration or liquidation).
S
Security Interest — An interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (s 12 of the Personal Property Securities Act 2009 (Cth)). The concept is defined functionally: any arrangement that has the economic effect of providing security over personal property creates a security interest, regardless of its legal form. The PPSR provides the system for registration and priority of security interests.
Shareholder — A person who holds one or more shares in a company. Shareholders (also called members) have certain statutory rights under the Corporations Act, including the right to vote on specified matters, the right to receive dividends (as declared), the right to participate in the distribution of surplus assets on winding up, and the right to bring proceedings (including the oppression remedy and the statutory derivative action). Shareholders generally have no management powers and are not liable for the company’s debts beyond their share capital.
Statutory Derivative Action — A proceeding brought by a member (or officer) of a company in the company’s name to enforce a cause of action belonging to the company (s 236 of the Corporations Act). The member must first obtain leave of the court, which requires the court to be satisfied that: (a) the member is acting in good faith; (b) there is a serious question to be tried; and (c) it is in the best interests of the company that the proceeding be brought. The statutory derivative action overcomes the strictures of the rule in Foss v Harbottle, which barred shareholders from suing on behalf of the company.
V
Voluntary Administration — A process under Part 5.3A of the Corporations Act under which an administrator is appointed to take control of a company that is insolvent or likely to become insolvent. The administrator investigates the company’s affairs and makes a recommendation to creditors. The creditors may then decide to: (a) accept a deed of company arrangement (DOCA); (b) end the administration and return control to the directors; or (c) place the company into liquidation. The process is designed to give the company a “breathing space” (a statutory moratorium on creditor enforcement) while its future is determined.