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Corporate Communication : Theory And Practice

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Discuss about the Corporate Communication for Theory and Practice.



Corporate law or corporation law is the study about a company of directors, employee’s shareholders, creditors and stakeholders, where they related or communicate with each other’s. It’s an important part of company’s law. The assignment is related with the act of Corporation Act 2001(Cth) of Commonwealth of Australia, which corporate with Business Enterprises in Australia at federal and state level[1]. Here, the essay contains of power to issue bonus shares of shareholders and their rights to compel the board of the company for not issue the shares.

It also contains the dividend of shareholders what they receive from the company and remuneration report where they can vote against the board[2].

According the sec - 254A of Corporation Act 2001, a company has power to issue three kinds of shares. Those are bonus shares, preference shares and partly paid shares. Bonus share only for the shareholders issues no consideration in with company. Preference shares only considerable for the redeemable preferences. Redeemable preference shares also issued according the terms liable to redeemed if it is happening in a proper and fixed time , according the company’s or shareholder’s option for redemption. A company can issue preference share according following matters[3]. Those are:

  • Repayment of amount of share to the shareholders
  • Involvement with excess profit amount
  • Increasing and decreasing of dividend amounts
  • Voting process among shareholders, board members and managements

A company can issue preference share only if the rights attached to the preference share with respect to the matters are set out in the company’s constitution or have been otherwise approved. Redeemable preference is a part of preference share which only applicable if the terms of issues are liable to be redeemed[4]. The redeemable when:

  • When it occurs at a proper or fixed time
  • According the terms of company
  • According the terms of shareholders.

The share is a no liability company, if a no liability company is wound up and a surplus remains. It must be distributed among the parties entitled to it in proportion to the number of shares held by them, irrespective of the amounts paid up on the shares and which issued when excess amounts remains left, then company can distributed the amount among shareholders according their share interests. A member who is in arrears of a call on a share, but whose share has not been fortified, is not entitled to practice in the distribution based on holding that share until the amount owing it in respect of the call has been fully paid and satisfied. A company can also incorporated as no liability companies if it was registered as no liability company and cease to carry up its business within 12 months after its registration[5]. The shareholders can also issue to dealer or promoters who are never related to preference shares.  

Partly paid shares for the shareholders who are paid for a particular time. A company can only determine the terms of shares according their rules and regulation.  The shareholders must submit an application for registration to the company according their name for providing shares. For bonus share there is no need to increase company’s capital.  Sec 254B described that term of issues, which include terms and rights related to that particular share. It also described that a share is not a liability for the companies, if that share is distributed between shareholders and not been forfeited. A forfeited share will not participate in distribution of shares until the amount received has been fully paid and satisfied[6].


Dividend Amount Company always paid to the shareholders out of the profits of the share. According sec 254T of Corporation Act 2001 , company may not pay the dividend amount to the shareholders unless assets of company cross its limits before declaring the dividend, the dividend amount is needs to distribute among shareholders and if it is not damage company’s ability to pay its customers.  

Here the board of Waldmart Ltd has issue bonus shares to shareholders as because company has the power to issue bonus share. Waldmart Ltd already increases dividend amount $1.25 cents that rises 25% on last year’s dividend.

b) Shareholders cannot directly compel or force the company to pay a dividend. There are only limited decisions where a shareholder can participate[7]. For example, making of company’s article, association and casting the votes in meetings. Shareholders never ignored board or company directly[8]. If the dividend is unsatisfactory or company treated illegally then shareholders directly take steps against the board. They have 5% voting rights in AGM. . However, dividend process is changeable according the company policy. Company can only decide the amount of dividsend and when to pay. A dividend can be paid four times a year[9].

In Ford vs. the Dodge Brothers case, the Dodge Brothers sued Henry Ford for refusing to distribute company’s cash to shareholders[10]. The Supreme Court gave judgment in favor of the Dodge Brothers and forced the Ford Company to pay the dividends.  However, nowadays AGM is the only way in presence of shareholders where a company can change the dividend policy.[11][12]

The shareholders never stop the directors from increasing and paying proposed dividend.  They have right to hold a meeting where they can discuss about paid or increasing the share. According the company’s rules, they can change the share policy. Shareholders have some general rights:

  • Attending meetings
  • Receive the annual reports from company.
  • Participate in the meetings when company changing the share policy, dividend
  • Right to receive the shareholder’s agreements
  • Respect the company’s minute book and securities registers
  • Right to appoint directors

A shareholder has legal rights and entity in a particular company where he can invest a sum of money and as a return, he gets benefits. It is the rights of shareholder to receive dividends from that company buy according the rights and regulation of that particular company. A shareholder works in a company individually[13]. They earn dividends as extra if the company is able to pay them. However, as company’s constitution, company can only fixed the amount. A shareholder only own shares, not own corporation or their assets. A company’s assets and liabilities are very different from shareholder’s assets and liabilities. When the dividend is declared, shareholders get their dividend amount but cannot demand that. The decision to skip dividends is only depends on the presumption of company’s share price which will continue to grow or that its stock will remain attractive. They can also decide to not paying the dividends when they are high prospects of more earnings. Once the board decided to pay or not pay the dividend, has declared the amount and dates.[14]


Here, Jim Smith the manager Better Super Ltd which holds 4% of the shares in Waldmart Ltd and the shareholders of the company thought that bonus share issue was completely unnecessary and increasing the divided amount also. There is no right of shareholders to stop the directors of Waldmart Ltd.

Remuneration is the basic salary that employee gets for his/her employment. It also includes the bonus or other benefits that an employee gets during employment. The minimum wage is the lowest remuneration that an employer can offer employee. The shareholders are also indirect employee in a company. They get remuneration according their investments in shares[15].

Remuneration reports are included in the Director’s report detailing with remuneration that a shareholder gets, payment, policies, and share interests. Shareholders at Annual General Meeting must vote the remuneration report. The directors and other managements never voted in the remuneration report. They avoid doing this for keeping them in distance from any conflicts related to give votes about the remuneration reports[16].

‘Two-strike’ test describe the voting process events where the shareholders can vote against the Remuneration Repots. The first strike happens, when Remuneration reports receives no votes of more than 25% at the Annual General Meeting. If it occurs then company explain weather and the extent to which shareholders may concern to taken in to their accounts[17].

The second-strike test occurs when company’s consequent Remuneration Report gets a no vote of 25% or more than 25%. In this matter, the shareholders will give votes in the same Annual General Meeting where directors must stand for re-election within 90 days [18]. However, directors or other management parties will not to be allowed to vote on this re-election. If the vote process is passed with at least 50% or more than 50% votes then directors must arrange for a ‘spill meeting ’within 90 days[19]. In addition, if needed to give a notice for the spill meeting then the directors must publish that in the same AGM at the time of second strike. The notice of spill meeting must contain the circumstances of in which the resolution or meeting will apply and invites shareholders to apply again for the proxy voting[20].

The company will give the minimum notice period for the spill meeting where it is also includes the nomination of candidates. At the spill meeting, directors must leave or vacate their positions for those managements who are presented in recent AGM. After the spill meeting end, the managements will have the power of cease to hold the office [21]. The company if failed to proceeds the spill resolution in between 90 days after passing the spill vote process, then the directors and the management will have committed an offence[22].


A proxy voting is applicable only for the shareholders. It is must to cast for every directed proxy. However, when shareholders are voting on the Remuneration Report in a spill meeting, if the nominated proxy holder does not give his vote to the proxy then automatically, it will transfer to the chairperson who must voted all directed proxy holders. Company must disclose their Remuneration Report with all details of information with the help of remuneration consultants.[23] If any conflicts arise regarding the position then the consultant, determine or help to proceed. The remuneration consultant always hired by the non-executive directors.[24]

In Waldmart Ltd, if the shareholders vote against the remuneration report and a second strike occurs, then the directors of the company will arrange for a spill meeting in between 90 days of the recent AGM. The proxy voting only decides to pass for a new remuneration report.


This essay emerges successfully provided the information about the shareholders rights and liabilities to issue bonus shares according the Corporation Act 2001(Cth). The power to issue of bonus by shareholder is briefly described according the acts. The shareholders of Waldmart Ltd have the power to issue bonus but they never compel or force the board for not issuing the shares. The dividend amount that board distributed among shareholders are always decides by the board members and they can change their policy according the statue of the company where shareholders never interfere in the decisions of the company. The other conclusion about the remuneration report is if the shareholders vote against the remuneration report and a second strike occurs, then the directors of the company will arrange for a spill meeting in between 90 days of the recent AGM. The proxy voting only decides to pass for a new remuneration report.



Bainbridge, Stephen. Corporate Law. West Academic, 2015.

Cassidy, Julie. Corporations law: text and essential cases. Federation Press, 2008.

Cornelissen, Joep. Corporate communication: A guide to theory and practice. Sage, 2014.

Davenport, Shayne, and David Parker. Business and law in Australia. Law book Co, 2012.

Ferran, Eilís, and Look Chan Ho. Principles of corporate finance law. Oxford University P

Hanrahan, Pamela F., Ian Ramsay, and Geofrey P. Stapledon. "Commercial applications of company law." (2013).

Liu, Chen, William B. Rouse, and Zhongyuan Yu. "When transformation fails: Twelve case studies in the american automobile industry." Journal of Enterprise Transformation 5.2 (2015): 71-112.

Morrissey, Daniel J. "The Riddle of Shareholder Rights and Corporate Social Responsibility." Brook. L. Rev. 80 (2014): 353.

Renneboog, Luc, and Peter G. Szilagyi. "How relevant is dividend policy under low shareholder protection?." Journal of International Financial Markets, Institutions and Money (2015).

Stout, Lynn. "The Corporation and the Law 1." Proceedings of the American Philosophical Society 158.4 (2014): 364.

Travlos, Nickolaos G., Lenos Trigeorgis, and Nikos Vafeas. "Shareholder wealth effects of dividend policy changes in an emerging stock market: The case of Cyprus." (2015).

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