Template - Corporations Power(1).docx - Section 51(xx Corporations Power 1 What is the direct legal effect of the provision 2 Head of Power The Cth may

Template - Corporations Power(1).docx - Section 51(xx...

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Head of Powers: Corporations Power Section 51(xx): Corporations Power 1. What is the direct legal effect of the provision: 2. Head of Power: The Cth may seek to rely on s51(xx). The test for the scope of this power is as follows There are two elements which need to be considered to determine if the proposed section (or insert section number given in the facts) falls within the power stated under s51(xx). Element 1: Whether (company) is a constitutional corporation under s51(xx)? a. S51(xx) applies to the following 3 categories off corporations: i. Foreign Corporations Not formed within Commonwealth It will be regarded as a corporation if, under foreign law, it has separate legal personality from its members ii. Trading corporations formed within the limits of Commonwealth A trading corporation, in the most straightforward sense, is a corporation set up primarily to engage in trade Three different tests to work out whether a company of this sort is a constitutional corporation (1) Purpose of Creation: Is (company) a constitutional corporation according to the purposive test? The nature of the corporation is determined by the purpose for which it was created. R v Trade Practices Tribunal; Ex parte St George County Council (1974) 130 CLR 533 concerned a local council. One of its functions was to supply electricity to local residents. The High Court held by majority that the council was not a trading corporation. Gibbs CJ observed that the council was set up not to trade, but ‘for the purposes of local government to provide an essential service to the inhabitants’ in the way ‘most beneficial to them’ (564). Example of Application: Here SL was set up primarily not to trade, but for the purpose of providing education for children with special needs and raising funds for the schools through investment and donation, and not purposively for trading. Therefore, it was held that SL was not a trading corporation .
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