The central hypothesis of the paper is that bit by bit and largely unnoticed Australian corporate law has undergone a profound change. Australian corporate law, and particularly the Corporation Act 2001 (Cth), has moved from an essentially private law, substantive rights model, to one that seeks to regulate the company and those involved in its affairs through the prescription of processes and procedures by which corporate decisions may be made and by which the procedural correctness of those decisions is assured. The paper will also seek to demonstrate, by an analysis of the changes in the patterns of corporate case law, that this proceduralising trend has effected a fundamental change in the nature of corporate law .
The modern registered company owes its immediate creation to the legislature. Historically, however, the nature of the corporate form and the content of what is now known in Australia as corporate law has been very much more the work of the courts. It is thus the case that the decision of the House of Lords in Salomon v A Salomon & Co Ltd is more often cited as the foundation of modern corporate law than are the Joint Stock Companies Act 1844 (UK) or the Limited Liability Act 1855 (UK). It is also the case that the building blocks of corporate law were predominantly taken from the private law. Within the open girders of the statutory framework, corporate law was built out of the concepts of contract, property, and trust. It is thus not surprising that the company was, and is still, regarded as a fundamentally private legal and economic institution.
Over the last 20 years or so, some commentators began to suspect that a change was occuring in the character of Australian corporate law. Michael Whincop and Mary Keyes thought that the doctrines and approach of corporate law were starting to resemble aspects of public law. This trend, which they regarded as still 'nascent and imprecise', entailed both more review of corporate decision-making and the adoption as grounds of review of factors that 'resemble those familiar from administrative law, such as a review of the procedure of decision-making'. Jennifer Hill saw the move to put shareholders in the role of supervisors and monitors of corporate management as part of an increasing focus on 'issues of fairness in the decision-making process itself as opposed to substantive outcomes. In reviewing the Corporate Law Economic Reform Program (Audit Reform & Corporate Disclosure) Act 2004 (Cth) ('CLERP 9') reforms, Jean du Plessis et al saw the more intrusive review of corporate actions as contributing to the creeping formalism in corporate law.
The observations of these commentators and the trends they detected arose out inquiries into a range of other substantive issues: the merits of the privatisation of public enterprises, the ways in which we might conceptualise the role of shareholders in modern corporate governance, and the Australian responses to the financial crashes of the early 2000s. The comments were also to one degree or another tentative, speculative, and conclusory impressions of an emergent trend generalised from particular instances discovered as part of the particular inquiry. Indeed, such are they very different questions the commentators were exploring, the different evidence from which they deduced their respective conclusions, the different times at which they were writing, and the complete absence of any across referencing or acknowledgement between them, that it is entirely possible that each of the commentators was describing something completely and fundamentally different. The incoherent and temporally contingenet nature of corporate law always holds out the possibility, this paper will suggest that the observations of the commentators do in fact have something in common. The central hypothesis of this paper is, therefore, that these otherwise unrelated observations are individual dots that may be joined to reveal a larger picture and that like the parable of the elephant in the dark room, each commentator was in fact describing parts of the same elephant. The paper will proceed as follows. First, the paper will describe the essential features and nature of the phenomenon that we are seeking to examine and then demonstrate the presence of this phenomenon in the current iteration of the Corporations Act 2001 (Cth) and in corporate case law. Second, the paper will attempt to assess and quantify the impact of this trend. Even if it is possible to identify a definite trend, the fact that to date it has gone largely unnoticed by all but a few commentators necessarily raises the question of whether it is a trend of any significance for Australian corporate law as a whole. The paper will attempt to give some sense of the significance of the trend through a quantitative analysis of changes in the nature of corporate case law. Thrid, the paper will speculate on the resasons why Australian law has begun to move in this particular direction. Finally, the paper will consider some of the more important implications of thirs trend for Australian corporate law as a whole.