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Abstract

Companies are increasingly the targets of shareholder class actions for nondisclosure and misleading statements. At least one commentator in the US has argued that liability for such actions might be reduced by amendments to the company’s certificate of incorporation. Does the constitution as a statutory contract between shareholders and the company allow elimination or reduction of company liability to shareholders in relation to Australian shareholder class actions? If it does should companies amend their constitution to protect against such actions? The author argues that it is unlikely that company constitutions could eliminate or reduce such liability. On the question of whether companies should attempt to limit liability in this way were it possible, he looks at the financial impact of shareholder class actions and finds mixed evidence.

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