meetings. corporate law: law principles and practice general provisions for meetings companies have...

Meetings

Corporate Law: Law principles and practice

General provisions for meetings

Companies have a number of different meetings.

Meetings have a number of purposes, such as:

• managing the company (by directors’ meetings)• members meetings (e.g. the AGM)• extraordinary meetings called by an interested party


General provisions for meetings

Procedural requirements must be complied with.

The law applying to meetings is imposed by legislation and common law.

Inappropriate procedures may lead to an invalidity of the meeting.

The company constitution may determine certain procedures to be complied with.


Statutory requirements

The replaceable rules (under the Corporations Act 2001 (Cth) set certain standards for meetings.

Meetings of directors15 Circulating resolutions of companies with more than

one director (248A)16 Calling directors’ meetings (248C)17 Chairing directors’ meetings (248E)18 Quorum at directors’ meetings (248F)19 Passing of directors’ resolutions (248G)20 Calling of meetings of members by a director (249C)21 Notice to joint members (249J(2))22 When notice by post or fax is given (249J(4))


Replaceable rules cont …

22A When notice under paragraph 249J(3)(cb) is given (249J(5))

23 Notice of adjourned meetings (249M)24 Quorum (249T)25 Chairing meetings of members (249U)26 Business at adjourned meetings (249W(2))27 Who can appoint a proxy (replaceable rule for

proprietary companies only) 249X28 Proxy vote valid even if member dies, revokes

appointment, etc. (250C(2))29 How many votes a member has (250E)30 Jointly held shares (250F)31 Objections to right to vote (250G)32 How voting is carried out (250J)33 When and how polls must be taken (250M)


Rules applying to meetings of members

Members must get sufficient notice of a meeting in order to determine if they should attend and contribute to the decisions of the meeting.

Lack of notice may invalidate the meeting’s decisions.

Bell Resources Ltd v Turnbridge Pty Ltd (1988) 6 ACLC 970


Proper purpose, and reasonable time and place A meeting of members must be called for a proper purpose (Corporations Act 2001 (Cth) s 249Q).

A meeting called to consider resolutions to be passed by a general meeting is considered to be a proper purpose, regardless of the motivation of those seeking the meeting.

NRMA Ltd v Scandrett (2003) 21 ACLC 176; (2002) 43 ACSR 401


Proper purpose, and reasonable time and place cont …

A meeting must be held at a reasonable place and time (Corporations Act 2001 (Cth) s 249R).

Leahy v Attorney-General (NSW) [1959] 2 All ER 300 (PC)

Bacon v Pianta [1966] ALR 1044

Coombs v Dynasty Pty Ltd (1995) 13 ACLC 1290

A company can use technology (such as the internet) to hold a meeting (s 249S).


Notice requirements Members of a company must receive adequate notice that a company meeting is to be held (Corporations Act 2001 (Cth) s 248C), as well as the matters to be considered at the meeting.

A notice must be given in writing to individual members.

A notice can be sent by post, fax, email or any other means permitted by the company constitution (s 249J).

If the company has an auditor, they must receive notice of the meeting (s 249K).


Notice requirements cont …

According to s 249L of the Corporations Act 2001 (Cth), the notice for a meeting must state:

• the place of meeting (if the meeting is to be held in two or more places, the technology that will be used to facilitate this (s 249S))

• the date and time of meeting• the nature of the business of the meeting• details of any special resolutions• the right to appoint a proxy.



A notice calling for a meeting of members at which there will be either special or ordinary resolutions must be given 21 days before the meeting (Corporations Act 2001 (Cth) s 249H), or 28 days for a listed company (s 249HA).

The notice period may be longer if the company’s internal rules stipulate this (s 249H(1)).



Different periods of time are required for different meetings:

• a longer notice of intention is stipulated for a particular resolution; e.g. two months’ notice of a meeting by the company to remove a director (Corporations Act 2001 (Cth) s 203D(2))

• a company can shorten the time required by statute if it is permitted; e.g. under s 249H(2), if certain conditions are met by whereby all members entitled to attend an AGM agree beforehand to the shorter notice

• a company cannot reduce the statutory time specified when giving notice of a meeting to appoint or remove a director (249H(3), or to remove an auditor (s 249H(4)).



Prescribed matters to be included in the notice are listed in s 249L of the Corporations Act 2001 (Cth), and include such details as the time, place and nature of business, including any special resolutions.

The notice must contain full and fair disclosure about the matters to be considered at the meeting.

The notice about the nature of business to be discussed at the meeting (s 249L(b)) must be clear and not misleading.Fraser v NRMA Holdings Ltd (1995) 127 ALR 543

Failure to give accurate information may be considered misleading and deceptive behaviour under s 18 of theCompetition and Consumer Act 2010 (Cth).



Administrative error or procedural irregularity regarding notice will not invalidate the meeting unless a court isof the opinion that the irregularity has caused or may cause substantial injustice and cannot be remedied by any order of the court.

A court can declare a proceeding to be invalid (Corporations Act 2001 (Cth) s 1322(3)). MTQ Holdings Pty Ltd v RCR Tomlinson Ltd [2006] WASC 96



The notice of a meeting may contain statutory notices. For example:

• A listed company must inform members that a non-binding resolution to adopt the remuneration report will be put at the AGM (Corporations Act 2001 (Cth) s 249L(2)).

• Special resolutions cannot be put without notice (e.g. share buyback (ss 257B, 257C).

• The general business of the meeting should be outlined.

• The notice should give details of any procedure in appointing proxies (s 294L).



Notice of a meeting sent to members must appropriately outline any matters to be voted on (Corporations Act 2001 (Cth) s 249L(3)).

The notice must be worded and presented in a clear, concise and effective manner, and contain sufficient information so that a member, on reading the notice, can decide whether it is in their interest to attend the meeting in order to vote for or against the resolution.Residues Treatment and Trading Co Ltd v Southern Resources Ltd (1988) 6 ACLC 913; 14 ACLR 375

The notice period for a meeting can be reduced by agreement of members who hold 95% of the votes that may be cast at the meeting (s 249 H(2)(b)).


Resolutions of the meeting

Under s 9 of the Corporations Act 2001 (Cth), there are two types of resolution:

Ordinary resolutions—matters of less significance can be passed as ordinary resolutions and require a simple majority vote by 51%of attending voters (or proxies) to be passed.

Special resolutions—matters of serious significance may require a special resolution. Special resolutions require notice that such a resolution is to be put and must be passed with a 75% vote by members attending the meeting (or proxies). Special resolutions are required to change the status of the company (ss 162–163), or to change the company constitution itself.


Resolutions of the meeting cont …

A company’s constitution determines whether an ordinary or special resolution is required.

A one-person company can make and pass a resolution by putting it in writing and signing the record (Corporations Act 2001 (Cth) s 248B(1)).



Members can give notice to a company of a resolution they plan to put at a general meeting (Corporations Act 2001 (Cth) s 249N(1)). This can be done by:

• members with at least 5% of the votes that may be cast on the resolution, or

• at least 100 members who are entitled to vote at a general meeting.



A notice must be in writing, outline the proposed resolution and be signed by members proposing the resolution (Corporations Act 2001 (Cth) s 249(2)).

A resolution put by members must be considered at the next general meeting (s 249N) that occurs more than twomonths after the notice is given (s 249O(1)).

A member can ask the company to send an explanatory statement as long as it is no more than 1000 words long or defamatory (s 249P).NRMA v Snodgrass (2002) 170 FLR 175

Members can use their right to force a company to hold a meeting, so that certain resolutions can be put (s 249D).


The requirement for quorum

A company constitution may set the numbers for a quorum.

The replaceable rules (Corporations Act 2001 (Cth) s 249T) determine that two members is sufficient for a quorum.

The lack of a quorum mayinvalidate the meeting.


The annual general meeting

Public companies must hold an AGM within five months after the end of its financial year (Corporations Act 2001 (Cth) s 250N(1)).

A public company must hold its first AGM within 18 months of its registration as a company (s 250N(2)), or a strict liability offence is committed (s 250N(2A)).

The AGM allows for communication between management to members, and will table the annual financial reports, determine dividends and other matters related to the company.


The annual general meeting cont …

Members can ask questions of the auditor (Corporations Act 2001 (Cth) s 250T).

Members can question the remuneration paid to company officers (s 250SA).

The AGM must be held at a reasonable time and place, and the company may hold the AGM at any place and by any means, but giving shareholders opportunity to take part.

The chairperson must give members as a whole a reasonable opportunity to ask questions about or makecomments on the management of the company (s 250S).


The annual general meeting cont …

A proprietary company does not have hold an AGM and can have a circulating resolution (Corporations Act 2001 (Cth) s 249A).

Special resolutions cannot be passed without a meeting.

A one-person company does not need to hold a meeting at all (s 250N(4)), but passes resolutions, if required, by the single director/member writing and signing the resolution into the minute book (s 249B(1)).


Minutes of a meeting

The minutes are the records of a meeting. The secretary keeps these.

The minutes are proof of decisions made (Corporations Act 2001 (Cth) s 251A(6)).

A company must keep proceedings and resolutions ofdirectors’ meetings and record them in its minute book within one month of the meeting (s 251A(1)(b) ).

Members have a right to copies of the minutes (s 251B(3)) and can inspect the minute books (s 251B(1)).

Australian Investments and Securities Commission vMacDonald (No 11) [2009] NSWSC 287


The role of the chairperson

The chairperson ensures:

• the meeting’s agenda is addressed• the rules of meetings are complied with• the company’s internal rules concerning meetings are

complied with.


The role of the chairperson cont …

To hold a meeting a chairperson must be elected.

At a member’s meeting, the directors can elect a chair (Corporations Act 2001 (Cth) s 249U(1)).

If there is no chairperson, decisions made at a meeting may be invalidated.

Colorado Constructions Pty Ltd v Platus [1966] 2 NSWR 598

Jenashare Pty Ltd v Lemrib Pty Ltd (1993) 11 ACLC 768


The role of the chairperson cont …

The chairperson:

• has wide powers and determines proceedings including who can speak and vote (Corporations Act 2001 (Cth) s 250S(1))

• allows questions to be put to the auditor (s 250T)• allows questions to be put to directors regarding

financial reports and remuneration (s 250SA) • must ensure a quorum is present• ensures appropriate procedures for voting to take place• can adjourn a meeting if appropriates (s 249U(4)).

Other types of meetings

Extraordinary meetings: meetings that are not ordinary meetings.

Class meetings: meetings of members holding a particular class of share (e.g. preference shareholders).Members holding a class of shares may meet to enter a scheme of arrangement.



Calling a meeting

Directors normally call a meeting (Corporations Act 2001 (Cth) s 249C).

A member can demand a meeting if they hold 5% of the company shares. The board must also organise a meeting if it is requested by at least 100 members entitled to vote (s 249D(1)).

The request by members must be in writing and state the reason for the meeting (249D(2)).

The meeting must be held at a reasonable place (s 249R).

If the directors fail to call a meeting, members can arrange the meeting and the directors will pay for the costs (s 249E(3)).


Calling a meeting cont …

The members themselves can call a general meeting if they have at least 5% of the votes that may be cast at a general meeting (Corporations Act 2001 (Cth) s 249F(1)).

The company must call and arrange to hold a general meeting, although the members calling the meeting must pay the expenses of calling and holding the meeting (s 249F(1)).

National Roads and Motorists’ Association Ltd v Snodgrass [2002] 42 ACSR 371


Court-ordered meetings

A court may order a meeting on the application of a director, shareholder or creditor, or if it is in the interests of the company (Corporations Act 2001 (Cth) s 249G(1)).

Re Noel Tedman Holdings Pty Ltd [1967] Qd R 561

A court has the power to make such ancillary directions that it thinks expedient (s 1319).


Calling directors’ meetings

The board of directors, consisting of executive and non- executive directors, meets to manage the company.

One director of a company can convene a meeting (Corporations Act 2001 (Cth) s 249C).

A directors’ meeting requires reasonable notice (s 248C) and can be held using the internet (s 248D).

Matters are decided by a simple majority according to the rules of the constitution. The chairperson has the casting votes (248E).


Calling directors’ meetings cont …

Directors can make resolutions without holding a directors’ meeting by putting the resolution in writing and those who vote for the resolution signing it in favour (Corporations Act 2001 (Cth) s 248A).

Directors have a duty of disclosure at a director’s meeting (s191).

Directors of a public company are not permitted to vote at a meeting (s 195).


Voting at meetings

Normally, voting at meetings is ‘one person, one vote’ (Corporations Act 2001 (Cth) s 250E).

Some classes of shares may not permit a vote.

The company’s chairperson will have a casting vote.


Procedures for voting

Voting is normally by show of hands (s 250J), unless a constitution provides otherwise.

A member can demand a formal vote (i.e. a poll) (s 250L).

A member(s) holding 5% of the votes can demand a poll (s 250K).


Proxies

A member of a company may appoint a representative to attend and vote at a meeting on their behalf.

A public company must allow a proxy; this is a non- replaceable rule (Corporations Act 2001 (Cth) s 249X).

If a proxy is appointed (s 249Y(1)), they have the right to:

• speak at the meeting• vote (but only to the extent provided for in the

appointment)• join in the demand for a poll.


Doctrine of unanimous consent

If the members of a company make a decision unanimously it will become a resolution of the company, even if appropriate meeting procedures have not been complied with.


Adjourning a meeting

A meeting may be adjourned by the chairperson because of an emergency, lack of quorum, a disruption, or because members, under the company’s constitution, are allowed to direct the chairperson to adjourn the meeting (Corporations Act 2001 (Cth) s 249U(4)).

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