Chapter 16

Report
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:
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•
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managing the company (by directors’ meetings)
members meetings (e.g. the AGM)
extraordinary meetings called by an interested party
Corporate Law: Law principles and practice
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.
Corporate Law: Law principles and practice
Statutory requirements
The replaceable rules (under the Corporations Act 2001
(Cth) set certain standards for meetings.
Meetings of directors
15 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))
Corporate Law: Law principles and practice
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) 249X
28 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)
Corporate Law: Law principles and practice
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
Corporate Law: Law principles and practice
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
Corporate Law: Law principles and practice
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).
Corporate Law: Law principles and practice
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).
Corporate Law: Law principles and practice
Notice requirements cont …
According to s 249L of the Corporations Act 2001 (Cth),
the notice for a meeting must state:
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•
•
•
•
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.
Corporate Law: Law principles and practice
Notice requirements cont …
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)).
Corporate Law: Law principles and practice
Notice requirements cont …
Different periods of time are required for different
meetings:
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•
•
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)).
Corporate Law: Law principles and practice
Notice requirements cont …
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 the
Competition and Consumer Act 2010 (Cth).
Corporate Law: Law principles and practice
Notice requirements cont …
Administrative error or procedural irregularity regarding
notice will not invalidate the meeting unless a court is
of 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
Corporate Law: Law principles and practice
Notice requirements cont …
The notice of a meeting may contain statutory notices. For
example:
•
•
•
•
A listed company must inform members that a nonbinding 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).
Corporate Law: Law principles and practice
Notice requirements cont …
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)).
Corporate Law: Law principles and practice
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.
Corporate Law: Law principles and practice
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)).
Corporate Law: Law principles and practice
Resolutions of the meeting cont …
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.
Corporate Law: Law principles and practice
Resolutions of the meeting cont …
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 two
months 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).
Corporate Law: Law principles and practice
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.
Corporate Law: Law principles and practice
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.
Corporate Law: Law principles and practice
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 make
comments on the management of the company (s 250S).
Corporate Law: Law principles and practice
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)).
Corporate Law: Law principles and practice
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 of
directors’ 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 v
MacDonald (No 11) [2009] NSWSC 287
Corporate Law: Law principles and practice
The role of the chairperson
The chairperson ensures:
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•
•
the meeting’s agenda is addressed
the rules of meetings are complied with
the company’s internal rules concerning meetings are
complied with.
Corporate Law: Law principles and practice
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
Corporate Law: Law principles and practice
The role of the chairperson cont …
The chairperson:
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•
•
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•
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)).
Corporate Law: Law principles and practice
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.
Corporate Law: Law principles and practice
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)).
Corporate Law: Law principles and practice
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
Corporate Law: Law principles and practice
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).
Corporate Law: Law principles and practice
Calling directors’ meetings
The board of directors, consisting of executive and nonexecutive 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).
Corporate Law: Law principles and practice
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).
Corporate Law: Law principles and practice
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.
Corporate Law: Law principles and practice
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).
Corporate Law: Law principles and practice
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 nonreplaceable 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.
Corporate Law: Law principles and practice
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.
Corporate Law: Law principles and practice
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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