Decision Making By The General Meeting Notes

Class 5: Decision making by the General Meeting

Corporations Act Chapter 2G.2 ‘Meetings of Members’.

Circulating resolutions of proprietary companies with more than 1 member

(1) This section applies to resolutions of the members of proprietary companies that this Act or, if a company has a constitution, the company's constitution requires or permits to be passed at a general meeting. It does not apply to a resolution under section329 to remove an auditor.

(2) A company may pass a resolution without a general meeting being held if all the members entitled to vote on the resolution sign a document containing a statement that they are in favour of the resolution set out in the document. Each member of a joint membership must sign.

(3) Separate copies of a document may be used for signing by members if the wording of the resolution and statement is identical in each copy.

(4) The resolution is passed when the last member signs.

(5) A company that passes a resolution under this section without holding a meeting satisfies any requirement in this Act:

(a) to give members information or a document relating to the resolution--by giving members that information or document with the document to be signed; and

(b) to lodge with ASIC a copy of a notice of meeting to consider the resolution--by lodging a copy of the document to be signed by members; and

(c) to lodge a copy of a document that accompanies a notice of meeting to consider the resolution--by lodging a copy of the information or documents referred to in paragraph(a).

(6) The passage of the resolution satisfies any requirement in this Act, or a company's constitution (if any), that the resolution be passed at a general meeting.

(7) This section does not affect any rule of law relating to the assent of members not given at a general meeting.

Note 1: A body corporate representative may sign a circulating resolution (see section250D).

Note 2: Passage of a resolution under this section must be recorded in the company's minute books (see section251A).

CORPORATIONS ACT 2001 - SECT 249B

Resolutions of 1 member companies

(1) A company that has only 1 member may pass a resolution by the member recording it and signing the record.

(2) If this Act requires information or a document relating to the resolution to be lodged with ASIC, that requirement is satisfied by lodging the information or document with the resolution that is passed.

Note 1: A body corporate representative may sign such a resolution (see section250D).

Note 2: Passage of a resolution under this section must be recorded in the company's minute books (see section251A).

CORPORATIONS ACT 2001 - SECT 249C

Calling of meetings of members by a director (replaceable rule--see section 135)

A director may call a meeting of the company's members.

CORPORATIONS ACT 2001 - SECT 249CA

Calling of meetings of members of a listed company by a director

(1) A director may call a meeting of the company's members.

(2) This section only applies to a company that is listed.

(3) This section applies despite anything in the company's constitution.

CORPORATIONS ACT 2001 - SECT 249D

Calling of general meeting by directors when requested by members

(1) The directors of a company must call and arrange to hold a general meeting on the request of:

(a) members with at least 5% of the votes that may be cast at the general meeting; or

(b) at least 100 members who are entitled to vote at the general meeting.

(1A) The regulations may prescribe a different number of members for the purposes of the application of paragraph(1)(b) to:

(a) a particular company; or

(b) a particular class of company.

Without limiting this, the regulations may specify the number as a percentage of the total number of members of the company.

(2) The request must:

(a) be in writing; and

(b) state any resolution to be proposed at the meeting; and

(c) be signed by the members making the request; and

(d) be given to the company.

(3) Separate copies of a document setting out the request may be used for signing by members if the wording of the request is identical in each copy.

(4) The percentage of votes that members have is to be worked out as at the midnight before the request is given to the company.

(5) The directors must call the meeting within 21 days after the request is given to the company. The meeting is to be held not later than 2 months after the request is given to the company.

CORPORATIONS ACT 2001 - SECT 249E

Failure of directors to call general meeting

(1) Members with more than 50% of the votes of all of the members who make a request under section249D may call and arrange to hold a general meeting if the directors do not do so within 21 days after the request is given to the company.

(2) The meeting must be called in the same way--so far as is possible--in which general meetings of the company may be called. The meeting must be held not later than 3 months after the request is given to the company.

(3) To call the meeting the members requesting the meeting may ask the company under section173 for a copy of the register of members. Despite paragraph 173(3)(b), the company must give the members the copy of the register without charge.

(4) The company must pay the reasonable expenses the members incurred because the directors failed to call and arrange to hold the meeting.

(4A) An offence based on subsection(3) or (4) is an offence of strict liability.

Note: For strict liability , see section6.1 of the Criminal Code .

(5) The company may recover the amount of the expenses from the directors. However, a director is not liable for the amount if they prove that they took all reasonable steps to cause the directors to comply with section249D. The directors who are liable are jointly and individually liable for the amount. If a director who is liable for the amount does not reimburse the company, the company must deduct the amount from any sum payable as fees to, or remuneration of, the director.

CORPORATIONS ACT 2001 - SECT 249F

Calling of general meetings by members

(1) Members with at least 5% of the votes that may be cast at a general meeting of the company may call, and arrange to hold, a general meeting. The members calling the meeting must pay the expenses of calling and holding the meeting.

(2) The meeting must be called in the same way--so far as is possible--in which general meetings of the company may be called.

(3) The percentage of votes that members have is to be worked out as at the midnight before the meeting is called.

CORPORATIONS ACT 2001 - SECT 249G

Calling of meetings of members by the Court

(1) The Court may order a meeting of the company's members to be called if it is impracticable to call the meeting in any other way.

(2) The Court may make the order on application by:

(a) any director; or

(b) any member who would be entitled to vote at the meeting.

Note: For the directions the Court may give for calling, holding or conducting a meeting it has ordered be called, see section1319.

CORPORATIONS ACT 2001 - SECT 249H

Amount of notice of meetings

General rule

(1) Subject to subsection(2), at least 21 days notice must be given of a meeting of a company's members. However, if a company has a constitution, it may specify a longer minimum period of notice.

Calling meetings on shorter notice

(2) A company may call on shorter notice:

(a) an AGM, if all the members entitled to attend and vote at the AGM agree beforehand; and

(b) any other general meeting, if members with at least 95% of the votes that may be cast at the meeting agree beforehand.

A company cannot call an AGM or other general meeting on shorter notice if it is a meeting of the kind referred to in subsection(3) or (4).

Shorter notice not allowed--removing or appointing director

(3) At least 21 days notice must be given of a meeting of the members of a public company at which a resolution will be moved to:

(a) remove a director under section203D; or

(b) appoint a director in place of a director removed under that section.

Shorter notice not allowed--removing auditor

(4) At least 21 days notice must be given of a meeting of a company at which a resolution will be moved to remove an auditor under section329.

CORPORATIONS ACT 2001 - SECT 249HA

Amount of notice of meetings of listed company

(1) Despite section249H, at least 28 days notice must be given of a meeting of a company's members.

(2) This section only applies to a company that is listed.

(3) This section applies despite anything in the company's constitution.

CORPORATIONS ACT 2001 - SECT 249J

Notice of meetings of members to members and directors

Notice to members and directors individually

(1) Written notice of a meeting of a company's members must be given individually to each member entitled to vote at the meeting and to each director. Notice need only be given to 1 member of a joint membership.

Notice to joint members (replaceable rule--see section135)

(2) Notice to joint members must be given to the joint member named first in the register of members.

How notice is given

(3) A company may give the notice of meeting to a member:

(a) personally; or

(b) by sending it by post to the address for the member in the register of members or the alternative address (if any) nominated by the member; or

(c) by sending it to the fax number or electronic address (if any) nominated by the member; or

(ca) by sending it to the member by other electronic means (if any) nominated by the member; or

(cb) by notifying the member in accordance with subsection(3A); or

(d) by any other means that the company's constitution (if any) permits.

Note: A defect in the notice given may not invalidate a meeting (see
section1322).

(3A) If the member nominates:

(a) an electronic means (the nominated notification means ) by which the member may be notified that notices of meeting are available; and

(b) an electronic means (the nominated access means ) the member may use to access notices of meeting;

the company may give the member notice of the meeting by notifying the member (using the nominated notification means):

(c) that the notice of meeting is available; and

(d) how the member may use the nominated access means to access the notice of meeting.

This subsection does not limit subsection(3).

When notice by post or fax is given (replaceable rule--see section135)

(4) A notice of meeting sent by post is taken to be given 3 days after it is posted. A notice of meeting sent by fax, or other electronic means, is taken to be given on the business day after it is sent.

When notice under paragraph(3)(cb) is given (replaceable rule--see section135)

(5) A notice of meeting given to a member under paragraph(3)(cb) is taken to be given on the business day after the day on which the member is notified that the notice of meeting is available.

CORPORATIONS ACT 2001 - SECT 249K

Auditor entitled to notice and other communications

(1) A company must give its auditor:

(a) notice of a general meeting in the same way that a member of the company is entitled to receive notice; and

(b) any other communications relating to the general meeting that a member of the company is entitled to receive.

Note 1: For when a company must have an auditor, see Part2M.3.

Note 2: An auditor may appoint a representative to attend a meeting (see subsection 249V(4)).

(2) An offence based on subsection(1) is an offence of strict liability.

Note: For strict liability , see section6.1 of the Criminal Code .

CORPORATIONS ACT 2001 - SECT 249L

Contents of notice of meetings of members

(1) A notice of a meeting of a company's members must:

(a) set out the place, date and time for the meeting (and, if the meeting is to be held in 2 or more places, the technology that will be used to facilitate this); and

(b) state the general nature of the meeting's business; and

(c) if a special resolution is to be proposed at the meeting--set out an intention to propose the special resolution and state the resolution; and

(d) if a member is entitled to appoint a proxy--contain a statement setting out the following information:

(i) that the member has a right to appoint a proxy;

(ii) whether or not the proxy needs to be a member of the company;

(iii) that a member who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise.

Note: There may be other requirements for disclosure to members.

(2) The notice of the AGM of a listed company must also inform members that the resolution referred to in subsection 250R(2) (resolution on remuneration report) will be put at the AGM.

(3) The information included in the notice of meeting must be worded and presented in a clear, concise and effective manner.

CORPORATIONS ACT 2001 - SECT 249LA

Notice of meeting not required to contain certain information

(1) The regulations may provide that a notice of a meeting of a company's members is not required by section249L or otherwise to include information specified in the regulations if any conditions specified in the regulations are satisfied.

(2) Without limiting subsection(1), the regulations may specify different conditions for:

(a) different kinds of information; and

(b) a notice of meeting given by a company or a class of companies.

(3) If:

(a) regulations are made for the purposes of subsection(1); and

(b) a notice of meeting does not include particular information in accordance with those regulations;

the information is taken to be included in the notice of meeting.

CORPORATIONS ACT 2001 - SECT 249M

Notice of adjourned meetings (replaceable rule--see section 135)

When a meeting is adjourned, new notice of the resumed meeting must be given if the meeting is adjourned for 1 month or more.

CORPORATIONS ACT 2001 - SECT 249N

Members' resolutions

(1) The following members may give a company notice of a resolution that they propose to move at a general meeting:

(a) members with at least 5% of the votes that may be cast on the resolution; or

(b) at least 100 members who are entitled to vote at a general meeting.

(1A) The regulations may prescribe a different number of members for the purposes of the application of paragraph(1)(b) to:

(a) a particular company; or

(b) a particular class of company.

Without limiting this, the regulations may specify the number as a percentage of the total number of members of the company.

(2) The notice must:

(a) be in writing; and:

(b) set out the wording of the proposed resolution; and

(c) be signed by the members proposing to move the resolution.

(3) Separate copies of a document setting out the notice may be used for signing by members if the wording of the notice is identical in each copy.

(4) The percentage of votes that members have is to be worked out as at the midnight before the members give the notice.

CORPORATIONS ACT 2001 - SECT 249O

Company giving notice of members' resolutions

(1) If a company has been given notice of a resolution under section249N, the resolution is to be considered at the next general meeting that occurs more than 2 months after the notice is given.

(2) The company must give all its members notice of the resolution at the same time, or as soon as practicable afterwards, and in the same way, as it gives notice of a meeting.

(3) The company is responsible for the cost of giving members notice of the resolution if the company receives the notice in time to send it out to members with the notice of meeting.

(4) The members requesting the meeting are jointly and individually liable for the expenses reasonably incurred by the company in giving members notice of the resolution if the company does not receive the members' notice in time to send it out with the notice of meeting. At a general meeting, the company may resolve to meet the expenses itself.

(5) The company need not give notice of the resolution:

(a) if it is more than 1,000 words long or defamatory; or

(b) if the members making the request are to bear the expenses of sending the notice out--unless the members give the company a sum reasonably sufficient to meet the expenses that it will reasonably incur in giving the notice.

CORPORATIONS ACT 2001 - SECT 249P

Members' statements to be distributed

(1) Members may request a company to give to all its members a statement provided by the members making the request about:

(a) a resolution that is proposed to be moved at a general meeting; or

(b) any other matter that may be properly considered at a general meeting.

(2) The request must be made by:

(a) members with at least 5% of the votes that may be cast on the resolution; or

(b) at least 100 members who are entitled to vote at the meeting.

(2A) The regulations may prescribe a different number of members for the purposes of the application of paragraph(2)(b) to:

(a) a particular company; or

(b) a particular class of company.

Without limiting this, the regulations may specify the number as a percentage of the total number of members of the company.

(3) The request must be:

(a) in writing; and

(b) signed by the members making the request; and

(c) given to the company.

(4) Separate copies of a document setting out the request may be used for signing by members if the wording of the request is identical in each copy.

(5) The percentage of votes that members have is to be worked out as at the midnight before the request is given to the company.

(6) After receiving the request, the company must distribute to all its members a copy of the statement at the same time, or as soon as practicable afterwards, and in the same way, as it gives notice of a general meeting.

(7) The company is responsible for the cost of making the distribution if the company receives the statement in time to send it out to members with the notice of meeting.

(8) The members making the request are jointly and individually liable for the expenses reasonably incurred by the company in making the distribution if the company does not receive the statement in time to send it out with the notice of meeting. At a general meeting, the company may resolve to meet the expenses itself.

(9) The company need not comply with the request:

(a) if the statement is more than 1,000 words long or defamatory; or

(b) if the members making the request are responsible for the expenses of the distribution--unless the members give the company a sum reasonably sufficient to meet the expenses that it will reasonably incur in making the distribution.

CORPORATIONS ACT 2001 - SECT 249Q

Purpose

A meeting of a company's members must be held for a proper purpose.

CORPORATIONS ACT 2001 - SECT 249R

Time and place for meetings of members

A meeting of a company's members must be held at a reasonable time and place.

CORPORATIONS ACT 2001 - SECT 249S

Technology

A company may hold a meeting of its members at 2 or more venues using any technology that gives the members as a whole a reasonable opportunity to participate.

Note: See section1322 for the consequences of a member not being given a reasonable opportunity to participate.

CORPORATIONS ACT 2001 - SECT 249T

Quorum (replaceable rule--see section 135)

(1) The quorum for a meeting of a company's members is 2 members and the quorum must be present at all times during the meeting.

Note: For single member companies, see section249B.

(2) In determining whether a quorum is present, count individuals attending as proxies or body corporate representatives. However, if a member has appointed more than 1 proxy or representative, count only 1 of them. If an individual is attending both as a member and as a proxy or body corporate representative, count them only once.

Note 1: For rights to appoint proxies, see section249X.

Note 2: For body corporate representatives, see section250D.

(3) A meeting of the company's members that does not have a quorum present within 30 minutes after the time for the meeting set out in the notice of meeting is adjourned to the date, time and place the directors specify. If the directors do not specify 1 or more of those things, the meeting is adjourned to:

(a) if the date is not specified--the same day in the next week; and

(b) if the time is not specified--the same time; and

(c) if the place is not specified--the same place.

(4) If no quorum is present at the resumed meeting within
30 minutes after the time for the meeting, the meeting is dissolved.

CORPORATIONS ACT 2001 - SECT 249U

Chairing meetings of members (replaceable rule--see section 135)

(1) The directors may elect an individual to chair meetings of the company's members.

(2) The directors at a meeting of the company's members must elect an individual present to chair the meeting (or part of it) if an individual has not already been elected by the directors to chair it or, having been elected, is not available to chair it, or declines to act, for the meeting (or part of the meeting).

(3) The members at a meeting of the company's members must elect a member present to chair the meeting (or part of it) if:

(a) a chair has not previously been elected by the directors to chair the meeting; or

(b) a previously elected chair is not available, or declines to act, for the meeting (or part of the meeting).

(4) The chair must adjourn a meeting of the company's members if the members present with a majority of votes at the meeting agree or direct that the chair must do so.

CORPORATIONS ACT 2001 - SECT 249V

Auditor's right to be heard at general meetings

(1) A company's auditor is entitled to attend any general meeting of the company.

Note: Section250RA imposes on the auditor of a listed public company an obligation to attend or be represented at the AGM.

(2) The auditor is entitled to be heard at the meeting on any part of the business of the meeting that concerns the auditor in their capacity as auditor.

(3) The auditor is entitled to be heard even if:

(a) the auditor retires at the meeting; or

(b) the meeting passes a resolution to remove the auditor from office.

(4) The auditor may authorise a person in writing as their representative for the purpose of attending and speaking at any general meeting.

Note 1: At an AGM, members may ask the auditor questions (see section250T).

Note 2: For when a company must have an auditor, see Part2M.3.

CORPORATIONS ACT 2001 - SECT 249W

Adjourned meetings

When resolution passed

(1) A resolution passed at a meeting resumed after an adjournment is passed on the day it was passed.

Business at adjourned meetings (replaceable rule--see section135)

(2) Only unfinished business is to be transacted at a meeting resumed after an adjournment

CORPORATIONS ACT 2001 - SECT 249X

Who can appoint a proxy (replaceable rule for proprietary companies and mandatory rule for public companies--see section 135)

(1) A member of a company who is entitled to attend and cast a vote at a meeting of the company's members may appoint a person as the member's proxy to attend and vote for the member at the meeting.

(1A) The person appointed as the member's proxy may be an individual or a body corporate.

Note: A body corporate may appoint a representative to exercise the powers that the body corporate may exercise as the member's proxy, see section250D.

(2) The appointment may specify the proportion or number of votes that the proxy may exercise.

(3) Each member may appoint a proxy. If the member is entitled to cast 2 or more votes at the meeting, they may appoint 2 proxies. If the member appoints 2 proxies and the appointment does not specify the proportion or number of the member's votes each proxy may exercise, each proxy may exercise half of the votes.

(4) Disregard any fractions of votes resulting from the application of subsection(2) or (3).

CORPORATIONS ACT 2001 - SECT 249Y

Rights of proxies

Rights of proxies

(1) A proxy appointed to attend and vote for a member has the same rights as the member:

(a) to speak at the meeting; and

(b) to vote (but only to the extent allowed by the appointment); and

(c) join in a demand for a poll.

Proxy's right to vote

(2) If a company has a constitution, the constitution may provide that a proxy is not entitled to vote on a show of hands.

Note: Even if the proxy is not entitled to vote on a show of hands, they may make or join in the demand for a poll.

Effect of member's presence on proxy's authority

(3) A company's constitution (if any) may provide for the effect that a member's presence at a meeting has on the authority of a proxy appointed to attend and vote for the member. However, if the constitution does not deal with this, a proxy's authority to speak and vote for a member at a meeting is suspended while the member is present at the meeting.

CORPORATIONS ACT 2001 - SECT 249Z

Company sending appointment forms or lists of proxies must send to all members

(1) If a company sends a member a proxy appointment form for a meeting or a list of persons willing to act as proxies at a meeting:

(a) if the member requested the form or list--the company must send the form or list to all members who ask for it and who are entitled to appoint a proxy to attend and vote at the meeting; or

(b) otherwise--the company must send the form or list to all its members entitled to appoint a proxy to attend and vote at the meeting.

(2) An offence based on subsection(1) is an offence of strict liability.

Note: For strict liability , see section6.1 of the Criminal Code .

CORPORATIONS ACT 2001 - SECT 250A

Appointing a proxy

(1) An appointment of a proxy is valid if it is signed, or otherwise authenticated in a manner prescribed by the regulations, by the member of the company making the appointment and contains the following information:

(a) the member's name and address;

(b) the company's name;

(c) the proxy's name or the name of the office held by the proxy;

(d) the meetings at which the appointment may be used.

An appointment may be a standing one.

(1A) The regulations made for the purposes of subsection(1) may prescribe different requirements for the authentication of an appointment given to the company by different means (electronic or otherwise).

(2) If a company has a constitution, the constitution may provide that an appointment is valid even if it contains only some of the information required by subsection(1).

(3) An undated appointment is taken to have been dated on the day it is given to the company.

(4) An appointment may specify the way the proxy is to vote on a particular resolution. If it does:

(a) the proxy need not vote on a show of hands, but if the proxy does so, the proxy must vote that way; and

(b) if the proxy has 2 or more appointments that specify different ways to vote on the resolution--the proxy must not vote on a show of hands; and

(c) if the proxy is the chair--the proxy must vote on a poll, and must vote that way; and

(d) if the proxy is not the chair--the proxy need not vote on a poll, but if the proxy does so, the proxy must vote that way.

If a proxy is also a member, this subsection does not affect the way that the person can cast any votes they hold as a member.

Note: A company's constitution may provide that a proxy is not entitled to vote on a show of hands (see subsection 249Y(2)).

(5) A person who contravenes subsection(4) is guilty of an offence, but only if their appointment as a proxy resulted from the company sending to members:

(a) a list of persons willing to act as proxies; or

(b) a proxy appointment form holding the person out as being willing to act as a proxy.

(5A) An offence based on subsection(5) is an offence of strict liability.

Note: For strict liability , see section6.1 of the Criminal Code .

(6) An appointment does not have to be witnessed.

(7) A later appointment revokes an earlier one if both appointments could not be validly exercised at the meeting.

CORPORATIONS ACT 2001 - SECT 250B

Proxy documents

Documents to be received by company before meeting

(1) For an appointment of a proxy for a meeting of a company's members to be effective, the following documents must be received by the company at least 48 hours before the meeting:

(a) the proxy's appointment;

(b) if the appointment is signed, or otherwise authenticated in a manner prescribed by regulations made for the purposes of subsection 250A(1), by the appointor's attorney--the authority under which the appointment was signed or authenticated or a certified copy of the authority.

Documents received following adjournment of meeting

(2) If a meeting of a company's members has been adjourned, an appointment and any authority received by the company at least 48 hours before the resumption of the meeting are effective for the resumed part of the meeting.

Receipt of documents

(3) A company receives a document referred to in subsection(1):

(a) when the document is received at any of the following:

(i) the company's registered office;

(ii) a fax number at the company's registered office;

(iii) a place, fax number or electronic address specified for the purpose in the notice of meeting; and

(b) if the notice of meeting specifies other electronic means by which a member may give the document--when the document given by those means is received by the company as prescribed by the regulations.

Constitution or notice of meeting may provide for different notification period

(5) The company's constitution (if any) or the notice of meeting may reduce the period of 48 hours referred to in subsection(1) or (2).

CORPORATIONS ACT 2001 - SECT 250BA

Proxy documents--listed companies

(1) In a notice of meeting for a meeting of the members of the company, the company:

(a) must specify a place and a fax number for the purposes of receipt of proxy appointments and proxy appointment authorities; and

(b) may specify:

(i) an electronic address for the purposes of receipt of proxy appointments and proxy appointment authorities; and

(ii) other electronic means by which a member may give the company a proxy appointment or proxy appointment authority.

(2) This section only applies to a company that is listed.

(3) This section applies despite anything in the company's constitution.

Validity of proxy vote

Proxy vote valid even if proxy cannot vote as member

(1) A proxy who is not entitled to vote on a resolution as a member may vote as a proxy for another member who can vote if their appointment specifies the way they are to vote on the resolution and they vote that way.

Proxy vote valid even if member dies, revokes appointment etc. (replaceable rule--see section135)

(2) Unless the company has received written notice of the matter before the start or resumption of the meeting at which a proxy votes, a vote cast by the proxy will be valid even if, before the proxy votes:

(a) the appointing member dies; or

(b) the member is mentally incapacitated; or

(c) the member revokes the proxy's appointment; or

(d) the member revokes the authority under which the proxy was appointed by a third party; or

(e) the member transfers the share in respect of which the proxy was given.

Note: A proxy's authority to vote is suspended while the member is present at the meeting (see subsection 249Y(3)).

CORPORATIONS ACT 2001 - SECT 250D

Body corporate representative

(1) A body corporate may appoint an individual as a representative to exercise all or any of the powers the body corporate may exercise:

(a) at meetings of a company's members; or

(b) at meetings of creditors or debenture holders; or

(c) relating to resolutions to be passed without meetings; or

(d) in the capacity of a member's proxy appointed under subsection 249X(1).

The appointment may be a standing one.

(2) The appointment may set out restrictions on the representative's powers. If the appointment is to be by reference to a position held, the appointment must identify the position.

(3) A body corporate may appoint more than 1 representative but only 1 representative may exercise the body's powers at any one time.

(4) Unless otherwise specified in the appointment, the representative may exercise, on the body corporate's behalf, all of the powers that the body could exercise at a meeting or in voting on a resolution.

Note: For resolutions of members without meetings, see sections249A and 249B .

CORPORATIONS ACT 2001 - SECT 250E

How many votes a member has (replaceable rule--see section 135)

Company with share capital

(1) Subject to any rights or restrictions attached to any class of shares, at a meeting of members of a company with a share capital:

(a) on a show of hands, each member has 1 vote; and

(b) on a poll, each member has 1 vote for each share they hold.

Note: Unless otherwise specified in the appointment, a body corporate representative has all the powers that a body corporate has as a member (including the power to vote on a show of hands).

Company without share capital

(2) Each member of a company that does not have a share capital has 1 vote, both on a show of hands and a poll.

Chair's casting vote

(3) The chair has a casting vote, and also, if they are a member, any vote they have in their capacity as a member.

Note 1: The chair may be precluded from voting, for example, by a conflict of interest.

Note 2: For rights to appoint proxies, see section249X.

CORPORATIONS ACT 2001 - SECT 250F

Jointly held shares (replaceable rule--see section 135)

If a share is held jointly and more than 1 member votes in respect of that share, only the vote of the member whose name appears first in the register of members counts.

CORPORATIONS ACT 2001 - SECT 250G

Objections to right to vote (replaceable rule--see section 135)

A challenge to a right to vote at a meeting of a company's members:

(a) may only be made at the meeting; and

(b) must be determined by the chair, whose decision is final.

CORPORATIONS ACT 2001 - SECT 250H

Votes need not all be cast in the same way

On a poll a person voting who is entitled to 2 or more votes:

(a) need not cast all their votes; and

(b) may cast their votes in different ways.

Note: For proxy appointments that specify the way the proxy is to vote on a particular resolution, see subsection 250A(4).

CORPORATIONS ACT 2001 - SECT 250J

How voting is carried out (replaceable rule--see section 135)

(1) A resolution put to the vote at a meeting of a company's members must be decided on a show of hands unless a poll is demanded.

(1A) Before a vote is taken the chair must inform the meeting whether any proxy votes have been received and how the proxy votes are to be cast.

(2) On a show of hands, a declaration by the chair is conclusive evidence of the result, provided that the declaration reflects the show of hands and the votes of the proxies received. Neither the chair nor the minutes need to state the number or proportion of the votes recorded in favour or against.

Note: Even though the chair's declaration is conclusive of the voting results, the members present may demand a poll (see paragraph 250L(3)(c)).

CORPORATIONS ACT 2001 - SECT 250K

Matters on which a poll may be demanded

(1) A poll may be demanded on any resolution.

(2) If a company has a constitution, the constitution may provide that a poll cannot be demanded on any resolution concerning:

(a) the election of the chair of a meeting; or

(b) the adjournment of a meeting.

(3) A demand for a poll may be withdrawn.

CORPORATIONS ACT 2001 - SECT 250L

When a poll is effectively demanded

(1) At a meeting of a company's members, a poll may be demanded by:

(a) at least 5 members entitled to vote on the resolution; or

(b) members with at least 5% of the votes that may be cast on the resolution on a poll; or

(c) the chair.

Note: A proxy may join in the demand for a poll (see paragraph 249Y(1)(c)).

(2) If a company has a constitution, the constitution may provide that fewer members or members with a lesser percentage of votes may demand a poll.

(3) The poll may be demanded:

(a) before a vote is taken; or

(b) before the voting results on a show of hands are declared; or

(c) immediately after the voting results on a show of hands are declared.

(4) The percentage of votes that members have is to be worked out as at the midnight before the poll is demanded.

CORPORATIONS ACT 2001 - SECT 250M

When and how polls must be taken (replaceable rule--see section 135)

(1) A poll demanded on a matter other than the election of a chair or the question of an adjournment must be taken when and in the manner the chair directs.

(2) A poll on the election of a chair or on the question of an adjournment must be taken immediately.

CORPORATIONS ACT 2001 - SECT 250N

Public company must hold AGM

(1) A public company must hold an annual general meeting ( AGM ) within 18 months after its registration.

(2) A public company must hold an AGM at least once in each calendar year and within 5 months after the end of its financial year.

Note: An AGM held to satisfy this subsection may also satisfy
subsection(1).

(2A) An offence based on subsection(1) or (2) is an offence of strict liability.

Note: For strict liability , see section6.1 of the Criminal Code .

(3) An AGM is to be held in addition to any other meetings held by a public company in the year.

Note 1: The company's annual financial report, directors' report and auditor's report must be laid before the AGM (see section317).

Note 2: The rules in sections249C‑ 250M apply to an AGM.

(4) A public company that has only 1 member is not required to hold an AGM under this section.

CORPORATIONS ACT 2001 - SECT 250P

Extension of time for holding AGM

(1) A public company may lodge an application with ASIC to extend the period within which section250N requires the company to hold an AGM.

(2) If the company applies before the end of the period within which the company would otherwise be required to hold an AGM, ASIC may extend the period in writing. ASIC must specify the period of the extension.

(3) A company granted an extension under subsection(2) must hold its AGM within the extended period.

(4) ASIC may impose conditions on the extension and the company must comply with those conditions.

(5) An offence based on subsection(3) or (4) is an offence of strict liability.

Note: For strict liability , see section6.1 of the Criminal Code .

CORPORATIONS ACT 2001 - SECT 250PAA

Exemptions by ASIC--class orders relating to externally-administered companies

(1) ASIC may, by legislative instrument, make an order exempting any of the following from section250N:

(a) a specified class of companies that are being wound up;

(b) a specified class of companies under administration;

(c) a specified class of companies subject to deeds of company arrangement.

(2) The order may be:

(a) unconditional; or

(b) subject to one or more specified conditions.

(3) ASIC must cause a copy of the order to be published in the Gazette .

CORPORATIONS ACT 2001 - SECT 250PAB

Exemptions by ASIC--individual externally-administered companies

(1) The liquidator of a company that is being wound up may lodge an application with ASIC to exempt the company from section250N.

(2) The administrator of a company under administration may lodge an application with ASIC to exempt the company from section250N.

(3) The administrator of a deed of company arrangement may lodge an application with ASIC to exempt the company from section250N.

(4) If an application is lodged under subsection(1), (2) or (3), ASIC may, by writing, exempt the company from section250N.

(5) The exemption may be:

(a) unconditional; or

(b) subject to one or more specified conditions.

(6) ASIC must cause a copy of the exemption to be published in the Gazette .

CORPORATIONS ACT 2001 - SECT 250PA

Written questions to auditor submitted by members of listed company before AGM

Member may submit question

(1) A member of a listed company who is entitled to cast a vote at the AGM may submit a written question to the auditor under this section if the question is relevant to:

(a) the content of the auditor's report to be considered at the AGM; or

(b) the conduct of the audit of the annual financial report to be considered at the AGM.

The member submits the question to the auditor under this subsection by giving the question to the listed company no later than the fifth business day before the day on which the AGM is held.

(2) Despite the question being one that is addressed to the auditor, the listed company may:

(a) examine the contents of the question; and

(b) make a copy of the question.

Company to pass question on to auditor

(3) The listed company must, as soon as practicable after the question is received by the company, pass the question on to the auditor. The company must pass the question on to the auditor even if the company believes the question is not relevant to the matters specified in paragraph(1)(a) and (b).

Contravention by individual auditor

(4) If the auditor is an individual auditor, the auditor contravenes this subsection if the auditor does not prepare, and give to the listed company, a document (the question list ) that sets out the questions that:

(a) the listed company has passed on to the auditor; and

(b) the auditor considers to be relevant to the matters specified in paragraphs(1)(a) and (b);

as soon as practicable after the end of the time for submitting questions under subsection(1) and a reasonable time before the AGM.

(5) An offence based on subsection(4) is an offence of strict liability.

Note: For strict liability , see section6.1 of the Criminal Code .

Contravention by lead auditor

(6) A person contravenes this subsection if:

(a) the auditor is an audit firm or audit company; and

(b) the person is the lead auditor for the audit; and

(c) the person does not prepare, and give to the listed company, a document (the question list ) that sets out the questions that:

(i) the listed company has passed on to the auditor; and

(ii) the person considers to be relevant to the matters specified in paragraphs(1)(a) or (b);

as soon as practicable after the end of the time for submitting questions under subsection(1) and a reasonable time before the AGM.

(7) An offence based on subsection(6) is an offence of strict liability.

Note: For strict liability , see section6.1 of the Criminal Code .

Certain questions do not need to be included in question list

(8) A question need not be included in the question list under subsection(4) or (6) if:

(a) the question list includes a question that is the same in substance as that question (even if it is differently expressed); or

(b) it is not practicable to include the question in the question list, or to decide whether to include the question in the question list, because of the time when the question is passed on to the auditor.

Listed company to make question list available at AGM

(9) The listed company must, at or before the start of the AGM, make copies of the question list reasonably available to the members attending the AGM.

CORPORATIONS ACT 2001 - SECT 250R

Business of AGM

(1) The business of an AGM may include any of the following, even if not referred to in the notice of meeting:

(a) the consideration of the annual financial report, directors' report and auditor's report;

(b) the election of directors;

(c) the appointment of the auditor;

(d) the fixing of the auditor's remuneration.

(2) At a listed company's AGM, a resolution that the remuneration report be adopted must be put to the vote.

Note: Under subsection 249L(2), the notice of the AGM must inform members that this resolution will be put at the AGM.

(3) The vote on the resolution is advisory only and does not bind the directors or the company.

CORPORATIONS ACT 2001 - SECT 250RA

Auditor required to attend listed company's AGM

Contravention by individual auditor

(1) If a listed company's auditor for a financial year is an individual auditor, the auditor contravenes this subsection if:

(a) the auditor does not attend the company's AGM at which the audit report for that financial year is considered; and

(b) the auditor does not arrange to be represented, at that AGM, by a person who:

(i) is a suitably qualified member of the audit team that conducted the audit; and

(ii) is in a position to answer questions about the audit.

(2) An offence based on subsection(1) is an offence of strict liability.

Note: For strict liability , see section6.1 of the Criminal Code .

Contravention by lead auditor

(3) A person contravenes this subsection if:

(a) a listed company's auditor for a financial year is an audit firm or an audit company; and

(b) the person is the lead auditor for the audit; and

(c) the person is not represented, at the AGM at which the audit report for that financial year is considered, by a person who:

(i) is a suitably qualified member of the audit team that conducted the audit; and

(ii) is in a position to answer questions about the audit.

(4) An offence based on subsection(3) is an offence of strict liability.

Note: For strict liability , see section6.1 of the Criminal Code .

CORPORATIONS ACT 2001 - SECT 250S

Questions and comments by members on company management at AGM

(1) The chair of an AGM must allow a reasonable opportunity for the members as a whole at the meeting to ask questions about or make comments on the management of the company.

(2) An offence based on subsection(1) is an offence of strict liability.

Note: For strict liability , see section6.1 of the Criminal Code .

CORPORATIONS ACT 2001 - SECT 250SA

Listed company--remuneration report

At a listed company's AGM, the chair must allow a reasonable opportunity for the members as a whole to ask questions about, or make comments on, the remuneration report. This section does not limit section250S.

CORPORATIONS ACT 2001 - SECT 250T

Questions by members of auditors at AGM

(1) If the company's auditor or their representative is at the meeting, the chair of an AGM must:

(a) allow a reasonable opportunity for the members as a whole at the meeting to ask the auditor or the auditor's representative questions relevant to:

(i) the conduct of the audit; and

(ii) the preparation and content of the auditor's report; and

(iii) the accounting policies adopted by the company in relation to the preparation of the financial statements; and

(iv) the independence of the auditor in relation to the conduct of the audit; and

(b) allow a reasonable opportunity for the auditor or their representative to answer written questions submitted to the auditor under section250PA.

(2) An offence based on subsection(1) is an offence of strict liability.

Note: For strict liability , see section6.1 of the Criminal Code .

(3) If :

(a) the company's auditor or their representative is at the meeting; and

(b) the auditor has prepared a written answer to a written question submitted to the auditor under section250PA;

the Chair of the AGM may permit the auditor or their representative to table the written answer to the written question.

(4) The listed company must make the written answer tabled under subsection(3) reasonably available to members as soon as practicable after the AGM.

For substantive rights of members to adequate notices of meetings and resolutions, see Redmond [6.90]-[6.120]. In particular, see Fraser and Another v NRMA Holdings and Others (1995) 15 ASCR 590 in Redmond at [6.120] and Re Marra Developments Ltd (1976) 1 ACLR 470 at:

http://www.lexisnexis.com.wwwproxy0.library.unsw.edu.au/au/legal/docview/getDocForCuiReq?lni=4BG7-GJW0-TWGM-X0XN&csi=267688&oc=00240&perma=true (NOTE: to access this link you must first login to Sirius on the UNSW Library Website, and access CaseBase or Lexus Nexus AU).

• Section 52 TPA- misleading and deceptive.

• Fraser v NRMA Ltd

• Free shares

• Distinction between impact on members of association and insurance

• Costs of future operation of road side assistance service

• Putting all the documents in one booklet- prospectus and notices

• What is said and unsaid

• Tricky notices- literally true but misleading in context

• Clarity and fairness- adapting explanation to audience.

• Re Marra developments Ltd page 373

• Equitable duty to disclose matters material to shareholder judgment

• The shareholder in a hurry

• Especially heavy duty of disclosure where directors derive benefit of resolution.

Disclosure of obligations:

The range of disclosure obligations:

• In addition to the requirement under 249L(b) to state the general nature of the business of a meeting there are two distinct species of duty at general law to inform members with respect to proposals that are put to them in general meeting for decision. The first is an obligation in framing notices of shareholder meetings to make sufficient statement of the objects and general nature of the meeting. The notice must sufficiently specify the general nature of the business of the meeting. They must properly put out the proposed resolution. Part V of the TPA no longer applies to the financial services- s 51AF(1). In their place Part 2 Div 2 of the ASIC Act and CA section 1041H were introduced in similar terms.

• Equity requires directors to provide members with information material to their deliberations. They have a fiduciary position.

The equitable duty to disclose matters material to shareholder judgement

• Directors are under an equitable obligation to make full disclosure of facts within their knowledge which are material to the decision before shareholders, including whether or not to attend the meeting. The obligation requires them to fully and fairly inform and instruct the shareholders upon what is proposed in the resolutions put before them.

• Directors may be required to undertake inquiries to obtain information for communication to members and directors must not consciously refrain from seeking relevant information or turn a blind eye to relevant material in order to avoid placing before members information which may contradict or qualify a position taken by the directors. They do not have to give shareholders every piece of information. Disclosure must not mislead members by suppression of information and shareholders are entitled to expect the information is fairly presented, reasonably accurate and not misleading. Breach need not be dishonest or involve moral turpitude.

• The court looks at whether the information is capable of being misleading.

Disclosure where directors derive benefits from the resolution

• The disclosure obligation is particularly insistent when directors stand to derive a benefit under the proposed resolution or have an interest in the subject matter. They must make full and true disclosure of any benefits they may receive.

Standards of clarity and intelligibility:

• The information provided to members should be in a form which is comprehensible to its readers on the run. Different communications are required for a small and financially sophisticated shareholder group with business experience. It must be intelligible.

6.120 Fraser v NRMA Holdings Ltd (1995)

Facts:

• NRMA had 1.8 million members and 1.3 million were members of NRMA. The directors proposed a demutalisation. NRMA was incorporated as a company limited by shares with the intention that all members of the group become members of Holdings. They were asked to vote on constitutional change which would extinguish individual ownership in the association in exchange for shares in a new company. They would be ASX listed. Holdings sent a prospectus to all members and tucked away were notices of meetings of the Association to consider resolutions to amend the constitution. There was no statement in summary form. Fraser argued the members were not adequately informed of the proposals subject to the resolutions. They wanted relief under section 52 of the TPA (prior to the exclusion of financial services under the Act). They argued that ‘free shares’ suggested no loss or outgoing to the person who accepts them, the prospectus failed to distinguish between the impact of the proposal upon members of the association and phrases like business as usual was imprecise and how it would conduct its business was confusing.

• The changes were described as ones where they got free shares. But they were actually getting an exchange. The federal court said this is a complicated matter to describe to the person on the street. One has to think about how they can explain complicated things. Free shares was a good way to adapt the explanation to the audience.

• They talked about the information that must be in memorandums and it generally applies to prospectus’. Format was thought to be important. NRMA contributed to confusion by putting notices and prospectus and everything else in the same booklet. When things are buried in a thick document and the front is ambiguous the courts point to it and say this can contribute to an overall impression of misleading and deceptive conduct. You must adapt the explanation to the audience. They used the term free shares to make it a clear way to convey to shareholders that they were getting something they didn’t have to pay for and that was valuable. You must direct information to your audience.

Reasoning:

• Black CJ, Von Doussa and Cooper JJ in the FC full court: there is a fiduciary duty of the directors to disclose all relevant information to its members to be considered in a general meeting under section 1022 of the Law in respect to contents of a prospectus. Such material information as will fully and fairly inform all members of what is to be considered a the meeting and for which their proxy may be sought. Section 52 requires the information given is not misleading or deceptive or likely to mislead or deceive. The question of whether conduct is misleading is to be judged objectively and the applicant carries the onus of establishing how or in what manner there was an error.

• They upheld the first of their complaints but dismissed the second because describing the association as similar was not misleading. Third complaint upheld because they said the members would be better off without attempting to tell them the disadvantages and they were left in a half light thinking the disadvantages were insignificant.

Re Marra Developments Ltd (1976)

Facts:

• The directors of M Ltd. received a requisition to call a meeting of shareholders. Because the chairman of directors was overseas, the meeting called in pursuance of the requisition was convened for a date more than two months after the receipt of the requisition. The company sought to validate the calling of the meeting under s. 366 of the Act and the requisitionalists also put on a summons for orders in relation to the notices of meeting and proxies which the company was distributing to members. They wanted a policy of selling station properties to reduce the debt structure but the shareholders believed this was against their best interests. It has 1800 shareholders and one third are overseas.

• It was found that the company should receive relief under section 366 of the Act but on conditions that it made the appropriate emendations to the notices of the meeting and proxies.

• Although it is said that a notice of meeting should be a fair intimation of what is actually proposed to a business man, this does not mean that it can be assumed that a shareholder is a person well versed in commercial affairs or that such a person would read carefully the whole document from beginning to end. Accordingly a notice of meeting should be drafted so that a person reading the notice hurriedly would not be misled as to the business proposed.

• There were 9 resolutions requisitioned by an active shareholder action group. The court held that the notices of meeting had to be addressed so they could be understood by a wide audience. It is no use to draft these documents as if a person of commerce would read it cover to cover. It needs to be written for a shareholder in a hurry. You have to adjust the text to the audience. There is an especially heavy duty of disclosure if the directors derive a benefit from the resolution.

Reasoning:

• Wooten J in the SC of NSW: Section141 of the Companies Act gives a member of a public company, who is entitled to attend and vote at a meeting of the company, the right to appoint not more than two other persons as his proxy or proxies to attend and vote instead of the member at the meeting.

• The Associated Stock Exchange's official list requirements contain a number of provisions relating to proxies. Some occur in Part B of Section1 which set out provisions which must be included in the articles of association of a company as a prerequisite of listing. Of these it is relevant to note only one: “(23) Shareholders shall be given an opportunity to vote by proxy for or against any resolution submitted to a meeting of the company.” The other requirements are in Section3 which lists requirements for retention of membership of the official list. So long as companies remain on the official list they are required to comply with certain provisions, one of which is (1): “To send out proxy forms which will enable shareholders to vote for or against any resolution to be submitted to a meeting of the company with notices convening general meetings of the company. Such proxy forms shall be blank so far as the person primarily to be appointed is concerned.

• The notice did not disclose precisely what the directors were proposing to sell, or when they proposed to sell it, or why they proposed to sell it, or the extent to which the operations of the company would be curtailed, and it did not reveal that the effect of selling assets would be to bring about a situation in which the whole of the assets of the company might go to preference shareholders, and that that course would particularly favour one of the directors.

• This brings me to what I regard as the two matters of substance raised by the Shareholders Action Group, namely that (a) shareholders receiving the notice of meeting and proxy forms may have been misled into believing that the only resolutions to be dealt with at the meeting are requisitionists’ resolutions, and may have made or may make their decisions as to whether or not to attend the meeting and, in the latter case, as to how to complete their proxies, under this misapprehension; (b) that the notice fails to give material information concerning Resolution B proposed by the directors.

• My view of the notice is that a person who reads it carefully and with consideration from beginning to end would not be misled, and would realise that Resolutions A and B could not have been proposed by the requisitionists, and he would, no doubt, infer that they had been proposed by the board, although the notice does not in terms say so.

• A poll is one vote per share and this is where the weight of your shareholding is brought to bear. Proxy votes are when you vote as if you are in a poll. This is for resolutions. To pass a valid resolution s249T requires you to have two members present and s249U makes the chair present who controls the proceedings. Proxies are under s249Y and 250A. Voting is under 250E and 250J. Demanding a poll-s250K, 250L (5% or 5 members). How many votes a member has-s250E. Public companies must hold AGM- s250N.

• For a proxy you tell a person to vote in a specific way for each resolution so you are basically appointing an attorney.

• Asking questions at meetings- s250S, 250SA, 240T

• Keeping minutes and members’ access- s251A and 251B- it is an offence not to keep minutes especially in director meetings.

• Is a public company meeting just a postal vote?

• How important is shareholder deliberation?

• How effectively does the member’s meeting hold the board to account? They are one of many ways shareholders can hold the board to account. It is an imperfect instrument.

• How important are the formalities? If the board calls a meeting but then it is realised that the power they wish to exercise is a general meeting power what would be the effect of a directors meeting? If you waive time notice and the formalities of 249L it might be that the court thinks that directors are shareholders so they can do this but then Saloman thinks formalities are important. Re Express engineering is about unanimous consent. Unanimous consent only applies to tiny companies. There are statutory provisions which allow the failure of formalities to be forgiven if the correct procedures are done. You might be subject to an action for unfulfilled directors duties but the underlying transactions are still good.

• Can the board reconstitute itself as the GM to do members’ business? Re Express Engineering Workds

• Can the members change the class rights attached to shares when a class holder has not been notified? Herman v Simon

• What if a preference shareholder with no present right to vote objects?

• Re Duomatic Ltd But compare with Re Compaction Systems. In Re Duomatic they weren’t told about the meeting- they couldn’t vote but could have gone and spoken if they had a notice of meeting. They said they wouldn’t have changed the resolution anyway. Re Compaction said the shareholder has an important part to play in the outcome because they can speak at the meeting.

• What about the interests of creditors?

• Can unanimous assent override the requirements of statute (by contrast with the constitution)? S1322- especially s1322(3). It provides if you have screwed up badly in your obligations then you can apply to the court to have the procedural things amended if there is no substantial injustice to a member as a result of a court validating the failure to observe the irregularities in the course of holding a meeting or decision making or signing documents…etc.

• Statute littered with saving provisions, so if formalities are not void- e.g. s191(4) directors disclosure of conflicts- s209(1) related party transactions.

• You can fire directors but meetings are not that effective. There is projected authority. Division of powers. Directors are sometimes majority shareholders. Board calls meetings. Hard to get a directors sacking resolutions through. Board or management sends and composes meeting papers. If you are putting in a requisition resolution to put info to explain and support you resolution you can do this but they have to requisition a resolution. Proxy process (institutional shareholders in a register). Voting process is not inclined to cause to be prominent the dissenting view- it is a financially supported majority system.

• Descriptive theories try to frame how the world is- this is for law and economics theorists. Normative theory is making an argument for how the law ought to be. No theory is ever value free. Even just descriptive theory. All theories are partial and tend to be better at explaining some of the corporate world rather than others. Provides values, justifications for rules/ legal practices. Spot and sort incoherencies in the rules/legal practices. Inform policies.

How important are the formalities? See Corporations Act s 1322, and consider Redmond [5.140]-[5.190] Especially Re Express Engineering Works, Re Duomatic, Kinsella v Russell Kinsella and Re Compaction Systems.

Residual control in the general meeting

Where the board is unable to act:

• There are several instances where the general meeting retains what might be thought of as some measure of residual control over directors. The first instance concerns situations when board powers may revert to the general meeting. E.g. if the board has a deadlock. Or a receiver may be appointed where directors cannot agree.

Ratification of directors acts:

• The general meeting’s power to ratify director’s acts which are in abuse or excess of their powers vests shareholders with residual authority.

• Directors may exceed their powers like exercising borrowing powers in excess of the limitations of the constitution. This can be ratified by a general meeting. The circumstances where the company can plead the breach of such a restriction are restricted under section 124 and 125.

Dual initiative to litigate in the company’s name?

• Commencing litigation on behalf and in the name of the company clearly falls within the management power conferred upon the board by section 198A. A shareholder may apply to the court to enforce a claim for the benefit of the company but the director cannot.

Informal corporate acts:

• Section 248A says that if directors agree to a course of action proposed by the managing director the company is bound. Informal assent of members can also sometimes be effective.

• Kinsella v Russell Kinsella- the interests of the company as a whole can be seen more clearly as the creditor’s interests. The interests of the shareholders at that point defer to the interests of the creditors. You have to give a greater weight to the interests of the creditors. Negligent of company not to consider the creditors. Small financial company and the main asset is an inner city lease in Taylor Square- funeral directors company. The HC said there is no such thing as a director’s duty to creditors. But s588G means that where a director decides to borrow money and when they are insolvent or it takes them to insolvency they cannot do this to prefer the interests of shareholders- must take creditor interests into account. S1324 gives standing to those affected by a decision to take action to get an injunction if a director has breach one of the provisions of the CA but not for breaches of general law duties, only statutory duties- creditor can use it.

5.160 Re Express Engineering Works Ltd (1920)

Facts:

• A private company was formed to acquire assets from a syndicate of 5 people. The 5 people were appointed as directors. The constitution provided that no director should vote as a director in respect of a contract they might be interested in. The liquidator claimed the debentures were not properly issued when the company was wound up. The liquidator said it was a director meeting to decide whether to issue debentures and the directors were precluded from voting. They argued they were shareholders.

Reasoning:

• Lord Sterndale in the CA England: Every member of the company assented to the purchase. It was a directors meeting but could be considered a general meeting of the company.

• Warrington LJ: 5 directors were the only shareholders.

5.165 Parker and Cooper Ltd v Reading (1926)

Facts:

• Since the company’s bank was unwilling to increase its overdraft, a director, Reading advance 1750 pounds to the company upon the security of a floating debenture. When the company later became insolvent the liquidator sought to set aside the debenture for defects in the appointment of the directors who executed it as well in its sealing of the company.

Reasoning:

• Astbury J in Chancery Division: They believed they were directors. The transactions were honest and for the benefit of the company. Action dismissed with costs.

5.170 Re Duomatic Ltd (1969)

Facts:

• The holders of all the voting shares in the company had informally indicated their assent to payment of director’s salaries but no attempt had been made to show that the holder of non voting redeemable preference shares had agreed. The directors relied upon the assent given as the company’s authorisation as payment to them.

Reasoning:

• Buckley J in the Chancery Division: They did not take the formal step to have a general meeting. The shareholders have a right to attend and vote. The preference shareholder has a right to receive notice of or attend and vote at the general meeting.

5.175 Re Compaction Systems Pty Ltd (1976)

Facts:

• There were 20 shares in Compaction and Omnico had 19. McDonald had one and was the chair of the board. The liquidator believed that Omnico was the legal owner of all 20 shares. He had the minutes of the meeting to wind up Compaction but did not ask McDonald to join. On becoming aware of the liquidator McDonald he argued that though he had no voting rights he was entitled to receive notice of meetings or attend to speak at any general meeting.

Reasoning:

• Bowen CJ in the SC of NSW: The class B share did not entitle McDonald to vote but it did entitle him to receive notice under the company articles and entitle him to attend meetings. Under art III and section 249K and 249V an auditor is entitled to attend any general meeting of the company and to receive all notices of any general meeting to be heard. This is not an insubstantial right.

5.180 Ho Tung v Man On Insurance Co Ltd (1902)

Facts:

• A company registered a set of articles of association upon its incorporation in Hong Kong and used these articles as its regulations until it was discovered 19 years later that the articles had never been signed by the subscribers to the memorandum. The registered articles conferred upon the directors a power to refuse to register share transfers. The SC of HK said that the registered articles were the regulations of the company.

Reasoning:

• Lord Davey in the PC: The court is entitled to draw the inference that all shareholders have accepted and adopted the articles as the valid and operative articles of association of the company. There is no reason why the shareholders should not adopt the regulations although irregularly registered. This was acquiescence of agreement.

5.185 Herrman v Simon (1990)

Facts:

• HPM Industries passed a special resolution purporting to delete article 5 of the articles of association. 502 were held by Mrs Simon and 500 by her brother Mr Herrman. There were two classes of preference shares. The first were held by Mrs Simon as to 4000 and the second to Herrman as to 2500. The second preference shares were held by Short Street Investments- whose capital Simon and Herrman each held one share and Hill Street Investments owned 4100 shares (which was half owned by Simon and Herrman). The change failed to comply with article 55 because no separate meetings were held and no notice was given to Short Street.

• The appeal did not succeed.

Reasoning:

• Meagher JA in the CA of the SC NSW: where all shareholders having a right to attend and vote at a general meeting of a company assent with full knowledge and consent to some matter which a general meeting of the company could carry into effect, that assent is as binding as a resolution in a general meeting would be. Mrs Simon did not have full knowledge and consent so she did not consent. Appeal should be dismissed.

5.190 Kinsela v Russell Kinsela Pty Ltd (in Liq) (1986)

Facts:

• A company granted a lease of its business premises to two of its directors. The company was wound up three months later as an insolvent company. Its liquidator sought a declaration that the lease was voidable and had been duly avoided. The lessees pleaded that all members had full disclosure and authorised the granting of the lease.

Reasoning:

• Street CJ in the CA of the SC of NSW: Where a company is insolvent the interests of the creditors intrude. They become entitled to displace the power of the shareholders and directors and deal with the company’s assets. It becomes their assets. The lease was not ultra vires and void as exceeding the capacity of the company. It was entered into by the directors in breach of their duty to the company in that it directly prejudiced the creditors. It is a voidable transaction and as no third party rights have intervened the company is entitled to avoid it.

CORPORATIONS ACT 2001 - SECT 1322

Irregularities

(1) In this section, unless the contrary intention appears:

(a) a reference to a proceeding under this Act is a reference to any proceeding whether a legal proceeding or not; and

(b) a reference to a procedural irregularity includes a reference to:

(i) the absence of a quorum at a meeting of a corporation, at a meeting of directors or creditors of a corporation, at a joint meeting of creditors and members of a corporation or at a meeting of members of a registered scheme; and

(ii) a defect, irregularity or deficiency of notice or time.

(2) A proceeding under this Act is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court and by order declares the proceeding to be invalid.

(3) A meeting held for the purposes of this Act, or a meeting notice of which is required to be given in accordance with the provisions of this Act, or any proceeding at such a meeting, is not invalidated only because of the accidental omission to give notice of the meeting or the non‑receipt by any person of notice of the meeting, unless the Court, on the application of the person concerned, a person entitled to attend the meeting or ASIC, declares proceedings at the meeting to be void.

(3AA) A meeting held for the purposes of this Act, or a meeting notice of which is required to be given in accordance with the provisions of this Act, or any proceeding at such a meeting, is not invalidated only because of the inability of a person to access the notice of meeting, unless the Court, on the application of the person concerned, a person entitled to attend the meeting or ASIC, declares proceedings at the meeting to be void.

Note: Under paragraph 249J(3)(cb), a company may, in certain circumstances, give a member notice of a meeting by notifying the member that the notice of meeting is available and how the member may access the notice of meeting.

(3A) If a member does not have a reasonable opportunity to participate in a meeting of members, or part of a meeting of members, held at 2 or more venues, the meeting will only be invalid on that ground if:

(a) the Court is of the opinion that:

(i) a substantial injustice has been caused or may be caused; and

(ii) the injustice cannot be remedied by any order of the Court; and

(b) the Court declares the meeting or proceeding (or that part of it) invalid.

(3B) If voting rights are exercised in contravention of subsection 259D(3) (company controlling entity that holds shares in it), the meeting or the resolution on which the voting rights were exercised will only be invalid on that ground if:

(a) the court is of the opinion that:

(i) a substantial injustice has been caused or may be caused; and

(ii) the injustice cannot be remedied by any order of the court; and

(b) the court declares the meeting or resolution invalid.

(4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:

(a) an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;

(b) an order directing the rectification of any register kept by ASIC under this Act;

(c) an order relieving a person in whole or in part from any civil liability in...

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