Public companies are required by the Corporations Act to hold an annual general meeting (‘AGM’) each year, within five months after the financial year end of the company.  Most companies hold their AGM in October or November, although ASIC can grant an extension to this time upon application by the company. Private companies are not required to hold an AGM, but many do so.

Ordinary AGM Business

The business ordinarily transacted at an AGM includes:

  • the Board of Directors and management present to the members the annual      financial report, directors’ report and auditor’s report for the previous financial year;
  • directors’ election;
  • auditor’s appointment and fixing of remuneration.

Any other business is special or other AGM business.

Other AGM Business

An AGM is also an important opportunity on the corporate calendar for a company’s members to ask questions of the company’s Board of Directors and management.  However, this opportunity does not give members unlimited scope to ask questions and propose motions from the floor. The Corporations Act includes a number of additional sections that regulate AGMs and the Chairman of the Board of Directors may, subject to the company’s constitution or articles of association, reject questions or motions and keep the meeting moving through the agenda.

Can Members ask Questions at an AGM?

Yes. Section 250S(1) of the Corporations Act provides that the chair of an AGM must allow a reasonable opportunity for the members as a whole at the AGM to ask questions about or make comments on the management of the company. Section 250T(1) provides that the chair of an AGM must allow a reasonable opportunity for the members as a whole at the AGM to ask the auditor or its representative questions regarding the audit. But these rights are limited.  First, the Corporations Act does not require the Board of Directors, management or the auditor to answer questions or respond to any comments.  Second, the Corporations Act does not prevent the chair of the AGM from stepping in to limit the number of questions when members have had a reasonable opportunity to ask questions.

Can Members Move Motions at an AGM?

Yes, but not if the members have delegated responsibility for management of the company to the Board of Directors and the motions relate to management issues.  If members are not happy with the decisions being made by the Board of Directors then those members should nominate themselves to stand for election to the Board of Directors. For motions that can be moved at an AGM, section 249N(1) of the Corporations Act provides that the following members may give a company notice of a resolution that they propose to move at a general meeting (including an AGM):

  • 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.

Section 249N(2) of the Corporations Act provides that the notice must be in writing, set out the wording of the proposed resolution and be signed by the members proposing to move the resolution. Section 249N sets out further requirements for members to move motions at an AGM, which are beyond the scope of this article.

Statements by Members

Section 249P(1) of the Corporations Act provides that members may request the company to give to all its members a statement provided by the members making the request about:

  • resolution that is proposed to be moved at a general meeting; or
  • any other matter that may be properly considered at a general meeting.

Section 249P(2) of the Corporations Act provides that the request must be made 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 the meeting.

Section 249P sets out further requirements for distribution of member statements to the AGM, which are beyond the scope of this article.

Conclusion

A company’s AGM is an important event in the corporate calendar.  It provides a forum to transact company business and gives members an opportunity to ask questions of, and make comments on, the company’s Board of Directors, management and auditor.  However, these opportunities are not unlimited. For more information, contact LegalVision to speak with one our experienced business solicitors.

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