Members’ meetings, or shareholders’ meetings, are held when the company needs to make an important decision that requires the vote of the company’s shareholders. These meetings are also known as general meetings. This article sets out the general process for calling a general members’ meeting, and the requirements that you must follow.
Rules for Members’ Meetings
For many companies, the directors make the majority of the key decisions. However, the Corporations Act sets out that certain decisions must be made by shareholders. These decision making powers, and the rules and processes for conducting a members’ meeting, are set out in the:
- Corporations Act;
- Company Constitution (if the company has one); and
- Shareholders Agreement (if the company has one).
Calling a Members’ Meeting
The Corporations Act provides that a meeting of members may be called by a director. However, the company’s constitution may displace this rule. For example, the constitution may state that the company requires two or more directors to call a meeting.
However, regardless of the company’s constitution, the Corporations Act states that in a public company, one director can call a members’ meeting.
Meetings at the Request of Members
If the shareholders of a company who hold at least five per cent of voting power request that the company directors call a meeting, the directors must do so. This applies to all companies regardless of the constitution. Once the shareholders have requested the meeting, the directors must call the meeting within 21 days and hold the meeting no later than two months after the shareholders requested it. Shareholders with at least five per cent of voting power in the company can also call, arrange and hold a general meeting.
The company must give at least 21 days notice of a meeting unless the constitution specifies otherwise. If the shareholders with at least 95% of voting power agree to this beforehand, the company can give a shorter period of notice. However, this rule does not apply to public companies if the purpose of the meeting is to remove a director. The company must give notice in writing to all shareholders, directors and the company auditor.
The notice must set out:
- the place, date and time of the meeting;
- the general nature of the business that will be conducted at the meeting;
- any special resolutions;
- details for appointing proxies (a ‘stand-in’ for a member who is unable or does not wish to attend a meeting).
Once the company convenes a meeting, there are various rules concerning the conduct of the meeting.
Time, Place and Purpose
The Corporations Act provides that a meeting must be held:
- at a reasonable time and place; and
- for a proper purpose.
A meeting may be held at two or more locations using technology that enables the shareholders to have a reasonable opportunity to participate.
The Corporations Act provides that the minimum number of shareholders that must be present at a meeting of members (the ‘quorum’) is two, unless the company is a single shareholder company. However, the company’s constitution can change this number. If a quorum is not present within the first 30 minutes of the scheduled meeting, then the company must adjourn the meeting. When the company resumes the meeting, if the quorum is still not present within the first 30 minutes, then the company must close the meeting. As a general rule, if the quorum is not present, the meeting cannot proceed.
If a shareholder cannot attend in person, or via video or phone, they may be able to attend by proxy. This means that they will give their vote to the chairperson, or tell the chairperson how they want to vote.
Meetings must have a chairperson, who oversees the conduct of the meeting. The directors can elect the chairperson unless the constitution specifies otherwise. However, the shareholders must elect a fellow member to be the chairperson if the:
- directors do not elect a chairperson; or
- person that the directors selected is not available or will not act as the chairperson.
Usually, the chairperson does not have a casting vote. However, some companies may have governing documents (such as a constitution or shareholders agreement) which state that the chair has a casting vote. For example, a casting vote would occur if the votes are split evenly. In this case, the chairperson’s vote counts as two votes to break the deadlock.
Each shareholder has one vote for each share they hold subject to any rights or restrictions. Shareholders can be issued shares under different classes. The company constitution or shareholders agreement will set out the different classes of shares and the rights that are attached to those shares. The share register will identify the class of shares that a particular shareholder has. A vote can occur through a poll or a show of hands.
The Corporations Act states that a company must keep minutes of all general meetings. Minutes are a written record of the proceedings and resolutions moved at the meeting. The company must enter these minutes in the company minute book within one month of the meeting taking place.
Members’ meetings are an important part of the way a company operates. Company’s hold members’ meetings to make business decisions that require shareholder approval. The rules and procedures for calling and running meetings are set out in the company’s governing documents such as the company constitution or the shareholders agreement and the Corporations Act. The company must follow these rules carefully to be fair to all shareholders and to ensure that important decisions are made correctly.
If you have any questions about company meetings or company procedures, you can contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.
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