What Are the Requirements for Shareholder Meetings in Proprietary Companies?

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Table of Contents

• Single Director Shareholder Companies
• Calling Shareholder Meetings 
• Conducting Shareholder Meetings
• Voting
• Key Takeaways
• Frequently Asked Questions

Running a proprietary company involves convening meetings with company directors and shareholders. Notably, shareholder meetings should follow specific rules and procedures consistent with your company’s constitution and shareholder agreement. If you fail to follow these rules, the meeting and any of its resolutions could be ineffective. This article explains the requirements around meetings for proprietary companies to avoid any complications in your shareholder meeting.

Single Director Shareholder Companies

If you are operating a single shareholder company as a single director, you do not have to hold formal meetings with yourself. However, you are still obligated to record any company resolutions and sign the resolution’s passage in your company’s minute books.

Calling Shareholder Meetings 

While your company constitution may set out the regularity of meetings and the mechanics for calling them, there are two methods by which shareholders can call a meeting under corporations law.  

1. A Shareholder Requests a Director to Call a Meeting

Shareholders can request the company directors to call a meeting. However, these shareholders must hold at least 5% of the votes to make this request. 

2. Shareholders Call a Meeting

Shareholders can also call a meeting without requesting directors to do so. In this instance, the shareholders must hold at least 5% of the votes to call a meeting. In addition, the shareholders who call the meeting must bear the expenses of holding the meeting. 

Conducting Shareholder Meetings

A company can hold its shareholder meetings:

• at a single physical venue;
• across multiple physical venues; or
• virtually via meeting technology.

You should note that the time and location of the meeting must be reasonable. Additionally, you must also give your shareholders a reasonable opportunity to participate in the meeting. Ultimately, what is reasonable depends on the circumstances and can generally be achieved using a common-sense approach.

Virtual Meeting Requirements

If holding meetings virtually, companies must ensure:

• the technology allows shareholders to participate effectively;
• shareholders can communicate and vote in real-time;
• the platform provides secure access and identity verification;
• there is a reliable method for recording attendance and votes; and
• technical support is available during the meeting.

Companies should include specific virtual meeting procedures in their constitution or provide detailed instructions with the meeting notice.

Notice for meetings

The requirements for giving notice of shareholder meetings are strictly regulated under the Corporations Act 2001 (Cth). Generally, companies must provide at least 21 days’ written notice for a meeting, though longer periods may be specified in the company constitution. 

Short notice is possible only if shareholders holding 95% of the voting rights agree for special resolutions, or if all shareholders agree for other resolutions. The notice must be provided individually to each shareholder entitled to vote, each director, and the company’s auditor (if applicable). 

For valid notice, the communication must include essential details such as the meeting’s:

• date;
• time;
• location (including virtual meeting access details if relevant);
•  the general nature of the business to be conducted;
•  the text of any proposed special resolutions; and 
• information about proxy rights. 

If the meeting will consider special business, the notice should include sufficient information to allow shareholders to make an informed decision. Companies should maintain proof of notice delivery, as failure to provide proper notice can invalidate meeting resolutions. 

The method of giving notice should comply with the company constitution and can include electronic means if shareholders have consented to this form of communication.

Quorums

A quorum refers to the minimum number of members you need to conduct a shareholder meeting. Generally, at least two shareholders must be present to meet a quorum. However, this can change if you provide otherwise in your company constitution or run a single-shareholder company. 

Meeting Chair Responsibilities

The meeting chair plays a crucial role in shareholder meetings. Their responsibilities include:

• declaring the meeting open and closed;
• ensuring proper meeting procedure is followed;
• maintaining order during discussions;
• managing the voting process; and
• exercising a casting vote if provided for in the constitution.

The chair is typically appointed according to the company’s constitution, often defaulting to the board chair.

Voting

Whether a shareholder is entitled to vote will depend on the rights attached to the class of shares they hold. These voting rights are typically found in the company constitution. 

Generally, members can vote: 

• by a show of hands where each shareholder has one vote; and
• on a poll where each shareholder has one vote per share held.

A shareholder can ordinarily demand a poll, although your company may limit a shareholder’s ability to demand a vote on specific matters in its constitution.

Proxy Voting

Shareholders may appoint a proxy to attend and vote on their behalf. Subject to the constitution when allowing proxy voting:

• proxy appointments must be in writing;
• the company must receive forms within the specified timeframe (usually 48 hours before the meeting);
• the proxy’s voting rights must be clearly stated; and
• the company must verify proxy credentials before the meeting.

The proxy form should specify whether the proxy can vote on all matters or only specific resolutions.

Circular Resolutions

Instead of calling an official shareholder meeting to obtain shareholder approval, you can document the resolution in writing and circulate it to your shareholders. Nevertheless, you can only pass the circular resolution if you obtain the requisite shareholder signatures. 

Passing a circular resolution is a more cost-effective way of obtaining shareholder approval for less contentious resolutions. This is because you avoid the trouble and cost of hosting an official shareholder meeting. However, if you send out a circular resolution, you must provide your shareholders with the documents you would have provided had the shareholder meeting occurred in person.

Meeting Records

In your company’s minute books, you must record the proceedings, resolutions and any resolution that has passed. You must sign and record the details from each meeting within one month of the meeting taking place.

Key Takeaways

Shareholder meetings are an essential part of corporate life. You can find the rules and procedures for calling and conducting shareholder meetings in your company’s constitution and shareholder agreement. To ensure you conduct an effective members meeting, ensure you:

• provide notice of the meeting to all shareholders and directors; and
• have enough members present to meet the quorum. 

Whether a shareholder can vote in a shareholder meeting will ultimately depend on the rights attached to the class of shares they hold.

If you have any questions about shareholder meetings or would like help reviewing or drafting a company constitution and shareholder agreement, our experienced commercial lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 1300 544 755 or visit our membership page. 

Frequently Asked Questions