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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. 

A shareholder might opt for this option if:

  • no directors are available to call a meeting; or
  • they want to gain a tactical advantage in a contested meeting by controlling the time and venue.

Notice of Shareholder Meetings 

If you want to call a shareholder meeting, you must generally give shareholders a minimum of 21 days’ notice of the meeting. However, you can extend this minimum notice period in your company constitution.

In your notice, you must set out: 

  • the date, time and place of the meeting;
  • the general nature of the meeting’s agenda;
  • any special resolutions that you are proposing; and 
  • any rights you shareholders have to appoint a proxy. 

Under corporations law, you must provide notice individually to every: 

  • shareholder that is entitled to vote; and 
  • director of the company. 

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.

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 quorum. However, this can change if you provide otherwise in your company constitution or run a single shareholder company. 

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 poll on specific matters in its constitution.

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 number of shareholder signatures. 

Passing a resolution via a circular resolution is a more cost-effective means 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 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 relating to 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

Who is a shareholder?

A shareholder is someone who holds shares in your company when you registered it or agree to become a member by acquiring shares later on.

What is a proxy?

Where a shareholder cannot attend a member’s meeting, they can authorise another person (a proxy) to vote on their behalf. Your company constitution and shareholder agreement should specify whether a member can appoint a proxy or not.

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