Horsley's meetings : procedure, law and practice [7th edition.] 9780409334852, 0409334855
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English Pages [521] Year 2015
Fulle Title
Foreword
Preface
Table of Cases
Table of Contents
1 The Nature of Meetings
Introduction
Organisations and meetings
People and meetings
Basis of procedures
Company legislation
Other legislation
Principles and precedents
Legal requirements and priorities
Statutory requirements
ASX listing rules for listed companies
Rules of the body
Common law
‘Meeting’ defined
Meetings of one person
Meetings by telephone or video
Types of meetings
General meetings
Joint meetings
Private meetings
Public meetings
Unlawful meetings
Validity of a meeting
2 The Secretary
Introduction
The secretarial function
Historical development
Differing types of meetings
Responsibilities
Duties
General arrangements
The agenda
Preliminaries
At the meeting
After the meeting
Minutes
Qualities and attributes
3 The Agenda
Introduction
Legal status
Function
Preparation
Form and wording
Minutes and matters arising
Routine business
Alteration of order
Other or general business
Circulation
Adjourned meetings
Annotated agenda
4 Notice of Meeting
Proper notice is essential
Rules should be complied with
Authority to give notice
Notice must be given to each member
Members unwilling or unable to attend
Members not entitled to vote
Waiver of notice
Accidental omission to give notice
Date, time and place of meeting
Board and committee meetings
Period of notice
Calculation of time
Service by post
Newspaper advertisement
Form of notice
Notice of business
Notice indicates scope of business
Other or general business
Inability to cancel notice
Adjourned meeting
Contingent notice
Evidence of notice
5 Quorum
Meaning
Historical origins
Rules should specify quorum
Where no quorum is specified
Where power to fix own quorum
Proper notice is still required
Can a quorum be one?
Are proxies to be counted?
Are the secretary, and others, to be counted?
Conflict of interest
Must quorum be present throughout meeting?
Quorum at adjourned meeting
Parliamentary practice
Loss of quorum
Others may rely on decisions of inquorate meeting
Lapsing of meeting
Determining the size of a quorum
6 The Chair
Chair is essential
Historical background
Appointment
Election
Authority
Removal
Chairing in practice
Nature of meeting
Discussion groups
The company context
Duties and powers
Qualities and characteristics
Preparation
Opening the proceedings
The debate
Procedures and practices
Involvement in the proceedings
Closing the debate
Public meetings
Demeanour
7 Conduct of Meeting
Historical origins
Parliamentary procedure
Rules of debate
Content of rules
Outline of debate
Relaxation of rules
Speaking at meetings
Participation by outsiders
Control by the Chair
Maintenance of order
Public meetings
Outline
Trespass
Breach of the peace
Unlawful assemblies
Action by the Chair
Injunction to prevent meeting being held
8 Defamation
Introduction
General principles
Definition
Examples of defamatory imputations
Who may defame and be defamed
Truth
Identification
Group defamation
Unintentional defamation
Innuendo
Publication
Liability for publication
Publication by failure to act
Re-publication and repetition
Protected reports
Libel and slander
Defence of qualified privilege
Qualified privilege at common law
Qualified privilege under the UDA
Loss of qualified privilege — excessive publication
Loss of qualified privilege — mistaken character of recipient
Loss of qualified privilege — malice and lack of good faith
Imputed malice
Derivative privilege
Summary of other defences under the UDA
Source of law
Innocent dissemination
Defence of honest opinion/fair comment
Defence of absolute privilege
Protected reports and public documents
Triviality
Resolution without litigation
Remedies
Criminal proceedings
Further reference
9 Points of Order
Definition
Who, when and how may be raised
Ruling by the Chair
Disagreement with the Chair’s ruling
Motion of dissent
Minutes
Court challenge to ruling
10 Motions and Amendments
Introduction
Terminology
Definition of ‘motion’
‘Motion’ and ‘resolution’
‘Question’
Motions
Desirable characteristics of a motion
Unacceptable motions
Invalid motions
Notice of motion
Submission of motion to the Chair
Motions not formally moved
Stating the motion
Seconding a motion
Lapsing of motions
Debate on the motion
Withdrawal of motion
Amendments
Definition
Characteristics of an amendment
Unacceptable amendments
Amendments and notice of motion
Amendments to special resolutions
Conduct of the debate
Debate on an amendment
Dealing with several amendments
Substantive motion
Counter motions
Right of reply
The vote
Omnibus motions
Recording in minutes
Postal ballots and circulating resolutions
11 Resolutions and Rescission
Definition of ‘resolution’
Validity of resolutions
Interpretation of resolutions
Types of resolutions
Ordinary resolutions
Special and extraordinary resolutions
Other uses of ‘special’ in the context of meetings
Unanimous resolution
Circulating resolution
Pious resolution
Rider
Rescission of resolutions
Meaning of rescission
Where rescission is desirable
Notice of rescission motion
Form of motion
Rescission at same meeting?
Rescission at later meeting
Procedure for rescission
Principles to apply
Examples of appropriate rules
Rescission of rescission
Recommittal
Legal advice
Further reading
12 Procedural Motions
Introduction
‘Procedural motion’
‘Formal motion’
‘Dilatory motion’
Types of formal motion
Basis of procedure
Procedure generally
The closure
Guillotine closure
Kangaroo closure
The previous question
To proceed to the next business
The matter (or question) to lie on the table
Adjournment motions
Other procedural motions
Withdrawal of a motion or amendment
The gag
‘That (a person by name) be now heard’
‘That the matter be referred to a committee’
‘That the matter be referred back to the committee’
13 Adjournment
Introduction
Meaning
Basis of procedure
Parliamentary practice
Common law
Adjournment by the Chair
Polls
Vacation of chair
Public meetings
Postponement
Defect in notice
Absence of quorum
Action to bring about adjournment
One meeting only
Minutes
Formal motions relating to adjournment
Formal motions
To adjourn the debate
To adjourn the meeting
‘That the Chair leave the chair’
14 Voting
Introduction
Methods of voting
Parliamentary procedure
By voices
By show of hands
By poll
By ballot
By acclamation
Vote of thanks
Common law principles
Casting of votes
Declaration by the Chair
Voting by show of hands
Voting by proxy
Chair’s casting vote
Majorities
Simple majority
Absolute majority
Special majorities
Effect of decisions made by a majority
15 Polls
Introduction
Who may demand a poll
When a poll may be demanded
Effect of demand for a poll
Withdrawal of a demand
When a poll is to be held
Conduct of a poll
Entitlement to vote
Method of voting
Date of resolution
Suggested procedures
16 Proxies
Introduction
Agency principles
General principles
Common law principles
The proxy document
Lodgement of proxy documents
Revocation of a proxy
Voting by principal
Exercising a proxy vote
Obligation to exercise a proxy vote
Soliciting of proxy votes
Powers of attorney
Proxy by power of attorney
Representatives of corporations
Suggested procedure on receipt of proxies
17 Elections and Ballots
Introduction
General principles
Election of the Chair
Voting methods
‘First past the post’ system
Preferential system
Other systems
Secret ballots
Postal ballots
Declaration of election
18 Minutes
Introduction
Definition
Must minutes be kept?
Form of minutes
Minutes contrasted with reports
Types of minutes
Contents of minutes
Minutes of adjourned meeting
Recording of resolutions
Names of movers and seconders
Writing up the minutes
Verifying the minutes
Altering draft minutes
Signing the minutes
Later amendment
Minutes as evidence
Circulation of minutes
Circulating resolutions
Minute books
Permanent retention
Writing minutes in practice
Introduction
Note-taking
Sequence
Procedural motions
Headings
Numbering
Style
Periods of time
19 Committees
Introduction
Definition
Types of committees
Establishment of committees
Initial considerations
Size of committees
Terms of reference
Practical guidelines
Proceedings of committees
General characteristics
General principles
Quorum
Proxies and alternates
Co-option
Resignation and vacancies
Executive versus non-executive committees
Executive committees
Non-executive committees
Reports and minutes
Recommendations and reports
Minutes as reports
Minority reports
Delegation
General considerations
Legal principles
Practical guidelines
Committees in practice
General observations
Practical guidelines
Value of committees
20 Companies — Introduction
Introduction
Applicability of general meeting procedure
The Corporations Act
‘Company’ defined
‘Corporation’ contrasted
Types of company
Proprietary and public companies
Subsidiaries, holding and related companies
Constitution
Replaceable rules
Memorandum and articles of association
Tables A and B
Australian Securities Exchange listing rules
Companies that are registered charities
Types of company meetings
21 Companies — General Meetings
Introduction
Meetings of the members
Companies that are registered charities
Annual general meeting: ss 250N and 250P
Notice of annual general meeting
Business of annual general meeting: ss 250PA–250T
Election of directors
Other general meetings
Calling of general meetings by directors: ss 249C and 249CA
Calling of general meetings at request of members: ss 249D and 249E
Calling of general meetings by members: s 249F
Class meetings
Calling of meeting of members by the court: s 249G
Notice of meeting: ss 249H–249M
Business of the meeting: ss 249L and 249N–249P
Special notice: ss 203D and 329
Accidental omission to give notice: s 1322(3)
Representative of corporation: s 250D
Use of technology: s 249S
Quorum: s 249T
Chair of general meeting: s 249U
Resolutions
Special resolutions
Amendment of constitution
Adjournment
Voting: ss 250E–250J
Polls: ss 250K–250M
Proxies: ss 249X–250C
Minutes: ss 251A–251B
Resolutions without meeting: ss 249A and 249B
Validation of meetings: s 1322
22 Companies — Directors’ Meetings
Introduction
Meetings of directors
Conduct of meetings: Pt 2G.1
Convening of meetings: s 248C
Notice of meeting
Notice of business
Use of technology: s 248D
Quorum: s 248F
Chair: s 248E
Adjournment
Voting: s 248G
Disclosure of interest and voting by interested directors: ss–196
Minutes: s 251A
Resolutions and declarations without meeting: ss 248A and 248B
Committees of directors: s 198D
Alternate directors: s 201K
Validation of meetings: s 201M
23 Companies — Creditors’ Meetings
Introduction
Compromises, arrangements and reconstructions
Voluntary administration
Winding up
Winding up by the court
Members’ voluntary winding up
Creditors’ voluntary winding up
Voluntary winding up generally
Winding up generally
Committees of inspection
Corporations regulations
Meetings of debenture holders
Meetings of members of registered managed investment schemes
24 Companies — Australian Securities Exchange Listing Rules
Introduction
Continuous disclosure
Documents sent to security holders
Voting rights
Rules requiring meetings
Notices of general meeting
Proxy forms
Attendance by CDI holders
Nominations for directors
Rotation of directors
Compliance with requirements of listing rules
Validity of votes
Approval to be by ordinary resolution
Voting exclusion statement
Giving draft documents to ASX
Appendix I
Appendix II
Index
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Previous editions 1st edition Mervyn G Horsley, Meetings: Procedure, Law and Practice, 1978
2nd edition W John Taggart, Horsley’s Meetings: Procedure, Law and Practice, 1983
3rd edition W John Taggart, Horsley’s Meetings: Procedure, Law and Practice, 1989
4th edition A D Lang, Horsley’s Meetings: Procedure, Law and Practice, 1998
5th edition A D Lang, Horsley’s Meetings: Procedure, Law and Practice, 2006
6th edition A D Lang, Horsley’s Meetings: Procedure, Law and Practice, 2010
Horsley’s Meetings Procedure, Law and Practice 7th edition
A D Lang BA (Hons), LLB (Melb) Barrister
LexisNexis Butterworths Australia 2015
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National Library of Australia Cataloguing-in-Publication entry Author:
Lang, Anthony David. Horsely’s Meetings: Procedure, Law
Title:
Practice.
Edition: ISBN:
7th edition. 9780409334845 (pbk) 9780409334852 (ebk) Includes index. Meetings — Law and legislation — Australia. Corporate meetings—Law and legislation—Australia. 346.9406.
Notes: Subjects: Dewey Number:
© 2015 Reed International Books Australia Pty Limited trading as LexisNexis. 1st edition 1978, 2nd edition 1983, 3rd edition 1989, 4th edition 1998, 5th edition 2006, 6th edition 2010. This book is copyright. Except as permitted under the Copyright Act 1968 (Cth), no part of this publication may be reproduced by any process, electronic or otherwise, without the specific written permission of the copyright owner. Neither may information be stored electronically in any form whatsoever without such permission. Inquiries should be addressed to the publishers. Typeset in Adobe Garamond and Myriad Pro. Printed in Australia. Visit LexisNexis Butterworths at www.lexisnexis.com.au
Foreword This is an excellent book. My association with it (as a consumer of its content) goes back many years, almost to my first day as a barrister. The book has served me well and its enduring character (as evidenced by yet another edition) suggests that there are many more grateful consumers. It is with much pleasure that I congratulate its author on the publication of the 7th edition. To those who may think that a book titled ‘Meetings: Procedure, Law and Practice’ deals with inconsequential issues of peripheral importance to our society, let me dispel those first impressions. In 1948, the United Nations General Assembly adopted the Universal Declaration of Human Rights. This was the first occasion that the world community of nations agreed upon a comprehensive statement defining universal human rights. One of the relatively few rights identified was the Article 20 right to freedom of assembly and association. In 1966, the United Nations adopted the International Covenant on Civil and Political Rights, which Australia later ratified. Article 22 of the ICCPR provides that everyone shall have the right to freedom of association with others. Freedom of association is a fundamental human right. A common expression of that right is the formation of associations of people and their assembly at a meeting. Each of us has the inalienable right to combine with others. That right is an individual right to join and participate in the affairs of the collectives we form. While you may not have perceived this book to be a human rights text, my first point about its importance is that its subject matter engages a fundamental human right of great importance to us all. As herd animals, we like to exercise our right to associate and we do so often. While our family is our most common and usually our most important collective, people form and participate in associations and organisations for business, political and social purposes. Not only do we collectivise as individuals but we also collectivise our associations to form associations of associations — federations, confederations, leagues and alliances of everything from sporting teams to nation states. My second point about the importance of this book is that it deals with a form of human interaction that pervades every form of human endeavour. Associations and organisations are ubiquitous — partnerships, corporations, trade unions, political parties, community groups, charities, religions and sporting clubs, to mention but a few.
Third, because of the importance of our right to associate and because of the ubiquitous nature of the associations we have formed, it is crucial to our society that there be normative rules of behaviour which control and regulate the interactions of people that occur within the associations they have formed. Normative rules have been established by both the common law and by statute and are identified and clearly explained in this book. Now that you understand both the importance of this book and its subject matter, I shall leave you to explore its content. I do so with the commendation that its author (a distinguished expert in the field) has here made a valuable contribution to our understanding of this branch of the law. The Honourable Justice Mordy Bromberg Federal Court of Australia Melbourne 17 February 2015
Preface It is gratifying that the feedback received from readers of the last edition has been overwhelmingly positive. A new edition has been made necessary by changes to both the applicable legislation and case law. There have been two significant legislative changes affecting the law of meetings since the last edition. First, the ‘100 member rule’ introduced in 1983 has finally been abolished. Following years of widespread criticism from the business sector and all the major relevant professional bodies, and as recommended by three government and parliamentary inquiries and reports since 2000, on 19 March 2015 the Corporations Legislation Amendment (Deregulatory and Other Measures) Act 2015 (Cth) amended s 249D of the Corporations Act 2001 (Cth) so that 100 members of a company can no longer require it to hold a general meeting. Second, as a result of amendments to the Corporations Act made by the Australian Charities and Not-for-profits Commission (Consequential and Transitional) Act 2012 (Cth) with effect from 1 July 2013, the general meeting provisions of the Corporations Act do not apply to companies limited by guarantee that are charities registered under the Australian Charities and Not-forprofits Commission Act 2012 (Cth). There have also been various case law developments since the last edition, and the relevant chapters have in each instance been updated and revised to reflect these. New text has been added to Chapter 7 analysing the extent to which an interlocutory injunction may be available to prevent a meeting from being held. My thanks are due to a number of people who have assisted with the new edition. First, to the Honourable Justice Mordy Bromberg of the Federal Court of Australia for his stimulating Foreword, which puts meetings into their broader social context. Second, to my colleague David Klempfner of the Victorian Bar, who has again contributed the chapter on defamation. And finally to Jennifer Burrows of LexisNexis for her good-humoured persistence with a sometimes recalcitrant author, and to Edward Caruso for his very thorough editing of the manuscript. As with previous editions, I wish to acknowledge the forbearance of my family in the preparation of this new edition. Thank you Melinda, Robbie and Emma. A D Lang Aickin Chambers Melbourne
7 May 2015
Table of Cases References are to paragraphs ABC v O’Neill (2006) …. 8.31 Aberfeldie Gold Mining Co v Walters (1876) …. 11.16, 21.10 Adam v Ward [1917] …. 8.17, 8.23 Adams v Adhesives Pty Ltd (1932) …. 21.10 Allen v Gold Reefs of West Africa Ltd [1900] …. 21.14 — v Hagger (1983) …. 4.2, 4.3 — v Jarrad (1974) …. 4.11 — v Townsend (1977) …. 11.2 Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd [2010] …. 6.5, 7.9 Alma Spinning Co (Bottomley’s case), Re (1880) …. 5.1, 5.3 Anaray Pty Ltd v Sydney Futures Exchange Ltd (1982) …. 5.10 Ansett v Butler Air Transport Ltd (No 2) (1958) …. 16.8 — Guinea Airways Ltd [1945] …. 16.5 Anthony v Seger (1789) …. 15.4 ANZ Nominees Ltd v Allied Resources Corp Ltd (1984) …. 16.5 Aqua-Max Pty Ltd v MT Associates Pty Ltd (2001) …. 5.6 Arcus v Castle [1954] …. 9.1, 9.2 Armstrong v Landmark Corporation Ltd [1967] …. 16.6 Arnot v United African Lands Ltd [1901] …. 14.12 Aspinall v Sutton [1894] …. 4.12 Attorney-General v Davy (1741) …. 14.18 Atwool v Merryweather (1867) …. 14.18 August Investments Pty Ltd v Poseidon Ltd (1971) …. 18.7 Austplat Minerals NL, Re (1990) …. 5.10
Australian Broadcasting Corporation v O’Neill (2006) …. 7.16 Australian Hydrocarbons NL v Green (1985) …. 21.17, 21.31 Australian Innovation Ltd v Petrovsky (1996) …. 21.9 Australian Koyo Ltd, Re (1984) …. 21.31 Australian Securities and Investments Commission v Hellicar (2012) …. 18.16 Australian Securities and Investments Commission v National Roads and Motorists’ Association Ltd (2002) …. 21.10 Australian Workers’ Union, Re (1983) …. 11.3 Ayres v Chacos (1972) …. 4.12 Baillie v Oriental Telephone & Electric Co Ltd [1915] …. 4.16, 10.20 Ball v Metal Industries Ltd [1957] …. 21.10 — v Pearsall (1987) …. 5.4, 5.11, 5.14, 13.12 Ballan Pty Ltd, Re (1993) …. 6.6 Ballina Shire Council v Ringland (1994) …. 8.4 Bancorp Investments Ltd v Primac Holdings Ltd (1984) …. 4.16 Barron v Potter [1914] …. 4.1, 5.6 Barter v Maher (1972) …. 11.2 Bean v Flaxton Council [1929] …. 19.20 Beatty v Gillbanks (1882) …. 1.21, 7.14 Beck v Tuckey Pty Ltd (2004) …. 21.13 Bell Resources Ltd v Turnbridge Pty Ltd (1988) …. 4.19, 13.10, 21.14 Bell v Burton (1993) …. 1.16, 4.16 Bennetts v Board of Fire Commissioners of NSW (1967) …. 14.10 Berglund v Graham [1927] …. 1.20 Betts & Co Ltd v Macnaghten [1910] …. 4.16, 10.20, 18.16 Bishop of Chichester v Harward (1787) …. 14.14 Blair Open-Hearth Furnace Co v Reigart (1913) …. 15.9 Bland v Buchanan [1901] …. 14.5, 14.14
Blunt v Heslop (1838) …. 18.28 Bombay-Burmah Trading Corp Ltd v Shroff [1905] …. 16.4, 16.5 Born Brands Pty Ltd v Nine Network Australia Pty Ltd [2014] …. 8.4 Bradley Egg Farm Ltd v Clifford [1943] …. 8.4 Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd [1992] …. 21.2 Brickworks Ltd v Warringah Shire Council (1963) …. 11.1 British Flax Producers Co Ltd, Re (1889) …. 15.6 British Provident Life & Fire Insurance Society, Re (1863) …. 18.16 Broadway Motors Holdings Pty Ltd (in liq), Re (1986) …. 21.31 Brougham v Melbourne Banking Corp Ltd (1880) …. 5.6 Brown v British Abrasive Wheel Co Ltd [1919] …. 14.10 Browne v La Trinidad (1887) …. 4.15 Bruner v Moore [1904] …. 18.28 Bryanston Finance v de Vries [1975] …. 8.23 Burton v Bevan [1908] …. 18.14 Bushell v Faith [1970] …. 21.22 Byng v London Life Assurance Ltd [1990] …. 6.5, 13.6 Byrne v Deane [1937] …. 8.12 — v Siemens Bros Dynamo Works Ltd [1919] …. 21.26 Campbell v Australian Mutual Provident Society (1906) …. 7.9, 10.23, 16.6 — v — (1908) …. 16.11 — v Crawford (1985) …. 4.16 — v Higgins (1957) …. 4.4, 4.11 — v Maund (1836) …. 15.2, 15.3, 15.8 Canberra Labor Club Ltd, Re (1986) …. 4.4 Cannon v Trask (1875) …. 4.9 Caratel (New) Mines Ltd , Re [1902] …. 14.12
Carlton Cricket & Football Social Club v Joseph [1970] …. 8.4 Cassidy v Daily Mirror [1929] …. 8.2, 8.9 Catesby v Burnett [1916] …. 9.7, 13.8 Cawley & Co, Re (1889) …. 3.8, 18.15 Central Exchange Ltd v Rivkin Financial Services Ltd (2004) …. 21.11 Chapman v Ellesmere [1932] …. 8.19, 8.20 Charlton v Barkly Reef Gold Mining Co (1877) …. 4.14 Chillington Iron Co, Re (1885) …. 15.6 Choppington Collieries Ltd v Johnson [1944] …. 4.17 CIC Insurance Ltd v Hannan & Co Pty Ltd (2001) …. 21.30 Clamp v Fairway Investments Pty Ltd [1971–73] …. 5.1 Clark v Framlingham Aboriginal Trust [2014] …. 1.19, 7.8 — v University of Melbourne [1978] …. 10.6 Clements Marshall Consolidated Ltd v ENT Ltd (1988) …. 21.12 Cleve v Financial Corp (1873) …. 4.17 Clifton v Mount Morgan Ltd (1940) …. 16.9 Clinch v Financial Corp (1868) …. 10.20 Colhoun v Green [1919] …. 4.16 Collerton v MacLean [1962] …. 8.11 Collins v Renison (1754) …. 7.15 Colonial Gold Reef Ltd v Free State Rand Ltd [1914] …. 15.8 Colorado Constructions Pty Ltd v Platus [1966] …. 6.1, 7.10, 18.7 Compaction Systems Pty Ltd, Re [1976] …. 21.17 Contouris v Kallos (2008) …. 7.16 Cook v Ward (1877) …. 19.20 Cooper v Marr (1966) …. 11.2 Cornfort v Royal Exchange Assurance Corp [1904] …. 18.28 Cornwall v Woods (1846) …. 17.3
Corpique (No 20) Pty Ltd v Eastcourt Ltd (1989) …. 13.8 County of Gloucester Bank v Rudry Merthyr Steam & House Coal Colliery Co [1895] …. 5.15 Cousins v International Brick Co [1931] …. 16.7, 16.8 Cummings v Macks (2000) …. 4.16 Daly v Gallagher [1925] …. 4.7, 10.20 David Syme & Co v Canavan (1918) …. 8.6 Davison v Vickery’s Motors Ltd (in liq) (1925) …. 16.1 Derbyshire County Council v Times Newspapers Ltd [1993] …. 8.4 Development Underwriting (Qld) Pty Ltd v Weaber [1971] …. 18.28 Devereaux Holdings Pty Ltd v Pelsart Resources NL (No 2) (1985) …. 4.16 Dhami v Martin (2010) …. 4.16, 21.15 Dickason v Edwards (1910) …. 17.3 Donohoe v Joynton-Smith (1948) …. 21.29 Donrob Enterprises Pty Ltd v Queensland Petroleum Management Ltd (1988) …. 5.8 Dougherty v Chandler (1946) 46 SR (NSW) …. 8.22 Doyle v Falconer (1866) …. 7.15 Duncan v Jones [1936] …. 1.20, 7.13 Duomatic Ltd, Re [1969] …. 21.2 East v Bennett Bros Ltd [1911] …. 1.15, 21.12 Eastern Resources of Australia Ltd v Glass Reinforced Products (GRP) Pty Ltd [1987] …. 4.16 Efstathis v Greek Orthodox Community of St George [1989] …. 4.17, 10.20, 21.15 Egger v Chelmsford [1965] …. 8.22 El Sombrero Ltd, Re [1958] …. 21.13 Emmens v Pottle (1885) …. 8.25
English, Scottish & Australian Bank, Re [1893] …. 16.1, 16.6 Ernest v Loma Gold Mines Ltd [1897] …. 14.12, 15.2, 16.4, 16.5 Everett v Griffiths [1924] …. 11.7 Exicom Ltd v Futuris Corp Ltd (1995) …. 21.4 Fanagan v Kernan (1881) …. 6.4 Faramus v Film Artistes’ Assn [1964] …. 17.2 Faure Electric Co v Phillipart (1888) …. 22.8 Ferguson, Re (1995) …. 1.16 Ffrost (A) & Co Pty Ltd, Re [1993] …. 21.2 Field v Receiver for Metropolitan Police District [1907] …. 1.21 Fireproof Doors Ltd, Re [1916] …. 1.15, 5.7, 18.16, 19.2 Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) (2001) …. 14.11 Flynn v University of Sydney [1971] …. 7.10 Forrest (AW & LM) Pty Ltd v Beamish (1998) …. 1.15, 4.2 Forssberg, Ex parte; Re Warringah Shire Council (1927) …. 11.16 Foss v Harbottle (1843) …. 14.18 Foster, Ex parte; Re University of Sydney [1964] …. 11.1 Fox v Allchurch [1926] …. 1.20 Fraser & Co Ltd, Re (1896) …. 14.11 Fraser v NRMA Holdings Ltd (1995) …. 4.16 Fruit & Vegetable Growers Association Ltd v Kekewich [1912] …. 21.10 Gem Exploration & Minerals NL, Re [1975] …. 21.4 Giblin v British-Australian Land & Banking Co Ltd (1891) …. 21.20 Gibson v Barton (1875) …. 18.28, 21.4 GIGA Investments Pty Ltd (in admin), Re (1995) …. 1.16 Gooden v Davies [1934] …. 1.20 Gordon v Carroll (1975) …. 12.8
Gosford Christian School Ltd v Totonjian (2006) …. 21.30 Gould, Re an Application by; Australian Railways Union, Re (1957) …. 1.19, 7.8 Grand Enterprises Pty Ltd v Aurium Resources Ltd (2009) …. 22.12 Green v R (1891) …. 5.4 Greenwell v Porter [1902] …. 14.10 Greymouth Point Elizabeth Railway & Coal Co Ltd, Re [1904] …. 5.10 Grossmith, Ex parte (1841) …. 15.2 Guise v Kouvelis (1947) …. 8.19 Harben v Phillips (1883) …. 16.2, 16.5 Harris (M) Ltd, Re [1956] …. 5.8 Hartley Baird Ltd, Re [1955] …. 1.15, 5.11, 21.20 Harvey v Adelaide & Hindmarsh Tramway Co Ltd (1881) …. 4.17, 10.5 Hascard v Somany (1693) …. 14.15 Hastings Deering Pty Ltd, Re (1985) …. 1.15 Haven Gold Mining Co, Re (1882) …. 15.2 Haycraft Gold Reduction & Mining Co, Re [1900] …. 4.3 Hearts of Oak Assurance Co Ltd v James Flower & Sons [1936] …. 18.19, 21.29 Helwig v Jonas [1922] …. 4.18 Henderson v Bank of Australasia (1890) …. 4.16, 7.2, 9.4, 9.8, 10.9, 10.19 Henderson v Louttit (1894) …. 5.11, 13.12 Herrman v Simon (1990) …. 21.2 Hickman v Kent & Romney Sheepbreeders’ Assn (1920) …. 14.11 Higgins v Nicol (1971) …. 1.16 — v O’Grady [1971] …. 1.16 Hill v Archbold [1968] …. 8.4 Hills Motorway Ltd, Re (2002) …. 1.18
Holmes v Keyes [1958] …. 15.3, 15.10 — v Life Funds of Australia Ltd [1971] …. 4.17, 21.10, 21.16 Homer District Consolidated Gold Mines, Re; Smith, Ex parte (1888) …. 4.11 Hooper v Kerr, Stuart & Co Ltd (1900) …. 4.3, 21.9 Horbury Bridge Coal, Iron & Waggon Co, Re (1879) …. 10.10, 10.12, 14.12 Horrocks v Lowe [1975] …. 8.21 Howard v Hill (1888) …. 16.5, 16.9 Howard’s case [1866] …. 19.20 Hughes v Union Cold Storage Co (1934) …. 10.20 Hulton v Jones [1910] …. 8.6 Humes Ltd v Unity APA Ltd (No 1) [1987] …. 21.10 Indian Zoedone Co, Re (1884) …. 6.5, 9.3, 9.4, 18.16 Inglewood Mining Venture Ltd v Price (1872) …. 4.22 Ingre v Maxwell (1964) …. 1.15 Isle of Wight Railway Co v Tahourdin (1883) …. 21.10 Jackson v Hamlyn [1953] …. 13.14, 16.6 James v Evening Standard Newspaper Co (1895) …. 23.6 — v Rymill [1933] …. 15.2, 17.2 Jeffrey and Curnow v Giles [2015] …. 8.31 Jennings, Re (1851) …. 18.11 Jervois Mining Ltd, Re; Campbell v Jervois Mining Ltd [2009] …. 16.10, 21.28 John Fairfax Publications v Gacic [2007] …. 8.3 John J Starr (Real Estate) Pty Ltd v Robert R Andrew (Australasia) Pty Ltd (1991) …. 7.9, 18.7 John v Rees [1970] …. 13.6 Johnson v Beitseen (1989) …. 4.7, 10.6, 13.8, 14.14 Johnston, Dunster & Co, Re (1891) …. 5.3, 21.20
Jones (RE) Ltd , Re (1933) …. 14.12 Kamara v Director of Public Prosecutions [1974] …. 1.21 Katoomba Coal & Shale Co Ltd, Re (1892) …. 4.7 Keep v Hurstville Soldiers’ Memorial Hall Club Ltd (1963) …. 17.9 Kelantan Coco Nut Estates Ltd, Re [1920] …. 5.8, 16.3 Kelly v Wolstenholme (1991) …. 6.3 Keough v Burnside City Corp (1992) …. 11.16 Kerr v John Mottram Ltd [1940] …. 18.16 — v Wilkie (1860) …. 13.5 Kirwan v Cresvale Far East Ltd (in liq) (2002) …. 14.14 Knight v Bulkeley (1859) …. 16.8 Knight’s case (1867) …. 18.16 Knowles v Zoological Society [1959] …. 14.15 Knupffer v London Express Newspaper Ltd [1944] …. 8.7 Kriewaldt v Independent Direction Ltd (1995) …. 22.12 La Compagnie de Mayville v Whitley [1896] …. 4.16 Labouchere v Wharncliffe (1879) …. 14.10, 14.15 Lancaster, Re (1877) …. 16.5 Lane v Norman (1891) …. 19.12 Lawrence v Atkins (1952) …. 4.7 — v Newberry (1891) …. 8.13 Leary v National Union of Vehicle Builders [1970] …. 4.13 — v — [1971] …. 7.8 Lee v Wilson (1934) …. 8.6 Leslie v City of Essendon [1952] …. 1.20 Levenstrath Community Association Inc v Nymboida Shire Council (1999) …. 5.10
Lewis v Daily Telegraph [1964] …. 8.9 Link Agricultural Pty Ltd v Shanahan [1999] …. 6.5, 15.7 Liverpool Household Stores Assn, Re (1890) …. 5.4, 19.10 London Association v Greenlands Ltd [1916] …. 8.4 London Flats Ltd, Re [1969] …. 1.14 Lucas v Mason (1875) …. 6.10, 7.15 Lynch v Hodges (1963) …. 11.2 — v Knight (1861) …. 8.13 Lyster’s case (1867) …. 5.5, 19.10 Machell v Nevinson (1724) …. 4.7 MacNamara, Ex parte [1893] …. 4.16 Magnacrete Ltd v Douglas-Hill (1988) …. 1.16 Magner v Fowler (1979) …. 4.18 Manton v Brighton Corp [1951] …. 19.20 Margaret Mitchell (The) (1858) …. 16.14 Mawby, Ex parte (1854) …. 15.8 Mayer v Harding (1867) …. 4.12 McCance, Ex parte; Re Hobbs (1926) …. 4.12 McCauley v John Fairfax (1933) …. 8.13 McDonald v Thorley [1976] …. 5.9, 5.14 McDowall v Bourke [1920] …. 1.20 McGellin v Mount King Mining NL (1998) …. 22.12 McGinity v Medical Council of Tasmania (2009) …. 5.4 McKerlie v Drillsearch Energy Ltd (2009) …. 4.19, 13.10 McLaren v Thomson [1917] …. 16.2, 16.5, 16.6 McLean Bros & Rigg Ltd v Grice (1906) …. 18.16 McMillan v Le Roi Mining Co [1906] …. 15.9, 17.9
McPherson v Mansell (1994) …. 4.19, 13.10 Menier v Hooper’s Telegraph Works (1874) …. 14.10 Mercantile Marine v Toms [1916] …. 8.4 Merchants & Shippers Steamship Lines Ltd, Re (1917) …. 4.5, 21.14 Merchants of the Staple of England v Bank of England (1887) …. 5.4 Mesure v Britten (1796) …. 4.12 Miller’s Dale & Ashwood Dale Lime Co, Re (1885) …. 4.1 Mirvac Ltd, Re (1999) …. 4.16 Mitropoulos v Greek Orthodox Church and Community of Marrickville and District Ltd (1993) …. 4.5 Montgomerie’s Brewery v Spencer (1899) …. 10.27, 14.14, 15.5 Moorgate Mercantile Holdings Ltd, Re [1980] …. 10.21 Morgan v Odhams Press [1971] …. 8.6 Morosi v Mirror Newspapers Ltd [1977] …. 8.19 MTM Funds Management Ltd v Cavalane Holdings Pty Ltd (2000) …. 23.13 Munster v Cammell Co (1882) …. 17.2 Myer Ltd; Lew v Coles Myer Ltd (2002) …. 16.6 Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corporation (1975) …. 4.1, 4.5, 4.11, 4.13, 4.16, 5.1, 5.3, 5.6, 5.12, 11.3, 13.5, 13.12, 13.18 National Australia Bank Ltd v Market Holdings Pty Ltd (in liq) (2001) …. 6.4, 6.16, 10.12 National Dwelling Society v Sykes [1894] …. 6.10, 13.8 National Roads & Motorists’ Association v Parker (1986) …. 21.10 Nell v Longbottom [1894] …. 14.14 Neuschild v British Equatorial Oil Co Ltd [1925] …. 13.14 New Pinnacle Group Silver Mining Co v Griffiths (1897) …. 16.5 New South Wales Henry George Foundation v Booth (2002) …. 16.12, 21.26, 21.28
Ngarmula Tharndu Karrungu Maya Ltd v Ngarluma Aboriginal Corporation RNTBC [2014] …. 7.16 North Eastern Insurance Co Ltd, Re [1919] …. 5.10 North Sydney Brick & Tile Co Ltd v Darvall (1989) …. 21.31 North Victoria Deep Leads Gold Mines Ltd, Re [1934] …. 21.23 North-West Transportation Co v Beatty (1889) …. 22.8 Northwest Capital Management v Westate Capital Ltd (2012) …. 6.1, 7.10 NRMA Ltd v Scandrett (2002) …. 10.21 NRMA Ltd v Snodgrass (2001) …. 21.10 NSX Ltd v Pritchard (2009) …. 21.10 Oil Basins Ltd v Bass Strait Oil Co (2012) …. 5.5 Oliver v Dalgleish [1963] …. 16.5 Oliver v North Nuggetty Ajax Co NL [1912] …. 13.8 Page v More (1850) …. 18.28 Parker & Cooper Ltd v Reading [1926] …. 4.7, 21.14 Parmiter v Coupland (1840) …. 8.3 Parrott, Re; Cullen, Ex parte [1891] …. 16.5 Patent Wood Keg Syndicate v Pearse [1906] …. 15.9, 21.10 Pearce, Duff & Co Ltd, Re [1960] …. 21.14 Peckham v Moore [1975] …. 8.4 Pembury Pty Ltd, Re [1993] …. 21.31 Phoenix Electric Light & Power Co, Re (1883) …. 15.2 Picturesque Atlas and Publishing Co Ltd, Re (1892) …. 10.21 Poliwka v Heven Holdings Pty Ltd (1992) …. 1.22 Portuguese Consolidated Copper Mines Ltd, Re (1889) …. 13.11 Potts v Miller (1940) …. 18.16 Prain & Sons Ltd, Re [1947] …. 1.15, 21.20
Queensland Petroleum Management Ltd, Re [1989] …. 5.8 Queensland Press Ltd v Academy Investments No 3 Pty Ltd [1988] …. 21.10 Quin & Axtans Ltd v Salmon [1909] …. 22.1 R v Archdeacon of Chester (1834) …. 15.6 — v Bishop’s Consistory Court of Winchester (1806) …. 15.7 — v Bradford in City Metropolitan Council; Ex parte Corris [1990] …. 14.14 — v Churchwardens & Overseers of Sutton (1864) …. 15.7 — v Cogdon; Ex parte Hasker (1877) …. 1.15 — v Cooper (1870) …. 15.5 — v D’Oyley (1840) …. 6.10, 13.6, 15.6 — v Deane (1890) …. 14.14, 17.3 — v Fulton (1876) …. 4.2, 4.3 — v Graham (1861) …. 15.7 — v Griffiths (1851) …. 14.15 — v Grimshaw (1847) …. 13.14 — v How (1863) …. 15.9 — v Jasperson; Ex parte Knights [1958] …. 18.12 — v Leech; Ex parte Tolstrup (1879) …. 1.15 — v Mariquita & New Grenada Mining Co (1858) …. 22.13 — v Mayor of Dover [1903] …. 15.5 — v Mayor of York (1853) …. 18.12 — v Mitcham City Corp; Ex parte G J Coles & Co Ltd (1980) …. 11.11 — v Nance (1740) …. 6.4 — v O’Sullivan (1948) …. 1.21, 7.14 — v Owens (1850) …. 6.4 — v Rector of Birmingham (1837) …. 14.12, 15.3 — v Rector of St Mary’s Lambeth (1838) …. 15.8
— v Roberts (1863) …. 10.23 — v Staples (1893) …. 18.7 — v Sunderland Corp [1911] …. 19.12, 19.13 — v Tralee Urban District Council [1913] …. 11.17 — v Vicar of St Asaph (1883) …. 15.3 — v Vincent (1839) …. 1.21 — v White (1867) …. 17.3 — v Wimbledon Local Board (1882) …. 15.2 Radio 2UE Sydney Pty Ltd v Chesterton (2009) …. 8.2 Railway Sleepers Supply Co, Re (1885) …. 4.12 Rana v Survery [2013] …. 18.16 Reader’s Digest Services Pty Ltd v Lamb (1982) …. 8.2 Redeemer Baptist School Ltd v Glossop [2006] …. 8.4 Renouf, Ex parte (1924) …. 11.16 Reynell v Lewis (1846) …. 19.2 Rhodesian Manufacturing Co Ltd, Re [1927] …. 15.2 Richard Brady Franks Ltd v Price (1937) …. 5.16 RM (No 13) Pty Ltd, Re (1995) …. 1.14, 18.19, 21.29 Roberts v Camden (1807) …. 8.5 Robinson v Imroth (1917) …. 19.20 Romford Canal Co, Re (1883) …. 5.1 Rowling v Harding (1976) …. 13.18 Royal Mutual Benefit Building Society v Sharman [1963] …. 4.6 Russell v Brisbane City Council [1955] …. 11.1 Ryan v Edna May Junction Gold Mining Co (NL) (1916) …. 4.16 — v Heiler (1990) …. 18.7 — v Kings Cross RSL Club Ltd [1972] …. 4.7 — v South Sydney Junior Rugby League Club Ltd (1974) …. 15.1, 15.7, 16.9,
17.2 Ryde Ex-Services Memorial & Community Club Limited (administrator appointed), Re [2015] …. 14.1, 15.2 Saddington (PW) & Sons Pty Ltd, Re (1990) …. 21.31 Sadgrove v Bryden [1907] …. 16.5 Salisbury Gold Mining Co v Hathorn [1897] …. 13.5 Sanitary Carbon Co, Re [1877] …. 1.15, 5.8 Scadding v Lorant (1851) …. 13.14, 16.7 Schaw v Wekey (1870) …. 11.16 Schneider v Leigh [1955] …. 8.21 Scottish & Colonial Ltd v Australian Power & Gas Co Ltd (2007) …. 21.16 Second Consolidated Trust Ltd v Ceylon Amalgamated Tea & Rubber Estates Ltd [1943] …. 15.2 SGIC Insurance Ltd v Insurance Australia Ltd (2004) …. 1.15 Shanahan v Strathfield Municipal Council [1973] …. 11.16 Sharp v Dawes (1876) …. 1.14 Shaw v Tati Concessions Ltd [1913] …. 15.6, 16.6 — v Thompson [1876] …. 13.6, 13.8 Sheahan v Londish (2010) …. 21.30 Sheldon v Phillips (1894) …. 16.2 Singleton v Ffrench (1986) …. 8.5 Sipad Holding ddpo v Popovic (1995) …. 21.30 Smith v Paringa Mines Ltd [1906] …. 4.19, 13.10 — v Sadler (1997) …. 4.9 — v Darley (1849) …. 4.1 South Norseman Gold Mines (NL) v Macdonald [1937] …. 21.10 Southampton Dock Co v Richards (1840) …. 18.12 Spicer (AM) & Son Pty Ltd (in liq) v Spicer (1931) …. 5.10
Spiller v Mayo (Rhodesia) Development Co Ltd [1926] …. 16.7 St Leonards Municipality v Williams [1966] …. 5.4 Stanley W Johnson Pty Ltd, Re [1936] …. 21.23 State of Wyoming Syndicate, Re [1901] …. 4.3 Steedman v Hakim (1888) …. 4.12 Steiglitz v Eggington (1815) …. 16.12 Stephens v West Australian Newspapers Ltd (1994) …. 8.19 Steuart v Oliver (No 2) (1971) …. 5.10, 7.8 Stewart v Chapman [1951] …. 4.12 Stock, Ex parte (1864) …. 18.16 Stoughton v Reynolds (1736) …. 13.5 Stratford Sun Ltd v OM Holdings Ltd; Re OM Holdings Ltd (2011) …. 7.16 Symes v Weedow (1893) …. 4.4, 4.17 Taurine Co, Re (1883) …. 1.15, 19.2 Taylor v Nesfield (1855) …. 6.5 Teede & Bishop, Re (1901) …. 10.20 Telegraph Newspaper v Bedford (1934) …. 8.17 Thiess v TCN Channel Nine Pty Ltd (No 5) [1994] …. 8.22 Thomas v Bradbury, Agnew & Co [1906] …. 8.26 Thompson v NSW Branch of British Medical Association [1924] …. 8.17 — v Stimpson [1961] …. 18.28 Thomson v Henderson’s Transvaal Estates [1908] …. 14.12 Thornton v MacKay (1946) …. 6.5 Thorpe v Adelaide University Post Graduate Students’ Assn Inc [2003] …. 17.2 Tiessen v Henderson [1899] …. 4.16, 4.21 Tolley v Fry [1930] …. 8.3 Toms v Cinema Trust Co Ltd [1915] …. 18.7, 18.11
Toogood v Spyring (1834) …. 8.17 Toohey v Melville (1892) …. 7.10 Toole v Flexihire Pty Ltd (1991) …. 4.11, 4.16 Torbock v Lord Westbury [1902] …. 10.21 Totally and Permanently Incapacitated Veterans’ Association of New South Wales Ltd v Gadd (1998) …. 10.21, 21.10 Totex Adon Pty Ltd, Re [1980] …. 21.13 Touzell v Cawthorn (1995) …. 1.14 Toyne v Everingham (1992) …. 8.19 Transcontinental Hotel Ltd, Re [1947] …. 21.20 Turnbull v National Roads and Motorists’ Association Ltd (2004) …. 21.10 Turner v Berner [1978] …. 21.10 Vale of Clwydd Coal Mining Co Ltd, Re (1912) …. 4.12 Vawdon v South Sydney Junior Rugby League Club (1975–76) …. 21.23 Vouris, Re (2003) …. 13.6 Wagner v International Health Promotions Pty Ltd (1994) …. 1.16 Wake v John Fairfax & Sons Ltd [1973] …. 8.13 Walkley v District Council of Northern Yorke Peninsula (1987) …. 10.18 Wall v Exchange Investments Corp Ltd [1926] …. 14.11 — v London & Northern Assets Corp [1898] …. 12.8, 14.11 Wandsworth & Putney Gaslight & Coke Co v Wright (1870) …. 9.5, 15.9 Ward v Williams (1982) …. 11.16 Watt v Longsdon [1930] …. 8.17 Waxed Papers Ltd, Re [1937] …. 16.9 Webb v Bloch (1928) …. 8.13, 8.22 Weir v Fermanagh County Council [1913] …. 11.20 Weribone on behalf of the Mandandanji People v State of Queensland [2013]
…. 4.16 Werner v Boehm (1890) …. 4.7 Westralia Pty Gold Mining Co NL v Long (1897) …. 18.16 White v Godfrey (1959) …. 4.12 Whitehouse v Capital Radio Network Pty Ltd (2002) …. 21.31 Whitlam v Australian Securities and Investment Commission (2003) …. 16.10, 21.28 Willaire Systems plc, Re [1987] …. 10.21 Wills v Murray (1850) …. 13.14 Wilson v Manna Hill Mining Co Pty Ltd [2004] …. 4.15, 4.16 — v Permasnow (A/asia) Ltd (1988) …. 5.10 Windsor v National Mutual Life Association of Australasia Ltd (1992) …. 21.10 Winter v McAdam (1957) …. 4.11 Wise v Dunning [1902] …. 1.21, 7.14 Wiseman v Professional Radio and Electronics Institute of Australasia (1978) …. 11.2 Wishart v Foster (1961) …. 4.9 — v Henneberry (1962) …. 9.5, 10.6, 13.6, 13.8 Wright, Ex parte; Re Concord Municipal Council (1925) …. 11.16 York Tramways Co Ltd v Willows (1882) …. 5.5, 17.2, 19.10 Young v Ladies’ Imperial Club [1920] …. 4.5 — v Sherman (2002) …. 14.14 Youssupoff v Metro-Goldwyn-Mayer Pictures Ltd (1934) …. 8.2
Contents Foreword Preface Table of Cases
1
The Nature of Meetings Introduction Organisations and meetings People and meetings Basis of procedures Company legislation Other legislation Principles and precedents Legal requirements and priorities Statutory requirements ASX listing rules for listed companies Rules of the body Common law ‘Meeting’ defined Meetings of one person Meetings by telephone or video Types of meetings General meetings Joint meetings Private meetings Public meetings
Unlawful meetings Validity of a meeting
2
The Secretary Introduction The secretarial function Historical development Differing types of meetings Responsibilities Duties General arrangements The agenda Preliminaries At the meeting After the meeting Minutes Qualities and attributes
3
The Agenda Introduction Legal status Function Preparation Form and wording Minutes and matters arising Routine business Alteration of order Other or general business
Circulation Adjourned meetings Annotated agenda
4
Notice of Meeting Proper notice is essential Rules should be complied with Authority to give notice Notice must be given to each member Members unwilling or unable to attend Members not entitled to vote Waiver of notice Accidental omission to give notice Date, time and place of meeting Board and committee meetings Period of notice Calculation of time Service by post Newspaper advertisement Form of notice Notice of business Notice indicates scope of business Other or general business Inability to cancel notice Adjourned meeting Contingent notice Evidence of notice
5
Quorum Meaning Historical origins Rules should specify quorum Where no quorum is specified Where power to fix own quorum Proper notice is still required Can a quorum be one? Are proxies to be counted? Are the secretary, and others, to be counted? Conflict of interest Must quorum be present throughout meeting? Quorum at adjourned meeting Parliamentary practice Loss of quorum Others may rely on decisions of inquorate meeting Lapsing of meeting Determining the size of a quorum
6
The Chair Chair is essential Historical background Appointment Election Authority Removal Chairing in practice
Nature of meeting Discussion groups The company context Duties and powers Qualities and characteristics Preparation Opening the proceedings The debate Procedures and practices Involvement in the proceedings Closing the debate Public meetings Demeanour
7
Conduct of Meeting Historical origins Parliamentary procedure Rules of debate Content of rules Outline of debate Relaxation of rules Speaking at meetings Participation by outsiders Control by the Chair Maintenance of order Public meetings Outline
Trespass Breach of the peace Unlawful assemblies Action by the Chair Injunction to prevent meeting being held
8
Defamation Introduction General principles Definition Examples of defamatory imputations Who may defame and be defamed Truth Identification Group defamation Unintentional defamation Innuendo Publication Liability for publication Publication by failure to act Re-publication and repetition Protected reports Libel and slander Defence of qualified privilege Qualified privilege at common law Qualified privilege under the UDA Loss of qualified privilege — excessive publication
Loss of qualified privilege — mistaken character of recipient Loss of qualified privilege — malice and lack of good faith Imputed malice Derivative privilege Summary of other defences under the UDA Source of law Innocent dissemination Defence of honest opinion/fair comment Defence of absolute privilege Protected reports and public documents Triviality Resolution without litigation Remedies Criminal proceedings Further reference
9
Points of Order Definition Who, when and how may be raised Ruling by the Chair Disagreement with the Chair’s ruling Motion of dissent Minutes Court challenge to ruling
10 Motions and Amendments Introduction Terminology
Definition of ‘motion’ ‘Motion’ and ‘resolution’ ‘Question’ Motions Desirable characteristics of a motion Unacceptable motions Invalid motions Notice of motion Submission of motion to the Chair Motions not formally moved Stating the motion Seconding a motion Lapsing of motions Debate on the motion Withdrawal of motion Amendments Definition Characteristics of an amendment Unacceptable amendments Amendments and notice of motion Amendments to special resolutions Conduct of the debate Debate on an amendment Dealing with several amendments Substantive motion Counter motions
Right of reply The vote Omnibus motions Recording in minutes Postal ballots and circulating resolutions
11 Resolutions and Rescission Definition of ‘resolution’ Validity of resolutions Interpretation of resolutions Types of resolutions Ordinary resolutions Special and extraordinary resolutions Other uses of ‘special’ in the context of meetings Unanimous resolution Circulating resolution Pious resolution Rider Rescission of resolutions Meaning of rescission Where rescission is desirable Notice of rescission motion Form of motion Rescission at same meeting? Rescission at later meeting Procedure for rescission Principles to apply
Examples of appropriate rules Rescission of rescission Recommittal Legal advice Further reading
12 Procedural Motions Introduction ‘Procedural motion’ ‘Formal motion’ ‘Dilatory motion’ Types of formal motion Basis of procedure Procedure generally The closure Guillotine closure Kangaroo closure The previous question To proceed to the next business The matter (or question) to lie on the table Adjournment motions Other procedural motions Withdrawal of a motion or amendment The gag ‘That (a person by name) be now heard’ ‘That the matter be referred to a committee’ ‘That the matter be referred back to the committee’
13 Adjournment Introduction Meaning Basis of procedure Parliamentary practice Common law Adjournment by the Chair Polls Vacation of chair Public meetings Postponement Defect in notice Absence of quorum Action to bring about adjournment One meeting only Minutes Formal motions relating to adjournment Formal motions To adjourn the debate To adjourn the meeting ‘That the Chair leave the chair’
14 Voting Introduction Methods of voting Parliamentary procedure By voices
By show of hands By poll By ballot By acclamation Vote of thanks Common law principles Casting of votes Declaration by the Chair Voting by show of hands Voting by proxy Chair’s casting vote Majorities Simple majority Absolute majority Special majorities Effect of decisions made by a majority
15 Polls Introduction Who may demand a poll When a poll may be demanded Effect of demand for a poll Withdrawal of a demand When a poll is to be held Conduct of a poll Entitlement to vote Method of voting
Date of resolution Suggested procedures
16 Proxies Introduction Agency principles General principles Common law principles The proxy document Lodgement of proxy documents Revocation of a proxy Voting by principal Exercising a proxy vote Obligation to exercise a proxy vote Soliciting of proxy votes Powers of attorney Proxy by power of attorney Representatives of corporations Suggested procedure on receipt of proxies
17 Elections and Ballots Introduction General principles Election of the Chair Voting methods ‘First past the post’ system Preferential system Other systems
Secret ballots Postal ballots Declaration of election
18 Minutes Introduction Definition Must minutes be kept? Form of minutes Minutes contrasted with reports Types of minutes Contents of minutes Minutes of adjourned meeting Recording of resolutions Names of movers and seconders Writing up the minutes Verifying the minutes Altering draft minutes Signing the minutes Later amendment Minutes as evidence Circulation of minutes Circulating resolutions Minute books Permanent retention Writing minutes in practice Introduction
Note-taking Sequence Procedural motions Headings Numbering Style Periods of time
19 Committees Introduction Definition Types of committees Establishment of committees Initial considerations Size of committees Terms of reference Practical guidelines Proceedings of committees General characteristics General principles Quorum Proxies and alternates Co-option Resignation and vacancies Executive versus non-executive committees Executive committees Non-executive committees
Reports and minutes Recommendations and reports Minutes as reports Minority reports Delegation General considerations Legal principles Practical guidelines Committees in practice General observations Practical guidelines Value of committees
20 Companies — Introduction Introduction Applicability of general meeting procedure The Corporations Act ‘Company’ defined ‘Corporation’ contrasted Types of company Proprietary and public companies Subsidiaries, holding and related companies Constitution Replaceable rules Memorandum and articles of association Tables A and B Australian Securities Exchange listing rules
Companies that are registered charities Types of company meetings
21 Companies — General Meetings Introduction Meetings of the members Companies that are registered charities Annual general meeting: ss 250N and 250P Notice of annual general meeting Business of annual general meeting: ss 250PA–250T Election of directors Other general meetings Calling of general meetings by directors: ss 249C and 249CA Calling of general meetings at request of members: ss 249D and 249E Calling of general meetings by members: s 249F Class meetings Calling of meeting of members by the court: s 249G Notice of meeting: ss 249H–249M Business of the meeting: ss 249L and 249N–249P Special notice: ss 203D and 329 Accidental omission to give notice: s 1322(3) Representative of corporation: s 250D Use of technology: s 249S Quorum: s 249T Chair of general meeting: s 249U Resolutions
Special resolutions Amendment of constitution Adjournment Voting: ss 250E–250J Polls: ss 250K–250M Proxies: ss 249X–250C Minutes: ss 251A–251B Resolutions without meeting: ss 249A and 249B Validation of meetings: s 1322
22 Companies — Directors’ Meetings Introduction Meetings of directors Conduct of meetings: Pt 2G.1 Convening of meetings: s 248C Notice of meeting Notice of business Use of technology: s 248D Quorum: s 248F Chair: s 248E Adjournment Voting: s 248G Disclosure of interest and voting by interested directors: ss–196 Minutes: s 251A Resolutions and declarations without meeting: ss 248A and 248B Committees of directors: s 198D Alternate directors: s 201K
Validation of meetings: s 201M
23 Companies — Creditors’ Meetings Introduction Compromises, arrangements and reconstructions Voluntary administration Winding up Winding up by the court Members’ voluntary winding up Creditors’ voluntary winding up Voluntary winding up generally Winding up generally Committees of inspection Corporations regulations Meetings of debenture holders Meetings of members of registered managed investment schemes
24 Companies — Australian Securities Exchange Listing Rules Introduction Continuous disclosure Documents sent to security holders Voting rights Rules requiring meetings Notices of general meeting Proxy forms Attendance by CDI holders Nominations for directors Rotation of directors
Compliance with requirements of listing rules Validity of votes Approval to be by ordinary resolution Voting exclusion statement Giving draft documents to ASX Appendix I Appendix II Index
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1 The Nature of Meetings Introduction 1.1 In meetings is to be found perhaps the best practical expression of the democratic way of life in action as it has evolved in our communities. Through the exchange of ideas on proposals and problems of common concern, by concentrating on the possibilities of reaching agreement and on the overall welfare of the organising body, and by ensuring that every decision reflects the opinion of the majority of those who choose to vote, the proceedings of properly conducted meetings exhibit, in general, the elements of realistic and practical democracy. The various forms of meetings range from the assemblies in the parliaments and of municipal and other councils — meetings of the elected representatives of the people — to meetings of groups of people with a shared interest, such as the annual and other general meetings of shareholders of companies, proprietors of strata title units and members of the numerous voluntary organisations active in every community. Varieties include meetings of boards, committees and executives, senates and councils of universities, school councils and parents’ clubs, public meetings convened for particular purposes, and inaugural meetings to establish new bodies. There are conferences, conventions, congregations, congresses and convocations: each, among their various meanings, designates an assembly or gathering, a coming together of people, all having the common element ‘con’ (from the Latin cum meaning ‘with’), denoting this characteristic feature of meetings. Related is the fashionable term ‘consensus’, meaning unanimity of opinion, a rare occurrence, which does not necessarily involve a meeting being held. Another term in vogue in relation to meetings is [page 2]
‘summit’, a convenient shorthand expression used to refer to a meeting of persons who hold appointments at peak or summit level, and a term that should be reserved for infrequent meetings of this type. All sorts of people participate in meetings: members of associations, religious bodies, trade unions and every kind of organisation; shareholders; employees; directors; delegates; representatives; elected persons; office-bearers; staff; educationists; professional people; people in politics at all levels. In general, participation at meetings (as compared with attendance at a performance or being present by permission to observe parliament or a municipal council in session) provides a means of having a hand in promoting the welfare of a cause, or the objects of the organisation. Meetings allow those present to speak out and cast their votes or indicate in some way or other what they believe in. The give and take of debate enables the expression of opinions by people who have similar interests and objectives, with resultant mental stimulus and extended knowledge and understanding before a vote is cast. From the viewpoint of the organisation, meetings thus provide a springboard for maintaining an adequately considered, up-to-date and dynamic policy in pursuing its purposes while keeping an eye on the future. At the same time, meetings provide the instrument by which a body is able to express its will, make decisions, create and interpret policy, issue directions and information, and conduct and supervise its affairs at a policy level. In most bodies authority and power to execute policy are vested in or delegated to a board of directors, council or governing committee or executive, the members of which are normally elected at general meetings of members. In exercising their authority they need to act as a group, making decisions by passing resolutions at their meetings. Such meetings are thus the working places of people elected to promote and guide the welfare of the body’s affairs. Facts can be brought to light about each proposal to enable the group to get to the heart of the matter and understand exactly what issues need to be considered. Implications and alternatives are taken into account, opinions aired, and the whole matter intelligently discussed with a view to arriving at unanimity of thinking. This is not always possible and, when it is not, the eventual decision reflects the majority viewpoint as to what is in the best interests of the organisation.
Organisations and meetings 1.2 Meetings play an essential part in the activity of every incorporated body, that is, all corporations, and of every voluntary organisation, whether it is
incorporated or not. In the area of government, semi-government and [page 3] local government corporations, the statutes setting up individual bodies and local government legislation all make provision for the requisite meetings and the issuing of by-laws and standing orders. Procedures in connection with meetings and elections of municipal and shire councils, and the rights and obligations of elected office-bearers including mayors and presidents in respect of the conduct of meetings, vary according to local legislation. In the case of companies and bodies of other types that are incorporated or registered under a statute, general meetings and those of the board or governing committee are usually obligatory. In the case of voluntary organisations with memberships, meetings provide the means by which they function. Such organisations are born at meetings, and in a similar way settle their constitution and rules, determine all major developments and elect their leaders — who themselves must operate through regular meetings, generally with a structure of committees, and each year report to the membership at an annual general meeting.
People and meetings 1.3 For many busy people participation in meetings is a part of their life — for some people, almost a constant way of life. Community work involves attendance at committee meetings of organisations. Shareholding, other forms of investment in enterprises, and membership of bodies covering personal interests and community responsibilities entail general meetings. Business and professional people are becoming increasingly engaged in committee meetings relating to internal management and training, in administrative meetings and conferences of their associations and in joint committee work. Participation in meetings (particularly where the purpose is new accomplishment and further development) provides personal rewards — a growth in knowledge, tolerance and wisdom through the exchange of views among a range of people of varying experience. Coupled with this is the satisfying experience of sharing responsibility for decisions, and, once the vote has been taken, a spirit of loyalty to each jointly produced resolution. Where meetings are well conducted with intelligent observation of the recognised procedures, increased benefits occur as regards productivity in achieving objectives and in
conserving the time of those attending while generating personal satisfaction. The law that lies behind and governs the procedures of meetings is based on principles of practical commonsense and the golden rule — taking into account that the will of the majority prevails. The system of debate, whether [page 4] on formal or relaxed lines, under firm yet imaginative chairing, enables proposals that are put forward to yield to improvement, and persuasion to contend with conflicting argument in the pursuit of agreement. Each of these aspects of meetings is examined in the following chapters.
Basis of procedures 1.4 The form of meeting that we now know has part of its basis in England at the time of King Henry VIII, when Thomas Cromwell transformed the machinery of government into an administrative process by which departments functioned in conjunction with the power of royal supremacy. Every morning a meeting held at the Board of the Green Cloth exercised budgetary supervision and control over the expenditure of one or other of the palace departments. It was during the reign of Queen Elizabeth I that the procedures for parliamentary debates evolved, in which lie the fundamentals that apply in modern meetings. To an extent, the customs of parliament have been adapted to be generally suitable for meetings of all sorts of bodies and to facilitate the orderly dispatch of business. A body of case law in relation to meetings has developed alongside, as decisions have been made by the courts. Thus, procedures have evolved that are widely recognised, although differing viewpoints exist about a few points. These procedures are examined in detail in Chapters 2–19.
Company legislation 1.5 The legislation that currently regulates all companies in Australia is the Corporations Act 2001 (Cth). The provisions of the Corporations Act relating to meetings are explained in Chapters 20–23. The listing rules of the Australian Securities Exchange Limited that apply to publicly listed companies are also examined in connection with meetings in Chapter 24; these rules are additional to the requirements of the Corporations Act. The details and comments
contained in the five chapters dealing with companies (Chapters 20–24) need to be read and considered in conjunction with the details of the recognised procedures explained in the general chapters, Chapters 2–19.
Other legislation 1.6 There is a variety of other legislation that, in providing for the incorporation or registration of bodies, contains specific or general requirements regarding the convening and conduct of meetings and elections; model rules are included in some cases. The jurisdiction of [page 5] many of these statutes is limited to the state or territory for which they are enacted. They include the various Acts that provide for the incorporation and regulation of not-for-profit associations, cooperative societies and strata title bodies corporate. In the case of each of these types of organisation, the procedures and requirements for meetings are largely derived from those applying to companies. Accordingly, both the general and the companies chapters will be of assistance in analysing the law as it relates to meetings of these bodies.
Principles and precedents 1.7 Experience has resulted in the general acceptance of a number of principles designed to facilitate proceedings at meetings, and a number of rules and precedents including ‘rules of debate’ have evolved. The procedures covered by these principles and rules enable each person at a meeting to express an opinion within necessary limits of time, provide protection to a minority, preserve decorum in behaviour, assist the business to be transacted in an orderly manner, and aim at confining discussion to a single issue. They guard against decisions being made without adequate consideration and without prior warning in the case of significant decisions. These recognised procedures that govern the way in which meetings are conducted are based on a blend of the case law relating to meetings — precedents arising from judgments of the courts, often referred to as the ‘common law’ — and practices that apply in parliamentary debates. Acts of parliament that provide for the incorporation of bodies invariably give attention to the proceedings of their meetings. Specific requirements about convening
meetings and keeping minutes, and minimum stipulations in relation to quorums, voting and majorities are often included in an Act itself. Detailed provisions governing the proceedings are often contained in a schedule to the Act or in regulations under the Act, which then apply to all bodies that do not determine and register their own individual rules setting out procedures suitable for the particular body. Provisions in an Act and in regulations are sometimes framed in a way that intentionally changes the law from that which operated when a decision of a court established a particular precedent. Such changes are introduced to overcome and avert problems and disadvantages that would otherwise occur for the body and its members. If, subsequently, a statute or regulation is drafted in a specific, pertinent way to change the situation, the precedent arising from the common law is no longer a factor as regards bodies and circumstances governed by the statute. [page 6]
Legal requirements and priorities 1.8 In convening and conducting its meetings a body needs to have regard to all requirements of law that are relevant to it. Any deviation from such requirements could place in jeopardy the validity of the proceedings at a meeting. The body would be faced with a continuing hazard that an interested party might take legal action to call into question some resolution or the whole meeting, on the basis that the proceedings were irregular because of neglect to observe some requirement or procedure. In deciding which procedures and aspects of the law relating to meetings are relevant and applicable to a particular body, the following priorities apply (in decreasing order of importance): 1. statutory requirements; 2. in the case of publicly listed companies only — the listing rules of the Australian Securities Exchange Limited; 3. the rules of the body; and 4. the common law. The situation with regard to each is described below: see 1.9–1.13.
Statutory requirements 1.9 Where a body is incorporated under a statute or its operations are subject to a statute, any requirements of that statute regarding meetings must be complied with. All provisions in the statute prevail over any differing provisions in the body’s own rules. Acts of the Commonwealth, states and territories under which many bodies are incorporated or registered and regulated include: the Corporations Act 2001 (Cth) — companies; Strata Titles Acts — strata title bodies corporate (in Victoria now known as owners corporations under the Owners Corporations Act 2006 (Vic)); Associations Incorporation Acts — incorporated associations; the Fair Work (Registered Organisations) Act 2009 (Cth) — trade unions and employer organisations; and Cooperatives Acts — cooperatives. The procedures at parliamentary sessions are set out in the individual standing orders of each house of parliament adopted by the house and subjected to periodical amendment. The procedures at meetings of municipal and shire councils are prescribed in by-laws or local laws determined and adopted by the particular council pursuant to the legislation regulating local government in the state or territory. [page 7]
ASX listing rules for listed companies 1.10 Companies whose shares are listed on the official list of the stock exchange need to comply with the listing rules of the Australian Securities Exchange Limited (‘ASX’). Compliance with the ASX listing rules is a condition of the company’s shares continuing to be traded on the stock exchange. The listing rules in so far as they relate to meetings are discussed in Chapter 24.
Rules of the body 1.11 The next consideration is the body’s own rules for regulating its affairs. Those rules that relate to meetings are paramount unless they happen to be in conflict with provisions in statutes that apply to the particular body. The body’s rules must be complied with strictly. The relevant rules may be contained in documents variously described as the constitution, rules, regulations, by-laws or
standing orders of the organisation, or often a combination of these. In the case of companies, the relevant rules were usually formally contained in its articles of association: see 20.11. To these rules are to be added any standing resolutions passed by the body at meetings that are designed to establish procedures in respect of meetings. In the case of long-established bodies, any departure from a usual procedure, unless authorised or endorsed by a meeting, should be undertaken with caution and consideration of possible consequences.
Common law 1.12 Next in priority to be taken into account where a relevant statute or the body’s rules are silent on a question of procedure is the common law — the law that has developed through being expressed in the course of judgments in cases decided by the courts in England and eventually in other countries that adopted the British legal system. The common law thus includes what is styled case law, and is sometimes referred to in that way. It forms an important part of the law relating to meetings. The courts, especially in earlier decisions during the developmental stages of the nineteenth-century Joint Stock Companies Acts, had regard to procedures of the House of Commons when giving rulings in relation to meetings. Accordingly, some parliamentary practices, appropriately modified, are relevant to and form the basis of certain recognised meeting procedures that apply today.
Doctrine of precedent 1.13 Decisions by the courts, where statute law is not directly involved, are largely governed by the ‘doctrine of precedent’. The basis [page 8] of this doctrine is to be found in the development of the legal system in England. From early days, records of judicial decisions were kept: the start of official law reports. The records included the reasoning by which the judges arrived at their decisions. In this way, invaluable practical legal experience became available for reference. The basis of the doctrine of precedent was that, in order to achieve continuing, uniform fairness, judges should follow the precedent of earlier decisions where they were relevant and appropriate to local customs. Thus, a body of principles evolved that, with experience, overcame regional differences in the pursuit of consistency and eventually became common throughout the
country — leading to the term ‘common law’. This is the basis of the common law system that applies in Australia, as well as in the United Kingdom, other British Commonwealth countries and the United States of America. This body of principles is adaptable to changing circumstances and is perpetually developing. When it is found that principles laid down in earlier judgments are not quite applicable to a case that comes before the court, it is the right and duty of the judge to interpret and adapt the relevant principles to the fresh facts involved in the current case. In the higher courts, when a judgment is delivered it is the subject of published reasons for decision, which include the reasoning in arriving at that finding. The judge’s reasoned adaptation of an established principle, in the form of a judgment, becomes part of the recorded common law and from then is taken into account and followed by judges in lower courts. This may be contrasted with ‘civil law systems’ operating in countries in Europe and elsewhere, where all law is ‘codified’; that is, embodied in statutes. Two types of precedent have developed: ‘binding’ and ‘persuasive’. Decisions of superior (that is, higher) courts are binding on inferior (that is, lower) courts. Accordingly, decisions of the Supreme Court of each state and territory are binding on all lower courts in that state and territory, and those of the High Court of Australia are binding on all state courts. Other precedents have an authority and influence that is merely ‘persuasive’. They may be helpful where no binding precedent exists. Judges may have recourse to these when seeking a precedent to assist in solving some legal problem. ‘Persuasive’ precedents are found in relevant judgments of courts whose decisions are not binding within the particular jurisdiction; and reference may be made to decisions of courts not only in another state or territory in Australia, but also in the United Kingdom and other countries where the common law system operates, such as New Zealand, Canada and the United States of America. [page 9]
‘Meeting’ defined 1.14 ‘The word “meeting” prima facie means a coming together of more than one person. It is of course possible to show that the word “meeting” has a meaning different from the ordinary meaning but there is nothing here to show this to be the case …’: Sharp v Dawes (1876) 2 QBD 26 at 29. The fundamental principle that ordinarily a meeting is a gathering of people — that is, a number of people, at least two — was established in law by the judgment in this case. It
has been reaffirmed more recently: ‘… there is no meeting because a meeting must consist of more than one person …’: Re London Flats Ltd [1969] 1 WLR 711; 2 All ER 744; see also Re RM (No 13) Pty Ltd (1995) 17 ACSR 758; Touzell v Cawthorn (1995) 18 ACSR 328. The word ‘meeting’ comes from the Old English metan and gemeting, words that derive from the moot of the Anglo-Saxons, the assemblies of free men from which sprang the idea of parliamentary government. The word ‘meet’ continues to connote the coming together of people, while ‘moot’ as an adjective still draws attention to the debatable aspect of matters about which there is more than one point of view. A suitable definition of a meeting for the purposes of this book is: … ordinarily an assembly of two or more persons, properly convened and constituted, coming together for discussion of defined topics, the transaction of business of a common interest or some other lawful purpose, and presided over by a properly appointed Chair.
Such a definition is subject to variation in exceptional circumstances pursuant to statutory provisions and legal rulings.
Meetings of one person 1.15 It is recognised in law that in certain exceptional circumstances a meeting may consist of only one person. The courts have held that, although ‘in the ordinary sense … it is quite clear that a meeting must consist of more than one person’, in a company where all the shares of a particular class are held by only one shareholder that single person can constitute a meeting of that class of shares: East v Bennett Bros Ltd [1911] 1 Ch 163; Re Hastings Deering Pty Ltd (1985) 9 ACLR 755. Similarly, where the company itself has only one member, that member may hold a valid meeting: SGIC Insurance Ltd v Insurance Australia Ltd (2004) 51 ACSR 470. The rules of a body may authorise the appointment of a committee consisting of only one person (as reg 76(1) of Table A of the previous companies legislation formerly did); in such a case its meetings are held [page 10] with that sole person present. It has been held that where there is nothing in the articles to prevent a committee of one being appointed, such an appointment may be made: Re Taurine Co (1883) 25 Ch D 118. As explained in Chapter 5, a quorum is the minimum number of persons that
must be present in order that business may be validly transacted by a meeting. Some rules specify the quorum for meetings of the body’s board of directors or governing committee, while other rules authorise the board or committee to fix its own quorum. The rules may provide for a quorum of one person, in which case a single person would constitute a meeting. A similar situation arises where a committee is authorised by the rules to fix the quorum for its meetings (as s 248F of the Corporations Act does in the case of the directors of a company) and it fixes a quorum of one. It has been held that it is not out of order for a quorum for meetings of a board of directors to be one: Re Fireproof Doors Ltd [1916] 2 Ch 142. Such a situation may presumably also arise where the rules of the body fix a quorum for general meetings of one member (as s 249T of the Corporations Act would permit in the case of companies). While many rules contain words to indicate that a quorum must be present throughout a meeting to enable valid resolutions to be passed, some rules contain words to the effect of ‘no business shall be transacted unless a quorum is present at the time when a meeting proceeds to business’. It has been held that where rules are in similar terms to the latter wording, the requirement is complied with by a quorum being present at the start of a meeting, even though one or more persons leave later and resolutions are passed when fewer than the quorum is present: Re Hartley Baird Ltd [1955] Ch 143. In that case only one member remained after others departed and the solitary presence of that member constituted a valid meeting. Thus, although a meeting may not commence unless a quorum is present, where the rules are in terms as above, a meeting that commences with more than one person may continue validly at a later stage with only one person being present: see further 5.11. In the case of shareholders, the courts in England have held that where only one person is present, even when that person holds proxies for every other person entitled to be present, that does not constitute a meeting. This is so even at a meeting that has been adjourned because a quorum was not present for the original meeting, where the company’s articles provide that in such a situation the members present by proxy shall be a quorum: Re Sanitary Carbon Co [1877] WN 223; and more recently Ingre v Maxwell (1964) 44 DLR 765 (Supreme Court of British Columbia). However, in the case of creditors, the courts in Victoria have held that one creditor who held proxies for all other entitled creditors did constitute a meeting: R v Cogdon; Ex parte Hasker (1877) 3 VLR (L) 88 and R v Leech; Ex parte Tolstrup (1879) 5 VLR (L) 494. [page 11]
It has been also held that one person, even though present in more than one capacity (for example, as member, trustee and proxy; or as shareholder and representative of a deceased estate) does not constitute a meeting: Re Prain & Sons Ltd [1947] SC 325; AW & LM Forrest Pty Ltd v Beamish (1998) 146 FLR 450.
Meetings by telephone or video 1.16 For many years, the courts regarded a meeting as not only something where people speak, but where they also meet each other in the flesh. Accordingly, resolutions purportedly passed by telephone hook-up were invalid: Higgins v O’Grady [1971] IAS, Current Review 65; although the possibility of meetings by telephone was contemplated in the future: Higgins v Nicol (1971) 18 FLR 343 at 357. It was always open for a body to include a provision in its rules specifically authorising the holding of meetings by telephone (perhaps subject to certain conditions), in which case such meetings would be valid. However, it is now well established that meetings may validly be held by telephone conference or video link, whether contemplated by the rules of the body or not. The words ‘meet together’ in company articles connote a meeting of minds made possible either by physical proximity or by technology. Provided that each person participating is able to avail the contributions to the meeting made by each other such person and to contribute himself or herself to the meeting without significant impediment, it is not of importance that the meeting together is achieved with the assistance of technology: Re Ferguson (1995) 58 FCR 106, sub nom Re GIGA Investments Pty Ltd (in admin) (1995) 17 ACSR 472; see also Bell v Burton (1993) 12 ACSR 325; Wagner v International Health Promotions Pty Ltd (1994) 15 ACSR 419. However, a series of separate telephone calls to individual directors will not constitute a valid meeting: Magnacrete Ltd v Douglas-Hill (1988) 48 SASR 565; 15 ACLR 325. The use of technology to conduct meetings both of directors and of members of companies is now specifically sanctioned by ss 248D and 249S of the Corporations Act respectively: see further 21.19 and 22.7.
Types of meetings General meetings 1.17 ‘General meeting’ is the term used to indicate a meeting that, subject to
any limitations imposed by the rules, is open to the attendance of every member of the body convening the meeting. The word ‘general’ (from L genus: class, kind) connotes that the meeting applies and pertains to all members (within implied limits; for example, a general meeting of [page 12] a class of shareholders, or of fellows, or of members of all committees) as compared with a sectional, regional or departmental meeting, or a board, council, committee or executive meeting. The term ‘general assembly’ has official, formal use in parliament and church organisations in some places, and in the armed services; in military parlance the term ‘generale’ meant the opening beat of the drum that signalled a full assembly of all troops, to be complete when the drum roll ceased.
Joint meetings 1.18 Where the members of two or more bodies wish to consider matters of common interest, it may be appropriate to hold a joint meeting. At the joint meeting the members of each body present will have the advantage of hearing the views of others who, while not necessarily members of the same organisation, have useful contributions to make to the discussion, perhaps from a different perspective. A joint meeting may also be appropriate where meetings of two or more bodies are required to be held to consider the same or related business, and there is a substantial overlap of membership between the bodies. In each case, the procedure for the joint meeting will need to be carefully worked out in advance, and if (as is likely) some variation of each body’s usual procedure for the conduct of meetings is required, separate resolutions passed by the members of each body at the beginning of the joint meeting adopting an agreed common procedure for the joint meeting. Any resolutions to be passed by the meeting should also be put separately to those members of each body present: see further Re Hills Motorway Ltd (2002) 43 ACSR 101.
Private meetings 1.19 The overwhelming majority of meetings are private. A private meeting is one to which admission is restricted. Admission is limited to persons entitled to attend, either by right of membership of the body concerned, or by individual invitation, or both. Examples are general meetings of shareholders of a company or of members of a trade union, association or club, or meetings conducted by
such bodies to which nonmembers are invited as individuals; also, meetings of public and statutory bodies including parliament, municipal and shire councils, hospital, school and various other boards, university councils and senates, and so on. Members of the public are not normally admitted to private meetings, but if they are permitted to be present it is as spectators — for example, in the public gallery in parliament and at municipal council meetings — and they are not allowed to participate in any way in the transaction of business. A private meeting may be held in a public building, but that does not affect its nature, and the public has no right to attend. Indeed, the [page 13] attendance at and participation in a private meeting by persons who have no right to be present may render the meeting invalid: Re an Application by Gould; Re Australian Railways Union (1957) 87 CAR 939; Clark v Framlingham Aboriginal Trust [2014] VSC 367; see further 7.8.
Public meetings 1.20 A public meeting is one to which members of the public are invited, either expressly or tacitly, to attend and participate: Gooden v Davies [1934] VLR 143; see also Fox v Allchurch [1926] SASR 384; McDowall v Bourke [1920] SALR 344; and Berglund v Graham [1927] VLR 162. Examples are public lectures, political meetings, and those seeking public support for a cause. The public may be admitted by ticket or otherwise. Tickets may be available at the commencement of the meeting or may need to have been applied for earlier. Admission may be free or there may be a charge. Usually, in the nature of things, public meetings are concerned with matters of general interest, although the subject may be of sectional rather than universal interest. The participation of most who attend is usually of an indirect nature, and is likely to be confined to listening to speakers and signifying their agreement with viewpoints, support being expressed by acclamation or by responding to an invitation from the platform to signify how they wish to vote on a proposal, expressed as a motion. The common law does not recognise any special right of public meeting: Leslie v City of Essendon [1952] VLR 222. ‘The right of assembly is nothing more than a view taken by the Court of the individual liberty of the subject’: Duncan v Jones [1936] 1 KB 218. However, under the common law, except to the extent of any control or prohibition by statute or official regulation or by law, public meetings for lawful purposes are not forbidden, and therefore may be held at any time and
place, provided the persons present have a right to occupy that place. The common law relating to public meetings is specifically curbed and modified by enactments at state and local government levels. Also the police have authority in relation to public meetings (and also to private meetings) in carrying out their basic role of ‘keeping the peace’. The statutes that relate to public meetings and to the powers and duties of the police vary to an extent. In some places the legislation is largely concerned with meetings held in the street and elsewhere outdoors: see further Chapter 7.
Unlawful meetings 1.21 For various reasons a meeting may be of an illegal character, or in certain circumstances it may become such. Assemblies of a public nature or in a public place that are in breach of the provisions of a relevant statute or by-law or local law are to be regarded as illegal. An assembly in the street [page 14] without permission of the appropriate authority is illegal. A lawful assembly that fails to comply with an order by the police to disperse thereupon takes on an illegal character. The powers of the police in relation to meetings that are illegal, including ‘unlawful meetings’, are covered by statute. At common law, the term ‘unlawful assembly’ has a distinct meaning. An ‘unlawful assembly’ is the common law misdemeanour consisting of the assembly of three or more persons with intent to commit by open force a crime, or in such a manner as to give firm and courageous persons in the neighbourhood reasonable grounds to apprehend a breach of the peace: R v O’Sullivan (1948) 48 SR (NSW) 400; Field v Receiver for Metropolitan Police District [1907] 2 KB 853. A lawful assembly is not rendered unlawful merely because the participants know that the unlawful acts of other persons hostile to the assembly will probably cause a breach of the peace: Beatty v Gillbanks (1882) 9 QBD 308. The participants in an otherwise lawful assembly whose procedure is calculated to incite or provoke a breach of the peace may be restrained from holding their meetings: Wise v Dunning [1902] 1 KB 167. Any meeting assembled under such circumstances as, according to the opinion of rational and firm persons, are likely to produce danger to the tranquillity and peace of the neighbourhood is an unlawful assembly. Everyone has a right to act in such cases as that person may judge right, provided it is not injurious to
another, but no person or number of persons have a right to cause alarm to the body of persons who are called the public: R v Vincent (1839) 9 C&P 91. In Kamara v Director of Public Prosecutions [1974] AC 104; [1973] 2 All ER 1242 it was stated that: I consider that the public peace is in question when either an affray or a riot or unlawful assembly takes place in the presence of innocent third parties. … No doubt an unlawful assembly differs from an affray because, unlike affray, it employs a common purpose and because, unlike affray, actual violence is unnecessary provided the public peace is endangered; but in my view it is analogous to affray in that (1) it need not be in a public place and (2) that the essential requisite in both is the presence or likely presence of innocent third parties, members of the public not participating in the illegal activities in question. It is their presence, or the likelihood of it, and the danger to their security in each case which constitutes the threat to public peace and the public element necessary to the commission of each offence.
Validity of a meeting 1.22 A valid meeting needs to comply with all relevant requirements contained in the rules of the body conducting it and all provisions of any relevant statute. In particular, proper notice needs to be given of the [page 15] meeting, a quorum must be present, and a Chair designated by or elected in accordance with the rules of the body should preside. These aspects are dealt with in Chapters 4–6. While the formalities of a meeting may be relaxed without the meeting necessarily becoming invalid, there must at least be an intention that the occasion be a meeting, and an awareness by the persons present that they are deliberating, in their capacity as members of the body, on its affairs: Poliwka v Heven Holdings Pty Ltd (1992) 6 WAR 505; 7 ACSR 85; see also 5.6. For the availability of injunctions to restrain the holding of an allegedly invalid meeting, see 7.16.
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2 The Secretary Introduction 2.1 Most meetings are held as part of the operations of an organisation. The officials of every organisation include a secretary, although not always with that designation: for statutory bodies the title of the office may be registrar; in a city or municipality it may be town clerk; in some associations it is executive officer or, especially for larger organisations, chief executive officer; in companies and most other bodies it is the secretary. The secretarial function in relation to the organisation’s meetings is one (really a multiplicity) of the various responsibilities of its secretary. For committee, sectional, regional and other divisional and branch meetings the function may be carried out by an assistant or sectional secretary. This secretarial function embraces planning and preparation before the meeting, plus tasks and responsibilities after it, as well as attendance at the meeting. In fact, unless there is adequate preparation by the secretary, a meeting may well be without defined targets to aim at, while preparation that is imaginative and efficient gives practical help to a meeting to achieve specific objectives with economy of time, and to arrive at decisions that are wise and beneficial. The success of a meeting is greatly influenced by, and may often be largely attributed to, good preparation by the secretary.
The secretarial function 2.2 In essence, the secretarial function during a meeting is separate and different from the function of all other persons participating. In principle, although possibly possessing more factual knowledge than any other one person present about some matters being discussed, the secretary of a meeting does not enter into the debate or discussion. If so directed by the Chair, the secretary
provides information; if invited, the secretary expresses opinion and views. The opportunity to communicate any facts [page 18] and comments that the secretary considers pertinent and useful occurs prior to the meeting, by advice to the Chair or in the form of a report to all members. During the meeting the secretary may seek permission of the Chair to make a statement if this would be helpful to the debate. The phrase ‘secretary to a meeting’ (rather than ‘of ’ or ‘at a meeting’) is thought by some to be particularly appropriate to the service performed and the relationship. At times, the secretary of a committee (and consequently of its meetings) is also a member of the committee. In such cases, the secretary has two personal functions: entitlement to participate in its meetings to the same extent as each other member, as well as fulfilling the secretarial responsibilities. The same situation occurs at a general meeting of an association where the secretary is a member of the body. In such circumstances, restraint, tact and care on the part of the secretary are necessary; and it is helpful, and also tactful, for the Chair to keep this dual capacity in mind during a meeting. In an organisation, duties concerning meetings are, of course, only part of the secretary’s overall responsibilities. But they are second to none in importance. In different organisations these duties, while basically similar, vary as regards the relative time and effort in which they involve the secretary personally. This chapter deals solely with the role of the secretary of a meeting, that is, not with the overall work as secretary of an organisation. In some ways it is the important duty of participating in meetings that gives the secretary a distinctive role and, originally, the title. However private, significant and confidential a meeting is, the secretary is in attendance as the executive officer of the meeting and the group that is present. The secretary is privy to the secrets of the discussion, the proposals, plans, purposes, reasons and fears aired, compromises arrived at and defences determined, and motions that are defeated and never recorded. The secretary is a vital instrument in the preparations prior to the meeting and guidance throughout it. The secretary is normally the officer who communicates to the public, to authorities and individuals, decisions made by the meeting. The secretary is the trusted, reliable confidant and recipient of all that transpires at a meeting, without entering directly into the decision-making.
Historical development 2.3 The title ‘Secretary’ has been in use in England since the sixteenth century. It was initially used in addressing a secretary of state. That official’s title stemmed from that of the sovereign’s secretaries, who were confidants, and whose duties were to attend audiences that the sovereign gave to officials, conduct official correspondence and keep records. [page 19] The word ‘secretary’ comes from the Latin secretarius, which was a title applied to confidential officers and was itself derived from secretum, meaning ‘a secret’. Consequential meanings developed of, first, a scribe, and then one who conducts correspondence, and thus one who keeps records — all functions that continue to be implicit in the designation of secretary. Secretaries of state possessed the authority to preside over executive departments of state. They came to have the title of ‘minister’ (originally meaning ‘servant’, from the Latin minister, as compared with magister meaning ‘master’), that is, minister of the crown: as a secretary, each was entrusted with the administration of a department of state to execute the policy decided on at meetings of the ‘cabinet council’ and in parliamentary sessions. The official title of certain ministers in some countries continues to be that of ‘secretary’.
Differing types of meetings 2.4 Three types of meetings require consideration: 1. Committee or board meetings. Frequently (but not always) held on a regular basis — weekly, monthly, quarterly — often at a fixed hour on, for example, the second Wednesday of each month. 2. General meetings of members. In companies and some other organisations these comprise the annual general meeting plus an occasional special (or extraordinary) general meeting. In many associations a regular (or ordinary) general meeting of members (monthly, bimonthly or quarterly) is the major activity of the body; their annual general meetings are usually held in conjunction with a regular meeting. 3. Joint meetings with other bodies (at committee or general membership level),
public meetings; creditors’ meetings. From the point of view of the secretary of such meetings, people other than members of the secretary’s organisation will be present, and there is an absence of established routine and precedent, and also of any flow of uncompleted work from a previous meeting (as is customary at meetings). The purpose and character of such a meeting is likely to be an individual one, possibly with far-reaching, important results or perhaps of only passing significance. The Chair may be a stranger to the secretary. The meeting may be held with friendly, happy motives, or it may be convened in strained circumstances. See further 1.18.
Responsibilities 2.5 Most chapters of this book refer to duties that fall to the secretary, tasks undertaken by that person, and ways in which a capable secretary [page 20] helps the efficient dispatch of business at a meeting. The various responsibilities listed in this chapter need to be considered in conjunction with information and comments contained in those sections that deal with the related procedure, including the administrative arrangements in connection with general meetings of companies. The remainder of this chapter sets out a representative range of responsibilities and duties of the secretary of a meeting. These vary to an extent, according to the type and nature of the meeting. A fundamental responsibility of a person who is to be the secretary at a meeting is to become well-informed about the constitution, rules and standing orders of the body that is convening or conducting the meeting; to understand its objectives and any legal relationships it has within a wider field or with other bodies; to become familiar with any legislation or regulations that govern its activities or affect the particular meeting; and to become knowledgeable about the recognised procedure of meetings, rules of debate and legal points and precedents arising from the common law and parliamentary procedures.
Duties 2.6 Depending on circumstances, the secretary may need to carry out the following duties:
Ensure compliance with: 1. any statutory, regulatory, stock exchange or other official requirements; 2. provisions of the body’s rules and standing orders, if any; 3. any previous resolutions that relate to the convening and conduct of meetings; and 4. common law precedents in so far as these are not otherwise provided for in these requirements. Convene meetings as directed and authorised in accordance with the constitution and rules. Usually this is at the direction of the governing committee or board of directors. The rules (or a statute) may include further authority. Some rules provide that a secretary may convene a meeting on his or her own initiative, but such an authority is usually confined to meetings of the committee and not general meetings. Where a statute, the rules or a resolution passed at a meeting with requisite authority requires meetings to be convened at specified times or intervals of time, the secretary has a responsibility to remind the Chair or committee of this, and if there is any disinclination to comply with the legal provisions, to impress on the persons concerned the obligation to fulfil this responsibility and penalties for disregarding the requirement. [page 21] Prepare and issue notices of each meeting in accordance with the rules. Enclose proxy forms and annual reports where appropriate. Ensure that all notices are posted by at least the legally required date, preferably earlier — caution is needed with bulk mail, which may not all commence transit on the same day. Guard against the development of any staff attitude that this mailing duty is to comply with a legal provision rather than to care for the interests of the members of the secretary’s organisation. Prepare the agenda: see further 2.8 and Chapter 3. Ensure the timely completion of all action, correspondence and reports arising from the previous meeting, especially things that need to be undertaken by the secretary in preparation for the current meeting. Receive notices of motion and, if valid and in order, include these in the agenda, and carry out relevant requirements of the rules.
General arrangements 2.7 Make suitable arrangements, in good time ahead of the event, with regard to all aspects of the meeting. According to circumstances these could include: suitable and adequate accommodation (unusual circumstances, especially unfavourable results in an annual report, may result in a much larger than customary attendance); comfort; seating, tables and lectern for speaker; suitable lighting at requisite points; ventilation, heating and cooling; microphone, tape or video recording and viewing equipment (for example, an overhead or computer projector); pens and stationery; ballot box; drinking water and glasses; trays; telephone; facilities for entry, exit, toilet, and press; admission arrangements; transport (before and after), courtesies, greeting and introductions for VIPs and guests; suitable refreshments during, after or as a preliminary to the meeting. Visualise everything that will happen from just before the start until shortly afterwards. Give personal attention to enough of the detail to ensure smooth progress. Arrange for votes of thanks to be proposed. Check that insurance has been effected, is up-to-date and adequate, to cover public liability, records, registers and books (if these have to be moved from the office to the meeting), and key persons if and while travelling outside their usual orbit to attend the meeting. Particularly careful preparation will be required if the meeting is being held at more than one venue by video link or similar technology. In such cases it is vital that all speakers at each venue are able to be clearly heard (and preferably seen) by each person attending the meeting. Appropriate support staff will need to be in attendance at each venue, properly briefed as to their responsibilities, and with each venue in constant but discreet communication with the secretary. A ‘dress rehearsal’ for the meeting will almost certainly be essential. [page 22] If the meeting is being held elsewhere than the usual place, check all facilities and arrangements; take nothing for granted. Ensure that the notice of meeting emphasises the different venue and includes clear directions about the address: preferably refer to the new location a second time in a covering communication. Take similar precautions if the time of commencement is changed from the usual hour. Confer with the Chair regarding the arrangements, the agenda and the timetable. Plan to cover the items within the available or a reasonable time, while
providing a margin for contingencies. Set targets and generally ‘program’ the agenda. This could result in: 1. adjusting the first draft of the agenda — for example, omitting an item and deferring it to the next meeting; 2. the Chair suggesting that the meeting refers an item to a committee, rather than dealing with it; or 3. extending the planned time of the meeting. If the Chair is to be elected at the meeting, confer with the organisers and other suitable people. Be prepared to preside briefly and conduct the election of a Chair of the meeting.
The agenda 2.8 As a preliminary, check the minutes of the equivalent meeting in the previous year and earlier years. This may provide a reminder of items, including preliminary considerations, which it may be useful to include on the current agenda. A schedule of essential items for each meeting covering a whole year provides a useful checklist, provided that it is regarded only as an auxiliary aid. Each meeting calls for fresh, alert thinking. Prepare the agenda. Depending on the type of meeting, circumstances and customary procedure, this may be embodied in or accompany the notice of meeting; this is preferable where practicable. If not, the agenda may be issued at the meeting. Occasionally its issue may be limited to the Chair and secretary. At times it is helpful for the secretary to attach reports, estimates, proposals, financial, sales or production statements, ratios, dissections and comparisons or other relevant documents. The relationship of each to a specific agenda item should be clearly indicated on both agenda and document. Each document should show its origin, author and date. They should be attached in the correct sequence. Any précis or report prepared by the secretary should be objective and impartial. In some circumstances (for example, an annual meeting, an unusual or public meeting, or an inexperienced Chair) the secretary can assist the Chair and the smooth flow of events by preparing a detailed, ‘narrative’ [page 23] agenda for the exclusive use of the Chair, retaining a copy for his or her own use.
In conjunction with the Chair, the secretary may arrange with individual persons to move and second specific motions (to be done unless someone else does this promptly) to ensure that they are properly brought before the meeting for debate without embarrassing pauses. Anticipate inquiries for information likely to be raised at the meeting. Have the requisite detail on hand. Brief the Chair so that queries can be dealt with.
Preliminaries 2.9 According to circumstances, particular items may need preliminary consideration and, in some cases, preparation of documents or plans prior to the meeting. The secretary needs to see that these are attended to by the appropriate persons, if not looked after personally, and that they are ready in time. The secretary should do everything necessary to see that all possible helpful information is available to those present in connection with each agenda item on which a decision needs to be made. The secretary should receive, and if necessary gather, these for distribution. The secretary may need to initiate reminders to committee Chairs and secretaries, the treasurer and others involved. The following are examples of such documents and preparations: periodical financial statements, annual report, forthcoming election of office-bearers, press release for issue at close of meeting, action to comply with statutory requirements or regulations, ballot papers for a possible election, perhaps voting papers for a poll. If the Chair is to deliver an address — for example, at an annual meeting or to explain a proposal or unusual circumstances — confer with the Chair and provide the Chair with pertinent information and helpful suggestions. Depending on circumstances, it may be appropriate for the secretary to prepare a first draft of the Chair’s speech and deliver it in good time before the meeting. If a senior office-bearer or long-serving person will retire during the meeting, the secretary can assist the felicities of the occasion by preparing a summary of highlights and also little-known facts of the contribution of the person to the welfare of the organisation, and supplying this to the Chair or other person who will express appreciation to the retiring person. If proxies are lodged, inspect proxies prior to the meeting, or just before or at the commencement of the meeting where the rules permit. Report to and confer with the Chair about these. Prepare a schedule of proxies lodged, showing voting totals and so on. [page 24]
At the meeting 2.10 Take to the meeting the following: the minute book with a bookmark indicating the minutes of the last meeting, usually still unsigned at this stage; a copy of the notice of meeting and any attachments; a copy of any document circulated since the last meeting, and important correspondence received; the constitution and other rules; any relevant statute or regulations; any reports, registers, account books, records and other documents that possibly may be required; for example, a list of financial (or unfinancial) members. At the first meeting of the board, council or committee of management after an annual or other general meeting it is usual for the minutes of that general meeting to be tabled for information and so that their correctness can be affirmed informally (or formally, and signed) while memories are fresh. At the meeting produce and read out any such records as directed by the Chair. Note the number of persons present. Inform the Chair as to whether there is a quorum present. If the rules require a quorum to be present throughout the meeting, be watchful about this in conjunction with the Chair. Record the number present at the start of the meeting. If required by the rules or if customary, arrange for the names of persons present to be recorded; provision of an attendance book for signatures may be a suitable procedure. Be in attendance throughout the meeting. Be acutely aware of what is going on at all stages. Take notes to aid the preparation of minutes. Carry out directions of the Chair. Assist the Chair in tallying the number of votes cast in divided issues. Be ready to inform, remind and advise the Chair about provisions of the body’s constitution and rules, procedure for the conduct of debate, points of order, relevant legislation, policy, precedents and resolutions passed at earlier meetings. Be watchful of the passage of time, and if necessary keep the Chair aware of any serious disparity with the contemplated timetable. Sit (usually) on the Chair’s left, but be the Chair’s right-hand person. Be prepared to counsel the Chair if a poll is demanded. Play an administrative part in the conduct of a poll, which may be held immediately or at an adjourned time according to circumstances and the Chair’s decision.
[page 25] The secretary must not give any impression of favouring or being in sympathy with one side or the other of a debated issue. If the secretary has pertinent and illuminating information that has not been brought to the attention of the meeting, it is in order for the secretary to request the Chair to permit this to be reported. If requested or invited to give views, appraise or comment during a meeting, the secretary needs to be diplomatic and refrain from discussion of personalities. In commenting on a controversial matter, the secretary should be open and direct, but guard against emotional expression; rather, the secretary should give reasons for the opinion held, stating these objectively and logically, in a way that relates them to the benefit of the organisation. The secretary should endeavour to frame all comments in a manner that does not confront a strongly expressed opinion of a member.
After the meeting 2.11 Promptly after the meeting, sort out what has to be done and determine priorities. Issue advices, communicate decisions to persons whose job it is to carry them out, initiate reports and action, send out correspondence, and generally carry out instructions and personal responsibilities arising from the meeting. Notes sent out immediately signed as ‘secretary’ with friendly requests for action and reports are more likely to stimulate prompt cooperation than delayed advice with a request for urgent attention in view of the short time left before the next meeting. Good results tend to flow from clear, concise memoranda with arresting, identifying headings, containing definite information, specific questions, coupled with logical reasons why the meeting desires the information, action and so on; and including a specified date (a reasonable one) for response, even if an interim reply. Where office-bearers have been elected, prepare and send out advices to the media and interested persons and organisations. Changes in signatures for banking and other purposes may also be needed. After an annual meeting, printed copies of the Chair’s address to the meeting may be widely circulated to members and the media, statutory returns may need to be lodged within a specified period, and accounts may need to be sent out for the new year’s subscriptions.
Minutes
2.12 Prepare minutes after the meeting that cover the proceedings. Submit a first draft to the Chair for approval. Enter the official copy in the minute book. Ensure that they are signed by the Chair of the meeting or the Chair of the next meeting. Issue a copy to each member before or at the next meeting if this is the customary procedure. [page 26] Be responsible for the safety and security of the minute book at all times, especially between meetings. It should not be given to any other person.
Qualities and attributes 2.13 Many of the personal, administrative and executive attributes of capable secretaries of organisations are qualities that are characteristic of effective secretaryship in relation to meetings. Success in this capacity lies in a combination of various factors — personal nature and capabilities, education, training, perceptive observation and experience — and is a practical blending of inherent gifts, cultivated talents and abilities, a friendly disposition, and the facility to respond harmoniously to enthusiasms shown by people participating in the meeting. These are broad characteristics. Experience shows that competent meeting secretaries vary, each with individual strengths and qualifications that characterise their successful work. Helpful qualities and attributes include the following (their sequence is not intended to indicate any order of importance): organising ability; systematic approach to work to be done; self-discipline to prepare properly for a meeting with a tendency to be meticulous rather than casual; temperament to deal with things in sufficient detail; enterprising; resourceful; imaginative, with creative ideas; tact; discretion; diplomacy; impartiality; courtesy; friendliness; gift for keeping on good terms with every person; familiarity with each person’s particular experience, knowledge, qualifications — and pet themes and eccentricities; ability to work with people and encourage them to work with the secretary;
facility for encouraging harmonious cooperation; practised experience in helping a group of people to utilise their combined time most advantageously; an interest in the people participating in the meeting as well as in the problem that the debate is endeavouring to solve or the objective it is trying to attain; flair for communicating — in writing and orally; ability to write effective letters; cultivated facility in framing resolutions and drafting good minutes; reasonable command of language and grammar; wide functional vocabulary; distaste for pedantry, clichés and outmoded phraseology; training in relevant skills; [page 27] instinct for assessing priorities, having regard to those people present as well as to the administrative significance of each item; commonsense; positive thinking; a good memory; high intelligence — a capacity to apprehend quickly the significant aspects of the motion being considered and in turn of each statement made in the debate, and to relate the latter to the first; and from the discussion to educe fresh relevant ideas in one’s mind, drawing on knowledge and experience; and to keep them all correlated; enthusiasm; energy; industry; reasonably intense interest in the happenings at the meeting, the general substance, progress and outcome of the debate; quiet efficiency, without fuss or drawing attention to self; sincerity; conscientious approach to work; attitude and action that earns respect of all; integrity; observation of secrecy regarding proceedings at meetings; strength to resist requests for release of confidential information; firmness where matters of principle, law, procedure, policy or precedent are involved; talent for conveying continuous reassurance to all present that the secretary is alert to ensure that proceedings never ‘go off the rails’; desire to guard against encouraging an attitude that the secretary’s views should be regarded as a dominating factor at meetings, even though some persons at a meeting may seem to assume and expect this to be the case; ability to accept criticism of the administration of, or preparation for, the
meeting without appearing to take this as a reflection on one’s personal work; preparedness to take initiative during a meeting where one believes it necessary; to put forward, through the Chair, ideas to help and suggestions to elicit discussion, but unobtrusively without appearing to wish to influence a decision; silence when this is wise.
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3 The Agenda Introduction 3.1 To enable the business of a meeting to be dealt with efficiently it is customary, and necessary from a practical point of view, for an agenda paper to be prepared prior to the meeting. The word ‘agenda’, derived from the Latin verb agere meaning ‘to do’, means ‘things to be done’. The term has been in use to describe the items of business to be transacted at a meeting since late in the nineteenth century. The terms ‘agenda paper’, ‘business paper’ or ‘order paper’ are sometimes used.
Legal status 3.2 There is no common law rule that an agenda paper is needed, nor is it a requirement of, for example, the Corporations Act, although its preparation may be provided for in certain other statutes or by the rules or standing orders of a particular body. While an agenda as such has no legal significance, many experienced secretaries do not destroy or discard agendas of board meetings or other meetings where important decisions are made, as they provide ancillary evidence and reminders of circumstances and reasons that may be useful in analysing the background to decisions to take or refrain from taking action, if this were to become important at some future time.
Function 3.3 An agenda is more than a list of items or a guide to matters to be dealt with at a meeting. It provides a program that is scheduled in a suitable way to facilitate the consideration of each item, and the transaction of business in an
orderly manner, to be completed within an appropriate time. It guards against possible oversight of a matter. It enables the items [page 30] to be arranged in both a logical and a flowing way that promotes efficiency and harmony in a meeting. It provides a restraint on members from raising matters that are to be discussed under a later heading. It also provides a basis on which to write the minutes of the meeting.
Preparation 3.4 Preparation of the agenda is normally one of the responsibilities of the secretary, generally in consultation with the Chair of the meeting. In some organisations the order of or priority about items is prescribed in the rules, which may also provide for the Chair or a small committee to settle the agenda. Preliminary preparation of the agenda for committee and board meetings starts as soon as the previous meeting concludes; in fact, during that meeting it is useful for the secretary to jot down warning notes for not only the next but also for other future meetings. In drafting an agenda the minutes of the previous meeting need to be referred to so that continuing business and matters to be reported are included. It is helpful to look at the agenda of that meeting to ensure that items on it that were not minuted for any reason are included again where appropriate. It is advisable to look at the minutes of the equivalent meeting in the previous year, and note whether this is the meeting at which some periodically recurring item is to be dealt with, including preparation for a forthcoming event or appointment. The secretary needs to devise a methodical system for recording notes and collecting various papers connected with any future meeting and filing these so that they are already together when the agenda is being prepared. Thoughtful planning of the agenda can do much to help a meeting to be orderly and efficient, and concluded by a time that can be estimated reasonably closely. Some items will tend to follow each other naturally, but careful selection of the order can be an effective aid to the steady accomplishment of a meeting’s business.
Form and wording
3.5 The items should be numbered in sequence, both as an orderly practice and for ready reference. It is useful for items that fall within a common heading to be placed in distinct groups with subdivided numbers. However, care is needed to ensure that significant items command the prominence they merit. An agenda should be a logical, comprehensible document designed to communicate readily to each member the nature and substance of the business to be dealt with. [page 31] Practices vary in the way in which the wording of agenda items commences: a verb, for example, ‘To approve’ or ‘Approve’; or a noun, for example, ‘Approval of ’. Any of these is suitable, but a consistent method is desirable. In any case, bear in mind that the opening words of each agenda item are, in a strict and technical sense, an abbreviation of the conventional wording that is used in connection with a special resolution, that is ‘To consider and, if thought fit, to pass a resolution to (for example, approve) …’.
Minutes and matters arising 3.6 The first item is normally ‘Minutes of the previous meeting on (date)’. This gives those present the opportunity to be satisfied about the correctness of those minutes as a record of the proceedings of that meeting. It also serves as a reminder of decisions made by and progress reported at the last meeting; and thus of matters that remain pending, decisions still to be made, and developments about which reports should be forthcoming. The sequence that follows, especially at meetings of boards and committees, may be influenced by the relative importance of various items to the particular organisation. While the immediate consideration of any business that arises from the minutes of the previous meeting seems a logical way to go about things, it is sometimes preferable for some or all such matters to appear as individual items later in the agenda except where concise reports will deal with them. A separate or subordinate item, often the second, namely ‘Business arising from the minutes’, is usual, under which such reports can be received and any other aspect be considered that is not the subject of a separate agenda item. Also under this heading the Chair should inquire whether a member wishes to refer to any further matter arising from the minutes. This should not be regarded as an opportunity to reopen debate on a matter that was resolved at the last meeting.
Routine business 3.7 It is generally agreed that routine matters should be disposed of early in a meeting. This term applies to the regular business that comes before most committee and board meetings. It includes such important agenda items as accounts to be passed for payment, share transfers, elections to membership, confirmation of decisions and adoption of recommendations of subcommittees, and so on. Several benefits accrue from routine business being dealt with at an early stage. These important matters are dealt with expeditiously in view of the amount of business still to be considered, but without undue haste because there is ample time for any member to query or scrutinise anything [page 32] seeming to warrant this. The usually precise nature of routine items and the formal manner in which they are handled establishes a conventional meeting atmosphere that is very suitable for discussing later matters that may be controversial and contentious, and then arriving at majority, if not unanimous, decisions on matters important to the success of the organisation. Furthermore, where discussion on routine matters is protracted, if it occurs late in the meeting one or more members of the committee or board may need to leave because of other engagements. A quorum may no longer be present and thus no further resolutions could be passed about items that, although routine, entail decisions before essential action can be taken. From a practical point of view it is desirable that a committee and the secretary should establish a regular method for all meetings as regards the arrangement of agenda items, but without the system being regarded as inflexible.
Alteration of order 3.8 The order in which business is dealt with at a meeting should follow the sequence stated in the agenda unless there is good reason for change. There are a number of practical reasons for this. A properly planned agenda will have taken into account possible effects on later agenda items that could arise in the event of certain resolutions being passed, or otherwise, when earlier items are dealt with. An agenda is structured logically, having regard to such matters, and the sequence
of items should not be changed unless to achieve some worthwhile benefit, and then only after adequate consideration. Also, where the agenda has been sent out before the meeting, some members may be unable to be present at the start, but intend to arrive in time for certain items that, according to the agenda, are to come up for consideration later. The Chair is not able to alter the order of the agenda without the consent of the meeting. A resolution may be passed by the meeting directing a specific change in the order of items in the agenda. This may arise from a request by the Chair for approval for a change if the Chair thinks this will facilitate the proceedings, or it may follow a motion moved by any other member. It has been held that directors may deal with the business at a board meeting in whatever order they please: Re Cawley & Co (1889) 42 Ch D 209.
Other or general business 3.9 The inclusion of ‘other business’ or ‘general business’ as a closing agenda item for committee and board meetings provides for the [page 33] consideration, if only in a preliminary way, of any unexpected or fresh and important business; also it enables up-to-date information on matters of passing interest to be reported and noted at the time rather than await the next meeting. The urgency of circumstances must be taken into account, but in principle ‘other’ or ‘general business’ needs to be within the terms of the notice of meeting, that is, the agenda cannot contain items that go beyond the scope of the notice. The Chair therefore needs to decide whether a new item is acceptable, or whether it calls for the usual due notice: see further 4.17 and 4.18.
Circulation 3.10 Unless impracticable, each member should be provided with a copy of the agenda. Preferably this should be sent out prior to the meeting, together with or as part of the notice of meeting. In particular, the agenda for an annual general meeting is usually embodied in the notice of meeting. Where a special resolution is to be proposed, or on any occasion when advance notice has been received by the secretary of the precise wording of a motion to be
moved at a meeting, the full motion should be reproduced on the agenda paper if practicable, so that all members can see the exact proposal that is to be voted on at the meeting. As a general principle, it is helpful for reports, subcommittee minutes, proposals and recommendations, estimates and budgets, correspondence and financial and statistical statements to be sent out in advance with the agenda for board and committee meetings. Some such information is highly confidential, and a suitable procedure needs to be decided on by each body. The prior circulation of documents, suitably prepared for that purpose, is likely to result in better informed discussion that occupies less time and culminates in wiser decisions. While, ahead of the event, board and committee members are studying and comprehending the assorted information about which the meeting will need to make decisions, they each have an opportunity to refresh their memory about individual particulars and check on up-to-date information. Also, the members have time to reflect on whether the information about each item is prepared and presented in the best way for the purpose — is it sufficient, is it too detailed, are there adequate comparative figures, would a certain matter be best dealt with by a subcommittee first?
Adjourned meetings 3.11 A fresh agenda is normally neither necessary nor desirable in the case of an adjourned meeting, which is no more than a further session of [page 34] the one meeting being held after an interval for purposes of administrative or physical convenience: see 13.14. If a new agenda is prepared for the adjourned meeting, care is needed to ensure that it is properly and adequately headed. Depending upon circumstances and arrangements, it may be useful for a new agenda to be issued, confined to the unfinished business, and perhaps embodying the wording of one or more or alternative motions arising from the first session and drafted during the period of adjournment. Possibly a draft of the minutes of the proceedings of the first part of the meeting may be read to the meeting, where this would be of benefit to those present in their consideration of the business still to be dealt with.
Annotated agenda 3.12 A frequent practice in connection with annual general meetings is for the secretary to prepare an annotated agenda for the guidance of the Chair throughout the meeting. If this is done it should cover every aspect and point with which the Chair needs to be concerned, as the Chair will tend to rely on it entirely. It should therefore commence with reminders to ascertain the presence of a quorum, and to welcome generally those present and by name any individual persons if appropriate. In many organisations it is customary at this stage for the Chair or the secretary to read out a list of those members whose apologies for non-attendance have been received before the meeting, and to ask if there are any further apologies. The annotated agenda should go on to refer to each occasion on which the Chair is to address the meeting, and to call on the secretary to read or announce anything, and on members to propose and second the formal motions. Each of these should be reproduced on the Chair’s agenda in full, together with the names of two persons who have agreed to propose and second it, this having been arranged previously by the secretary. The annotated agenda should indicate a slight pause before the Chair closes the meeting to provide an opportunity for members to propose one or more votes of thanks, possibly to the Chair and others. The secretary should hold a copy of the annotated agenda, which, with insertions of notes made at the meeting, is readily converted into the minutes. Sometimes every member of the board or council is provided with a copy of the annotated agenda. This enables directors or councillors to know exactly when and if the Chair is counting on them to move, second or speak to a motion. To guard against hazards for the Chair, care is needed in preparing an annotated agenda. The exact wording in the official agenda that is held by all others present needs to be embodied in the Chair’s special agenda — then italics, redlining or a different font, clearly distinguishing the insertions for the Chair’s personal reference, should be utilised for the [page 35] additional information, to ensure that the Chair is alerted constantly as to what the annotated agenda contains that is not in the standard agenda. Apart from an annual general meeting, or a special or extraordinary general meeting, an annotated agenda for the Chair is useful for a joint meeting of more than one body, or any meeting of a prolonged or complex nature.
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4 Notice of Meeting Proper notice is essential 4.1 It is most important that all persons with an entitlement or obligation to attend a meeting be notified, suitably in advance, of the time and place at which it will be held, and the nature of the business to be dealt with. The word comes from the Latin notitia, meaning ‘known’. Proper notice of meeting is one of the requisites of a validly constituted meeting. It is essential that a meeting be properly convened: Barron v Potter [1914] 1 Ch 895. Where a meeting is convened without proper notice, the meeting is null and void to all intents and purposes, and no business can be validly transacted at the meeting: Smyth v Darley (1849) 2 HL Cas 789; 9 ER 1293; Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corp (1975) 11 SASR 504; 33 LGRA 70. Although lack of proper notice invalidates a meeting as between a company (or other body) and its members, this does not necessarily adversely affect rights of creditors or other third parties: Re Miller’s Dale & Ashwood Dale Lime Co (1885) 31 Ch D 211.
Rules should be complied with 4.2 The courts have tended to interpret requirements as to notice strictly, and, accordingly, every such requirement set out in the body’s rules and any applicable statute should be complied with precisely: R v Fulton (1876) 2 VLR (Eq) 100. However, a meeting of a domestic tribunal called other than in accordance with its rules will not inevitably be invalid, provided it is conducted substantially fairly: Allen v Hagger (1983) 4 IR 100. While strict compliance with the rules is usually required, a technical
construction of the rules cannot be relied upon to avoid giving notice to those who would normally be entitled to notice: A W & L M Forrest Pty Ltd v Beamish (1998) 146 FLR 450. [page 38]
Authority to give notice 4.3 A notice needs to be issued with proper authority, that is, in accordance with any requirement in the rules, or consequent to a resolution of the appropriate body or committee. The notice should show the name and office, that is, the appointment, of the person who signs and issues the notice. This is normally the secretary. If the rules provide that notices are to be issued by order of or under the hand of an officer or officers as specified, a departure from this or neglecting to refer to such officers on the notice makes it invalid, and the meeting is therefore not duly convened: R v Fulton (1876) 2 VLR (Eq) 100; compare Allen v Hagger (1983) 4 IR 100. Unless the rules provide otherwise, it is not competent for the secretary, as such, to issue notices of meeting on the secretary’s own authority: Re State of Wyoming Syndicate [1901] 2 Ch 431. A resolution convening each individual meeting or a number of successive meetings should be passed at a meeting of the board, council or committee and recorded adequately in the minutes of that meeting. Agreement by and consents of individual directors given separately do not amount to proper authority where the constitution of the company vests that authority in the board, council or committee, as is usual: Re Haycraft Gold Reduction & Mining Co [1900] 2 Ch 230. However, a notice issued other than with the required authority may be ratified before the meeting by the requisite authority, and thereby becomes good notice: Hooper v Kerr, Stuart & Co Ltd (1900) 83 LT 729. Subject to wording in the rules, it would normally be competent for a resolution to be passed authorising the secretary to convene meetings, if this is desired. It is usual and good practice for the words ‘by order (or resolution) of the (board, committee or council)’ to appear above the name of the secretary.
Notice must be given to each member
4.4 The prima facie rule is that, in the absence of express provision to the contrary, meetings must be summoned in some such way as will bring notice of them to every member: Symes v Weedow (1893) 14 ALT 197. If rules do not stipulate a procedure to be adopted when calling meetings, they need to be convened in a way that will bring notice of each meeting to every member: Campbell v Higgins (1957) 3 FLR 317. Hence, notice of a special meeting given at an ordinary meeting to those present and not brought to the notice of all members is insufficient: Campbell v Higgins (1957) 3 FLR 317. It is also not sufficient to send one [page 39] notice to two members resident at the same address: Re Canberra Labor Club Ltd (1986) 5 ACLC 84.
Members unwilling or unable to attend 4.5 The notice must be sent to every person entitled to receive a notice of meeting in accordance with the rules or a relevant statute: Young v Ladies’ Imperial Club [1920] 2 KB 523. This needs to be done even in the case of members who advise that they cannot or will not be present, or that they desire a notice should not be sent to them. The notice is a summons that serves as an admonition to members to perform their duty. Because a duty is laid on all members to attend on being duly summoned, no member is empowered to waive the right to receive due notice: Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corporation (1975) 11 SASR 504; 33 LGRA 70. Some cases suggest that notice need not be sent to a member who is not within reach of notice, or who is seriously ill: Re Merchants & Shippers Steamship Lines Ltd (1917) 17 SR (NSW) 146; Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corp (1975) 11 SASR 504; 33 LGRA 70. However, in considering whether a person is within reach of notice it is necessary to have regard to modern means of rapid communication: Mitropoulos v Greek Orthodox Church and Community of Marrickville and District Ltd (1993) 10 ACSR 134. It is prudent to avoid the possibility of the validity of the meeting being challenged by sending notice to all members, even those it is presumed will be unable to attend.
Members not entitled to vote 4.6 Where rules provide for notice of meeting to be given to all members, and the organisation has some members who are not entitled to vote at the meeting, if notice is not given to the latter members the meeting is invalidly convened and resolutions passed at it are not valid: Royal Mutual Benefit Building Society v Sharman [1963] 1 WLR 581.
Waiver of notice 4.7 Rules frequently include a clause to the effect that if all (or a very high proportion) of the members are present at a meeting of which requisite notice has not been given, and pass a resolution (some rules specify ‘unanimously’) to waive the formality of notice, the meeting is deemed to be validly constituted as regards notice: for example, s 249H(2) of the Corporations Act. Longstanding court rulings provide that, where all members of a body are present at a meeting and agree to waive the absence [page 40] of proper notice, the business transacted at the meeting is valid: Machell v Nevinson (1724) 11 East 84n; Johnson v Beitseen (1989) 41 IR 395. If all those entitled to attend the meeting agree to waive the inadequacy or lack of notice, this is sufficient and in order, even though they do not actually meet together for this purpose nor all attend the meeting: Parker & Cooper Ltd v Reading [1926] Ch 975. However, if only some of the members are present at a meeting, no implicit waiver of the rules of the organisation so as to obviate any procedural defects or any non-observance of the relevant rules for the calling of the meeting can be supposed to have occurred: Lawrence v Atkins (1952) 74 CAR 139. A person who attends a meeting that has been convened irregularly and listens to what is going on does not thereby necessarily acquiesce in or submit to the proceedings: Werner v Boehm (1890) 16 VLR 73. However, if a person present at a meeting claims the notice was invalid, but fails to record any objection at the meeting itself, that neglect may preclude the later making of the objection: Re Katoomba Coal & Shale Co Ltd (1892) 13 LR (NSW) (Eq) 70; compare Ryan v Kings Cross RSL Club Ltd [1972] 2 NSWLR 79. Where resolutions passed at a meeting convened by a notice that was invalid
have been acted on without objection and adopted by acquiescence over a long period, such resolutions have been held to be valid and effective: Daly v Gallagher [1925] QSR 1.
Accidental omission to give notice 4.8 Well-drafted rules normally provide that accidental omission to notify a member or the non-receipt of a notice by a member does not thereby invalidate a meeting: for example, s 1322(3) of the Corporations Act. Well-drafted rules normally provide that accidental omission to notify a member of the non-receipt of a notice by a member does not thereby invalidate a meeting: for example, in relation to companies, s 1322(3) of the Corporations Act; see further 21.17 and 21.31.
Date, time and place of meeting 4.9 The notice needs to state the date, time of commencement and place of the meeting: Wishart v Foster (1961) 4 FLR 72. It is of practical value to show the day of the week. It is beneficial to members and an encouragement to a good attendance to include adequate details of the place of meeting; even where it is at a customary venue, clear directions are helpful to new members and infrequent attenders. The time and place of the meeting should be reasonably convenient for those entitled to attend: Cannon v Trask (1875) LR 20 Eq 669. Directors have a duty to convene meetings, particularly annual general meetings, at [page 41] a time and a place where all members of the company present in the state will be able to attend: Smith v Sadler (1997) 25 ACSR 672. Where the rules state a place and a time for meetings to be held, those provisions need to be followed. If they are no longer suitable because of changed conditions, arrangements should be made to amend the rules; from a practical point of view, the amendment should preferably take the form of deletion of precise provisions that are unduly restrictive.
Board and committee meetings 4.10 A frequent practice of boards of directors, committees of management and similar groups is for meetings to be held frequently at regular intervals and times; for example, every, or every second, Monday at 2.30 pm. In such cases, by arrangement and with the full understanding of each board or committee member including new members, there is no necessity for notice to be given of each meeting. However, in such circumstances, care is needed to ensure consistency of procedure, as well as where very significant or unexpected business will be dealt with. It is wise practice for notice to be issued for all meetings.
Period of notice 4.11 Notice of a meeting should be given in such a manner as may reasonably be expected to come to the attention of members concerned, and in such time as to give those members a reasonable opportunity of attending the meeting: Winter v McAdam (1957) 1 FLR 210. Notice must be given to members in sufficient time to enable them to attend if they so desire; the terms of the notice should contain sufficient information as to the business to be discussed: Campbell v Higgins (1957) 3 FLR 317. A notice is not a proper summons unless it is received at a time that affords the member a reasonable opportunity of reaching the place of the meeting at or before its commencement, and of adequately preparing for the business to be transacted; in order to determine what is ‘reasonable’ or ‘adequate’, regard must be had to all the circumstances of the case: Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corp (1975) 11 SASR 504; 33 LGRA 70. In the case of an organisation with members in Geelong and Hobart, a notice of special meeting published in the Melbourne Age on the morning of the meeting was held to be totally inadequate, and the meeting invalid: Allen v Jarrad (1974) 160 CAR 1018. Rules normally state a minimum length of time required between the notice being sent and the date of the meeting. In bodies incorporated under a statute — for example, the Corporations Act, Strata Titles Acts and [page 42] Associations Incorporation Acts — the statute usually specifies a minimum period of notice for general meetings that the body’s constitution or rules may
not reduce. In the case of meetings of directors of companies, no minimum period of notice is prescribed by the Corporations Act. In the absence of a relevant provision in the company’s constitution, the law only requires that the notice be fair and reasonable: Re Homer District Consolidated Gold Mines; Ex parte Smith (1888) 39 Ch D 546. In deciding what is fair and reasonable, the practice of the directors of the particular company is an important factor: Toole v Flexihire Pty Ltd (1991) 6 ACSR 455; 34 AILR 131.
Calculation of time 4.12 The term ‘clear days’ as regards notice (for example, ‘at least 14 clear days’ notice must be given’) means that there needs to be at least (for example) 14 days between the date of issuing (normally posting) the notice and the date of the meeting excluding both dates: White v Godfrey (1959) 1 FLR 357. A ‘clear day’ means a period of 24 hours commencing at midnight. Thus, for example, ‘14 clear days’ before a specific date covers a period that ends at midnight just as that specific day commences — the period commenced at midnight at the close of the day prior to the first of the required 14 days: In many statutes, statutory rules and by-laws the intention to exclude both days and to give the person affected a clear interval of time between the two is put beyond all doubt by the insertion of words such as ‘clear days’ or so many days ‘at least’: Halsbury’s Laws of England, 4th ed, Vol. 45, para [1133].
Unless a relevant statute provides otherwise, the wording ‘not less than 14 days’ means 14 clear days: Re Railway Sleepers Supply Co (1885) 29 Ch D 204; Ex parte McCance; Re Hobbs (1926) 27 SR (NSW) 35; Ayres v Chacos (1972) 19 FLR 468. Where rules state ‘(for example, seven) days’ notice’ this does not mean exactly (for example, seven) days’ notice, nor does it require that notices to all the members need to be sent out on the same day. It is deemed to mean ‘not less than (for example, seven) days’ notice’. While this is not unquestionably (for example, seven) clear days, it would be open to challenge and therefore inadvisable for such notices to be sent other than on a ‘clear days’ basis. The need for strict compliance with not less than the minimum period of notice provided for in the rules has been referred to by the courts in numerous cases. Where a notice is required to be given within a specified number of days before a stated date, it must be given on the last of such days at the latest, and the following day does not meet the requirement: Steedman v Hakim (1888) 22 QBD 16. Where a notice is required to be given within
[page 43] a specified number of days of a stated date, this does not mean that it must be given at least that number of days before that date: Stewart v Chapman [1951] 2 KB 792; [1951] 2 All ER 613. Sundays and holidays are treated as normal days for the purpose of notices (and for all general purposes as regards meetings) unless the body’s rules contain a different provision. Where a period is fixed within which some act must be done, Sundays and holidays in general count like other days: Aspinall v Sutton [1894] 2 QB 349. It makes no difference that the last day of the period falls on a Sunday; it is no excuse for omission to act on some prior day: Mesure v Britten (1796) 2 Hy Bl 617. The rule does not hold good if it would render performance impossible — for instance, if the prescribed period consisted of all holidays — in which case the act may be lawfully done on the next possible day: Mayer v Harding (1867) LR 2 QB 410. It is in order for a notice to be sent that gives a longer period of notice than the prescribed minimum, unless the rules clearly specify differently: Re Vale of Clwydd Coal Mining Co Ltd (1912) 29 WN (NSW) 189. Well-drafted rules usually state ‘at least’. Reasonably early notice of a meeting, fairly well in advance of the event, can be helpful to members in their planning to attend. However, the issue of a final notice so long before the meeting as to be unrealistic, even if followed by an informal reminder, is obviously to be guarded against, and its validity may be challenged by members. The notice should carry a date, even though that date may be earlier than the date of issue. From the beneficial viewpoint of both the issuing body and the recipient, it is preferable that the date should be the date of posting; but this is not always possible where notices are in a printed form, and are so numerous that mailing is spread over more than one day. The date on the notice should not, of course, be later than the date of posting.
Service by post 4.13 Rules usually provide for serving notices by post, although this would not normally be specified as a requirement. Rules also usually include a provision deeming service by post either to be effected at the time at which the notice would have been delivered ‘in the ordinary course of post’ (for example, s 29(1) of the Acts Interpretation Act 1901 (Cth)), or a given number of days after posting. It is important that a suitable deeming provision be included in the
rules, as otherwise service will not be effected until the notice is actually received: Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corp (1975) 11 SASR 504; 33 LGRA 70. If a notice is posted but not received, in the absence of a deeming provision the meeting will be invalid: Leary v National Union of Vehicle Builders [1970] 2 All ER 713. [page 44]
Newspaper advertisement 4.14 Rules sometimes provide for the giving of notice of meeting by the insertion of an advertisement in a newspaper. However, it has been held that, unless the rules provide for notice by an advertisement exclusively or that an advertisement is sufficient, advertising a meeting is not equivalent to giving notice to every member: Charlton v Barkly Reef Gold Mining Co (1877) 3 VLR (L) 101.
Form of notice 4.15 Rules usually require a notice to be in writing, although this is not a requirement at common law. If the rules do not require written notice, notice may be given orally: Browne v La Trinidad (1887) 37 Ch D 1. Oral notice may be given by telephone: Wilson v Manna Hill Mining Co Pty Ltd [2004] FCA 912; BC200404374. From a practical point of view, the inclusion of a postal address, and possibly a telephone number, facilitates communications such as apologies for nonattendance and prompt advice of change of address or death. Where a general meeting is being convened, the notice should describe the meeting in that way, having regard to wording in the rules. It should indicate whether it is an ordinary meeting or some other type of meeting as provided in the rules; for example, a special or extraordinary general meeting. Where it is an annual general meeting, this should be stated. The alternative wordings — namely, ‘general meeting of the (name of body)’ and ‘general meeting of members of the (name of body)’ — appear to be optional. The phraseology that appears in the relevant rule would be the more correct wording.
Notice of business 4.16 Whether notice is required to be given of the business to be transacted at a meeting will depend on: the requirements of the body’s rules and any applicable statute; and whether the meeting is a general meeting of the members of the organisation or a meeting of its governing body. Whether the meeting is a general meeting or a meeting of the governing body, any relevant statutory requirements or rules of the organisation as to the notice required to be given of the business proposed to be transacted at the meeting must be strictly complied with: see 4.2. The distinction between general meetings of members and meetings of the governing body arises from the common law in relation to municipal corporations. Notice [page 45] of the business proposed to be transacted was required for general meetings of the members of the corporation, as a general rule, so that the members could make an informed decision on whether each would exercise their right to attend. On the other hand, members of the governing council of a municipal corporation were not entitled to an opportunity to consider whether they would attend such meetings because they were duty-bound to attend all of them; accordingly, no notice of the proposed business had to be given: Cummings v Macks (2000) 96 FCR 345. This principle has been applied in the context of meetings of directors of companies, so that at a properly convened meeting directors may transact all business within their powers even though no notice has been given to the members of the board of the business to be transacted: La Compagnie de Mayville v Whitley [1896] 1 Ch 788; Eastern Resources of Australia Ltd v Glass Reinforced Products (GRP) Pty Ltd [1987] 2 Qd R 31; 10 ACLR 496; Toole v Flexihire Pty Ltd (1991) 6 ACSR 455; 34 AILR 131; Dhami v Martin (2010) 241 FLR 165; 79 ACSR 121 at [47]. The principle has also been applied to the governing bodies of other organisations such as trade unions: Campbell v Crawford (1985) 12 FCR 317. Despite these cases, it will still be preferable and prudent to give notice of the business proposed to be transacted at such meetings, especially if it is significant or unusual: Bell v Burton (1993) 12 ACSR 325; Wilson v Manna Hill Mining Co Pty Ltd [2004] FCA 912; BC200404374.
If notice of business is required, the notice should make clear the purpose and general nature of the meeting. The business to be dealt with should be stated adequately and candidly. In particular, where very significant business is to come before the meeting, this needs to be clear in the notice. Its purpose is to enable the recipients to know what is proposed to be done at the meeting, and they can then decide whether or not to attend. A notice of meeting should be worded in such a way that ordinary minds can understand its meaning: Henderson v Bank of Australasia (1890) 45 Ch D 330. A notice must give members fair warning of the matters to be dealt with: Ryan v Edna May Junction Gold Mining Co (NL) (1916) 21 CLR 487; 22 ALR 222. It is not necessary that a notice set out precisely the terms of the resolution proposed to be considered by the meeting. It is sufficient if the general nature of the business is specified: Colhoun v Green [1919] VLR 196. A notice is not a proper summons unless it conveys to the member, with reasonable particularity and accuracy, the nature of the business to be transacted: Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corp (1975) 11 SASR 504; 33 LGRA 70. Whether the notice is sufficiently clear will also depend on the degree of sophistication and understanding of the members to whom it is addressed: Weribone on behalf of the Mandandanji People v State of Queensland [2013] FCA 255 at [40]; BC201301405. [page 46] In one case in which a notice of meeting stated a proposed resolution to allow the directors additional remuneration, it was held that the notice was not good, as it did not disclose the amount, which was substantial, of the intended increase: Baillie v Oriental Telephone & Electric Co Ltd [1915] 1 Ch 503. In another case, a notice was held to be not good where it did not disclose that directors would have an underwriting interest, and further interests, in a scheme to be considered at the meeting: Tiessen v Henderson [1899] 1 Ch 861. However, the court held to be good a notice that stated that a proposed resolution, as set out precisely, would be passed with ‘such amendments as shall be determined on at the meeting’: Betts & Co Ltd v Macnaghten [1910] 1 Ch 430. An insufficient notice may be found to be misleading. However, the courts have held that it is not necessary for the notice to include minute detail of the business to be transacted. A notice is sufficient so long as the nature and intent of the business is clearly indicated and brought to the minds of those for whom it is intended: Ex parte MacNamara [1893] 10 WN (NSW) 83. In the case of companies, the courts have held that notices should be couched in
clear terms, and that any comments made by the directors and circulated with the notice should fully and fairly inform and instruct the shareholders upon what is proposed to be done, particularly where this involves alteration of existing rights and provisions of the constitution: Bancorp Investments Ltd v Primac Holdings Ltd (1984) 9 ACLR 263. The test is to ask whether the information, if provided to an ordinary shareholder who scanned or read the document quickly, not as a lawyer, but as an ordinary person in commerce or as an ordinary investor, would fully and fairly inform and instruct the shareholder about the matter on which he or she would have to vote: Devereaux Holdings Pty Ltd v Pelsart Resources NL (No 2) (1985) 9 ACLR 956. Further, 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 that may contradict or qualify any particular position taken or advocated by the directors or a majority of them: Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 at 466; 127 ALR 543; 15 ACSR 590. The body’s rules generally state what details are to be included in a notice of a special or extraordinary meeting, or where a special resolution is to be proposed. The rules may stipulate that certain details are to be included where other particular business is to come before the meeting. Some specific form of notice may be required in some or all circumstances. Any such requirements are to be strictly observed: for example, s 249L(1)(c) of the Corporations Act stipulates that where a special resolution is to be proposed at a meeting, the notice of meeting must set out an intention to propose the special resolution and state the resolution. [page 47] In the case of a special resolution to adopt a new constitution, it will not always be necessary to distribute the full text of the proposed constitution, particularly where the document is lengthy and complex. Instead, it may be appropriate to give a concise and clear summary of the effect of the changes, provided that summary is accurate and complete in all material respects: Re Mirvac Ltd (1999) 32 ACSR 107.
Notice indicates scope of business 4.17 The proceedings of a meeting may not deal with matters outside the scope of the notice of that meeting. Accordingly, care is needed in drafting the
notice so that it is not unduly restrictive, while complying with the principles and requirements of adequate and sufficient information about what is to be dealt with. In one case, the directors of a company convened a meeting to consider ‘proposed extensions’ to a tramway. At the meeting, a resolution was passed approving extensions other than those originally proposed. The court held that the resolution was invalid: Harvey v Adelaide & Hindmarsh Tramway Co Ltd (1881) 15 SALR 136. In another case, where the notice of meeting included the words ‘to elect directors’ although only one director was retiring, it was held that it was in order for more than one director to be elected at the meeting up to the number of directors specified in the constitution of the company: Choppington Collieries Ltd v Johnson [1944] 1 All ER 762. A special meeting called to transact special business is not able to deal with other business: Symes v Weedow (1893) 14 ALT 197. Even if the rules of the body do not require notices of meeting to specify the business to be transacted, if the business to be transacted at the meeting is specified in the notice of meeting, the meeting is confined to dealing with that matter: Efstathis v Greek Orthodox Community of St George [1989] 1 Qd R 146, sub nom Ephstathis v Greek Orthodox Community of St George (1988) 13 ACLR 691. It is, however, competent for an extraordinary general meeting convened on the requisition of members to deal with special business that had been notified to members more than seven days before the meeting, notwithstanding that such business had not been notified in the requisition for the convening of the meeting and the notice convening it: Holmes v Life Funds of Australia Ltd [1971] 1 NSWLR 860. The fact that a notice of meeting includes an item of business of a type that the meeting is not competent (for example, under the rules, statute or a previous resolution) to deal with does not in any way create validity for the proposed transaction; in principle, it is an invalid notice, and therefore the meeting could not be validly held. However, if a notice is invalid in part because of the inclusion of business outside the scope of the meeting, [page 48] the rest of the notice is not necessarily invalid: Cleve v Financial Corp (1873) LR 16 Eq 363.
Other or general business 4.18 The inclusion of an item of ‘other business’ or ‘general business’ enables items of a routine or minor nature to be brought forward. However, if rules provide that no business is to be transacted at a meeting unless specified in the notice of the meeting, a notice that includes ‘any other business properly brought forward’ is insufficient for the purpose of the particular rule. Consequently, any resolution passed at the meeting is not binding if it relates to a matter insufficiently referred to in the notice: Helwig v Jonas [1922] VLR 261. Some organisations have a provision in their rules enabling matters to be brought forward as general business if a sufficiently high proportion of members so agree. In such cases, if notice of the matter has not otherwise been given, the requirement for the special majority must be met: Magner v Fowler (1979) 46 FLR 78; 26 ALR 671.
Inability to cancel notice 4.19 After a notice of meeting has been validly issued, the meeting is not legally able to be cancelled or even postponed unless the rules or standing orders permit this, which would not be usual: Bell Resources Ltd v Turnbridge Pty Ltd (1988) 13 ACLR 429; McPherson v Mansell (1994) 16 ACSR 261; McKerlie v Drillsearch Energy Ltd (2009) 74 NSWLR 673; (2009) 72 ACSR 288. In fact, once an actual resolution has been passed to convene a meeting a similar situation occurs: Smith v Paringa Mines Ltd [1906] 2 Ch 193. Where it is no longer opportune or convenient for the meeting to be held as initially decided upon, an expedient procedure may be for the meeting to be held and, provided a quorum is present, to be forthwith adjourned to a specified date, or to a date to be determined by the Chair and notified to the members. In such circumstances, notice of the adjourned meeting, with an explanation, should be sent to every person entitled to receive notice of meetings although, unless the rules require otherwise, it is not necessary legally to send out notices of an adjourned meeting where at the earlier part of the meeting the time and place of the later part of the meeting was decided: see 4.20. If a quorum does not attend a meeting planned to adjourn immediately, the rules need to be complied with. Rules often require such a meeting to be held at the same time and place one week later. However, if the rules [page 49]
provide that a meeting, lacking a quorum, lapses or is dissolved, a fresh meeting would need to be called, involving the issue of a new notice.
Adjourned meeting 4.20 Unless the rules provide otherwise, it is not necessary to give (that is, to issue, send or serve) notice of an adjourned meeting where the date, time and place were fixed at the earlier meeting when it adjourned. But rules frequently require notice to be given where the adjournment is for more than a fortnight or a month: for example, s 249M of the Corporations Act. In principle, the adjourned (that is, later) meeting may deal with only the remainder of the business for which the original meeting was convened, as it is deemed to be a continuation of that meeting. Certainly, it may not deal with any additional business if a notice of the later meeting is not issued to everyone entitled to receive a notice of meeting, with attention being drawn to the circumstances and the additional business. A meeting which is an adjournment of an earlier meeting that had been assembled as the result of an invalid notice is itself an invalid meeting. See further Chapter 13.
Contingent notice 4.21 In one case where notice was given simultaneously of two meetings to be held contiguously, one immediately after the other, to consider two alternative proposed resolutions, the second meeting to be held only in the event of the earlier resolution not being passed, the court held that the notice of the second meeting was not to be deemed invalid because of the contingent nature of that meeting: Tiessen v Henderson [1899] 1 Ch 861.
Evidence of notice 4.22 The minute book is prima facie evidence not only that any notice mentioned in it has been duly sent, but that such notice contained the requisite information, and such notice will be sufficient if it substantially sets forth the nature of the business to be transacted and the resolutions to be proposed: Inglewood Mining Venture Ltd v Price (1872) 6 SALR 2. From a practical point of view, it is advisable for an accurate record to be made and kept by the secretary of the number of notices posted and the time and date or dates of posting. Such a record enables the secretary to ensure that the notices
posted equal the number of persons entitled to receive them, and provides reliable evidence of this in the event of a query arising later.
[page 51]
5 Quorum Meaning 5.1 A quorum is the minimum number of persons who need to be present to constitute a valid formal meeting. Without a quorum, a meeting is not properly constituted and cannot transact business validly. Indeed, if there is no quorum present, there is no meeting in the legal sense. Without a quorum the meeting may not commence. In such circumstances, if the persons present proceed to conduct what purports to be a meeting, it has no legal effect: Re Alma Spinning Co (Bottomley’s case) (1880) 16 Ch D 681; Re Romford Canal Co (1883) 24 Ch D 85; Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corp (1975) 11 SASR 504; 33 LGRA 70. As a result, the decisions of an inquorate meeting are not strictly speaking capable of being ‘ratified’ at a subsequent quorate meeting; they must be made afresh: Clamp v Fairway Investments Pty Ltd [1971–73] ACLC 27,599; Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corp (1975) 11 SASR 504; 33 LGRA 70. The requirement for a quorum does not imply that, for a resolution to be valid, the number of votes cast must be at least equal to the quorum.
Historical origins 5.2 The literal meaning of the Latin word quorum is ‘of whom’. Its use in connection with meetings derives from the wording used in commissions by which persons were designated by name when appointed as members of a body, namely, quorum vos … unum esse volumus, meaning ‘of whom it is our wish that you … shall be one’. It has been in use since early in the seventeenth century, when it initially applied to justices of the peace with particular qualifications whose presence was essential to constitute a bench properly. In due course, the
term became used to designate a fixed number [page 52] of members of a body whose presence is essential to transact business validly.
Rules should specify quorum 5.3 It is usual for the rules of a body to specify the quorum both for general meetings of members of the body and for meetings of its governing committee or board. This is the customary way in which the minimum number or the minimum proportion of the members of the body, or of the committee or board, is stipulated as being thereby authorised to act for and on their or its behalf at a properly convened and constituted meeting. Any requirements in a body’s rules as to quorum must be strictly complied with: Re Alma Spinning Co (Bottomley’s case) (1880) 16 Ch D 681; Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corp (1975) 11 SASR 504; 33 LGRA 70. An exception, however, is that if the total number of members of a body is less than the number specified for a quorum, all those members present at a general meeting may nevertheless pass valid resolutions: Re Johnston, Dunster & Co (1891) 17 VLR 100.
Where no quorum is specified 5.4 If the rules do not specify a quorum, a common law rule applies that, in the case of a corporation, a majority of the membership of the body needs to be present to enable a general meeting to conduct business validly, that is, in a way that will have legal effect: Merchants of the Staple of England v Bank of England (1887) 21 QBD 160 at 165. In the case of unincorporated associations, in the absence of a quorum specification all members would have to be present, unless the association has a sufficiently longstanding custom allowing a lesser number to transact business validly: Ball v Pearsall (1987) 10 NSWLR 700. In the case of meetings of committees, the common law rule is that all members of the committee need to be present if no quorum is specified in the rules or when the committee is appointed: Re Liverpool Household Stores (1890) 59 LJ Ch 616. The same rule applies to bodies created by statute, such as commissions:
Green v R (1891) 17 VLR 329; 13 ALT 29; St Leonards Municipality v Williams [1966] Tas SR 166; McGinity v Medical Council of Tasmania (2009) 19 Tas R 1.
Where power to fix own quorum 5.5 If the rules provide that the quorum for meetings of a committee may be fixed by the committee itself, the application of the common law [page 53] rule described in 5.4 makes it clear that the committee meeting at which the quorum is fixed must be attended by every member of the committee. However, in the case of companies, where it is usual for the constitution to authorise the directors to fix the quorum for board meetings, if the directors neglect to fix the quorum and if a relevant statute does not make specific provision, the common law rule is that a majority of the directors is a quorum at a board meeting: York Tramways Co v Willows (1882) 8 QBD 685. In an earlier case, it was held that where the company’s constitution did not specify the quorum, the number of directors that usually acted in conducting the business of that company constituted a quorum: Lyster’s case (1867) LR 4 Eq 233. Where the company’s constitution gives the directors power to alter the default quorum requirements of the constitution, the decision must be made in accordance with the constitution of the company (which will usually require a formal resolution of directors): Oil Basins Ltd v Bass Strait Oil Co (2012) 297 ALR 261 at [51]; (2012) 91 ACSR 700.
Proper notice is still required 5.6 In addition to a quorum being present, the prior issue of a notice of the meeting to all persons entitled to receive one is needed for the meeting to be validly constituted: Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corp (1975) 11 SASR 504; 33 LGRA 70; see also 4.1 and following. The mere physical presence together of a sufficient number of persons to comprise a quorum, or more than a quorum, does not give those persons any entitlement to conduct a meeting. Such a gathering does not constitute a meeting: Brougham v Melbourne Banking Corp Ltd (1880) 6 VLR (Eq) 214 at
222. Even if all members of the body are present, their casual meeting together does not constitute a meeting if one of them objects: Barron v Potter [1914] 1 Ch 895. Where a member of a body is tricked into attending a meeting and caught by surprise, it is strongly arguable that the meeting should not be allowed to stand, and that any resolution passed should be set aside: Aqua-Max Pty Ltd v MT Associates Pty Ltd (2001) 3 VR 473.
Can a quorum be one? 5.7 A body’s rules or a company’s constitution may provide for a quorum of one person for a meeting, including a meeting of its governing committee or board. The rules or constitution may authorise the committee or board to fix its own quorum and, if so, it is possible for it to fix a quorum of one person. It has been held that it is not out of order for a board of directors to have a quorum of one: Re Fireproof Doors Ltd [1916] 2 Ch 142. [page 54]
Are proxies to be counted? 5.8 Unless a statute (for example, the Strata Titles Acts) or the rules specifically provide otherwise, proxies are not counted in reckoning a quorum: the required number of persons must be personally present. A member represented by his or her attorney is not present in person: M Harris Ltd [1956] SC 207. However, the duly appointed representative of a corporate body that is a member is counted in the quorum: Re Kelantan Coco Nut Estates Ltd [1920] WN 274. Where the rules specify a quorum of more than one, and also permit proxies to be counted in reckoning the quorum, ordinarily there must still be at least two persons present to constitute that quorum, even taking proxies into account. This is on the basis of the general principle that a meeting consists of more than one person: see 1.15. Where the quorum is two and proxies are counted, the presence of merely one shareholder who holds proxies for several others does not constitute a quorum: Re Sanitary Carbon Co [1877] WN 223; compare the position of creditors: see 1.15. In addition, where a member is represented by more than one proxy and proxies are counted towards a quorum, only one such proxy may be counted: Re Queensland Petroleum Management Ltd [1989] 1 Qd R
549, sub nom Donrob Enterprises Pty Ltd v Queensland Petroleum Management Ltd (1988) 14 ACLR 307.
Are the secretary, and others, to be counted? 5.9 Whether or not the secretary (or any other officer; for example, the auditor) or a guest Chair is reckoned when counting the quorum, depends on the rules and, in particular, on whether the secretary, other officer or Chair is a voting member of the body, committee or board that is meeting. A Chair who is a voting member will, in the absence of a contrary provision in the rules, be included in the count of members needed for a quorum: McDonald v Thorley [1976] Qd R 208.
Conflict of interest 5.10 Some rules provide that a quorum, during discussion and voting on any particular matter, is not to take into account a member who has an interest in a contract or other financial matter being dealt with by the meeting. Whether or not this is stated specifically in the rules, a quorum, while the matter is being dealt with, must not rely on the presence of one or more such persons or their proxies where the rules forbid them to vote on such a matter: Re Greymouth Point Elizabeth Railway & Coal Co Ltd [1904] [page 55] 1 Ch 32; Levenstrath Community Association Inc v Nymboida Shire Council (1999) 105 LGERA 362. The presence of a quorum at a meeting means a quorum competent to transact and vote upon the business before the meeting. If some of those present are disqualified from voting and there is not otherwise a quorum, no business can validly be done: Steuart v Oliver (No 2) (1971) 18 FLR 83. In the case of proprietary companies, the constitution will often provide that directors may not vote in regard to any contract or proposed contract or arrangement in which they directly or indirectly have a material interest. Directors so disqualified from voting cannot count towards a quorum: Wilson v Permasnow (A/asia) Ltd (1988) 14 ACLR 129; Re Austplat Minerals NL (1990) 2
WAR 289. If a disinterested quorum of directors is not possible because of such a situation, then it will be necessary for the board to convene a general meeting of members: Re North Eastern Insurance Co Ltd [1919] 1 Ch 198. However, in the absence of a provision in the rules of the body excluding from a quorum members who have an interest in the business before the meeting, members present at the meeting and having such an interest may be counted in assessing whether or not a quorum is present, even if they abstain from voting: A M Spicer & Son Pty Ltd (in liq) v Spicer (1931) 47 CLR 151; Anaray Pty Ltd v Sydney Futures Exchange Ltd (1982) 6 ACLC 271.
Must quorum be present throughout meeting? 5.11 Rules frequently provide that a quorum must be present throughout the meeting. Other rules are worded in a way to imply this. Unless the rules contain particular wording that indicates otherwise, the common law rule is that there must be a quorum present at all times throughout a meeting: Henderson v Louttit (1894) 21 R (Ct of Sess) 674; Ball v Pearsall (1987) 10 NSWLR 700. The Chair should close the meeting (or adjourn it where this is validly possible under the rules) on discovering that a quorum is no longer present. However, some rules, including reg 42 of Table A of the previous companies legislation, provide that no business shall be transacted unless a quorum ‘is present at the time when the meeting proceeds to business’. Under such a rule, it is possible for a meeting that commences with a quorum present to continue to transact business validly, even though the number present falls below the quorum through the departure of one or more members: Re Hartley Baird Ltd [1955] Ch 143. [page 56]
Quorum at adjourned meeting 5.12 Where a properly constituted meeting is validly adjourned, the adjourned meeting is still subject to any mandatory requirement in force as to quorum: Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corp (1975) 11 SASR 504; 33 LGRA 70.
However, this leaves open the question of whether, in the case of a provision that requires a quorum to be present only at the time when the meeting proceeds to business, it is essential for a quorum to be present upon the resumption of a meeting that had commenced with a quorum present and subsequently had adjourned to a later hour or day. As an adjourned meeting is in law merely a continuation of the original meeting (see 13.14), it would seem on a strict view that a quorum need not be present at the beginning of the adjourned meeting under such a provision.
Parliamentary practice 5.13 In the case of corporations and associations, in the absence of a quorum where the body operates under rules that require a quorum to be present throughout the meeting, any business dealt with lacks validity, and indeed the meeting itself does not have any capacity to function. This may be contrasted with parliamentary procedure, based on the practice of the House of Commons, which is that, after the Speaker has ascertained a quorum is present at the start, any business effected by parliament during the absence of a quorum is not thereby invalidated, but the transaction of further business is not proceeded with upon the lack of a quorum being brought to the attention of the Speaker; that is, the House itself is responsible for watching its quorum.
Loss of quorum 5.14 In the case of the meetings of corporations and associations, it is among the Chair’s responsibilities to be satisfied that a quorum is present at the start and, if required by the rules, throughout the meeting. The secretary has a responsibility to inform and guide the Chair about this. The courts will not assist those who seek to frustrate the proper conduct of a meeting. Hence, a person who deliberately withdraws from a meeting so as to remove the quorum may not rely upon that loss of quorum in seeking relief, even though any decisions made subsequent to the loss of quorum may be invalid: Ball v Pearsall (1987) 10 NSWLR 700. Moreover, a member who seeks to draw attention to the absence of a quorum is also to be included in the count: McDonald v Thorley [1976] Qd R 208. [page 57]
Others may rely on decisions of inquorate meeting 5.15 Although the lack of a quorum invalidates any business being transacted or decisions made by the group of people present at the ‘meeting’, any such acts will be regarded as valid as far as a third party is concerned where there is some material consequence to the third party, provided that the latter is not aware of the irregularity: County of Gloucester Bank v Rudry Merthyr Steam & House Coal Colliery Co [1895] 1 Ch 629.
Lapsing of meeting 5.16 In the absence of a quorum, a meeting ‘lapses’. In the case of a meeting where a quorum is not obtained, s 249T(4) of the Corporations Act provides that the meeting is ‘dissolved’. The term ‘adjourns’ is frequently, but loosely, used to indicate that a meeting ‘lapses’ or ‘dissolves’ (or, in the case of a properly constituted meeting, ‘concludes’). However, this is a misleading use of the word ‘adjourn’, which is correctly employed to mean that a meeting ceases for the time being but is to be continued at some later time. The rules of some bodies (for example, s 249T(3) of the Corporations Act) provide that if a quorum is not present within a given time (usually half an hour) the meeting is ‘adjourned’ either to a date to be fixed or for a specified period (usually one week): see further 13.12. From a practical point of view, although a meeting lapses (unless it is adjourned) if a quorum is no longer present, those who remain may agree to continue discussing some particular matters informally, perhaps arriving at some definite conclusions. Such discussion is not recorded in the minutes and has no validity. However, at the following meeting, the Chair may explain and summarise what was discussed and generally agreed upon informally by those who were present. An expedient sometimes used is for that following meeting to appoint an ad hoc committee (or subcommittee) comprising those who had remained at the previous meeting, and then to receive an immediate report from that committee for consideration by the meeting. Additional meetings are not always feasible, and informal discussion without a quorum, followed by responsible, formal discussion and decision at a later, properly constituted meeting, may be a sensible way to avoid interrupting consideration of an important matter at a vital stage, and consequently to assist the subsequent meeting to arrive at the wisest decision about it. The absence of a quorum at an
earlier meeting does not invalidate a substantive and independent resolution passed at a [page 58] later meeting at which a quorum is present: Richard Brady Franks Ltd v Price (1937) 58 CLR 112.
Determining the size of a quorum 5.17 Careful thought should be given when quorums are being fixed for the annual general meeting, other general meetings and meetings of committees and boards. Each such quorum should be specified either in the constitution of the body, or in a subordinate instrument, such as regulations, by-laws or standing orders for the conduct of meetings; the latter may usually be changed with less complication. When a new committee is formed, a quorum for its meetings should be fixed by, and recorded in minutes of, the appointing body unless this is already covered by existing rules. For all types of meetings, a commonsense size of quorum should be determined: sufficient members to conduct business with an adequate spread of responsibility, experience and representation. However, this does not mean some unrealistically large number based on a theoretical ideal that business should not be proceeded with and transacted unless a substantial proportion of the members is present. The rules of some bodies provide that a quorum is a specified proportion of the membership. In practice, this can require a difficult and possibly hazardous calculation, particularly having regard to a provision in the rules of many bodies that unfinancial members are not entitled to vote. For this reason, it is usually desirable to specify an actual number of members as a quorum, rather than a percentage. Care is needed in the procedure at a meeting at which a body’s rules or standing orders are being amended. If the proposed amendments include the rule that prescribes the existing quorum, it is important that rule is not deleted until the new rule is in operation: otherwise, instantly, the body is without a quorum and can transact further business validly only by resolutions being passed by a majority of the membership: see 5.4.
[page 59]
6 The Chair Chair is essential 6.1 Every meeting needs to have a Chair. The basic role of the Chair is to preside at the meeting. The Chair should superintend all aspects of the meeting, exercise control as needed and generally enable those present to fulfil the function and purpose of the meeting in an orderly, lawful fashion: It is an indispensable part of any meeting that a chairman should be appointed and should occupy the chair. In the absence of some person (by whatever title he be described) exercising procedural control over a meeting, the meeting is unable to proceed to business. This may perhaps require some qualification if all present are unanimous. And, in a small meeting, procedural control may pass from person to person according to who for the time being is allowed by the acquiescence of those present to have such control. But there must be some person expressly or by acquiescence permitted by those present to put motions to the meeting so as to enable the wish or decision of the meeting to be ascertained: Colorado Constructions Pty Ltd v Platus [1966] 2 NSWR 598 per Street J.
Also: [W]ith the exception of a situation where all present are unanimous (a situation which does not apply in this case), the role of a chairperson is an indispensible substantive requirement of a general meeting: Northwest Capital Management v Westate Capital Ltd (2012) 264 FLR 424 at [25] per Edelman J.
The function of the Chair is vital because, if a meeting degenerates to a stage where decisions cannot be ascertained, the proceedings may become invalid: see 7.10.
Historical background 6.2 ‘The chair’ has been a symbol of authority throughout recorded history. Occupancy of a chair (often the only one), as compared with the backless benches and stools on which others sat (unless they stood), was
[page 60] synonymous with the exercise of power. The chair was a dominating feature of the art of Ancient Egypt and other early cultures in picturing the person in authority in a distinctive way. Our word ‘chair’ has important attributes. It stems from the same Greek word for chair from which ‘cathedral’ is derived: a cathedral is a bishop’s ecclesiastical chair. In Wales, to sit in a chair at an eisteddfod was the honour accorded a bard of distinction: eistedd means ‘to sit’. During the Middle Ages, there was rarely more than one chair in a household in Britain. It was reserved for the master. Persons of lesser consequence sat on settles and stools. As late as the seventeenth century, there was a particular chair to be occupied exclusively by the head of the household. This was about the time that the word ‘chair’ came into use to apply to the office of a person chosen to preside over a meeting. It is noteworthy that in the British House of Commons, despite its entire reconstruction twice after being destroyed by fire and during war, the only chair is the Speaker’s chair. All other members sit on benches. The word ‘Chair’ is used in this book to describe the person presiding at a meeting. It has been used in that sense for well over 300 years: 1658–9 in Burton Diary 23 Mar. (1828) 243 The Chair behaves himself like a Busby amongst so many school-boys … and takes a little too much on him: Oxford English Dictionary.
This terminology also accords with the standing orders of the House of Representatives and other Australian houses of parliament.
Appointment 6.3 The Chair should be properly appointed. Any specific requirements in the rules of the body need to be precisely followed. If the rules specify that a particular officer (for example, the president) ‘shall’ chair the meeting, that person, if present, must preside; another officer or member may only chair if the rules so allow. A person who is not entitled to do so cannot simply assume the Chair. If the relevant rules require the Chair to be elected or chosen by the meeting, those present must at least by their conduct acquiesce in the appointment of one of their number to preside. If instead the authority of a self-appointed Chair to exercise procedural control is denied by some present, that person cannot be regarded as the Chair. In such circumstances, a resolution passed on the casting vote of the purported Chair will be null and void: Kelly v Wolstenholme (1991) 4 ACSR 785.
Election 6.4 It is only in some circumstances that a meeting will need to elect its own Chair. The rules of bodies usually either identify the person who is [page 61] to be the Chair of each committee or meeting within the organisation, or specify a method by which the Chair is to be selected and appointed. However, committees may be empowered to elect their Chairs, or this may be necessary because of the absence of the regular Chair and deputy, or because of the resignation or death of the Chair. On a wider scene, where a meeting of interested people is convened for some purpose, it will sometimes be appropriate and expected for the meeting to elect its Chair, rather than simply for the convenor or nominee to preside. Frequently, at a meeting of this type, the first person who is nominated and accepts nomination is elected to the Chair without further nominations being forthcoming. Where necessary, a temporary Chair, who may be self-selected and appointed, officiates and controls proceedings while the Chair of the meeting is elected by those present. There are longstanding decisions of the courts that a candidate for appointment as Chair of a meeting may not preside over an election for that office, nor act as the returning officer or a scrutineer; if a candidate so acts and is elected as Chair, that election is invalid: R v Owens (1850) 28 LJQB 316; Fanagan v Kernan (1881) 8 LR Ir 44; National Australia Bank Ltd v Market Holdings Pty Ltd (in liq) (2001) 161 FLR 1; 37 ACSR 629. Normally some suitable person (for example, the secretary or one of those who convened the meeting) takes the initiative and calls for nominations. However, the convenors of a meeting are not thereby entitled to nominate an interim Chair: National Australia Bank Ltd v Market Holdings Pty Ltd (in liq) (2001) 161 FLR 1; 37 ACSR 629. When one nomination is received, further nominations should always be called for. It is customary for each nomination to be seconded, but there is no particular need for this; to save embarrassment if no seconder is forthcoming, the person who is presiding may decide to second a nomination. A person who is entitled to nominate a candidate for election does not necessarily lose that right to nominate by reason of having to preside at the election: R v Nance (1740) 7 Mod Rep 337. In the absence of rules to the
contrary, eligible persons may nominate themselves or second such a proposal, and may vote for themselves: National Australia Bank Ltd v Market Holdings Pty Ltd (in liq) (2001) 161 FLR 1; 37 ACSR 629. Often, in practice, only one nomination is received. The person temporarily in control puts the nomination, in the form of a motion, to the vote. This should be done even if there is only one nomination, unless the rules specify this is not required. Upon the vote being carried, the person who has been presiding should declare the person who has been elected to be the Chair, naming that person. The Chair thus derives [page 62] authority from the meeting, which by its vote has consented to control being in the Chair’s hands: see further 6.5. It should be noted that if a person is nominated by name in the form of a precise motion accepted as such by the person presiding, that motion is not capable of being amended as regards the name of the nominated person (unless the rules provide for this). Strictly, that motion should be voted on forthwith. If carried, it becomes a resolution; if lost, another person is nominated. Where more than one nomination is received, an election is held. Voting methods vary. These are examined in Chapter 17, especially 17.4–17.7. In established bodies, the rules usually specify a procedure that must be followed. As noted at 15.6, if a poll is demanded on the election of the Chair of a meeting, the poll must be held immediately. As soon as a meeting has elected its Chair, that person takes the chair forthwith and the proceedings continue under the control of the new Chair. The minutes of the meeting should record by name that the person elected has assumed the chair.
Authority 6.5 The authority of the Chair is derived from the meeting itself. Those present have elected one of their number to chair, or have raised no valid objection to that person presiding under the rules of the body governing the appointment of a Chair. The relationship between the meeting and the Chair may be analysed in terms analogous to common law principles of agency: Public meetings must be regulated somehow and where a number of persons assemble and put a man
in the chair, they devolve upon him, by agreement, the conduct of that body. They attorn to him, as it were, and give him the whole power of regulating themselves individually: this is, within reasonable bounds. The chairman collects, as it were, his authority from the meeting: Taylor v Nesfield (1855); Wills on Vestries 29n.
The Chair who presides at the meeting and has to receive the poll and declare its result has prima facie authority to decide all emergent questions that necessarily require decision at the time: Re Indian Zoedone Co (1884) 26 Ch D 70; and see 6.6. However: Authority to preside over a meeting does not give dictatorial power. It merely makes the chairman, ‘first among equals’, and imposes on him certain duties including taking the chair and carrying on the meeting so that the business before the meeting is disposed of as the meeting desires, and also preserving order at the meeting. The preservation of order includes not only the prevention of disorder but also the conduct of the meeting in accordance
[page 63] with the rules of the body that is meeting. Disregard by the president of such rules is incompatible with his duty to keep order. … The chairman of a meeting of a particular body … is bound by the rules of that body and cannot refuse to put motions which are in order under those rules … It is his duty to put these motions in order to ascertain the sense of the meeting. He should not rule out of order a motion which is within the competence of the meeting when all the conditions incidental to the submission of the matter to the meeting have been observed: Wishart v Henneberry (1962) 3 FLR 171.
Further, the Chair of a meeting in exercising the powers conferred on that position must make decisions reasonably with a view to facilitating the purpose for which the powers have been conferred: Byng v London Life Assurance Ltd [1990] Ch 170; Link Agricultural Pty Ltd v Shanahan [1999] 1 VR 466; (1998) 28 ACSR 498. In exercising those powers, the Chair is entitled to make procedural decisions, such as preventing the meeting from being tape-recorded, subject to any contrary decision of the meeting itself: Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd [2010] SASC 266 at [71] and [81]. The Chair cannot, either by closing or adjourning the meeting, or by refusing to act at a meeting, prevent that meeting from transacting business that it is entitled to transact, subject to express rules giving the Chair power to adjourn: Thornton v MacKay (1946) 56 CAR 561. The procedure for a meeting disagreeing with a ruling made by the Chair is discussed in 9.5.
Removal 6.6 Unless the rules of the body prescribe that a particular person must preside, the Chair of a meeting may be removed and replaced with another by the passing of a resolution stating ‘That (another person by name) do take the chair’, or ‘That … vacate the chair in favour of …’. The rules of procedural fairness (or natural justice, as it used to be called) do not apply to the removal of the Chair of a meeting: Re Ballan Pty Ltd (1993) 46 FCR 106; 12 ACSR 605. It is essential that a new Chair be appointed by the same resolution that removes the incumbent. If not, on the resolution of removal being passed, the meeting will have no Chair, and accordingly will lapse. The formal motion ‘That the Chair leave the chair’ is, in fact, moved with that object — that is, to secure the adjournment of the meeting in an indirect way: see further 13.19. Vacation of the chair by that person in order to adjourn the meeting because of disruption is referred to in 7.15 and 13.6. [page 64]
Chairing in practice Nature of meeting 6.7 The Chair’s approach to the conduct of the proceedings of a meeting is influenced by its nature. The procedure needs to be appropriate for the sort of meeting it is, and will differ as between, for instance, a meeting convened to further the interests of a candidate standing for political election, one organised to hear a member of parliament give a report to constituents, an annual general meeting of a public company, a special general meeting of an association, the regular meeting of a board of directors and a public meeting organised for fundraising purposes. Meetings of the type with which this book is primarily concerned provide the means by which a number of people may come together to arrive at decisions. Their fundamental purpose is to make decisions. This must never be lost sight of by a Chair.
Discussion groups 6.8 In this regard, meetings, as such, differ from discussion groups. Although
group discussion in a regulated way provides the base on which all meetings are dependent to fulfil their purposes, meetings fail to accomplish objectives unless decisions are taken, whereas the function of discussion groups is to discuss — with a specific purpose, but not always with any certainty or even hope that a consensus of viewpoint or a particular conclusion will be arrived at. Discussion groups have various purposes: to enable the participants to gain new knowledge, or raise the standard and scope of their knowledge; to evolve fresh ideas and practical methods; to formulate statements, reports or recommendations; to determine ways to grapple with problems; to provide people with opportunities for developing communication and social skills, by participating in joint and group efforts, and so on. Under the guidance of a Chair (by whatever title used) the group engages in an exchange of ideas, views, experience, notions and wisdom. The participants gain from the coordinated knowledge and opinion ventilated during the discussion period, and there may be a beneficial accomplishment of some specific objective. The satisfaction that comes to each participant in a discussion group, including the Chair, tends to be in the value of this personal contribution and what each derived from the discussion, as much as a possible satisfaction that the group really achieved something. The satisfaction that comes to those who participate in meetings lies in the knowledge that the group was successful in arriving at and making one or more definite decisions. Much published material is available about the challenging job of leadership and chairing of discussion groups and various techniques and [page 65] skills. A terminology has evolved. Personality, training, social skills and understanding of human relations and communications all play their parts. A great accumulation of knowledge, experience and research in this challenging field is available for study by those who have a flair and enthusiasm for the practice of chairing.
The company context 6.9 In this book, the word ‘Chair’ signifies ‘Chair of a meeting’. It is therefore desirable to consider briefly the term ‘Chair of the company’ or, to be precise, ‘Chair of the board of directors’. The responsibilities of such a person include presiding at meetings, but this is only part of a wide range of duties and obligations.
In the business scene in Australia, ‘the Chair’ is regarded as the preeminently important person in the company. The appointment of company Chair carries high prestige in the community. The burden of responsibilities the Chair carries varies, of course, with the size, nature and significance of the company. In a substantial public company, it can be great and constant. The Chair is the company’s chief official representative as regards the public scene, and is answerable to the shareholders on behalf of the board of directors. The Chair has responsibility to the company as an operating entity, including its employees and those who deal with it, and, to an extent, to the community. Even where the Chair is an external director (that is, where not holding executive employment within the company) the Chair needs to be in close touch with managerial aspects, yet is not part of management. The Chair endeavours to be in a position to assess the relative efficiency of management, including financial aspects and long-range planning so as to help keep fellow directors informed, reassured or alerted. The role of the Chair includes some responsibility for securing decisions by the board of directors that are practical and likely to promote the business and welfare of the company, and for guarding against unwise decisions; and, where a board comprises both external and executive directors, for preserving a balance between varying interests; also for maintaining a unified board. The Chair is the person who, when presiding at meetings, will wish to, and be expected to, apply the principles of good chairing. That is, to be impartial and non-assertive, refrain from entering the debate, protect minority opinion and be satisfied that resolutions reflect the will of the majority. Thus, some problems of chairing can arise for the company Chair in reconciling these several roles, namely: 1. public and shareholder relations; 2. applying intelligence, knowledge and experience for the best interests of the company; [page 66] 3. leadership of the board; and 4. presiding at board meetings and general meetings. When presiding at board meetings, the Chair needs to steer a course that watches the interests of the company and its shareholders, ensures that control of the proceedings does not pass to others and at the same time guards against
making any compromise of matters of principle with regard to the conduct of the meeting. Board meetings are meetings of committees, and therefore suitable relaxation of rules of debate is possible. When it is clear that there is not agreement as to what is the right decision on an important issue, the Chair may need to have regard to this dual role, and as company Chair adopt a firm attitude. Tact, pleasant demeanour and good humour can help to make pressure and determination seem less obvious. The Chair may think it right and proper to exercise initiative in the interests of the company, and introduce persuasive argument directed to further consideration being given, rather than for the meeting to make its decision too quickly. For instance, the Chair may encourage the board to appoint a subcommittee to look into the matter thoroughly and immediately and make a prompt recommendation. The Chair who when speaking to fellow directors can display conviction and factual knowledge about the company’s operations, plans, people, suppliers and markets in the light of trends and forecasts earns their respect. The views, suggestions and cautions of the Chair command attention. Colleagues recognise that the Chair was appointed to be the leader — the ‘skipper’ — and therefore to control and guide the board as it formulates, decides on and supervises the policy that will influence and perhaps determine the fortunes and destinies of the company. The Chair’s effective discharge of that responsibility in delicate conjunction with the job of presiding at board meetings calls into play some of the personal attributes and qualities that led to selection for that appointment. A paramount consideration is that in all situations it is the Chair’s duty to ensure that the sense of the meeting is ascertained, that minority opinion is not smothered and that when a resolution is passed it does reflect the will of the majority. In considering the problem that arises from the apparent ‘dual chairing’ role of a company Chair, it should be noted that the only requirement that the Corporations Act places on the Chair, as such, is to be the Chair of meetings. The only references to the Chair in the Corporations Act are in those provisions dealing directly with meetings, either of directors or of members. In the case of directors, the replaceable rule in s 248E of the Corporations Act requires each meeting to be chaired by a director. The Chair may be elected for an indefinite or specified period, or for each individual meeting (or a part of it). In the case of meetings of members, the replaceable rule in s 249U permits the directors to elect [page 67]
any individual (whether a director or member or not) to chair, and requires those directors present at the meeting to elect an individual to chair the meeting if this has not already been done. Failing election by the directors, the members must elect a member to chair. As can be seen, the Corporations Act does not require there to be an ongoing Chair of the board (and Chair of the company), even though this is a vital role in almost every major company.
Duties and powers 6.10 The duties, responsibilities, powers and obligations of a Chair become intermingled. At times, the exercise by the Chair of some discretionary power may be so clearly required as to become a duty. Responsibilities that rest with a Chair give rise to decisions and actions influenced by particular circumstances as well as by the rules. The manner in which each Chair perceives those obligations and tackles them tends to be influenced by personal characteristics and confidence in one’s capacity as a leader, diplomat and decision-maker. It is the Chair upon whom it devolves both to preserve order in the meeting and to regulate the proceedings so as to give all persons entitled a reasonable opportunity of voting. The Chair is responsible for doing the acts necessary for these purposes, subject to being called upon to answer for such conduct if anything is done improperly: R v D’Oyley (1840) 12 A&E 139; 113 ER 763. It is the duty of the Chair, and a primary function, to preserve order, and to take care that the proceedings are conducted in a proper manner and that the sense of the meeting is properly ascertained with regard to any question properly before the meeting: National Dwelling Society v Sykes [1894] 3 Ch 159. The duties and powers of a Chair include the following: Preside. This is the paramount duty of the Chair. At the outset, be satisfied that: 1. the meeting has been properly convened; 2. it is properly constituted; 3. a quorum is present; and 4. if the rules so require, a quorum is present throughout the meeting (otherwise the Chair should not allow the meeting to continue). Prior to the meeting, an obligation, if not a duty, is to: 1. be conversant with provisions in the body’s rules and standing orders regarding the procedure and voting at meetings, and, in particular, concerning the Chair; 2. be reasonably informed about the rules of debate, including the effect of
procedural motions; [page 68] 3.
study the agenda items, acquire appropriate information about each, and tentatively plan the progress and timing of the meeting. During the meeting, maintain and preserve order. This is a primary duty of the Chair: It is no doubt the duty of the chairman of a meeting where a large body of people are gathered together to do his best to preserve order, and it is equally the duty of those who are acting as stewards or managers to assist him in so doing: Lucas v Mason (1875) LR 10 Ex 251.
Require the retirement, or otherwise arrange for the removal, of a person who continues to act in a disorderly way after being requested to desist. Be impartial. Be consistent in all rulings and decisions. Act with probity and in a bona fide way on every issue. This fundamental concept of chairing provides the basis by which, as long as there is no sign of fraud or bad faith, the courts will in general uphold and not interfere with a Chair’s decision, even if through an inadvertent error it is not technically sound, provided injustice to individuals is not caused by that decision. Guard against any unwitting abuse of the authority and power that lies in the Chair. See that all items on the agenda are dealt with, and in the sequence set out, unless the meeting consents to the order being changed. Conduct the proceedings in a manner designed to facilitate decision-making and the transaction of business. Be continually conscious of the passage of time, and the degree of progress through the agenda items as compared with the time at the disposal of the meeting. Endeavour to guide and regulate debate with a view to the completion of all business within, at the most, a reasonable extension of the available time, while having regard to the desirability of securing an adequate range of opinion and ample discussion on each item. Superintend and control the proceedings in accordance with the requirements of any relevant statute and regulations, the rules of the body, case law and the rules of debate. Exercise powers available to a Chair from those sources. Make decisions in procedural questions, give rulings on points of order and decide who shall speak when two or more persons rise together. Acquit any particular
duties and obligations that the rules or standing orders of the body impose on the Chair of a meeting. Receive and accept properly moved, valid motions and amendments. Ensure that each is clearly expressed as to intention and implementation. During debate on a motion or an amendment, give reasonable opportunity to all present who are entitled to speak. Call on speakers [page 69] by name where it is necessary or desirable. Ensure a reasonable hearing for each speaker. Facilitate fair, orderly, pertinent, useful and adequate discussion of each item by appropriate guidance and action. Require all speakers always to address their comments to ‘the Chair’. Require speakers to keep strictly to the point. Disallow irrelevancies. Keep the debate confined to one issue at a time. Guard against speakers digressing to a related matter: this not only wastes time but also confuses the point in question. Ensure that all present know exactly what the motion (original or substantive) or the amendment is that they are about to vote on, especially after prolonged debate involving amendments. Put to the vote each question formally before the meeting accurately and fairly to ascertain the sense of the meeting on the issue. (This does not apply where a motion is validly withdrawn, or the debate is not proceeded with consequent to certain procedural motions.) Take the vote by show of hands in the first place unless the body’s rules provide otherwise. Declare the result of each question voted on. Be satisfied that those who vote are entitled to do so. If the Chair is a member (and is entitled to a vote as such), consider whether to cast one’s own deliberative vote, and, if so, whether at the same time as all other members vote or only if there is an equality: see further 14.14. Give a casting vote where there is equality of voting and where the rules provide the Chair with a casting vote; however, unless the rules are insistent, a Chair may decline to exercise the right to give a casting vote. If a casting vote is given, use it only after considering the best interests of the body: see further 14.14. Decide on and announce the arrangements for taking a poll where such has been properly demanded. As Chair, conduct a poll without demand if such is clearly appropriate. Subsequently declare the result of the poll.
Allow valid proxies and reject others (where the rules permit voting by proxy). Be watchful to safeguard the interests of the minority — and of the majority. Provide protection to a minority’s rights during debate by ensuring that all differing views are adequately and fairly ventilated, while recognising that the views of the majority represent the will of the meeting. The minority should have their say; the majority their way. Endeavour to assist the meeting to work towards the ideal of an ultimate resolution that represents a unified viewpoint after differences have been resolved, but without unduly curtailing the substance and practicability of a motion favoured by a majority. Provide guidance [page 70] in ensuring that each resolution passed conveys clearly a decision that does indeed reflect the will of the majority. Declare an adjournment of the meeting when it has been validly adjourned, or if it is proper for the meeting to be adjourned on the Chair’s own authority. Declare the meeting closed after ensuring that each agenda item has been dealt with and inquiring if there is any other business relevant to the purpose of the meeting. Take steps to see that any decisions made at the meeting, for which the Chair has some responsibility to implement, initiate or supervise, are set in motion. Carefully read the minutes of the meeting, as drafted, and signify they correctly record the proceedings, that is, they are accurate and complete. It is customary (although not a universal practice) for these minutes to be actually signed by the Chair of the following meeting, who may not be the same person. Accordingly, in most cases, the Chair’s duties at the commencement of a meeting will include responsibility for signing the minutes of the previous meeting, after inquiring whether those present are agreed they are a correct record of the proceedings of that meeting. When signing minutes of the present or the immediately previous meeting, a Chair needs to recognise that, by doing so, the minutes are turned into a permanent record that has legal significance, in that the signed minutes are prima facie evidence in law of the correctness of the document.
Qualities and characteristics 6.11 Good chairing reflects personal qualities and characteristics of the type
stated below. Few people would be gifted with or display all these attributes; in aggregate, they typify an ideal. These qualities, some being of a type that develop and mature with dedicated practice and experience, include: leadership in a positive way; comprehension of the yardsticks of efficiency in chairing; understanding of human nature and relationships; capacity to deal with diverse personalities; good judgment; ability to generate personal enthusiasms in self and others; flair for appreciating peculiar requirements of particular occasions and circumstances; discretion in coping with the temperament of individual persons and divergent views and objectives of the participants; dignity, integrity; ability to command the respect of those present; demeanour and behaviour that continue to earn respect; talent for presiding gracefully; application of the niceties and decorum of debate while administering the requirements of the rules; avoidance of dictatorial attitude; courtesy; sensitivity to moods of people; facility [page 71] not to induce hostility to the Chair nor antagonise people; a good listener; sympathetic attitude; sense of humour; friendly disposition; impartiality regardless of personal or sentimental circumstances; sense of justice for all; ability to gain cooperation; persuasive personality; warmth in approach; skill in dealing with people as a group; capacity to develop appreciation by all present that the viewpoint and desire of each individual need to be merged into the opinion and wishes of the meeting as a whole; aptitude for integrating varying opinions; the wit to detect potential conflict and wisdom to act to avert an open clash; tact; diplomacy; patience; even temper; ability not to display annoyance; selfcontrol in contentious, difficult and uncertain situations; capacity to think calmly; firmness; courage to take distasteful action; determination; presence of mind; commonsense; quick perception; acumen; shrewd insight; capacity to think objectively; facility to distinguish instinctively between opinion and fact and between principle and detail; ability to make quick decisions; instinctive use of correct grammar, but without pedantry; in command of a
good, versatile vocabulary, but generally using everyday words; a clear, warm voice; intonation (that is, not a monotonous tone) when speaking; confidence — personally and as a Chair: 1. through sound knowledge (and, in due course, experience); and 2. through being well-informed about relevant rules of the body; knack in arousing participation — that is, in stimulating group discussion — whenever needed; skill in presenting to a meeting a summary of points brought out in debate, progress achieved, matters remaining to be determined, decisions to be made and the salient points to be borne in mind when casting a vote.
Preparation 6.12 Planning by the Chair is necessary before the meeting. Without this, the Chair will be at a disadvantage, hampered from the outset in attempting to complete the agenda in the available time in a responsible manner. Unless properly prepared, the Chair will find it difficult to keep each debate directed towards accomplishing its objective, which is normally a firm decision that fairly and accurately reflects the sense and will of the meeting. Experienced Chairs carry out a mental rehearsal of what has to be done at each stage of the meeting, and how best to accomplish this, bearing in mind the people who will be there (noting any apologies received in advance). They try to anticipate ways the meeting will react to each item and questions likely to be asked. They guard against being unprepared. [page 72] This preparation also assists the Chair to recognise what are the really vital points and issues (therefore requiring adequate discussion time), and which aspects are subordinate or superficial (therefore, if raised, to be handled with adequate dispatch). Knowledge of what the agenda really consists of as regards substance, significance and priorities adds greatly to a Chair’s confidence in embarking on the mental undertaking of presiding over a meeting. Planning will cause a Chair to think about the pros and cons of each item, sometimes involving investigation and refresher reading. This helps the Chair to preside with foresight about alternative outcomes and suitable ways in which these could be expressed clearly in the form of motions and resolutions. It also assists the Chair to bring an open mind to the meeting regardless of any strong
personal beliefs, and militates against forming preconceived convictions as to what decisions the meeting should or will make. For such preliminary preparation, the Chair needs to receive information, reports, recommendations and so on long enough before the meeting, so that they can all be digested and related to the realities and purposes of the agenda item concerned. At least some of this information could also be sent out to all who will attend. In many instances, this should benefit the quality of debate with a saving of time. However, while Chairs must be prepared to absorb and grapple with detail in their preliminary reading, other people may not do this. Therefore, material to be sent to everybody needs careful selection, as non-digested preliminary detail in their hands at the meeting can sometimes result in timeconsuming questions, explanations and discussions about side issues. Prior to the meeting, the Chair should become familiar with the agenda as a whole and appreciate the significance and purpose of each item, including any unusual or special features. Particular purposes of the meeting or of any agenda item should be referred to importantly in the Chair’s opening remarks. The Chair personally needs to guard against doing or saying anything to interfere with or disparage any special objectives of the meeting. When introducing a significant agenda item, care in referring to the reason for it should assist understanding, avoid misapprehensions and elicit immediate inquiries from any who are not sure of the facts. This should facilitate the debate.
Opening the proceedings 6.13 The first step is to call the meeting to order in some definite way. This can usually be done without any great display of authority; for example, by the Chair simply standing. Apart from words such as ‘Please take your seats’, if necessary, it is preferable to wait for complete silence before commencing to speak. [page 73] It is vital that the initial words convey that the Chair’s mood is one of confidence: a brisk opening message, not a colourless one. The Chair’s attitude, style of communication and effectiveness in conveying information at this stage tend to set a standard for the nature of positive thinking, cooperation and the communication process throughout the meeting. Similarly, each agenda item should be introduced with a positive and constructive approach. Some items are suitable to be introduced by stating in
specific terms the nature of the outcome the Chair expects from the debate — for example, a decision about a proposal in a certain report, a decision as to whether to make a recommendation about a particular matter, and if so to determine the recommendation, a decision with regard to the raising, expenditure or investment of funds and so on. It may be helpful, depending on whether the matter has been discussed at a previous meeting or whether a full report from a committee or an officer has been circulated before the meeting, to briefly outline the alternatives, as the Chair sees them, without indicating any personal views about their merits. When this is a suitable procedure, any uncertainties can be inquired about and dealt with there and then, and the core of the debate may proceed without further preliminaries. A brisk beginning is likely to induce in all present, including the Chair, a businesslike approach to arriving at a decision. The Chair can help to keep the proceedings moving along at a lively pace. It is important, however, that a Chair should be speaking only when this is necessary. Whenever this occurs, a concise style with a pleasant manner provides a tone and pattern for all others. The Chair’s example may discourage verbosity among others, although an abiding job of every Chair is to take positive steps to restrain the naturally talkative members without smothering enthusiastic contributions. On the other hand, diffident members need to be encouraged and the value of their participation stressed when they are drawn out. Fresh ideas when volunteered should be appreciated even when the Chair knows that they have been tried previously without success or that they are out of line with policy; this can be explained with a promise that the suggestion will be looked at again. A Chair should refrain from belittling or criticising any speaker’s contribution, unless this seems essential, and then should guard against any personality aspect coming into it. All participants appreciate thanks being expressed by a Chair at the conclusion of a prolonged, difficult debate.
The debate 6.14 Chairs of experience are agreed it is essential for them to master the rules of debate. This needs study and continued practice. Familiarity [page 74] with the formal and procedural motions is important. Each Chair must be aware of what should be done and said, using the correct wording, if confronted with a formal motion; and of the exact consequent procedure. The Chair must be acquainted with the constitution, rules and standing orders
of the particular body, especially the provisions relating to meetings. It is scarcely sufficient to rely on the secretary’s knowledge. In any case, the latter could not prevent the Chair from infringing a rule. The secretary would hesitate to bring a lapse by the Chair to the latter’s notice unless it were really significant: such would scarcely help the Chair’s standing or self-confidence, nor his or her authority if calling on some other member to comply with the rules. Every meeting, whatever its size and nature, should be conducted with the same degree of responsibility and care. Many Chairs require the decorum of debate to be observed at all meetings, even if not always the strict formalities of the rules. At committee meetings, of course, the rules of debate are suitably relaxed, but the etiquette of conduct may still be observed with benefit. Those present will quickly react to and cooperate with a Chair who is noted for expecting and wanting the niceties of behaviour with their overtones of formality, at even the smallest of meetings. Consistency in a Chair’s requirements is appreciated and earns respect, whereas occasional and unexpected short cuts may not be. Especially when faced with difficult circumstances or a delicate situation, Chairs should not overlook the fact that election or appointment as Chair means that he or she was chosen as leader and accordingly vested with an authority to give directions and rulings. Selection by the meeting showed belief that the Chair possesses the required qualities to direct the proceedings in a way to enable the participants to achieve the meeting’s purposes and objectives. The Chair carries the goodwill of colleagues. Accordingly, there is every reason to be resolute and forthright even though some actions or words of the Chair may be distasteful to some. People attending a meeting do not appreciate a Chair who dodges an issue. They expect the Chair to do a creditable job. Value as a Chair depends on the way in which a person is prepared to exercise the authority and power of the office. In particular, troublemakers (whether by their nature or deliberate intention) must be dealt with firmly. At times, a request (perhaps a demand) for an apology for indecorous words or behaviour is appropriate and will be appreciated by all but the offender. In superintending the rules of debate and carrying out the role required, it is important that the Chair applies the procedure in such a manner that every person who is directly affected feels fairly treated. This calls for a sound understanding of the application of the rules, coupled with a pleasant manner in administering them. The Chair should see that all [page 75]
present know at the outset the rules of debate will apply. It must be made clear by actions and words that the Chair is thoroughly familiar with the rules and that they are being applied in the interests of, first, equality of opportunity and fair play for all; and second, the progressive dispatch of business culminating in decisions. However alert a Chair is, some breach of the rules is likely to escape notice: it is important that the reaction of the Chair should not be a defensive one if someone present, on a point of order, draws attention to some infringement or alleged breach. In many circumstances, including committee meetings, but not in all cases, it is appropriate for the Chair to indicate that speakers who move motions or amendments during the debate are expected to state these in precise words and properly phrased sentences. This encourages clear thinking by the mover and assists better understanding by all. Drafting on paper is the key to well-worded motions.
Procedures and practices 6.15 Throughout the meeting, everyone present should have the Chair’s full attention. The Chair should not read papers when someone is speaking, but instead show active interest in what is said; listen carefully to each speaker; have regard to the person as an individual as well as to what is said, and thus gain a fuller understanding of the speaker’s contribution; note helpful suggestions and link similar ideas; be watchful for statements that may be misunderstood or misinterpreted and get them clarified; assist in discovering a way to reconcile views that diverge. It is helpful to jot down names of individuals whenever they speak, so that when next addressing or referring to a person, the Chair may be sure of using the correct name. A Chair needs to be watchful for lack of attention and interest by any person and quickly try to assess the reason. It may be due to the dullness of proceedings, or undue reiteration of points, rather than lack of interest in the subject matter. As progress is made in finding a solution to a problem, it may be useful to sum up that progress if a convenient lull occurs. Care is needed — an unintended impression may be given that the Chair is stating points in priority of importance, or a point may be inadvertently omitted. Summing up also provides an opportunity for the Chair to rephrase statements that are obscure or could be misunderstood. Some Chairs may feel it prudent, and within the bounds of their responsibility as Chair, to draw attention to any argument or point that seems to them to be fallacious or decidedly irrelevant; but, if so, the Chair then needs to
allow the point to be discussed further by those who have spoken previously. [page 76] If several issues make an appearance while one matter is being debated, the Chair is entitled to interrupt the discussion, disentangle the issues, jot down the intruding ones for later consideration, and then signal resumption of discussion on the original matter. If progress is lacking or comments are merely repetitions, a thought-provoking question from the Chair may stimulate the debate. A Chair who, prior to the meeting, has meditated about and visualised various views and ideas likely to be ventilated may be able to throw in a helpful query about a point that has been overlooked or perhaps is a little ahead of the discussion. This may be of additional value if the query has relevance to the particular interests of some person who has not yet spoken. If the debate becomes contentious in an acrimonious way, it may prove beneficial for the Chair to interrupt the debate, and state each of the conflicting arguments with a view to clarifying the opposing points, unemotionally, in relation to the issue to be voted on. If the Chair states each contention precisely, it may be found that the conflict rests on erroneous assumptions and misconceptions because of ambiguous statements and lack of exact definitions and clear explanations.
Involvement in the proceedings 6.16 Every Chair normally enters into the general discussion from time to time according to the situation. This is often necessary to keep the discussion on track, to bring factual information to notice or to guard against the main point being overwhelmed by a related issue or a problematic outcome or even a red herring. Such involvement by the Chair should be regarded strictly as a temporary role. Otherwise, there is a risk that the Chair will participate on some aspects almost as part of the debate, unless keeping constantly in mind, with vigilance and self-discipline, the need to concentrate on the job as Chair. In general, the Chair should not move (or second) motions unless their subject matter is completely non-contentious; otherwise, it may appear that the Chair is not acting impartially. Sometimes the Chair will wish to aid the meeting by formulating a motion, perhaps in order to speed up the meeting process. In such situations, it is preferable for the Chair to suggest the motion and then have someone else move it by saying, ‘May I have a motion that …’: National
Australia Bank Ltd v Market Holdings Pty Ltd (in liq) (2001) 161 FLR 1; 37 ACSR 629. Particularly when presiding at a meeting of a committee or board, a Chair needs to be conscious that the fact that every member properly takes an objective attitude on some types of issue may result in a preponderance of entirely disinterested comments being ventilated or a general absence of debate, rather than personal opinions being expressed. This could arise [page 77] through the members adopting an ultra-responsible attitude about a matter that would affect them personally; for example, a certain project or a reorganisation. Unless there is prompting from the Chair, faulty determinations may be made, especially decisions to make no changes; and in a situation where some type of progressive step seems desirable, positive leadership by the Chair may be needed even though such may seem to be outside the usual privileges and duties of a Chair. In contrast to the last point, there needs to be great tact and care if it happens that the Chair is regarded as belonging to one of two opposing factions. Such a situation places strain on the Chair to demonstrate absolute impartiality. The Chair of a standing committee or board can benefit every meeting by ensuring all agendas include items that: 1. enable the committee to make an up-to-date review of the main operations of the body; 2. determine any consequential action; and 3. initiate plans and projects directed to the body’s progressive development and general welfare. Such a procedure by the Chair reflects positive thinking towards continuous, steady improvement and expansion of operations, service, personnel, organisation and so on. This assists every meeting to be a productive one. It maintains a high level of creative interest among the members at worthwhile, busy meetings that do not have overcrowded agendas. It is useful for a Chair to examine the minutes of the previous meeting prior to the current meeting. This is normally an early agenda item. Items to be noted are not only those with which the present meeting will be dealing further but also any matters about which a query for information might arise. Prior consideration
and discussion with the secretary and others helps the Chair to be prepared to respond capably to any question. At the meeting, the Chair may ask the secretary or a committee Chair to reply to certain queries, but a knowledgeable manner when dealing with an inquiry gives reassurance and confidence to a questioner and all others that the chairing and administration generally is in good hands. It is helpful to demonstrate some knowledge of each matter being discussed. But, in doing so, unless it is a subject on which they are thoroughly informed, Chairs should be prepared to acknowledge their limitations of knowledge about the item. If informative or research material about an agenda subject has been studied by a Chair as preparation for the meeting, it may prove useful to have it available to assist discussion and possibly draw out comment on further published information or the need to invite a specialist to attend a later meeting. [page 78] 6.17 At meetings of associations and similar organisations, a motion or amendment may be moved by a member who is unaware that the proposal is contrary to policy or had been rejected by a resolution at a previous meeting. Such a situation may occur at a meeting of the governing committee or at a general meeting. The Chair of the meeting may, and the secretary of the body would, recognise this immediately and the motion or amendment could not be accepted. The proposal may be suitably modified if not abandoned. However, if it is clearly favoured by the majority present, the Chair may feel that a fresh motion should be encouraged, to take the form of: 1. notice of motion of the proposal for a specified future meeting; 2. a recommendation to a meeting of a parent or senior level within the organisation; or 3. a direction to the governing committee to examine the matter carefully and, by a stipulated date, to bring forward a report containing a recommendation supported by reasons. The last procedure is often a fruitful one where established policy comes under serious question or criticism at a meeting.
Closing the debate 6.18 A Chair needs to sense when it is time to bring the debate to a close. Where formal rules of debate are operating, the Chair can announce that shortly
the mover will be called upon to exercise the right of reply, and inquire whether any other persons wish to speak before then. At a committee meeting, the Chair can propose to sum up the situation, direct the secretary to read the motion and then put it to the vote, before inquiring whether any person wishes to say anything new or additional.
Public meetings 6.19 At public meetings, the Chair’s task is frequently essentially that of presiding without great personal involvement in the subject matter of the occasion. Many of the general chairing procedures apply. Experience and particular personality characteristics are beneficial qualities. The preservation of order is a major responsibility. The Chair’s demeanour, words and actions greatly influence the tone of the occasion. The main tasks are to preside without relaxing vigilance, explain the purposes and nature of the function, introduce the one or more speakers, ensure that they get a fair hearing, control a question or discussion time and keep a close eye on the clock. Near the end, depending on circumstances, the Chair may ask those present to vote on one or more motions relating to the subject matter. The Chair may call on someone to propose a vote of thanks to the speaker or speakers and put the motion to the vote. Alternatively, [page 79] the Chair may express appreciation, and call on those present to join in acclamation. The final duty of the Chair is normally to declare the meeting closed. In conjunction with the organisers or the secretary of the body, a wise Chair ensures that the physical arrangements are as good as possible in the circumstances. Matters for attention include the following: ample comfortable seating; lighting; ‘No Smoking’ signs; ventilation and temperature; and perhaps a clock. If a platform is used for speeches, check that there are sufficient seats, tables, water and glasses, writing materials, ballpoint pens, lecterns, microphones (to be tested) and that there is a press table.
Demeanour 6.20 A friendly and considerate attitude from the Chair is worth cultivating. This does not in itself indicate laxity or weakness by a Chair. However, it needs to be realised that undue frivolity or light-heartedness on the part of a Chair is
likely to be reflected in similar behaviour by others. A Chair has the opportunity to be gracious to latecomers (whose sense of guilt makes them ill at ease) with a smiling nod or other gesture to welcome. When thanking a person for special service or advice, welcoming a new member or extending good wishes to a retiring member, a Chair’s words should show clearly that this is on behalf of the meeting. Similarly, any reproach or rebuke from the Chair is a reprimand from and on behalf of the whole meeting rather than being of an authoritarian nature, and suitable words can both make this clear and ease the tension for everybody. During a meeting, there may be criticism of the organisation, its operations or the arrangements in connection with the meeting. Chairs need to guard against reacting as if there were something personal in such comments. A meeting is a suitable place for members to exercise their entitlement to be critical, and the fact that this is sometimes harshly phrased may be due to the unease of the person in speaking in this way in public. It is important for Chairs to avoid getting exasperated or irritated, let alone angry; also to be on guard against letting one or more persons ruffle them or provoke by needling. Indignation is best restrained, even though words and attitudes are resented. Chairing is an art — a blend of personal flair and practice. Much can be learned by self-training methods such as: 1. observing other Chairs in action; 2. attending meetings under various Chairs — good, indifferent and bad — watching the way good Chairs open and close meetings and handle routine matters, noting methods they adopt to ensure that all who are [page 80] present experience a sense of participation and observing how they handle delicate situations; 3. learning to be self-critical, but without unduly curbing characteristics that are part of a natural, lively personality; and 4. developing confidence, command of speech and a presence by lecturing and delivering the occasional address before an audience, at least some without the sustaining comfort of a floor lectern.
Elegance in chairing may develop with experience. It may be attainable for those who continually search for excellence in their performance whenever they preside at a meeting: cultivation of natural strengths, constant endeavour to overcome personal shortcomings, habitual attention to the refinements, and unfailing courtesy. Perception of trends in group thinking may develop in Chairs with a knack of understanding what other people want. Wisdom and experience will give rise to an instinct for tempering efficiency and control to the circumstances of each meeting according to its nature and purposes and the participants. These are among ingredients of chairing of quality and distinction, inherent in meetings conducted in style.
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7 Conduct of Meeting Historical origins 7.1 Based on experience and precedents established over the centuries, a pattern of procedures has been developed by which various matters are dealt with as they occur during meetings. In general, these procedures arise from practices formulated within the supreme assembly, namely, parliament, especially the British House of Commons, ‘the mother of parliaments’. Many procedures have been adapted to be more suitable for meetings of a less weighty character, which do not need to take into account the perpetual opposition to almost every proposal that is an intrinsic feature of parliamentary debate, and which tend to be self-contained occasions, in contrast to parliamentary sessions, which are more or less continuous.
Parliamentary procedure 7.2 In the description that follows, reference will be made to rules that apply in parliament. This may assist in an understanding of the origins of, and reasons for, these procedures for meetings generally. They should not be regarded as arbitrary, rather illogical, precepts, but rather understood in their context. As has been pointed out by the courts in the case of general meetings of companies: [M]eetings of this kind are not bound to model all their proceedings strictly on the rules of the House of Commons. Those rules are very useful; they are the result of long experience, and when those rules are understood they work out admirably. But they are too complex for the apprehension of ordinary shareholders: Henderson v Bank of Australasia (1890) 45 Ch D 330 at 339 per Chitty J.
Rules of debate 7.3 The procedures include a number of ‘rules of debate’ that, except where
varied in a body’s own rules or standing orders, are recognised as [page 82] governing the way in which meetings are conducted unless formalities are relaxed; for example, during committee meetings. These rules of debate guide the meeting from the time when it assembles, and the Chair ascertains that a quorum is present and declares the meeting open, and then proceeds to deal with the agenda items in turn. The commonly recognised rules of debate have no statutory authority, and it is not legally necessary to apply them at a meeting unless they are included in the body’s own rules or standing orders. However, adherence to conventional rules of debate provides the Chair and other participants in the meeting with helpful confidence should there be a subsequent challenge to the validity of a resolution or some other aspect of the proceedings of a meeting. These rules of debate have arisen through custom, and have at their heart the ordinary rules of good manners and common decency. They assist the whole tone and orderly conduct of a meeting, and the efficient and smooth running of its business. Chairs of meetings, provided they are consistent, will be acting within their authority if they enforce them.
Content of rules 7.4 The rules of debate cover the manner in which: (1) each item of business is introduced, that is, by some person moving a motion; (2) that motion is debated; (3) an amendment to that motion may be moved during the debate; (4) that amendment is debated, and then voted on; (5) any further amendments are similarly dealt with; and (6) in due course, the motion is voted on, and the result declared by the Chair. The rules indicate: (1) the rights of persons to move and second motions, and speak during the debate, and limitations to these rights; (2) the Chair’s authority and powers; (3) types of motions that relate to procedure, rather than the subject matter of items of business being debated; and (4) various measures that facilitate equitable proceedings, harmony and the efficient dispatch of business.
Outline of debate
7.5 A primary function of meetings, generally speaking, is to arrive at and make decisions. These decisions are expressed in the form of resolutions. As a first step, a motion is moved, and then discussed in a regulated way. Debate provides an opportunity for all those who have something to contribute to state their views as part of the meeting making a decision by a majority vote. Discussion needs to be directed to this end. Unless a body’s rules state otherwise, voting is by voices or show of hands. Each person present and entitled to vote has one vote, and no other votes are counted. The Chair has only one vote, namely, a deliberative vote as a [page 83] member. If votes for and against a motion are equal, the motion is not carried: a majority is needed. A declaration by the Chair that a motion has been carried or lost is conclusive (except where fraud is evident or it is clear that the requisite majority was not obtained), unless a poll is demanded. A poll provides the opportunity for ‘a counting of heads’ and, depending on circumstances and the body’s own rules, enables votes to be cast by or on behalf of other persons not personally present when the vote by voices or show of hands is taken, although present in person or by proxy when the poll is taken. The separate elements of the debate are discussed in detail in Chapters 9–16.
Relaxation of rules 7.6 Unless a body’s own rules or standing orders prescribe specific procedures, the rules of debate are often relaxed by tacit agreement and common consent, particularly in the case of small meetings and bodies of moderate size. In meetings of committees, or when a meeting ‘goes into committee’, many of the rules of debate are not applied, sometimes with the sanction of the body’s rules and, in any case, as generally countenanced by custom and precedent. However, a Chair always has the power to insist on adherence to the rules of debate should this be necessary to enable the meeting to accomplish its business equitably, expeditiously and in harmony. The role of committees and the procedure at their meetings is discussed in detail in Chapter 19. The role, duties and powers of the Chair have been described in Chapter 6.
Speaking at meetings 7.7 In general, unless rules state otherwise, every person present at a meeting (and entitled to be present) has a right to speak. That right is regulated in compliance with the general rules of the organisation, any standing orders or other rules of the body specifically governing meetings, the commonly recognised rules of debate and the overriding authority of the Chair. All speakers should stand when addressing the meeting and should face the Chair. This rule is generally relaxed at committee meetings, where only a few people are present or when the atmosphere is informal. If the Chair speaks, whether or not rising, the speaker interrupted should sit, but may rise and continue when the Chair has finished speaking. Speakers should address their remarks to the Chair and, through the Chair, to the meeting. [page 84] If more than one person wishes to speak at the same time, the Chair decides which will be heard. The first person to stand is normally the next one to speak, subject to the ruling of the Chair, who would usually name as the next speaker the person first noticed. However, the Chair may consider it to be in the best interests of the meeting for speeches to alternate between those in favour of and those against the motion. If several persons rise simultaneously at the outset, the Chair may inquire whether any of them oppose the motion, and if so, invite one of them to speak. Also, a person with very pertinent knowledge or experience or representing a relevant minority opinion, if wishing to speak, may be ‘given the nod’ by the Chair. This power vested in the Chair to determine the order in which speakers may address the meeting is an important ingredient of the authority of the Chair to take suitable action to preserve orderly conduct; for instance, during discussion on a contentious issue when several enthusiastic or indignant people may stand simultaneously: see further 6.5. At times, the order in which a number of people will speak to a motion is arranged before the meeting by the Chair, usually in consultation with the mover and seconder. It is competent for a meeting to pass a resolution that a particular person be heard, be not heard, or be no longer heard: see 12.17 and 12.18.
Participation by outsiders 7.8 The attendance at and participation in a private meeting by persons who have no right to be present may render the meeting invalid: Re an Application by Gould; Re Australian Railways Union (1957) 87 CAR 939; Clark v Framlingham Aboriginal Trust [2014] VSC 367. In the latter case, Robson J held: At general law, the proper position is that the participation of non-members in a general meeting of a body ought be limited, so that they are unable to exercise influence in the conduct of the meeting, which, if excessive, may invalidate the meeting.
In Australia, however, there is no general rule, and the circumstances of each particular case have to be considered. The test appears to be whether the presence of the unauthorised participants may have made a material difference to the outcome of the meeting. Thus, the presence of so many unqualified persons at, and their participation in, a meeting may be such that a court would hold that it could not be regarded as a meeting of the particular body. So, also, where the presence of some unqualified person is relied upon to constitute a quorum, there is no quorum and no meeting or, in other words, the proceedings of the meeting, if it is held, are ineffectual: Steuart v Oliver (No 2) (1971) 18 FLR 83. The position is different in England, where it has been held that, if one or [page 85] more persons who are not members of a committee actively participate in its deliberations and decisions (as opposed merely to being present), this will necessarily invalidate the proceedings of the meeting: Leary v National Union of Vehicle Builders [1971] 1 Ch 34 at 53–55. See also 11.2.
Control by the Chair 7.9 A fundamental duty of the Chair is to ensure the preservation of the right of minorities to ventilate their views during a debate. At the same time, the Chair has the authority to curtail discussion of a type that amounts to obstruction causing unnecessary delay in bringing the question to the vote: see further 6.10. However, even after reasonable discussion has occurred, a Chair may not terminate the debate if one or more further eligible persons wish to speak, unless the meeting so agrees, either tacitly or through an appropriate procedural motion: see Chapter 12.
Chairs need to be impartial and consistent in their rulings on all occasions, regardless of their personal views and beliefs on the subject being discussed: see further 6.10. Offensive language, imputations of improper motives or personal reflections on another person should not be indulged in by any speaker. Repeated interjections, deliberate heckling or conversation between persons attending a meeting should not occur. Such behaviour may be deemed by a Chair to be disorderly conduct. If the disruption is sufficiently serious, the Chair may require those responsible to leave the meeting: see further 7.10. The Chair’s rulings regarding procedure and the general conduct of a meeting should not be disputed. However, depending on the rules of the body, it may be competent for a person to move a motion of dissent from a Chair’s ruling: see 9.4–9.6. Moreover, it is for the meeting to determine how a particular debate should be conducted; for example, whether amendments should be dealt with one at a time or together: Campbell v Australian Mutual Provident Society (1906) 7 SR (NSW) 99; 24 WN 11. Similarly, the meeting by majority vote has power to preclude a member from tape-recording the meeting: Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd [2010] SASC 266 at [82]. Items of business should be dealt with in the order set out on the agenda paper. The sequence should be varied only with the consent of the meeting. It is competent for the Chair to suggest that the order be changed, if it is thought that this will facilitate the conduct of business; in practice, if the meeting does not object, an alteration is often made following a positive announcement by a Chair that it is proposed to vary the sequence of agenda items for some stated reason. It is open to the Chair to propose [page 86] time limits for the debate, although some flexibility should be allowed: John J Starr (Real Estate) Pty Ltd v Robert R Andrew (Australasia) Pty Ltd (1991) 6 ACSR 63 at 84. All persons present need to appreciate that the business of a meeting is expedited by their personal observance of the rules of debate, and by their support of the Chair in maintaining order, whether through formal rulings and decisions or otherwise. Equally, the Chair must ensure that all persons who are entitled to participate in the meeting are able to do so to the extent that the law allows. This includes
proper time for discussion, and the views of all participants being respected and listened to. If a minority of members is prevented from being able to participate fully in the meeting, then, in the case of a company, there will be actual oppression for the purposes of the Corporations Act: John J Starr (Real Estate) Pty Ltd v Robert R Andrew (Australasia) Pty Ltd (1991) 6 ACSR 63 at 71–72.
Maintenance of order 7.10 There is venerable authority that in the case of any ordinary meeting, where a person otherwise entitled to be present so obstructs the proceedings that they cannot be peaceably continued, the person responsible may be removed and prevented from returning: Toohey v Melville (1892) 13 LR (NSW) 132. The courts will deny validity to proceedings at a meeting that is in such disarray that purported resolutions cannot be regarded as having validly been passed: Northwest Capital Management v Westate Capital Ltd (2012) 264 FLR 424. Where a meeting degenerates into little better than a brawl, disorder to this extent will automatically work a deferment of the meeting: Flynn v University of Sydney [1971] 1 NSWLR 857. If all present remain and order is restored, then the meeting could validly resume. But if the degree of disorder is sufficient to justify persons in withdrawing, unfinished business cannot be proceeded with in their absence: Colorado Constructions Pty Ltd v Platus [1966] 2 NSWR 598. For the Chair’s power to adjourn a meeting that has become disorderly, see 13.6.
Public meetings Outline 7.11 Halsbury’s Laws of England, 3rd ed, Vol. 7, para 418 states: The most important liberties of the subject which have been created and elaborated … include … the right of public meeting, which means that any
[page 87] persons may meet together so long as they do not thereby trespass upon private rights of property, or commit a nuisance, or infringe the law relating to public meetings or unlawful assemblies.
In addition to the general principles governing the conduct of all meetings,
there are a number of specific aspects of the law that arise only in the context of public meetings. The particular principles to be observed in relation to public meetings are: 1. that the meeting is not prohibited by statute, regulation, ordinance or by-law; 2. that all requirements, both before and during the meeting, of any statute and so on, are observed (this could include the need for a prior application, the need for the premises to be licensed for public meetings, observance of provisions regarding fire, safety and noise); 3. that no obstruction or interference with right of passage is caused; 4. that there is no trespass on private property; 5. that the meeting does not constitute a breach of the peace, or include the likelihood of inciting a breach of the peace; and 6. that the meeting is not an unlawful assembly. Trespass, breach of the peace and unlawful assemblies are examined in more detail in 7.12, 7.13 and 7.14 respectively. The Chair of a public meeting and its organisers have a responsibility for endeavouring to ensure that no breach of the peace occurs, and have a right to initiate action to maintain order, including arranging for the removal of a person who refuses to leave when ordered by the Chair to do so: see 7.10. The duties, powers and rights of the Chair in maintaining order at a meeting and precautions to be taken in the case of unruly behaviour are considered in 7.15.
Trespass 7.12 ‘Trespass’ may be defined as wrongful interference with a person’s possession of property. In general, any person who enters or remains on premises without the occupier’s consent, and particularly against the wishes of the occupier, is a trespasser. At a meeting, the body or person who organised it is the occupier and, as such, is entitled to determine who may be present. The occupier may request any person to leave the premises, prior to, at the commencement of or during a meeting: see further 7.15. Trespass occurs after a request for a person to leave, even if the person had paid for the right of admission. In the latter case, the request to leave may, in effect, constitute a breach of contract and the person concerned may be entitled to sue for breach of contract. However, the person has no grounds to resist being ejected.
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Breach of the peace 7.13 ‘Breach of the peace’ is a term — an abbreviation of the time-honoured phrase ‘breach of the Queen’s (or King’s) peace’ — that appears to relate to any offence or crime. In connection with meetings, it relates to unlawful meetings or to sufficiently disorderly conduct, including behaviour of a violent nature, which would include resisting an ejection ordered by the Chair. It is a breach of the peace to incite other people to commit what would be a breach of the peace. The preservation of the sovereign’s peace is the most longstanding prerogative of the Crown, the execution of which is now a duty of the police and the right of any private citizen. This extends to prevention of a breach and includes a duty and a right respectively to seize a person who is about to commit a breach of the peace. At common law, police officers are empowered to arrest any person who commits a breach of the peace in their presence: Duncan v Jones [1936] 1 KB 218.
Unlawful assemblies 7.14 At common law, an assembly of three or more persons is an unlawful assembly if it is constituted with intent to commit a crime by open force or to carry out any purpose, lawful or unlawful, in such a manner as to give firm and courageous persons in the neighbourhood reasonable grounds to apprehend a breach of the peace. An assembly of three or more persons may become unlawful if a proposal is made to it to do an act of violence to the disturbance of the public peace and the proposal is acted upon: R v O’Sullivan (1948) 48 SR (NSW) 400. If a different definition of the term ‘unlawful assembly’ is provided in a statute, that statutory definition naturally supersedes the common law in relation to all matters covered by that statute. A lawful assembly is not rendered unlawful merely because the participants know that the unlawful acts of other persons hostile to the assembly will probably cause a breach of the peace: Beatty v Gillbanks (1882) 9 QBD 308. The participants in an otherwise lawful assembly whose procedure is calculated to incite or provoke a breach of the peace may be restrained from holding their meetings: Wise v Dunning [1902] 1 KB 167. For various reasons, a meeting may be of an illegal character, or in certain circumstances it may become such. Assemblies of a public nature or in a public place that are in breach of the provisions of a relevant statute or ordinance are to be regarded as illegal. An assembly in the street without permission of the appropriate authority (where such authority is required by statute) is illegal. A
lawful assembly that fails to comply with an order by the police to disperse thereupon takes on an illegal character. The police [page 89] in each state and territory have particular statutory powers in relation to meetings and assemblies that are illegal.
Action by the Chair 7.15 Once a meeting has commenced, it is usually the Chair who requests someone to leave. As the person in control of the meeting, the Chair is the authorised agent of the occupier. Usually, a request to leave would occur only: 1. if the presence were discovered of a person not entitled to be at the meeting; or 2. in the case of a person indulging in disorderly conduct. A person who fails to leave the premises upon being requested to do so by someone who clearly has some authority thereupon becomes a trespasser. At common law, a trespasser may be removed from the premises. Reasonable force may be employed to eject a trespasser. What is ‘reasonable’ depends on the circumstances. The courts will sanction the use of ‘that degree of force which might be necessary to remove the person … and to keep him excluded’: Doyle v Falconer (1866) LR 1 PC 328. However, it is clear that a right to eject a person does not give entitlement to inflict bodily harm. Excessive violence against a trespasser will render the occupier liable for the tort of assault: Collins v Renison (1754) 1 Sayer 138. The Chair and stewards involved may be similarly liable: Lucas v Mason (1875) LR 10 Ex 251. It is important for the Chair to be explicit when identifying the particular person or persons asked to leave; this needs to be effectively communicated so that the offending parties are not able to claim validly they were unaware they were being addressed. A firm request, but not made in an unpleasant or derogatory manner, by the Chair, clearly identifying the persons concerned and indicating the easiest passage way to the nearest door, is often sufficient to persuade them to leave the meeting. A repetition of the request is desirable if it is not promptly complied with. Then, if the persons do not leave, the Chair should direct stewards, the secretary or other appropriate members, or the police if they
are in attendance, to escort the persons, who are now trespassers, from the meeting and to eject them. As noted above, any resistance to the ejection is a breach of the peace. It is within a Chair’s power to adjourn a meeting where disorder prevents it from proceeding properly. The adjournment may be for just a little while or to some other date. The specific time and place for resumption needs to be stated clearly by the Chair, who should rise and announce the adjournment and the reasons for doing this. The Chair should then leave [page 90] the meeting (which is thereby terminated) in an authoritative manner and with dignity. In any such circumstances, it is wise for a Chair to demonstrate determination to maintain control and to make a prompt decision. Whatever the Chair decides upon and announces should be adhered to. The options are an adjournment, or a request to leave followed up by removal if the request is disregarded. Adjournment is possibly more appropriate in the case of a private meeting where the disorder is of a vocal, argumentative nature rather than an attempt to disrupt the meeting. A decision to request an offending person to leave may result in forcible ejection with the possibility of a breach of the peace and the offending persons liable to arrest. A Chair should preferably not ask offending persons for their names. If the latter refuse, they commit no offence; the Chair has no redress and the authority of the Chair suffers.
Injunction to prevent meeting being held 7.16 In general, the principles that apply in determining whether an interlocutory injunction should be granted to prevent a meeting from being held are those explained by the High Court in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65]. The principles are that the applicant must demonstrate that there is a serious question to be tried, and that the balance of convenience favours the grant of an injunction. In many subsequent meetings cases, the court has gone no further than applying the principles in O’Neill. However, in a number of cases it has been held that
there are particular considerations that apply when an injunction is sought in relation to a proposed meeting. For example, in Contouris v Kallos (2008) 67 ACSR 543 at [14] Young CJ in Eq said: Generally speaking, courts are very loathe to prevent meetings of members or people casting votes at meetings of members. Experience shows especially with public companies, that members get tremendously upset if they go to a function all prepared to discuss matters and to vote to find that there is some court order preventing them from exercising their democratic rights. As a general rule, the court will not prevent meetings and discussions and voting …
Some tentative doubt has been cast on this proposition in more recent cases: see Stratford Sun Ltd v OM Holdings Ltd; Re OM Holdings Ltd (2011) 83 ACSR 84 at [24]–[25]; Ngarmula Tharndu Karrungu Maya Ltd v Ngarluma Aboriginal Corporation RNTBC [2014] WASC 79 at [24].
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8 Defamation1 Introduction 8.1 The sharing of an interest that draws people into organisations, whether it be social, sporting, recreational, professional, business, trade, political or whatever, seems often to promote personal antagonisms. During the course of a meeting, there is a very real possibility that a speaker will make statements that upset or offend other people. Similarly, documents may be circulated before, during or after a meeting that are critical of others. Often, those statements or documents will be potentially defamatory. It is therefore important that persons attending and controlling meetings have a basic understanding of the law of defamation. While any critical evaluation of the affairs of a body or the conduct of its officers or members could be defamatory, those persons seeking to vindicate their reputation in legal proceedings are likely to be met, and often defeated, by one of the many defences available. The best defence to any defamation action is always justification, as truth affords a complete defence. However, in the context of the conduct of meetings, the principal defence is qualified privilege. If the circulation of a defamatory allegation is kept to the officers and members of the organisation, and those who prepare the material are careful to check the accuracy of its factual basis, and to ensure that no one involved was motivated by any kind of spite, illwill or improper purpose, it can safely be said that, even though the defamatory allegation might turn out to be completely untrue, the victim will have little prospect of redress in the courts. [page 92] Since 2006, defamation laws operate in each Australian state and territory in
substantially identical terms. Thus, uniform principles now govern the law of defamation throughout the Commonwealth. The provisions of the uniform defamation Acts, or ‘UDA’ as the states’ and territories’ Defamation Acts will be referred to in this chapter, largely supplement rather than replace the operation of the common law of defamation. To the extent of any inconsistency, the UDA prevail. However, the common law of defamation continues to apply unless the UDA provide otherwise. Therefore, in order to better understand this complex area of law, the general principles arising from the common law as well as the UDA need to be considered.
General principles Definition 8.2 Defamation is primarily a tort, that is, a civil wrong. At common law, it can arise in either of two ways: libel or slander — see 8.15. The distinction between libel and slander has been abolished by the UDA. Libel may also be a criminal offence: see 8.32. Any statement that ‘is likely to lead an ordinary reasonable person to think the less of a plaintiff’ is defamatory: Radio 2UE Sydney Pty Ltd v Chesterton (2009) 238 CLR 460 at 467 [5]. It is important not to place too much emphasis on terms such as ‘decent’, ‘rightthinking’ and ‘reasonable’ that find their way into the judgments: the fact is that, while judges direct juries in these terms, there is a tacit acceptance of a more flexible standard of opinion, namely, that of ordinary members of the community, with all their prejudices and ignorant and vulgar attitudes. Thus, allegations that the plaintiff is a homosexual, a communist, a victim of rape, has ‘scabbed’ on union mates (in refusing to participate in an illegal strike), has been a psychiatric patient or has Negro blood, have all, at different times and in various places, been recognised as defamatory. Moreover, the ‘ordinary reasonable reader’ is someone ‘of ordinary intelligence, experience and education’, ‘fair minded’ and not ‘avid for scandal’: Radio 2UE Sydney Pty Ltd v Chesterton (2009) 238 CLR 460 at 467 [6]. One thing, however, is very clear: that the standard of opinion is that held by the community at large, and not by some narrow sectional group: Reader’s Digest Services Pty Ltd v Lamb (1982) 150 CLR 500. For instance, allegations that people who are Jehovah’s Witnesses have had blood transfusions would seriously damage their reputations in the eyes of other Jehovah’s Witnesses. However, since this adverse reaction would not be shared by the community at large, the
allegation would not be defamatory. [page 93] Statements will also be defamatory if they are calculated to expose the victims to ‘hatred, ridicule or contempt’ or cause them to be shunned or avoided; that is to say, if a statement disparages some quality of character, or refers to some experience, conduct or adventure of the victims in a way that might tend to change their relationship with others in a fashion that is undesirable, from their point of view, as where people might feel embarrassed to be with them, might avoid them socially, might cease to deal with them in business or might hold them in less esteem politically. An apposite illustration of the essence of the wrong of defamation is given by the statement that a person is HIV-positive. While most people will feel sympathy for the person, some may also feel embarrassment towards him or her. The person concerned would not want his or her relationship with others to be affected by their embarrassment. At common law, there must be disparagement or dishonouring of the person who complains of defamation. But even at common law, as we have seen, an animadversion relating to the victim’s experiences, involving no fault on the part of the victim, may nevertheless be defamatory, not because it causes others to think less of that person, but because it causes others to shun or avoid the victim: Youssupoff v Metro-Goldwyn-Mayer Pictures Ltd (1934) 50 TLR 581. Thus, a defamatory statement need not impute any moral blame to the plaintiff. Importantly, there need not be any intention on the part of the publisher or speaker to defame the plaintiff for the cause of action to arise: Cassidy v Daily Mirror Newspapers [1929] 2 KB 331. A defamatory statement may be published inadvertently or deliberately: see 8.8.
Examples of defamatory imputations 8.3 Imputations that have been held to be defamatory generally fall under the following broad heads: imputations as to character; imputations of immorality; imputations of insolvency or as to credit; and imputations tending to injure a person’s reputation in business, his or her employment, trade, profession, calling or office, by imputing some quality that could be detrimental, or the absence of some quality that is essential, to the
successful carrying on of the business, etc., or office: John Fairfax Publications v Gacic (2007) 230 CLR 291. As to the last of these categories, one of particular significance in the context of meetings is that it is clearly defamatory to impute to a person holding office any corrupt, fraudulent, wanton, mischievous, dishonest or other misconduct in that office. It is also defamatory to impute unfitness for the duties of office-bearer or want of ability to discharge them: Parmiter v Coupland (1840) 6 M & W 105. [page 94] It may also be defamatory to say that someone has been dismissed from office, if the imputation is that the person has been discharged for misconduct, or some other such fault or dereliction of duty: Tolley v Fry [1930] 1 KB 467 at 480.
Who may defame and be defamed 8.4 Any living person may be defamed. However, a dead person cannot be defamed. Interestingly, the UDA also bar actions for defamation against the publisher of defamatory matter who has died since publishing the matter. Thus, a person cannot ‘assert, continue or enforce a cause of action for defamation in relation to the publication of defamatory matter by a person who has died since publishing the matter’. While this provision of the UDA has no application to corporate defendants, it may well become significant where a natural person is sued or sought to be sued in defamation. The ability of corporations to sue for defamation has been severely curtailed by the UDA. Under the UDA, a corporation has no cause of action for defamation in relation to the publication of defamatory matter about the corporation unless, at the time of the publication, the corporation was one: 1. whose objects do not include obtaining financial gain for its members or corporators; or 2. that employs fewer than 10 persons and is not related to another corporation. In Born Brands Pty Ltd v Nine Network Australia Pty Ltd [2014] NSWCA 369, the NSW Court of Appeal took a literal approach to the prohibition, suggesting that only persons having a contract of employment are to be counted for the purposes of the relevant provision. The Born Brands decision stands in contrast to
the decision in Redeemer Baptist School Ltd v Glossop [2006] NSWSC 1201 where the Court held that the term ‘employs’ means no more than to use the services of a person. The UDA also bar a corporation that is a local government body or other governmental or public authority from suing for defamation. The UDA reflect and extend the common law principles that local government authorities whose members are popularly elected cannot sue in defamation: Derbyshire County Council v Times Newspapers Ltd [1993] AC 534; Ballina Shire Council v Ringland (1994) 33 NSWLR 680. However, the UDA make clear that the bar on certain corporations suing in defamation does not affect any cause of action for defamation that an individual associated with a corporation has in relation to the publication of defamatory matter about the individual even if the publication of the same matters also defames the corporation. [page 95] An action for defamation cannot be brought against an unincorporated association or body of persons in its collective name: London Association v Greenlands Ltd [1916] 2 AC 15. Thus, where a libel is published in a journal, minutes or other publication of an unincorporated association, the only course of action open to the victim is to sue the officers or members who have published, or authorised publication of, the matter in question: Mercantile Marine v Toms [1916] 2 KB 243; and see Carlton Cricket & Football Social Club v Joseph [1970] VR 487. However, it may well be that officers will be able to use the association’s funds to cover the costs of defending such an action, even though this is not expressly authorised by the rules: Hill v Archbold [1968] 1 QB 686. There have been cases that have recognised that the committee of an unincorporated association may be rendered personally liable on a contract expressed to be between the association and another (Bradley Egg Farm Ltd v Clifford [1943] 2 All ER 378; Peckham v Moore [1975] 1 NSWLR 353), and there has been a suggestion that the committee would have a right of indemnity from the association’s funds: Hutley JA in Peckham v Moore, above. No doubt the existence of a right of indemnity against the association fund is assumed by every person who undertakes the duties of a committee member of a voluntary association. But there is little direct authority in its favour. Committee members who are made personally liable for participation in a libel perpetrated on behalf of the association or in carrying out their duties should not assume
that, if their defence is unsuccessful, they will have an enforceable right to reimbursement in relation to damages from the association’s funds, in the absence of a specific indemnity provision in the rules.
Truth 8.5 The law presumes that defamatory material is untrue: Roberts v Camden (1807) 9 East 93; Singleton v Ffrench (1986) 5 NSWLR 425. If, for example, it is alleged that the treasurer of a club is guilty of defalcation, the plaintiff is not required, in order to establish a claim of defamation, to prove that the allegation is false. Rather, it is for the defendant to justify the allegation. Liability in defamation is incurred by the person who publishes defamatory matter: as to publication, see 8.10. The publisher may attempt to prove that what was said was substantially true. If successful the defendant will be entitled to a verdict against the plaintiff, as truth is a complete defence; the defence of justification will have been made out. In addition, the UDA provide a defence of ‘contextual truth’ where the publisher of defamatory matter proves that the matter carried, in addition to the defamatory imputations of which the plaintiff complains, [page 96] one or more other imputations (called ‘contextual imputations’) that are substantially true and the defamatory imputations do not further harm the reputation of the plaintiff because of the substantial truth of the contextual imputations. As a matter of prudence, the publisher of defamatory matter should rely on the defences of truth and/or contextual truth only where the publisher is already in possession of the evidence needed to justify the allegations. If the defence fails, the damages payable may be increased as the hurt suffered by the plaintiff will have been exacerbated or aggravated by the defendant’s unsuccessful attempt to prove the truth of its publication. However, as has already been noted, qualified privilege is a defence that applies notwithstanding that a defamatory allegation is untrue. Thus, where the secretary of a club has reported to the president a suspicion that the treasurer has misappropriated club funds, the fact that the charge is without substance will not deprive the secretary of this defence, unless the secretary was motivated by spite, ill-will or some other improper purpose in making the report.
Identification 8.6 Most often, the victim of defamatory attack is named, and there is no problem of identification. But in cases where such a problem arises, the fact that the victim was not mentioned by name, or indeed was not even intended by the publisher, is irrelevant; the test is whether reasonable people, knowing the person complaining, might have identified that person as the person referred to: David Syme & Co v Canavan (1918) 25 CLR 234 at 238. Thus, if a completely fictitious piece of writing is centred around a character whose name is chosen with great care to avoid any possibility of reference to an actual person, and a person comes forward to claim, ‘This defames me; my friends see me in the piece and are laughing behind my back’, the plaintiff may well have a good case: Hulton v Jones [1910] AC 20. And this will be so notwithstanding the fact that they could not possibly believe it of the plaintiff and did not do so. So, also, if a charge of corruption is made against Detective Bill Brown, other people in the force known as Bill Brown will be able to sue, if others might think they were the person referred to: Lee v Wilson (1934) 51 CLR 276. The rules relating to defamation liability combine to produce the following situation: a person may be sued for publishing a true statement about A that anyone who read it could, despite its terms, suppose to be a false statement about B: Hulton v Jones, above; Morgan v Odhams Press [1971] WLR 1239. ‘Innocence’ may, however, be a defence in certain circumstances: see 8.25. However, in the context of internal communication between officers and members of organisations interested in a common subject or activity, [page 97] qualified privilege will, in most cases, provide adequate protection from the possibility of defamation liability.
Group defamation 8.7 An unincorporated association cannot be sued for defamation; so, also, it cannot sue to vindicate its reputation. A consequence of the rule is that, if the executive of the cricket club publishes a letter defamatory of X, X may sue individually the people involved in the publication. If X says of the club, ‘The club is inefficient and corrupt’, particular officers charged with responsibility for the administration may claim that people took them as the targets of the allegation, and may sue individually. But in neither case may the club, as a club
itself, sue or be sued. A group that has no legal personality apart from its members, such as an unincorporated association, cannot sue to vindicate its reputation. The same is true of any amorphous grouping, such as ‘the lawyers’, ‘the doctors’, ‘the Jews’, ‘the Italians’, ‘the students at X university’, ‘the staff of X department store’. See further 8.4. On the other hand, a group may be so small, so well-defined and so identifiable that each member of the group may claim to be personally referred to, as where it is said ‘The jury in X case were biased against the defendant, and convicted him out of prejudice’: Knupffer v London Express Newspaper Ltd [1944] AC 116. Here, each may sue. So, also, the speaker at a meeting where there is a lawyer present may say ‘All lawyers are thieves’, and in the context this may be taken as saying that the lawyer known to be present is corrupt. Here, again, this lawyer may sue. But these instances merely illustrate the proposition that defamation is an intrinsically personal wrong.
Unintentional defamation 8.8 Defamation may occur completely accidentally, both as to defamatory meaning and as to reference to the victim: see 8.6. The question, ‘Was the victim in fact defamed as a result of the publication?’, is answered without reference to the publisher’s state of mind. In other words, intention is irrelevant to whether a publication is defamatory. However, if the publisher is able to prove that the circumstances of the publication were such that the plaintiff was unlikely to sustain any harm, then the publisher will be successful in raising the defence of triviality. In addition, innocence is a defence in certain circumstances: see 8.25.
Innuendo 8.9 Words innocent or true on their face may take on a defamatory innuendo: Lewis v Daily Telegraph [1964] AC 234. For example, if people hear the statement, ‘X has been advertising a lot lately’ and know that [page 98] X is a professional person prohibited from advertising, they may in fact interpret the statement to be an imputation that ‘X is breaching the ethical rules of the profession’. This is an innuendo, and is highly defamatory. Even though the innuendo is not intended, as when it arises because of the existence of extrinsic facts of which the writer or speaker could not possibly have been aware, X will
nevertheless have been defamed: Cassidy v Daily Mirror [1929] 2 KB 331. But, again, damages may be minimal, and there may be a defence: see 8.25.
Publication 8.10 The key to liability for defamation is publication. Generally, although not necessarily, the writer of defamatory material is also the publisher, or one of the publishers. Liability arises, not because of writing the material, but because the writer also published it or took part in its publication. Publication is the making known of the defamatory material to a person other than the victim. If, at a private meeting only attended by A and B, A verbally assails B, alleging the gravest breaches of the moral code, corruption and criminal conduct, A does not defame B. If someone else, C, overhears, A may have defamed B. A personal and confidential letter highly defamatory of B does not defame B, if B alone reads it. It may, if C reads it. In order to be liable, the publisher must bear some responsibility for the act of publication. Thus, if a thief takes a defamatory letter from A’s briefcase and reads it, there is no publication. If the letter is sealed and the envelope marked ‘personal and confidential’, there is no publication if the envelope is opened and the letter read by B’s spouse. If an eavesdropper overcomes the reasonable precautions A has taken to avoid this, and overhears the confidential conversation in which A is accusing B of serious offences, there is no publication.
Liability for publication 8.11 At a committee meeting of an unincorporated association, X, a committee member, plans to raise grave charges against the president, Y. X writes a letter, which contains these charges, for circulation to each member of the committee. X dictates the letter to a secretary, Z, and this is the first of a series of publications that may or may not be actionable: see 8.16. Y, at this stage, might be able to sue X. Z distributes copies of the letter to the committee members: this is the second publication, and, now, Y might legitimately attempt to sue X and Z also. At the meeting, X speaks in relation to the letter, adding to it and explaining it. These additions may also be defamatory: see 8.15. The minute secretary, W, takes [page 99]
minutes, which include X’s defamatory letter, and distributes copies to the members of the association. Here is a further publication (of the letter itself and of the defamatory additions) carried out by W, and authorised by X and possibly by everyone else on the committee, including, of course, the officers. Each could be sued, separately or together, on these publications. The onus would then be cast upon each of defendants W, X and Z to raise whatever defences may be available to them to avoid liability to plaintiff Y. Obviously, therefore, if defamatory material is included in papers prepared for or arising out of the conduct of meetings, circulation must be limited to the persons in the organisation with a real interest in receiving it; in this way, the defence of qualified privilege may be available. Nevertheless, this privilege may be lost by specific individuals who were motivated by malice: see 8.21. And privilege would almost certainly not extend to newspaper publication, for such publication would doubtless be regarded as ‘excessive’: see 8.19. To summarise, in the example quoted above, persons liable for publications arising out of the meeting would include the responsible officers and also anyone else who could be regarded as involved in the circulation of the defamatory material. They would be liable if they could be said to have authorised, expressly or impliedly, the publication, or to have been negligent as to that consequence when it was within their power to prevent it. In other words, liability for any particular publication devolves upon the person who actually makes, or procures the making of, that publication, the person who participates in its making (for example, in the case of a newspaper, in addition to the publisher of the paper, the writer, the printer, the editor and the vendor will all be liable) and anyone who expressly or impliedly authorised its making. The fact that an office-bearer has passed on at the request of a member a document defamatory of that office-bearer for consideration by the committee or at a meeting does not mean that the office-bearer has consented to the libel and is thereby deprived of the right to sue: Collerton v MacLean [1962] NZLR 1045.
Publication by failure to act 8.12 Persons who have control over premises may be liable for publication if they fail to take steps to remove defamatory material from those premises. Officers of a club, by allowing a defamatory notice placed by an anonymous person on the club noticeboard to remain there, may themselves be liable for its publication: Byrne v Deane [1937] 1 KB 818. The question is: ‘Have they, by non-removal, really made themselves responsible for its continued presence?’ A similar principle could lead to liability of the Chair of a meeting for the defamation of a participant. Liability could arise if the Chair knew
[page 100] in advance that a particular defamatory comment was to be uttered, and failed to take the necessary steps as Chair in order to prevent its utterance, or failed to intervene to interrupt an obviously slanderous speaker. But, in either case, the question ultimately would be: ‘Has the Chair, by failing to act, really become responsible?’ And it must be remembered that, so long as no speaker is actuated by spite, ill will or some other improper or ulterior purpose (see 8.21), proceedings at the meeting itself could be conducted under the umbrella of qualified privilege, so that it would be unlikely that even the speaker could be liable, much less the Chair.
Re-publication and repetition 8.13 If a newspaper were to obtain a copy of the defamatory minutes discussed in 8.11 and publish a story based on them, it would be liable to the same extent as if it had originated the calumny: Webb v Bloch (1928) 41 CLR 331. It is no defence that one has merely repeated what someone else has said or prefaced the re-publication with words such as ‘it is alleged that …’: McCauley v John Fairfax (1933) 34 SR (NSW) 339; Wake v John Fairfax & Sons Ltd [1973] 1 NSWLR 43 at 49. Additionally, anyone at the meeting, or any officer or member involved in the original publication who intended that the words be re-published or repeated in this way would be liable for that subsequent publication. There is also liability for a re-publication or repetition where this is the natural and probable result of the original publication: Lynch v Knight (1861) 9 HL Cas 592. It need also be borne in mind that, because each publication constitutes a separate cause of action, a re-publication of defamatory matter may, subject to any defence available to protected reports (see 8.14), create liability in circumstances where the original publication was not actionable. ‘It has long ago been decided that it is no answer to a libel that the original statement was made on a privileged occasion’: Lawrence v Newberry (1891) 7 TLR 588 per Denman and Wills JJ at 589. Thus, subject to any defence available to fair and accurate reports, re-publication of defamatory comments originally uttered in parliament or court — and therefore covered by absolute privilege — may well be actionable.
Protected reports 8.14 Where an association or other body meets to consider the conduct of an officer or member, or some other matter, the meeting and the associated
documents are protected by qualified privilege: see 8.16. Reports of such proceedings in the body’s journal, magazine, newsletter, or whatever, if of limited circulation to members, would also clearly be protected by this defence. But what is the position if someone (for example, a journalist) [page 101] makes a report of what was said at such a meeting, and the report is published in a newspaper? The UDA recognise that ‘proceedings of public concern’ may be reported under qualified privilege: see 8.28.
Libel and slander 8.15 At common law, defamation consists of two branches: libel and slander. However, as stated in 8.2, the UDA have abolished the distinction between libel and slander. Prior to the enactment of the UDA, the distinction was important as the ability to sue without proof of any actual pecuniary loss depended on whether the defamatory publication was a libel or a slander. However, not only has the distinction between libel and slander been abolished but the UDA now expressly provide that the publication of defamatory matter of any kind is actionable without proof of special damage. In other words, irrespective of whether the defamatory matter is written or spoken, a plaintiff is able to sue in defamation without showing they have suffered any actual financial loss.
Defence of qualified privilege 8.16 Of all the defences listed in 8.17–8.29, qualified privilege provides the most protective umbrella under which those involved in meetings may conduct their business without fear of harassment from the defamation litigant. It even provides protection from the person who has been done a very real injustice, namely, someone who has been defamed by material that is untrue, and is seeking only the restoration of their reputation. The courts have recognised in the defence of qualified privilege the importance of maintaining channels of communication between people who have joined together in organisations to secure or enjoy some common interest free from the threat of legal proceedings if what passes proves to be defamatory and untrue.
Qualified privilege at common law 8.17 The essential ingredient of qualified privilege at common law is the existence of a reciprocity of duty and interest, or a mutuality of interest, between the person making the defamatory statement and the person receiving it: Toogood v Spyring (1834) 1 CM & R 181; Adam v Ward [1917] AC 309. Thus, where an employer makes inquiries of a referee regarding the character of a job applicant and the reply is defamatory, the reciprocity of duty and interest is present and the reply accordingly privileged; but where a ‘friend’ interferes in a marriage, and makes defamatory statements about the conduct of the husband overseas to the wife at home, the [page 102] reciprocity is absent, and the statements accordingly are actionable: Watt v Longsdon [1930] 1 KB 130. Mutuality of interest is present, for example, in communication between residents and ratepayers on the question of corruption in council, and between electors on the capacities of a candidate for office; but the most obvious manifestation of this mutuality of interest is where people have grouped together out of some interest, whether it be in nature social, sporting, recreational, professional, business, trade, political, etc. Their communications between themselves on matters arising out of the expression of this interest, the organisation of the group, the conduct of the elected or other officers, the conduct of members in and about the affairs and activities of the organisation, are clearly potentially the subject of qualified privilege. Thus, the requisite common interest has been found to arise in the case of discussion of company affairs among shareholders (Telegraph Newspaper v Bedford (1934) 50 CLR 632) and in a professional association in disciplinary proceedings: Thompson v NSW Branch of British Medical Association [1924] AC 764. The most obvious forum for the expression of this mutuality of interest is at the meetings of the organisation, so that the business at the meeting, the material prepared for the meeting, and whatever arises out of the meeting for dissemination to members about the meeting, are all clearly the subject of qualified privilege. If there is to be liability for defamatory statements at meetings of members of organisations, it will be because the privilege has been lost for some reason: see 8.19–8.21.
Qualified privilege under the UDA 8.18 The UDA preserve the common law relating to qualified privilege, but, in addition, have created new statutory areas of privilege: see 8.28. Suffice to say that the UDA are broader in compass than the common law concepts of qualified privilege, and extend the privilege enjoyed by those conducting and participating in meetings. Under the UDA, there is a defence of qualified privilege for the publication of defamatory matter to a person (‘the recipient’) if the publisher proves that: 1. the recipient has an interest or apparent interest in having information on some subject; and 2. the matter is published to the recipient in the course of giving to the recipient information on that subject; and 3. the conduct of the publisher in publishing that matter is reasonable in the circumstances. In determining whether the conduct of the publisher in publishing matter about a person is reasonable in the circumstances, a court may take into account: [page 103] 1. the extent to which the matter published is of public interest; and 2. the extent to which the matter published relates to the performance of the public functions or activities of the person; and 3. the seriousness of any defamatory imputation carried by the matter published; and 4. the extent to which the matter published distinguishes between suspicions, allegations and proven facts; and 5. whether it was in the public interest in the circumstances for the matter published to be published expeditiously; and 6. the nature of the business environment in which the publisher operates; and 7. the sources of the information in the matter published and the integrity of those sources; and 8. whether the matter published contained the substance of the person’s side of the story and, if not, whether a reasonable attempt was made by the publisher to obtain and publish a response from the person; and
9. any other steps taken to verify the information in the matter published; and 10. any other circumstances that the court considers relevant. The UDA make it clear that a recipient has an apparent interest in having information on some subject if, and only if, at the time of the publication in question, the publisher believes on reasonable grounds that the recipient has that interest.
Loss of qualified privilege — excessive publication 8.19 Qualified privilege is lost if the method of its exercise exceeds the reasonable needs of the occasion. Thus, the Racing Calendar may be protected by privilege when it publishes a decision of the stewards of the Jockey Club, but not The Times newspaper: Chapman v Ellesmere [1932] 2 KB 431. Publication to the general public will generally fall outside the defence: Stephens v West Australian Newspapers Ltd (1994) 182 CLR 211; Morosi v Mirror Newspapers Ltd [1977] 2 NSWLR 749; compare Toyne v Everingham (1992) 91 NTR 1. But this rule, in the context of the types of publication likely to arise from a meeting, will be important only in the rare case where a report of a meeting percolates through to the mass media; in most situations where qualified privilege is raised as a defence to defamation arising from meetings, excessive publication will therefore not be an issue. Nevertheless, privilege at common law can clearly be lost on this ground even in the situation of publication otherwise than through mass media, as is demonstrated by Guise v Kouvelis (1947) 74 CLR 102. There, a [page 104] committee member projected himself into a dispute between members of a club who were playing cards in a room containing some 50 other persons, some of whom were non-members. In a loud voice, he charged the plaintiff with being a ‘crook’. Reporting the plaintiff to the committee would clearly have been privileged. A public accusation such as that adopted by the committee member clearly was not.
Loss of qualified privilege — mistaken character of recipient 8.20 At common law, the rule that the person about whom the defamatory
matter is published must have the requisite interest is an absolute one. If the recipient of the defamatory matter does not have the requisite interest, the privilege fails, regardless of the extent of the publisher’s knowledge, care or good faith: Chapman v Ellesmere [1932] 2 KB 431.
Loss of qualified privilege — malice and lack of good faith 8.21 At common law, a defence of qualified privilege is defeated if it is shown that, in publishing the matter in question, the publisher was actuated (that is, motivated) by malice. ‘Malice’ is a term of art. It includes spite or ill-will, but also extends to any improper motive or ulterior purpose of the publisher at the time of the publication. Malice will be established where it is shown that the publisher took improper advantage of the occasion that gave rise to the qualified privilege (for example, communication between members of an association at a meeting of members) by making statements that the publisher did not believe to be true, or for the purpose of venting spite or ill-will towards the plaintiff, or for some other indirect or improper motive: Schneider v Leigh [1955] 2 QB 195. The common law position is replicated in the UDA which provide that a defence of qualified privilege is defeated if the plaintiff proves that the publication of the defamatory matter was actuated by malice. A good illustration of the operation of qualified privilege in the context of meetings, and of the nature of the concept of malice, is provided by Horrocks v Lowe [1975] AC 135. The facts were as follows. Bolton Corporation was the owner of a piece of land. In ignorance of a restrictive covenant attached to the land prohibiting its use for a club, the corporation (which then had a Conservative majority of councillors) leased the land to the local Conservative club for the erection of a clubhouse. A company of which the plaintiff was Chair and majority shareholder had the benefit of the covenant. When the corporation discovered the covenant’s existence, the plaintiff refused to release the covenant on any terms because of detriment to adjoining owners. Building of the clubhouse, which was [page 105] nearing completion, had to be abandoned and the corporation had to pay substantial compensation to the Conservative club. The plaintiff was also a Conservative member of Bolton town council and the Chair of the council’s
management and finance committee, which had been responsible for leasing the land. At a meeting of the town council, the defendant, a Labour member of the council, made a speech concerning the land in which he strongly criticised the plaintiff in terms that were defamatory and untrue, and urged his removal from the committee. In the course of his speech, the defendant said that: For two months he [the plaintiff] has been like Achilles sulking in his tent while we waited for news. I don’t know how to describe his attitude whether it was brinkmanship, megalomania or childish petulance …
And: I suggest that he has misled the committee, the leader of his party and his political and club colleagues some of whom are business associates.
The plaintiff in his action for slander accepted that the defendant’s words were spoken on a privileged occasion, but alleged that the defendant had been actuated by express malice. However, the House of Lords held that, since the defendant, however prejudiced he had been, or however irrational in leaping to conclusions unfavourable to the plaintiff, had believed in the truth of what he had said, he was entitled to succeed in his defence of privilege. Although gross and unreasoning prejudice could give rise to an inference of malice where it constituted evidence that the defendant had been indifferent to the truth or falsity of what he has said, it could not do so in a case when it had induced him to believe in the truth of his allegations and there were no other circumstances from which malice could be inferred.
Imputed malice 8.22 In the situation where several people on a committee or involved in an organisation have been involved in a defamatory publication (see 8.10), the malice of any one participant cannot be imputed to others, themselves innocent, so as to defeat their claim of qualified privilege: Egger v Chelmsford [1965] 1 QB 248. However, the malice of an employee or agent may be imputed to the principal: Webb v Bloch (1928) 41 CLR 331, but compare Dougherty v Chandler (1946) 46 SR (NSW) 370; Thiess v TCN Channel Nine Pty Ltd (No 5) [1994] 1 Qd R 156.
Derivative privilege 8.23 The immunity provided by qualified privilege applies to all reasonable and usual incidents of communication between members of organisations. If a communication between A and B is privileged, then A’s dictation of it to a secretary, C, is also privileged: Bryanston Finance v de
[page 106] Vries [1975] QB 703. So, also, where a secretary or agent participates in the defamatory, but privileged, communication between A and B, such person also enjoys a derivative privilege: Adam v Ward [1917] AC 309.
Summary of other defences under the UDA Source of law 8.24 As indicated earlier, the UDA co-exist with the common law, except to the extent of any inconsistency or exclusion, in which case the provisions of the UDA prevail. The UDA extend the defences available to the publisher of allegedly defamatory matter. In addition, the UDA contain provision for the resolution of defamation actions without the need for litigation.
Innocent dissemination 8.25 Both the UDA and the common law allow a defence of innocent dissemination. At common law, the defence is available to a distributor or seller of material containing defamatory matter who can show that: 1. the distributor did not know that the material contained defamatory matter; 2. the ignorance was not due to negligence on the part of the distributor; and 3. the distributor had no grounds for supposing that the publication was likely to contain defamatory matter: Emmens v Pottle (1885) 16 QBD 354. The UDA defence of innocent dissemination is to the same effect as the common law, although its field of operation is broader. The essential feature of the defence of innocent dissemination is the protection afforded to purely subordinate distributors, such as copiers, live program broadcasters, libraries, newsagents and booksellers, who have no effective control over the content of material they ‘publish’.
Defence of honest opinion/fair comment
8.26 The defence of honest opinion under the UDA largely replicates the common law defence of fair comment. In each instance there are three elements for the publisher to prove. It must be shown that the words complained of are: 1. opinion (as opposed to fact); 2. the opinion is based on proper material; and 3. the opinion relates to a matter of public interest. [page 107] In order for the comment to be fair: 1. the facts must be truly stated; 2. the comment must be honest; and 3. imputations of corrupt or dishonourable motives must be warranted by the facts. As to the requirement that the opinion be based on ‘proper material’, this will be satisfied if based on material that is substantially true, was itself published on an occasion of absolute or qualified privilege, or was published on an occasion that attracted the protection of the defences afforded to publication of public documents and fair reports of proceedings of public concern under the UDA. Examples of matters of public interest are national and local government, public services and institutions, and works of authors and artists displayed or performed in public. At common law, malice defeats the defence: Thomas v Bradbury, Agnew & Co [1906] 2 KB 627. As to malice, see 8.21. However, the defence of honest opinion under the UDA can only be defeated if the plaintiff proves that the opinion was not honestly held at the time of publication.
Defence of absolute privilege 8.27 A statement is said to be absolutely privileged when it is of such a nature that no action will lie for it, however false and defamatory it may be and even though it is made with malice. The following are the broad areas of absolute privilege: parliamentary proceedings, judicial proceedings and high executive communications.
Protected reports and public documents 8.28 While it is generally no defence to an action for defamation that the statement was merely a report of what someone else said (see 8.13), there are exceptions recognised by the common law and the UDA in favour of two broad categories of documents: reports of proceedings of public concern and publication of public documents. Dealing with the latter category first, it is a defence to publication of defamatory matter if the publisher proves that the matter was contained in: 1. a public document or a fair copy of a public document; or 2. a fair summary of, or a fair extract from, a public document. ‘Public document’ encompasses a diverse range of documents, but includes: parliamentary reports, papers and records; court orders, records, judgments and reports; documents issued by the government (including local government) of a country for the information of the public; and records or other documents open to inspection by the public. [page 108] It is also a defence to the publication of defamatory matter if the publisher proves that the matter was, or was contained in, a fair report of any proceedings of ‘public concern’. Once again, ‘proceedings of public concern’ is a compendious expression that covers a wide range of public proceedings, including those of parliamentary bodies, international organisations, courts, tribunals, inquiries and local government bodies. Of particular importance in the context of meetings is the fact that proceedings of learned societies, sports or recreation associations and trade associations, or of a committee or governing body of any of such societies or associations, come within the definition of ‘proceedings of public concern’, where the proceedings relate to a decision or adjudication made in Australia about a member or members or a person subject by contract or otherwise by law to control by the society or association. Under the UDA, a plaintiff can overcome the privilege attaching to publication of public documents and fair reports of proceedings of public concern if, and only if, the plaintiff proves that the defamatory matter was not published
honestly for the information of the public or the advancement of education.
Triviality 8.29 It is a defence to the publication of defamatory matter if the publisher proves that the circumstances of the publication were such that the plaintiff was unlikely to sustain any harm.
Resolution without litigation 8.30 The UDA set out a process whereby the publisher of defamatory matter can make an ‘offer to make amends’. The offer to make amends serves a dual purpose. On the one hand, if accepted, it provides a mechanism for resolving the dispute without resort to the courts. On the other hand, if not accepted, an offer of amends may be relied on by way of defence if: 1. the publisher made the offer as soon as practicable after becoming aware that the matter is or may be defamatory; and 2. at any time before the trial the publisher was ready and willing, on acceptance of the offer by the aggrieved person, to carry out the terms of the offer; and 3. in all the circumstances the offer was reasonable.
Remedies 8.31 The remedies that are available are as follows: 1. Injunctions. However, the courts have consistently held that the public interest in the right of free speech is such as to mean that an injunction [page 109] to prevent publication is virtually unobtainable before trial: ABC v O’Neill (2006) 227 CLR 57. 2. Damages. An action for defamation is essentially an action to (a) compensate a person for the harm done to that person’s reputation; (b) provide consolation for the hurt and distress suffered as a result of the wrongful publication; and (c) vindicate the plaintiff’s reputation: Jeffrey and Curnow v Giles [2015] VSCA 70. All three considerations are reflected in the quantum of damages awarded upon the Court upholding a plaintiff’s claim. The UDA require that
there be an ‘appropriate and rational relationship between the harm sustained by the plaintiff and the amount of damages awarded’. The UDA prohibit the award of exemplary or punitive damages for defamation. 3. Special damages. These may also be awarded for actual loss; for example, loss of a contract or loss of office. Damages may be mitigated in a variety of ways; for example, by evidence of an apology or a correction or even evidence of the plaintiff’s bad character.
Criminal proceedings 8.32 In all Australian jurisdictions, defamation may in some circumstances also be a crime. Prosecution for criminal defamation is very rare.
Further reference 8.33 Defamation is a complex area of the law. This chapter attempts to provide a summary only of the law of defamation, particularly as it relates to the conduct of meetings. For detailed explanation, reference should be made to specialist defamation texts, such as T K Tobin and M G Sexton, Australian Defamation Law and Practice, loose-leaf service, LexisNexis Australia. [page 110]
1
Owing to the untimely death of Mervyn Horsley, this chapter was kindly contributed to the first edition (1976) by Dr Robert Hayes, now Associate Professor in the Law School of the University of Western Sydney. The chapter was extensively revised for the fifth edition by D A Klempfner BEc, MA, LLB (Hons) (Mon) of the Victorian Bar, and has been further updated by Mr Klempfner for the subsequent editions.
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9 Points of Order Definition 9.1 ‘Just what constitutes a point of order is not easy of definition’: Arcus v Castle [1954] NZLR 122. A point of order is one of the few instances when a speaker may be legitimately interrupted. A person may only be interrupted while speaking (that is, during a speech) in three circumstances: 1. by a person moving one of two procedural motions, namely, the closure (see 12.8) or the gag (see 12.17); 2. by the Chair, to call for order, or to ask the speaker to keep to, or get to, the point; 3. on a ‘point of order’ being raised. A point of order is not a motion. It is an allowable interjection that directs the Chair’s attention to an apparent or alleged breach of order. In effect, it is an appeal to the Chair for a ruling. A point of order is often framed as a query (for example, ‘Is the speaker in order by … (referring to) …?’), rather than as an assertion. 9.2 A point of order usually relates more to procedure or the manner of a speech than to the substance of what is being said, although the latter is sometimes relevant. A point of order is raised validly where it draws attention to an irregularity or impropriety in the proceedings or some defect in the constitution of the meeting. Examples are: 1. the absence of a quorum; 2. some breach of standing orders or the accepted rules of debate; 3. introduction by the speaker of subject matter not relevant to the motion or
amendment being discussed, or beyond the scope of the notice or the authority of the meeting; and 4. offensive or abusive language, or uncalled-for insinuations regarding a person’s motives or conduct. [page 112] A point of order is not something to be raised because a person wishes to contradict, disagree with or object to what is being said or implied, or to contend that it is untrue or misrepresents the facts. Debate should not be subjected to interruption under cover of what have been described in parliament as ‘fraudulent points of order’ by the insertion of improper speeches that immediately contradict or disclaim what has been said. The proper place for such comments is in speeches for or against the question under debate. A query at the commencement as to whether or not the meeting has been validly called does not qualify as a point of order: Arcus v Castle [1954] NZLR 122.
Who, when and how may be raised 9.3 Any person qualified to be present is entitled to raise a point of order and submit it to the Chair for immediate decision, regardless of whether that person has spoken during the debate: Re Indian Zoedone Co (1884) 26 Ch D 70. A point of order should be ‘taken’ — that is, raised — the moment the apparent breach occurs or at least as soon as it is observed. However, it may be raised at any time during the meeting. A point of order is addressed to the Chair as follows: ‘Chair, I rise to (or raise) a point of order’, ‘I take a point of order’, or simply ‘Point of order’. Unless standing orders provide otherwise, the procedure should be as follows: 1. 2. 3. 4.
A person rises to take a point of order. The speaker stops and sits down. The interrupter states exactly what the point of order is. The Chair briefly considers the matter, makes a decision and gives a ruling either upholding or dismissing the point of order. 5. The debate then proceeds in accordance with the Chair’s ruling and direction.
A person raising a point of order needs to state the point concisely as soon as the Chair requests this. Any observations are to be confined to the point raised; a speech is not called for. The person raising the point of order sits down when finished, and remains silent unless the Chair has a question. In some circumstances, the Chair may give the person who was interrupted an opportunity to make an explanation about the point raised; in general, a Chair should be prepared to hear a speaker’s reasons for the manner of the speech objected to. In practice, the Chair may confer with the secretary. It is open to the Chair to invite others to speak briefly on the point. However, the Chair should guard against allowing general discussion to [page 113] develop with ventilation of divided opinions. Otherwise, the Chair will be faced with the need to give a judgment and the possibility of having to deal with fresh points of order.
Ruling by the Chair 9.4 The Chair has power to decide all incidental questions that arise at a meeting and require a decision there and then: Re Indian Zoedone Co (1884) 26 Ch D 70. The Chair has the power to deal with all procedural points that may arise and to give a ruling on them: Henderson v Bank of Australasia (1890) 45 Ch D 330. For a more detailed discussion of the authority of the Chair, see 6.5. The Chair’s ruling may be that the point of order is not a valid one; the speaker then resumes without restraint. On the other hand, the Chair may rule that the point is well taken and, for instance, call on the speaker to conform to the rules, confine the comments being made or behave appropriately, as the case may be. A person who is permitted by the Chair to continue to speak must not persist in the irregular conduct. A Chair needs to take particular care that rulings on points of order are impartial and consistent. The Chair is not obliged to give reasons for the ruling; if the Chair does so, any comments should be brief. Many Chairs will not do so unless requested or challenged, in the belief that an explanation could be taken to indicate that the matter was open to doubt, and could also evoke a query as to the pertinency or validity of the Chair’s reasoning.
Disagreement with the Chair’s ruling 9.5 As a general principle, unless standing orders set out a specific procedure, those present at a meeting should accept the Chair’s ruling on a point of order without challenging it or expressing dissent. This should apply even if it appears to be an unbefitting ruling. Appointment as Chair of a meeting thereby invests that person with authority to exercise control in accordance with the constitution of the body and the recognised rules of debate. This connotes an obligation to make decisions on alleged points of order whenever required. Each such decision calls for care, but without delay, as the Chair draws on knowledge and understanding of the law and rules that apply to the particular meeting. Reasonable speed by a Chair in giving decisions is better than infallibility (if such were even possible). A hesitant, indecisive Chair invites a lack of acceptance of control and possible disorder. Accordingly, the desirability of quick decisions, despite the hazard of imperfect judgment, needs to be [page 114] recognised by the meeting, from which the Chair collects authority, and to which the Chair looks for an expression of confidence. In this philosophy lie practical reasons for the maxim that, in principle, a Chair’s rulings on points of order should be accepted. Even so, it is competent for a motion of dissent from the Chair’s ruling to be moved, but not all authorities agree that a Chair needs to accept such a motion. Some Chairs would decline to do so in the absence of specific standing orders. The basis of their refusal lies in precedent, parliamentary and judicial. However, there are contradictory authorities in both the standing orders of parliament and the cases. In the parliaments in Australia, rulings of the Speaker in the Lower House, President in the Upper House and Chairs of committees may be dissented from; the precise procedure is set out in the standing orders for each house. But in Britain, rulings of these presiding officials are, by tradition and precedent, not challenged. The House of Commons procedure is that, if the standing orders do not provide the Speaker with clear directions on which to base a ruling, the Speaker is to refer the point at issue to the judgment of the house. The cases are similarly unhelpful. In an old English case, the court held that where a body’s rules do not contain express provisions governing meetings, the
proceedings of a meeting must be regulated by the people present and by the Chair, ‘and if his decision is quarrelled with it must be regulated by the majority’: Wandsworth & Putney Gaslight & Coke Co v Wright (1870) 22 LT 404. This has been interpreted by some as indicating a meeting is able to pass a valid resolution that replaces the Chair’s ruling on a point of order with a different decision of its own. However, in an Australian case almost a century later, Joske J (who was an acknowledged authority on meeting procedure) held: [A] chairman of a public meeting, so long as the meeting desires him to be chairman, has control of the business of the meeting and, therefore, is entitled to insist on his ruling on matters of procedure and points of order, to refuse to allow his ruling to be disputed, and to refuse to accept or put a motion of dissent from his ruling on matters of procedure and points of order. If a public meeting be dissatisfied with a chairman’s rulings, this situation can be overcome by the meeting passing a resolution that some other person, who is mentioned by name in the resolution, take the chair: Wishart v Henneberry (1962) 3 FLR 171.
The cases can perhaps be reconciled on the basis that the first judgment was given in the context of a meeting of a body with a designated Chair under its rules, while the second refers to a meeting that could be chaired by any person present. Hence, in the second case it was open to the meeting to replace the Chair if it disagreed with the Chair’s ruling, whereas in the first case that option was not available, and it was only through a resolution of the meeting that the Chair’s ruling could be overturned. [page 115]
Motion of dissent 9.6 A motion of dissent from a Chair’s ruling needs to be moved immediately. It may be moved by the person who raised the point of order or by any other person. A person moving it should state concisely the basis of the disagreement. The motion itself would be ‘That the ruling of the Chair that … be disagreed with’ or ‘dissented from’. A Chair who accepts the motion may decide to state briefly the reasons for giving the ruling, and then put the matter to the vote without allowing discussion. It would be normal for only the mover of the motion of dissent and the Chair to speak. Some standing orders that specify a procedure provide that the motion to be put to the vote is to be worded ‘That the Chair’s ruling be upheld’, that is, the reverse of the wording of the actual motion of dissent that had been moved. This positive approach arises from a traditional practice designed to support the
authority of the Chair against challenge, although it conflicts, in effect, with the principle that a motion cannot be amended by what amounts to a negative. Another principle is also infringed where the dissent motion is put to the vote in this positive form because, in this particular instance, where voting is equal the motion is deemed to be carried; this is on the basis that equal voting on the motion as actually moved — that is, ‘That the ruling be disagreed with’ — would result in it being not carried. The varying practices regarding points of order and Chairs’ rulings, including departures from recognised rules of debate, emphasise the need for a clear, precise procedure to be included when a body formulates standing orders for the conduct of its meetings. If a motion expressing dissent is carried, the Chair should accept the meeting’s judgment graciously. The Chair is then faced with the choice of either giving a fresh ruling or not changing the ruling. The Chair should announce the decision immediately. Where a procedure is set out in standing orders, this is likely to cover the question of whether or not the Chair’s ruling need necessarily be changed. It should be noted that the dissent motion merely expresses disagreement: it does not state an alternative ruling. Where the Chair is satisfied that the majority had entirely bona fide intent in so seriously disagreeing with the ruling, it would seem appropriate for the Chair to change that ruling to accord with the views of the meeting, that is, to allow the particular procedural point to be regulated by the majority vote. This would be in line with the procedure of the majority of organisations in Australia that, when formulating standing orders for their meetings, follow the Australian parliamentary practice by which members have a right to express disagreement with a ruling and vote on the issue. [page 116] Disagreement by a person with a ruling on a point of order does not necessarily imply lack of respect for a Chair’s judgment or authority, or a lack of confidence in the Chair. Rather, apart from instances of involuntary disappointment or resentment, it indicates that the mover feels that there are likely to be a number of other persons who hold a view that differs from that of the Chair, and that the matter is of sufficient importance to call for a vote on it. As indicated previously, those attending a meeting need to foster, rather than diminish, a certainty that the Chair enjoys the confidence of the meeting, and motions of dissent should be moved only with adequate thought and where warranted. However, it is to be recognised that decisions made by judges are frequently reversed or upset by
appellate judges without attracting criticism or disparagement, and in these cases the initial decision had been made after careful deliberation, whereas rulings by Chairs on points of order must necessarily be made on the spot, as quickly as possible.
Minutes 9.7 If proceedings covering a point of order are recorded in the minutes (which would depend on circumstances, standing orders and precedent), the entry should be brief and confined to the ruling, unless the Chair both explained the reasons and stated a wish for the explanation to be recorded. Minutes provide prima facie evidence of the proceedings, but not, of course, that the ruling was correct or otherwise; however, the onus of proving otherwise would fall on any person wishing to take legal steps to upset the ruling or its effect. If a Chair’s ruling is incorrect with material effect, the related proceedings may be set aside by the court: Catesby v Burnett [1916] 2 Ch 325.
Court challenge to ruling 9.8 Acquiescence by a person who stands to lose in a material way does not interfere with that person’s right subsequently to institute legal proceedings with a view to the matter being rectified. In particular, it is not necessary for a member to challenge the Chair’s ruling at the time, or refuse to act in conformity with it, in order to have the ruling reviewed by the courts: Henderson v Bank of Australasia (1890) 45 Ch D 330.
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10 Motions and Amendments Introduction 10.1 All discussion at a formal meeting is conducted through the debate of motions. Accordingly, each new item of business should be introduced in the form of a motion. The person who brings forward a matter should move ‘That …’, setting out the motion moved. The motion should formally be moved near the beginning of the speech, not at the end: in principle, a person may not make a speech unless a motion is before the meeting. The Chair may allow an explanatory speech as a preliminary, but only on the understanding that the speaker will conclude it with a motion. Preferably, the mover should commence by briefly explaining the intention of the motion, then move it — that is, state the precise words of the motion — and only then speak to the motion by putting forward arguments in its support.
Terminology Definition of ‘motion’ 10.2 The classic definition of ‘motion’ is found in Erskine May’s Treatise on the Law, Privileges, Proceedings and Usage of Parliament, 23rd ed, LexisNexis UK, London, 2004, p 382: A motion is a proposal made for the purpose of eliciting a decision of the House. Motions may be classified either as substantive or as subsidiary. Substantive motions are self-contained; subsidiary motions may be (1) ancillary motions dependent on an order of the day, such as the motion that a bill be now read a second time, or (when there is a preceding motion that the report of
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a committee be now considered) that the House agrees with the report of a committee; (2) motions made for the purpose of superseding questions, such as motions for the adjournment of a debate … (3) motions dependent on other motions, such as amendments.
‘Motion’ and ‘resolution’ 10.3 The two words ‘motion’ and ‘resolution’ are frequently used indiscriminately. However, each has a distinct meaning. A motion — that is, the effect of something being moved — is a proposition submitted to a meeting with a view to it being adopted by a majority vote. It is a proposal to do or accomplish something, arrange for something to be done or express an opinion about something. A resolution — that is, the result of something being resolved — is a motion that has been carried by the requisite majority voting in its favour. It is possible (though not usual, nor normally desirable) for a meeting to decide to pass a resolution that by the use of suitable words has the effect of affirming the motion was not carried, and thus recording this in a positive way in the minutes. Until and unless a resolution is passed, a meeting does not accomplish anything that has a real effect, that is, does not produce a result that has any potency at all, nor, of course, any legal significance; but when a resolution has been passed, a legally binding decision has thereby been made. In summary, a resolution records a decision taken by the meeting and a motion sets out a decision proposed to be taken. The Corporations Act, the various state Associations Incorporation Acts and many other statutes use the term ‘resolution’ loosely to refer both to ‘motion’ and ‘resolution’. They rarely use the word ‘motion’. The failure of the legislature to maintain a useful terminological distinction is unfortunate. The Chair declares a motion ‘carried’ ‘at’ a meeting (or ‘on’ a poll or ‘by’ a ballot). Thereby a resolution is ‘passed’ ‘by’ that meeting, and is recorded as such in the minutes, that is, ‘Resolved that …’.
‘Question’ 10.4 In parliamentary parlance, a ‘motion’ becomes the ‘question’ upon it being accepted by the Chair and thereupon submitted for debate. The term ‘question’ has thus come to be used in connection with meetings to refer generally to a motion, amendment, or formal or other procedural motion presently being discussed. It is a useful generic expression for describing the matter currently under debate.
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Motions Desirable characteristics of a motion 10.5 A motion is the basis of a potential decision. If it becomes a resolution, it has legal effect, which is possibly long-range. The substance and wording of each motion needs care and foresight. Apart from some characteristics that are very desirable, there are a number of grounds on which a Chair is entitled to reject a motion, at least in the form moved, certain of which may affect the validity of a resolution resulting from it (see further 10.6): 1. Form: a motion should be in a positive, affirmative form. It should not be in a negative form, unless this achieves some specific advantage and value for the body; for example, to ensure that a disallowance of a request or rejection of a recommendation is recorded unmistakably in the minutes. Thus, in principle, a motion should not be worded in such a negative way that a ‘yes’ vote registers support for a ‘no’ proposal. 2. Content: a motion should be complete and plain, so that a resultant resolution, when read in the future, identifies with certainty its objective and substance. On the other hand, a resolution that lacks certainty and is open to interpretation can lead to hesitancy or error in implementation, dispute and possible litigation. It should be as short as reasonably possible; two or more separate motions are preferable to a lengthy, complex one. 3. Wording: a motion customarily commences with the word ‘That’. It should be in precise and definite language. Its intention and import should be clear. Wording should be explicit and lucid to guard against any uncertainty or misapprehension as to what is to be voted on. It should be free from vagueness or ambiguity: Harvey v Adelaide & Hindmarsh Tramway Co (1881) 15 SALR 136. 4. Drafting: a motion should be framed and phrased in a way to enable persons to vote in favour of or against the proposal, and thus facilitate the ability of the meeting to make a decision. It should be in the form of one proper, grammatical sentence; but a motion may comprise several parts put together grammatically in the one sentence.
Unacceptable motions
10.6 A Chair may not rule out of order, and must accept for debate, any motion within the competence of the meeting where all necessary incidental conditions (such as the giving of any notice required) have been observed: Wishart v Henneberry (1962) 3 FLR 171; see further 6.5. [page 120] However, a Chair may decline to accept a motion if it does not measure up to certain essentials. Legal implications flow from all but the last of the following eight requirements. A resolution would be invalid if resulting from a motion that did not comply with the first three requirements, and, if not entirely invalid, its validity would be at least in jeopardy if not complying with the next four requirements: 1. A motion must not be in conflict with the constitution, rules, standing orders, or any statutory or other legally binding provisions that regulate the activity and conduct of the body. It must not propose some action that is ultra vires, that is, beyond the legal powers of the body as permitted by its constitution or by law, or that goes beyond the purposes or objects of the body as set out in its constitution: Clark v University of Melbourne [1978] VR 457. It must not be contrary to the law, nor have an intention of leading to a breach of the law. 2. A motion must comply with any relevant statutory requirements or rules or standing orders of the body as to its form and notice of motion. 3. A motion that has been ruled out of order by the Chair, without a resolution disagreeing with that ruling being passed, must not be considered again at the same meeting: Johnson v Beitseen (1989) 41 IR 395. 4. A motion must be within the scope of authority of the meeting. 5. A motion should be relevant to the item of business to which it is intended to relate and the business for which the meeting was convened. 6. A motion must not, directly or in effect, constitute either a negative of a resolution already passed at the same meeting, or be an attempt to reverse the result of a motion lost when voted on at the same meeting. 7. A motion should not be inconsistent with a resolution passed at a previous meeting. The existing resolution should first be formally rescinded: see Chapter 11. 8. A motion should not be redundant by being merely a repetition of an earlier decision or established policy.
If carried, a motion thereupon becomes a resolution, and thus, of course, the above characteristics (some requisite, some desirable) apply equally to resolutions.
Invalid motions 10.7 A motion, although carried and thus purporting to be a resolution passed at a meeting, will be of no effect if it infringes the constitution or rules of the body, or a statutory or other legal requirement. Any such purported resolution will be held to be invalid from the beginning, and cannot be ratified in normal circumstances. If it contravenes the law it is illegal, and thus absolutely invalid. However, if a motion were to be passed [page 121] at a meeting of which proper notice had not been given, or at which a quorum was not present, or if it were outside the authority of the meeting, it may be competent for a subsequent meeting to pass a further resolution not vitiated by the same defect; this, in effect (but not in law), would ratify the earlier invalid resolution. Such a possibility will depend upon the circumstances, provisions in the rules including requirements as to notice, and the character and substance of the resolution itself. For some examples of invalid resolutions, see 11.2.
Notice of motion 10.8 The rules of most bodies, the constitutions of companies and the Corporations Act, and other statutes under which organisations are incorporated or registered, provide that notice of motion in writing must be given in certain circumstances. This requirement particularly applies where motions of special significance (as specified in the rules, constitution or statute) are to be moved at general meetings of members, and sometimes at other meetings. Rules may stipulate that the rescission of a previous resolution requires notice of motion. Such a provision means that the exact words of the motion should be included in the notice of meeting. In practice, in some cases as a requirement of the rules, such a notice of motion is usually accompanied by a clear explanation of reasons for the proposal, arguments in its favour and the general effect; sometimes arguments against the proposal are also included. The rules of some bodies or statutory requirements call for the notice of meeting including the motion to be advertised in the press. The mover of a motion of which notice is given may be the Chair or president
on behalf of the board or governing committee, or any office-bearer on their own initiative, or a member acting as an individual or for a group of fellow members. The name of the mover is sometimes stated in the notice; if so, the seconder’s name is often also included. It is usual for such a motion not to be proceeded with at a meeting if the mover is absent, unless the latter has authorised another person formally to move the motion. However, subject to the rules of the body, there is strictly nothing to prevent any member who wishes to do so from taking up the moving of a motion of which notice has validly been given. For a more detailed discussion of notice of motions, see 4.16.
Submission of motion to the Chair 10.9 In many circumstances, it is preferable that motions (and amendments to them) be submitted to the Chair in writing. Some rules and standing orders require this. However, such a practice is sometimes neither expedient nor desirable because of the nature of the particular [page 122] meeting. It has been held that a Chair may not refuse to accept a motion or an amendment merely because it is not submitted in writing: Henderson v Bank of Australasia (1890) 45 Ch D 330.
Motions not formally moved 10.10 Although it is usual for the Chair not to accept a motion until it has formally been moved by a person present at the meeting, this is not a legal requirement. The Chair is entitled to put a motion to the meeting even if it has not been formally proposed or seconded: Re Horbury Bridge Coal, Iron and Waggon Co (1879) 11 Ch D 109. In general, the Chair should not move (or second) a motion: see 6.16.
Stating the motion 10.11 After accepting a motion and before it is debated, the Chair should state the proposal in clear terms, that is, ‘The motion before the meeting is that …’. All present may then appreciate exactly what it is that the meeting is about to debate and then vote on. In parliament, this practice is called ‘stating the question’.
Seconding a motion 10.12 When a motion has been moved, it is customary for another person to second it. Some rules and standing orders stipulate this. However, a seconder is not essential under the recognised rules of debate, nor required by common law: Is there any law of the land that at a meeting of shareholders a motion cannot be put unless it is seconded? I am not aware of any. … I think that the objection that the amendment was not seconded cannot prevail, it being admitted that it was put and voted on. … In my opinion if the chairman put the question without its having been proposed or seconded by anybody, that would be perfectly good: Re Horbury Bridge Coal, Iron & Waggon Co (1879) 11 Ch D 109 at 117–18. The custom at many meetings is that motions are not put unless they are both moved and seconded. That custom may become part of the rules of the meeting. However, where the custom has not become a rule, there is no requirement that a motion be seconded: National Australia Bank Ltd v Market Holdings Pty Ltd (in liq) (2001) 161 FLR 1; 37 ACSR 629.
From a practical point of view, unless there is someone present who is prepared to second a motion upon it being moved, it would seem likely to be overwhelmingly defeated when voted on. On this basis, some writers suggest that the Chair should exercise a discretion not to accept a motion for which no seconder can be found, pointing out that consideration of the motion is likely to be a waste of the meeting’s time. However, whether the Chair has a discretion in law to reject a motion that has been [page 123] validly moved, even if not seconded (in the absence of specific provision in the body’s rules or standing orders), is doubtful. After all, it may be that the mover is sufficiently persuasive in speaking to the motion to sway the meeting; if not, the motion will simply be defeated. One way of avoiding the problem is for the Chair itself to second the motion ‘pro forma’, so as to allow debate. Parliamentary procedure generally requires a motion or an amendment to be seconded, otherwise it may not be further debated. However, in the House of Commons, a seconder is not needed where the mover is a member of the government or a privy councillor, a practice followed by some other parliaments. The rules or standing orders of many bodies require every motion to be seconded. Indeed, in some bodies, the standing orders provide that a seconder must be forthcoming before the mover is permitted to speak. The purpose of such a procedure is to avoid time being spent on a proposal for which there is no real support. However, such a rule militates against the proposal receiving a seconder, because there will have been no opportunity for the arguments in favour to have been presented (unless discussion has occurred prior to the
meeting, a practice that can curtail debate at the meeting itself ). In Chapter 12, reference is made to the need for certain of the formal motions to be seconded. This is the generally recognised procedure, but the legal situation as regards seconding a formal or any procedural motion is the same as with all motions. As a general principle, an unseconded motion, if not initially proceeded with, may be moved later in the meeting, if another person is then prepared to second it. From a practical point of view, the suitability of a renewal of the motion would be influenced not only by the agenda arrangements and standing orders, but also by any intervening resolution or lost motion that has a direct bearing on its terms.
Lapsing of motions 10.13 A motion is often referred to as ‘lapsing’ if it is not seconded when this is required. In parliamentary terms, the motion ‘falls to the ground’ and no debate ensues. A ‘dropped motion’ is a parliamentary term for a motion that ‘lapses’ because it is not seconded where this is required by the rules. In parliamentary usage, the term ‘lapsed’ also applies to a motion of which notice has previously been given, but which is not moved because the member sponsoring it fails to rise and do so when called on during the sitting. A motion is also sometimes referred to as ‘lapsed’ if, in the event of a ‘division’ being called for to vote on it, a quorum is not present when the division takes place, in which case no decision is arrived at; and also where [page 124] the ‘previous question’ is resolved in the affirmative, thus disposing of the motion: see further 12.11.
Debate on the motion 10.14 Except for the mover of the motion, each person may speak only once during the debate (which is frequently referred to informally as ‘discussion’) on the motion. However, the seconder may reserve the right to speak until during the debate itself, provided this is made clear when seconding the motion; this practice is based on the notion that the main supporter of the mover, all of whose arguments were propounded at the outset, is provided with a delayed
opportunity to counter opposing arguments brought forward during the debate. Reservation of a speech does not give the seconder any greater right to speak during the debate than any other person; and should it happen that the motion is voted on before the speech is made, the seconder will have lost that opportunity. The sole exception to the ‘one speech only’ rule is that the person who moves a motion has ‘a right of reply’, and if the motion is debated may speak a second time: see 10.26. There may also be an easing of the general rule that each person may speak only once by discretion of the Chair. The Chair may, exceptionally, invite or allow a second comment by a speaker where, for some particular reason, it seems necessary or appropriate to permit that person to add an explanation of what has been said earlier. This course may seem desirable because of an indication in a comment by a later speaker that some misconception had been placed on what the earlier speaker had been attempting to put forward. Such an explanation should only be allowed where the Chair is satisfied that a genuine misconception has arisen and is likely to be resolved by the explanation. The Chair should confine the speaker to the explanation, and not permit a further speech in debate. There is no ‘right of personal explanation’ at common law or in customary meeting procedure: see further 9.2.
Withdrawal of motion 10.15 A motion that has been moved and accepted by the Chair thereupon comes into the control of, and is the property of, the meeting. It must be put to the vote unless: 1. one or more amendments to it are moved, voted on, carried and embodied in the original motion, thereby changing and superseding it; 2. the meeting consents to its withdrawal; or 3. one of the formal motions is passed to prevent a vote being taken. As to 2 and 3, see further 12.16. [page 125]
Amendments
Definition 10.16 An amendment is an alteration to a motion while it is still being debated. Strictly, the term should be ‘proposed amendment’. It is a proposal, in the form of a motion of amendment, that the main motion be altered in some specified way. The purpose of an amendment being moved is to change something about the existing form of the motion, but merely to modify it, not to negative or defeat it; that could be signified by a vote against it. A proposal for an amendment to a motion is itself in the nature of a motion. It is brought before the meeting by being moved, namely, ‘I move an amendment to the motion, “That …” ’, during the debate. Most of the general principles discussed in 10.5–10.15 in the context of motions apply equally to amendments. It is customary for a proposed amendment to be seconded in the same way and for the same reason that an original motion is usually seconded, but, again, seconding is not essential. If an amendment is not seconded where the rules require a seconder, it ‘lapses’ or ‘falls to the ground’ and is of no further concern to the meeting. It may be added that, when a motion or amendment is put to the vote, the seconder does not need to cast a vote in favour; the seconder may abstain from voting or vote against the proposal, with or without making an explanation.
Characteristics of an amendment 10.17 Generally speaking, amendments are moved with a view to altering the motion by adding, deleting, substituting or rearranging words. It is desirable that an amendment (except to make an elementary change) should be in writing and handed to the Chair. This contributes to a clear understanding of the significance of each word, and the logic and effect of the suggested alteration. Consequently, this helps to avoid the confusion and waste of time that often occurs because: 1. the mover of the amendment has not gone through the salutary discipline of committing to paper the proposed change and its practical effect; and 2. in the absence of an amendment in writing, the Chair is without the benefit of any visual aid to assist comprehension of the significance of the amendment (particularly if more than one is forthcoming) and to enable the Chair to inform the meeting of its effect on the motion. Unfortunately, this practice, although conducive to efficiency, is rarely followed
unless required by standing orders; furthermore, it is without support at law: see 10.9. [page 126] Amendments should be drafted in such a way that, if passed, the resulting motion will have the characteristics described as desirable in 10.5.
Unacceptable amendments 10.18 An amendment: 1. should not be in the form of a direct negative or mere contradiction of the motion, nor have that effect: Walkley v District Council of Northern Yorke Peninsula (1987) 27 APA 381; 2. should not raise a point already disposed of by an earlier vote at the meeting; and 3. must be moved before the Chair puts the principal motion to the vote. 10.19 The Chair may also reject an amendment on grounds that it: 1. 2. 3. 4. 5. 6. 7. 8.
is inconsistent with an amendment already agreed to when voted on; is inconsistent with a resolution passed earlier at the meeting; does not come within the scope, purpose or notice of the meeting; is beyond the scope of the question being considered; does not relate to the motion; is irrelevant; is offered in a spirit of mockery; appears designed to prevent the meeting coming to a decision on the matter; or 9. appears designed mainly to obstruct or delay progress. Also, as in the case of an original motion, an amendment must comply with any requirements of standing orders, and must not be in conflict with the constitution of the body or any other legal provisions that regulate its activity. However, if there is any real doubt, a Chair should accept an amendment that is moved, as the rejection by the Chair of a relevant and material amendment could
result in legal action seeking to upset a consequent resolution or loss of a motion. A Chair needs to be most careful before ruling that an amendment is not in order, as refusal to accept a proper amendment may invalidate a resolution: Henderson v Bank of Australasia (1890) 45 Ch D 330; see further 9.7. While an amendment should not be such as to alter the original motion so that it relates to entirely different subject matter, an amendment is acceptable that would delete all the words after the word ‘That’ and insert others in their place, if it is relevant to the terms of the original motion and does not amount to negating it. This follows parliamentary practice, and is known as a ‘counter amendment’. The practice makes possible the complete redrafting of a motion, so that it becomes acceptable to one or [page 127] more groups opposing its original terms, and not unacceptable to the mover and other supporters.
Amendments and notice of motion 10.20 A major reason for requiring notice of motions to be given in advance is to enable every member to see the details and appreciate the significance of the proposal. There needs to be adequate disclosure of all material facts relevant to the question members will be called to vote on: Baillie v Oriental Telephone & Electric Co Ltd [1915] 1 Ch 503. Thus, each member is able to decide in advance about the merits of the proposal: perhaps that it is a matter on which the member wishes to express adverse or cautionary views and possibly vote against, and therefore should attend the meeting; or, on the other hand, that the member generally endorses the proposal as expressed in the motion and is agreeable for it to be carried, and therefore will abstain from voting and does not need to be present. It is not possible to know the number of shareholders who, being satisfied that the arrangement, as proposed, was advantageous to them, were content not to vote and did not attend the meeting: Clinch v Financial Corp (1868) LR 5 Eq 450. It is essential that all material information is stated adequately in the notice of meeting if members are to be able to decide from the notice whether or not the protection of their interests calls for their attendance at the meeting: Hughes v Union Cold Storage Co (1934) 78 Sol Jo 551. For a detailed discussion of notice requirements, see Chapter 4, especially 4.17. The question that consequently arises is whether, during the meeting, the Chair
may accept any amendment to a motion of which notice has been given. The generally accepted principle is that an amendment is allowable only if the proposed change is within the scope of the notice that has been given, and accordingly an amendment that materially alters a motion of which notice has been given will often not be acceptable. This principle applies whether or not the issued notice of the meeting refers to a resolution being passed ‘with or without amendment’ as is sometimes stated. There are many judicial statements about the application of this principle. In one case, the court ruled that a meeting convened to pass resolutions to wind up the company with a view to its reconstruction could not abandon the reconstruction and pass a resolution to wind up: Re Teede & Bishop (1901) 17 TLR 282. Where a notice of motion proposing the appointment of specified persons to fill vacancies on the board of directors was contained in a notice of meeting, the court held that an amendment moved at the meeting proposing different persons to fill the vacancies was valid: Betts & Co Ltd v Macnaghten [1910] 1 Ch 430. An alteration from seven to 14 days notice of a meeting is a legitimate amendment to a motion: Daly v Gallagher [1925] QSR 1. However, an amendment to dismiss the entire [page 128] council of an organisation, where notice of a motion to dismiss a particular councillor has been given, is beyond the scope of the notified business, and consequently invalid: Efstathis v Greek Orthodox Community of St George [1989] 1 Qd R 146, sub nom Ephstathis v Greek Orthodox Community of St George (1988) 13 ACLR 691. Careful attention should be given to all the wording during preparation of the notice of a meeting that contains a notice of motion in precise words. In consultation with the intended Chair of the meeting and the mover of the motion, the secretary in preparing the notice should contemplate and anticipate possible amendments, and word the notice and the accompanying explanation of the motion with such possibilities in mind. Where possible, agreement should be arrived at in advance as to suitable action to be taken by the Chair in the event of any such amendments being moved. A Chair needs to be cautious about accepting an amendment that, although not appearing to modify the motion, introduces some particular reason for the proposal. Sometimes the linking of a specific reason to a decision seems to apply inferences, implications or possible limitations that absent members might not
have been happy to endorse had this been expressed in the written notice of motion.
Amendments to special resolutions 10.21 The term ‘special resolution’ is used in various statutes, including those governing companies, associations and cooperatives, to describe a resolution at a general meeting of members that may only be passed by more than a simple majority (usually three-quarters of those present and voting, including proxies where allowed) and that requires a specified period of notice (usually 21 days). Special resolutions are often required under the relevant statute to effect major changes to the body; for example, alterations to the constitution, winding up and change of name. There is conflicting authority about the extent to which special resolutions may be amended. In an early Australian case, it was held that amendments may be made to a special resolution of which notice has been given provided they do not alter its nature, but if the amended resolution would not fall within the notice it will be invalid: Re Picturesque Atlas and Publishing Co Ltd (1892) 13 LR (NSW) Eq 77. Similarly, in an early English case an amendment was judged valid that resulted in a smaller increase in the rate of directors’ fees than that stated in the notice: Torbock v Lord Westbury [1902] 2 Ch 871. Both these cases are consistent with the general principle referred to in 10.19 that applies to amendments to all motions of which notice has been given. However, in the later English case of Re Moorgate Mercantile Holdings Ltd [1980] 1 All ER 40, it was held that the substance [page 129] of a special resolution must be identical to that of which notice had been given, and accordingly only corrections of grammatical or clerical errors, or rephrasing in more formal language, will be permitted. Re Moorgate has subsequently been distinguished by the English Court of Appeal in Re Willaire Systems plc [1987] BCLC 67. More recently, in Totally and Permanently Incapacitated Veterans’ Association of New South Wales Ltd v Gadd (1998) 146 FLR 161; 28 ACSR 549, Young J of the NSW Supreme Court, after conducting a detailed review of the authorities, declined to follow Re Moorgate and held that the following statement from the third edition of this work is a correct statement of the Australian law: Amendments may be made to a special resolution of which notice has been given provided that they do not alter its nature, but if the amended resolution would not fall within the notice it would be
invalid.
Totally and Permanently Incapacitated Veterans’ Association of New South Wales Ltd v Gadd has subsequently been applied in NRMA Ltd v Scandrett (2002) 171 FLR 232; (2002) 43 ACSR 401.
Conduct of the debate Debate on an amendment 10.22 Upon the Chair accepting an amendment, the debate on the original motion is suspended. Discussion of the proposed amendment takes priority, and must be kept relevant to the amendment. In due course, the amendment is voted on, that is, a vote is taken on the proposal that the motion be amended in the specific way put forward: the question put to the vote by the Chair is ‘That the amendment, namely …, be agreed to’, or words to that effect. The debate on an original motion is said to be ‘superseded’ by debate on an amendment to it. The use of this word follows the terminology of parliament where the word ‘superseded’, when applied to either ‘a debate’ or ‘the question’, means that the matter being debated is set aside. It does not necessarily mean that another item of business takes its place; for instance, the debate is superseded upon the adjournment of parliament or if it is found that a quorum of members is not present. An amendment may not be moved or seconded by a person who has already moved, seconded or spoken to the motion or a previous amendment. Thus, a person may not propose or second more than one amendment to a motion. However, an amendment is a fresh proposition for debate, and any person, including the mover of the original motion, may speak during the debate on it, whether or not that person has already participated in the debate on the main motion or an earlier amendment. [page 130] As with any motion, each person may speak only once during the debate on an amendment. The debate should be confined to the motion or the particular amendment presently being dealt with by the meeting. If the comments of any speaker digress from the subject, or stray from the motion or amendment, or introduce other
subject matter, that person’s speech is liable to be interrupted by another person on a ‘point of order’, if the Chair has not already directed the speaker to keep to the question being debated. The mover of an amendment does not have a right of reply, in contrast to the mover of an original motion. Nor is the seconder entitled to reserve a speech until later (in the absence of a specific standing order giving that right). The mover and seconder’s contributions to the debate on the amendment are confined to any speeches they make when moving and seconding it. If the proposed amendment is lost when voted on, the main motion is revived, and the meeting resumes debating it. The main motion is open to further proposals for amendment until it is put to the vote.
Dealing with several amendments 10.23 Only one amendment to a motion should be before a meeting at the same time. If it appears that several amendments are to be proposed, the Chair should take steps to have each one placed on paper, and then, in turn, formally moved, seconded, debated and voted on in the sequence in which they affect the terms — that is, the wording — of the original motion. Where the Chair knows that more than one amendment is to be moved, it is usual to deal with them in the sequence just described, rather than the order in which they have been put forward. This is because some amendments proposed later in time may affect earlier parts of the motion, and, if carried, change its structure and internal logic. Furthermore, an arrangement by which the order of amendments coincides with the flow of the phraseology and meaning of the motion enables the meeting to understand each step — that is, each proposed amendment — placed before it by the Chair. However, a Chair may prefer to deal with amendments in the order received: 1. in some cases it may be more satisfactory from a practical point of view; 2. the Chair may believe in the equity of the principle ‘first moved, first considered’ on the basis that any other priority could conceivably produce a materially changed motion before it becomes time to deal with an amendment that had been notified at the outset; or [page 131] 3. a ‘formal motion’ or other procedural motion could bring about a vote on the
existing substantive motion before all the amendments had been considered. The standing orders of some bodies stipulate that an amendment may not be moved to any part of a motion preceding a point already amended. It would be usual for standing orders of such a type also to require that written notice of motion and of any proposed amendments be lodged prior to the debate. Where a procedure operates under which amendments are received and dealt with strictly in the order in which they affect the words of the motion, the term ‘prior amendment’ may be used. It denotes a proposed amendment that would alter an earlier part of the motion than that for which an amendment has already been moved and is about to be or is already being debated. Thus, a person may indicate the desire ‘to move a prior amendment’. Depending on standing orders, the Chair could seek temporary withdrawal of the existing amendment so that the prior amendment may be dealt with. Where a body’s standing orders prescribe a precise procedure for dealing with amendments, it is usual for provisions to be included to handle various contingencies just described. Although it is desirable that a meeting deal with a number of amendments in due succession, the meeting may decide to deal with all the amendments together: Campbell v Australian Mutual Provident Society (1906) 7 SR (NSW) 99. While a proposed amendment is being debated, it is preferable that a Chair does not accept an amendment to that amendment, and many Chairs refuse to do so. Although an amendment to an amendment is not legally impermissible, the subsequent discussion is likely to be confusing to those present, including the Chair. Misconceptions and possible error could arise. If a Chair does permit an amendment to be moved during debate on an amendment, the second (that is, amending) amendment must be dealt with as a priority and immediately debated, in the same restricted way that all amendments should be discussed, and then voted on. If it is carried, it becomes embodied in the primary amendment, the debate on which then resumes. As a practical alternative to an amendment being moved while an amendment is already being debated, it is in order for a person to indicate the intention of moving a later amendment, which that person explains, when the present one has been disposed of. This is called ‘foreshadowing’ a further amendment. If it is stated that the later proposal is dependent on the outcome of the vote on the amendment already being considered (for example, if defeated, an alternative proposal; if carried, a consequential development), this is described as foreshadowing a contingent amendment. [page 132]
Foreshadowing can be helpful in some circumstances, as it enables those present to be aware that there is a variety of suggested modifications to the original proposition that they may be invited to consider and vote on. See 10.25 on foreshadowing a counter motion. If a poll is demanded on an amendment (possibly after it has been lost on a vote by show of hands), the Chair may decide that the poll will be held at a later time. This means that the fate of the proposed amendment remains undecided for the time being. In such circumstances, no other amendment to the main motion should be accepted by the Chair until after the poll; this would apply even though some other proposed amendment may relate to a quite different aspect of the motion. This course of action is based on the complementary principles that a Chair should allow only one amendment to a motion to be before a meeting at the same time, and that a further amendment should not be moved until the meeting has disposed of the one presently being dealt with. It also appears that at common law, where the vote on an amendment is taken on a poll (and not the more usual show of hands), no further amendment to that particular aspect of the main motion may be moved, regardless of whether the amendment was carried (thereby changing the substantive motion) or lost: R v Roberts (1863) 3 B&S 495. For further discussion of polls, see Chapter 15.
Substantive motion 10.24 If the amendment is carried, it thereby immediately becomes embodied in the original motion by adding, deleting or substituting words. The motion in its newly altered form is referred to as the ‘substantive motion’. This is a term used to denote the principal motion with which the meeting is dealing at a given time. From the meaning of the adjective, a substantive motion is one that stands on its own feet. Particularly as used in parliament, the term ‘substantive motion’ designates an independent motion that is self-contained, that is, it is not a motion that is dependent on another motion, or has a procedural relationship to another motion (for example, with a view to disposing of that other motion, or deferring its consideration). The term ‘substantive motion’ can refer to a motion during the time it is in its original form, or in a later, amended form. However, the term is usually not brought into use, as regards meetings generally, until after an amendment has been passed and thus incorporated in the motion. Until then, the term ‘original motion’ is a conveniently descriptive one. Further amendments may be moved, seconded, accepted by the Chair, debated and voted on. Where one is lost, the meeting resumes discussing the existing substantive motion. Whenever an amendment is carried, a different substantive motion thereby comes into existence, and becomes the main question before the
meeting. The new motion is open to debate, [page 133] and may be amended in further ways. The standing orders of some bodies provide that amendments may not be moved that relate to wording introduced or changed as the result of an earlier amendment being carried. However, in the absence of such a restriction, it is competent for a later amendment to be moved with a view to modifying the consequence of an earlier amendment, provided it does not deal with a point already decided by the previous vote. Needless to say, a substantive motion may not be further amended in such a way that it reverts, in effect, to the original motion. In due course, when no further proposals for amendment nor other speeches for or against the motion itself are forthcoming, the substantive motion is put to the vote, after the mover of the original motion has exercised the ‘right of reply’.
Counter motions 10.25 During debate on a motion or an amendment, a person may foreshadow one or more other motions that would affect the terms of the motion being discussed. These are known as ‘counter motions’. They are not to be confused with amendments. When first submitted, a counter motion is thus foreshadowed rather than moved. It is a proposal that involves the subject matter of the motion already before the meeting, but that suggests a course of action different from, rather than being antagonistic to or opposing it. The proposal may not readily lend itself to being submitted as an amendment because it may contain a distinctive proposition that merits consideration in its own right as an alternative. Its sponsor may believe it deserves immediate consideration alongside the existing motion. Foreshadowing makes the meeting aware of the alternative proposal. If a counter motion is foreshadowed immediately after a motion has been moved and seconded, a procedure is sometimes adopted whereby the meeting agrees to the temporary withdrawal of the first motion. The counter motion is then moved. If seconded, it is accepted by the Chair, debated in the normal way, able to be amended and in due course voted on. If carried, the first motion is then unnecessary and its withdrawal becomes permanent. In some organisations, a more elaborate method of foreshadowing is employed. The substantive and one or more foreshadowed motions are debated simultaneously in a ‘cognate debate’, where the mover, seconder and other
speakers in turn speak in favour of their motion and against all others. It is open for a speaker to speak against all motions before the meeting. Rights of reply are usually taken in the reverse order to the moving speeches. Each motion is then voted on in turn, until one is carried. If one motion is carried, the remaining motions lapse. This method is useful [page 134] where one or more motions deal with essentially the same subject matter, but propose quite different ways of dealing with it. The cognate debate is said to give more equal treatment to each alternative than the traditional method of motion and counter amendment.
Right of reply 10.26 The mover of an original motion has a ‘right of reply’ if the motion is debated. The right of reply, if the mover wishes to exercise it, is taken just before the Chair puts the motion to the vote of the meeting, that is, the mover is the final speaker in the debate. However, if an amendment has been moved and is about to be voted on, there are instances where this may be a very suitable time (and sometimes the most useful time) for the mover to utilise the right of reply. There are other considerations, though. For instance, the Chair may insist that amendments will be accepted for debate according to the order in which they affect the wording of the motion. For this or some other reason, the first amendment to be moved may be of only minor significance or introduce an improvement with which the mover concurs. Thus, there may be little if anything to which to ‘reply’. On the other hand, an amendment may be moved later that strikes at the root of the proposal, or some strongly persuasive argument against the motion may be put forward near the close of the debate. Opinions vary a little among authorities as to when the right of reply needs to be exercised during the debate when an amendment has been moved. That is, whether just before the substantive motion is voted on, or just before the vote is taken on the first amendment, or, alternatively, when the vote is about to be taken on an amendment selected by the mover of the original motion. There is some variation in opinion regarding a right of reply following the voting on certain procedural motions: see Chapter 12. However, it is generally agreed that a right of reply continues to exist after the previous question motion has been lost or the closure motion has been carried — results that, in each case,
require a vote to be taken immediately on the question before the meeting: see 12.8 and 12.11. Therefore, before putting the question to the vote, the Chair should allow the mover of the original motion to exercise the right of reply if wishing to do so. While the previous question may be moved only on an original or substantive motion, the closure may be moved during discussion on an amendment also, and this aspect comes into consideration. There is also general agreement that the right of reply is lost if the mover of the original motion chooses to speak during the debate on an amendment. However, the mover would be entitled to speak during the discussion on a [page 135] procedural motion (where debate is permitted; for example, the previous question) without losing the right of reply. Variations in views about the whole procedure regarding the right of reply arise because of differences in provisions found in those standing orders that deal with the matter. In parliament, the right of reply is exercised at the close of the debate on the main question. However, some organisations when formulating standing orders for their meetings have adopted practices suitable for their own inclinations and purposes, while others have merely copied what they understood to be standard practice. As a consequence, some standing orders provide in effect that where an amendment is moved, the mover of the original motion loses the right of reply if it is not exercised immediately before the first amendment is put to the vote. The ‘right of reply’ seems to have been introduced into the recognised rules of debate to achieve two things: 1. so that the person who initiated the motion is provided with the privilege of replying and answering various points made against the proposal (in some instances, it may be thought almost an obligation to provide the meeting with a reply) before a vote is taken; and 2. so that all present, just prior to voting, may have the opportunity of hearing the mover again after listening to all opposing reasons and conflicting views. However, if a motion is considerably transformed through several amendments, a reply at that stage by the mover may be of doubtful relevancy or value, and perhaps scarcely warranted or proper. A practical way for the situation to be dealt with is for the mover of the original
motion to be permitted to exercise the right of reply just before the first amendment is put to the vote, or to be allowed to do this just before either a later amendment or the substantive motion is voted on. This procedure is subject to a proviso that the Chair may decide and rule that, unless the mover exercises the right of reply just before the vote is taken on an amendment specified by the Chair, the mover is not able to do so later as this would be confusing to the main issue to be voted on. Also, if the mover of an original motion rises to speak on the first or a later amendment, the Chair may make a ruling that the right of reply will be forfeited if the mover speaks during the debate on an amendment. The standing orders of some bodies include a clause of this nature. Where the matter is not covered by standing orders, rules or precedent within the organisation, a Chair would be in order to allow the right of reply to be taken just before the main motion is voted on if the mover wishes to do so at that point, provided the mover has not spoken during the debate on an amendment. [page 136] When a right of reply is being exercised, no new information or argument may be introduced, nor should it be a concise recapitulation of the opening speech. The speaker may summarise arguments in favour of the motion that have been brought out during the debate. However, the main concept of the right of reply is to enable the speaker to clear up points not properly understood, to deal with both legitimate and fallacious criticism, and, as necessary while expressing views about opposing arguments, to explain again the main purpose of the motion. The mover of an amendment or a formal or other procedural motion does not have a right of reply, unless this is specifically provided for in a body’s standing orders. Movers of original motions do not always take advantage of their right of reply. Perhaps it is strategic to let the vote be taken without the core of the matter being emphasised again; perhaps the mover senses that at the end of a long debate everyone is weary of the topic and that a further speech may do more harm than good. It is useful to appreciate that the exercise of the right of reply closes the debate, and thus has a value in helping to confine discussion within reasonable limits. A Chair, upon sensing that opposing views have been satisfactorily ventilated, may feel that an opportune way for the debate to be closed is to call on the mover to reply ‘if no other person wishes to speak’. Such a practice is frequently adopted where a recommendation contained in a committee report is brought forward in
the form of a motion moved by the committee Chair.
The vote 10.27 Immediately after the right of reply has been taken (in the case of a motion), or the debate has otherwise closed (in the case of an amendment), the Chair must put the question to the vote. The duty to put motions and amendments to the vote, ensure a correct tally of votes, and ascertain and declare the result is one of the Chair’s main responsibilities. Accordingly, the Chair needs to make sure that all persons present realise what it is precisely that they are voting on. Where several amendments have already been voted on, the exact substance and definite effect of the substantive motion may not be readily appreciated without a brief final explanation by the Chair, and, if necessary, restatement of the actual motion to be voted on. In particular, when the vote is taken on an amendment, the Chair should make it clear that it is the amendment that is being decided, and endeavour to ensure that everyone understands what will be the effect — that is, the limited effect — of a favourable vote. [page 137] Where a motion comprises more than one proposition, the Chair may announce that, as a preliminary but without any further debate at all, the motion will be divided into two or more parts, and each part put to the vote separately. After this has been done, the Chair then puts the motion as a whole to the vote, and it is that final vote by which the motion is carried or lost. It is competent for a meeting to ask the Chair to divide the motion in this way for voting purposes; the Chair should normally agree to such a request. Voting is discussed in detail in Chapter 14, and polls are considered in Chapter 15. An equality of votes indicates that there is not a majority in favour of the motion. Therefore, the motion is not carried. The Chair’s declaration of the result should use those words. However, even though no resolution was passed, there may be merit in the fact that the motion was not carried being recorded in the minutes in view of the equal division of opinion on the matter. The difference between a motion being ‘not carried’ and ‘lost’, treating each of these as a technical term, could be important where standing orders provide that a specified period of time or number of meetings must elapse before a defeated
motion may be moved again. For discussion of whether the Chair has a casting vote, see 14.14. As soon as a resolution has been passed or a motion has been lost, the Chair should always declare the result firmly. The result of the voting should be made clear to all present. Normally, it is sufficient for the Chair to announce that the motion is carried, not carried or lost, as the case may be, without going into details. Where rules specify a particular majority, the Chair should also announce the number of votes for and against the motion, slating these figures in a way to show that the declaration of the result complies with the requirements of the rules. There are occasions where it is useful or complimentary to declare that a motion has been carried unanimously. If the substantive motion is carried when voted on, it thereby becomes a resolution. If a motion is not carried, it does not become a resolution, and disappears into oblivion. It is, of course, possible for one or more amendments to be carried, and then for the subsequent substantive motion to be lost. After the main motion has been finally voted on, and has either become a resolution or has been lost, nobody may address the meeting further on that question. For this reason, no more amendment of the motion is possible, although it is open for the meeting to appoint a committee to consider the lost motion further, and report back: Montgomerie’s Brewery v Spencer (1899) 5 ALR 112. [page 138] An unsuccessful motion, whether an original or a substantive motion or a proposed amendment, may not be put to the vote a second time at the same meeting; thus, a second motion in similar terms or with the same aim should not be accepted by the Chair. Standing orders and rules often provide that a specified period (or number of meetings) must elapse before a similar motion is moved again, or, in some rules, before the subject matter of the motion is raised again.
Omnibus motions 10.28 An ‘omnibus motion’ is one that includes two or more proposals, although they (or some of them) are not dependent on each other: it is a motion that, in fact, is more than one motion, each (or some) having an independent significance, and a distinct consequence if carried. An example would be a single motion that embraces several proposed amendments to a company’s constitution
or a body’s rules, where the changes are not all connected or some may introduce fresh policy. Such a motion must be voted for or against in its entirety (subject, of course, to valid amendments where this is possible). Accordingly, where a voter agrees with some of the proposals but finds one or more unacceptable, a decision needs to be made as to whether to vote for the latter or against the former. Where such a motion is carried, it is described as an omnibus resolution, which is a useful term, as it indicates that it was passed in the light of the above circumstances. The terms ‘composite motion’ and ‘composite resolution’ are sometimes used as an alternative to ‘omnibus motion’. However, it is accepted as useful for the term to be used more particularly to describe a multi-part motion (and resolution) framed by a Chair or drafting committee to incorporate the principal points of several motions of which notice has been received, where all of them deal with similar or closely related subject matter, or all of them are directed to the same objective.
Recording in minutes 10.29 As a general principle, unsuccessful motions are not recorded, nor necessarily referred to in minutes, on the basis that the function of minutes is to record what a meeting accomplishes, rather than to provide an account of what happens at it. However, there are exceptions to this principle: for instance, the rules of a body may provide otherwise, particular circumstances may make it prudent to record the matter, or the meeting itself may decide that its minutes are to record the loss of a particular motion. Also, the minutes need to record the exact words and fate of all motions of which the rules require notice to be given in writing [page 139] prior to the meeting, and also of all motions that are the subject of a poll or a postal ballot whether successful or otherwise. It is not absolutely necessary by law that resolutions be recorded. However, relevant statutes, rules and standing orders invariably require minutes to be kept of proceedings of meetings. Furthermore, the physical and administrative effort involved in organising and conducting a meeting up to the point of a resolution being passed would be scarcely useful or worthwhile unless the decision made is then recorded in an official, permanent form that is authoritative for both practical and legal purposes. Minutes are discussed in detail in Chapter 18.
Postal ballots and circulating resolutions 10.30 It is normally at an actual meeting that a motion is submitted for the consideration of those present. This is so that they may first debate it, that is, discuss the proposal in a formal way through a controlled ventilation and exchange of views, beliefs and argument, and then vote on it, either while the meeting is still assembled, or later, at an extension of the meeting, when a poll is conducted at a convenient time subsequently, in which case members who were not present at the first part of the meeting may also decide to attend and record their votes: see Chapter 15. However, some constitutions and rules permit a motion to be submitted in written form, for instance: 1. on a voting paper sent to all persons entitled to cast a vote, that is, a postal ballot; or 2. where a written resolution is signed by every person entitled to vote (or a specified majority), that is, a circulating resolution. The former procedure is sometimes called a ‘referendum’ or ‘plebiscite’; the latter, a ‘resolution without meeting’, ‘(unanimous) resolution in writing’ or ‘flying minute’: see further 11.8. Both procedures lack a vital element of a meeting, namely, the debate. For this reason, in the case of postal ballots, well-drafted rules often make provision for the circulation of written arguments for and against the proposal, while with circulating resolutions a higher majority (often unanimity) is required.
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11 Resolutions and Rescission Definition of ‘resolution’ 11.1 The important distinction between a ‘motion’ and a ‘resolution’ has already been discussed in 10.3. In summary, a resolution is simply a decision of a meeting, set out in a form of words; a motion is a proposed decision, that is, a resolution that has not yet been agreed to by the meeting. As a general rule, formally constituted bodies can only make decisions by the passing of resolutions at a duly convened meeting: Russell v Brisbane City Council [1955] QSR 419; Brickworks Ltd v Warringah Shire Council (1963) 108 CLR 568 at 576 per Windeyer J. Resolutions may be contrasted with regulations and by-laws, which are, in effect, legislation, usually requiring special notice and majorities to be passed: A resolution may serve to define, ‘for the time being’ at any rate, a policy or principle intended to be followed in dealing with some class of subject matter. We say ‘for the time being’ because, unlike a by-law or regulation, a resolution may be rescinded or varied by another resolution: Ex parte Foster; Re University of Sydney [1964] NSWR 1000.
Validity of resolutions 11.2 In 10.6 and 10.7, a number of matters that may render a motion invalid were discussed. Of particular importance in this context is the improper participation of outsiders in the meeting: see generally 7.8. The courts have held that a motion moved by a person who is not a member of the body meeting and not entitled to be present at or to participate in [page 142]
its deliberations, and subsequently purported to be carried at the meeting as a resolution, is invalid: Lynch v Hodges (1963) 4 FLR 348. Similarly, where the secretary of a body was invalidly made a member ex officio of all committees, and at a committee meeting moved a motion and played a dominating part in the discussion (including making a false statement on a relevant matter), it was held that the presence and participation of the secretary wholly vitiated and invalidated the purported resolution, even though it had been carried unanimously: Allen v Townsend (1977) 31 FLR 431; 16 ALR 301. However, in one case where, in addition to the requisite quorum of members, five others not entitled to be members moved, seconded and voted on a motion to appoint an office-bearer and it was carried unanimously, the appointment was held to be valid: Barter v Maher (1972) 21 FLR 10. The improper exclusion of a person entitled to participate in the meeting may also invalidate all subsequent resolutions of the body: Cooper v Marr (1966) 9 FLR 371. Failure to notify all members of the passing of a resolution as required by the rules of a body does not invalidate the resolution itself: Wiseman v Professional Radio and Electronics Institute of Australasia (1978) 35 FLR 24; 20 ALR 545.
Interpretation of resolutions 11.3 In general terms, resolutions are to be interpreted in the same way as other documents. However, most resolutions are drafted with less formality than statutes, contracts and other legal documents, and need to be interpreted in that context. Hence, for example, the former Arbitration Commission has held that in construing the meaning of resolutions of industrial organisations and their governing bodies it is proper to look at the common understanding by their members of the words used: Re Australian Workers’ Union (1983) 11 IR 283. Similarly, in the case of municipal councils, the courts have held that, while resolutions represent the formal embodiment of decisions of the council, it is a mistake to read them as if they were acts of legislation. Resolutions are for the most part (as their wording often evidences) formulated on the spur of the moment; it is essential therefore to look at the circumstances in which the resolution or proposition was made if it is to be given its fair and natural meaning. It would, accordingly, be misleading to rely only on the bare words of a resolution disengaged from the events that led to, and result from, its being passed, and to look for unreason rather than for reason: Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corp (1975) 11 SASR 504; 33 LGRA 70.
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Types of resolutions Ordinary resolutions 11.4 An ordinary resolution is one that to be passed requires no more than a simple majority of those voting at a show of hands or on a poll. It is the type of resolution by which the majority of decisions are made at general meetings of most bodies. An ordinary resolution is the form of resolution that is known and recognised at common law, and, as a general principle, the word ‘resolution’ means an ordinary resolution unless the context in which it occurs indicates otherwise. However, rules and statutes may include a different definition of ‘ordinary resolution’; for example, it may apply only to resolutions passed by voters who are present in person (and not by proxy). A statutory example is the Bankruptcy Act 1966 (Cth), which in s 5(1) defines ‘resolution’ to mean ‘a resolution passed by a majority in value of the creditors present personally, by telephone, by attorney or by proxy at a meeting of creditors and voting on the resolution’, substantially altering the common law meaning.
Special and extraordinary resolutions 11.5 There is no standard, universal definition of, nor requirement for, a ‘special resolution’ or an ‘extraordinary resolution’. These forms of resolution are created by statute or rules, and their requirements need to be specified in a legislative document, usually the Act under which the body is incorporated or its constitution. Statutes that contain definitions of these resolutions include the Corporations Act and the various state Associations Incorporation Acts, Cooperatives Acts and Strata Titles Acts. The term ‘extraordinary resolution’ has now generally been supplanted in the various statutes by ‘special resolution’. Until 1 July 1998 the expression ‘extraordinary resolution’ had not been used in the companies legislation for many years, except to provide that anything previously required to be done by extraordinary resolution could now be done by special resolution (see, for example, s 253(9) of the Corporations Law). Since that date, however, the Corporations Law and now the Corporations Act have reintroduced the term in the context of meetings of the members of registered management investment schemes: see further 23.13.
Normally, the main requirement for a special or extraordinary resolution to be passed is a particular majority: see further 14.17. Sometimes the notice of meeting is to be for a longer period than usual. Often the notice needs to contain the exact words of the proposed resolution and emphasise that it is a special (or extraordinary) resolution. [page 144] The statute or rules will also usually state the circumstances in which resolutions of this type are required: normally to pass motions that contain very significant proposals; for example, to change the name or objects of a body, amend its rules, widen or limit eligibility for membership, merge with another body, wind it up, undertake very substantial expenditure and so on. Additional requirements beyond those of statute may be stipulated in a body’s rules, provided that those requirements do not conflict with or infringe the provisions of the statute. In practice, however, most rules will contain provisions along the lines of those in the Corporations Act: see further 21.23. The constitutions of a few organisations continue to provide that two consecutive meetings are necessary to enable a special resolution to be passed, the second meeting being required to confirm a resolution passed at the first. Usually this was a requirement of early companies legislation at the time when these bodies were first incorporated. Reference to this pair of meetings is found in older cases concerning company meetings conducted under the former legislation. There is conflicting authority about the extent to which special resolutions may be amended: see 10.20.
Other uses of ‘special’ in the context of meetings 11.6 It should be noted that a ‘special resolution’ and a ‘special (general) meeting’ are distinct things; the latter is sometimes, but not always nor necessarily, convened for the purpose of passing the former. Ordinary resolutions may be passed at special general meetings. The same applies to an ‘extraordinary resolution’ and ‘extraordinary (general) meeting’. Similarly, ‘special business’ may well include matters the subject of ordinary resolutions. Usually constitutions and rules will specify the ‘ordinary business’ that may be transacted as such at a general meeting (for example, consideration of accounts and reports, election of directors, appointment of auditor), and state
that any other business transacted will be ‘special business’. Although every item the subject of a special resolution will usually fall into the category of special business, motions about many of the matters that comprise special business as defined in the body’s rules are likely to require merely an ordinary resolution.
Unanimous resolution 11.7 A ‘unanimous resolution’, a reference to which may be found in constitutions, rules and statutes, is a descriptive term that carries practical and, in some cases, legal implications. The phrase ‘carried unanimously’ strictly means that every person present at a meeting and entitled to [page 145] vote did vote, and that they all voted in favour of the motion. Where a resolution is recorded as having been passed unanimously, all members present are deemed to have voted in favour of it; but the form in which acquiescence is actually indicated matters not, provided acquiescence is given: Everett v Griffiths [1924] 1 KB 941. The word ‘unanimous’ (‘of one mind’) is often used incorrectly to indicate ‘carried without dissent’, which is the correct way to record a resolution where no unfavourable votes were cast although everyone did not vote in favour of it. ‘Nem con’ (nemine contradicente, ‘no-one saying otherwise’) and ‘nem dis’ (nemine dissentiente, ‘no-one dissenting’) are other ways of referring to a resolution carried with no votes being cast against it. These abbreviations of Latin phrases are acceptable and recognised for use in minutes and reports.
Circulating resolution 11.8 A ‘circulating resolution’, also known as a ‘resolution without meeting’, ‘(unanimous) resolution in writing’ or ‘flying minute’, is possible only if it is provided for in a body’s constitution or rules, or by statute. It is a resolution passed without a meeting being held, but is valid nevertheless. The procedure usually applies to proceedings of a board of directors or other governing body of an organisation; in the case of companies, for example, under the replaceable rule in s 248A of the Corporations Act or an equivalent provision in the company’s constitution: see further 22.14. However, s 249A of the Corporations Act permits the same procedure for resolutions of the members of proprietary (but not public) companies: see further 21.30.
Normally the applicable provision will require the resolution to be signed by every person entitled to vote. It may require a unanimous agreement; or may provide that all entitled persons must sign a page containing the resolution, the signatures to indicate either ‘in favour’ or ‘not in favour’, with a specified large proportion of favourable votes being necessary for it to be a validly passed resolution. Such resolutions are infrequent in most bodies. The facility is useful where there is no real division of opinion on the substance of the resolution, and a meeting would be inconvenient, costly or perhaps impracticable without delay occurring.
Pious resolution 11.9 This is a descriptive term sometimes used to denote a resolution that is no more than an expression of opinion, viewpoint or a wish, or a declaration of belief, faith, disapproval or disgust. Although when motions of this type come before a meeting they are often carried, most [page 146] resolutions passed at meetings are typical of the constructive purpose and nature of meetings, which is to arrive at operating decisions, that is, to take appropriate action to accomplish something.
Rider 11.10 The term ‘rider’ is occasionally used in relation to resolutions. In legal parlance, a rider denotes an additional clause added to a document after it has been drafted. It came to be applied in parliamentary procedure to a new, supplementary clause attached to a Bill on a separate sheet of paper, generally after the first reading of the Bill. Its use in meetings is properly confined to a clause added to and embodied in a motion just before it is put to the vote. As with any change to the wording of a motion, it is an amendment and needs to be moved, seconded and voted on as such. But the point of a rider is to add something that does not create any alteration to the substance and thrust of the motion, but introduces a touch of improvement or enrichment; for instance, to facilitate its operation, to extend courtesies, to encourage consequential or parallel action, and matters of this nature that could have been included in the motion or by an amendment, but were not introduced either by oversight or in an endeavour to keep the discussion (perhaps contentious, technical or of a delicate nature) centred on main issues without the chance of being sidetracked by
refinements. Standing orders, by express provision, may allow a rider to be moved, seconded and voted on after the relevant resolution has been actually passed, so that its words can be added to and embodied in the resolution. At conference meetings of certain types of bodies, such a procedure may assist a desirable ‘tidying up’ of a resolution passed after a prolonged and possibly acrimonious debate; but unless provided for in the rules, the principle applies that no further amendment is possible after an original or substantive motion has been voted on and the result declared: see 10.26.
Rescission of resolutions Meaning of rescission 11.11 To rescind a resolution means to revoke and annul it, and thus cancel its effect. For this to be done, a motion of rescission needs to be moved, seconded, debated and voted on in the normal way. To amount to rescission of the previous motion, the subsequent motion must reverse in substance the previous motion considered as a whole. Accordingly, partial revocation of a resolution is not possible: R v Mitcham City Corp; Ex parte G J Coles & Co Ltd (1980) 26 SASR 74; 44 LGRA 224. [page 147]
Where rescission is desirable 11.12 Occasions may arise where it is desirable or even necessary that an earlier decision should be so greatly altered as to be tantamount to a contrary resolution. In such a case, it may be preferable for the first resolution to be rescinded and a fresh one passed. Alternatively, through misunderstanding, obscurity, error or negligence, the wording of a resolution as recorded in the minutes may indicate or imply something quite different from the actual sentiment and intention of the motion that became the resolution. Rescission of such a resolution and the passing of a fresh one may be preferable to passing a subsequent resolution that interprets, explains and adds to the misleading one. Most significantly, if an invalid resolution happens to be passed of a type
beyond a body’s legal powers, in conflict with its constitution, or contrary to a statutory provision, such a resolution may, by a subsequent resolution, be either rescinded or ‘declared null and void’. On the other hand, if motions are carried at a meeting not validly constituted (for example, for lack of a quorum), these may be transformed into valid resolutions by such being moved and passed at a later, properly constituted meeting without any question arising as to whether the earlier ‘decisions’ should be rescinded — they are not valid resolutions capable of being rescinded: see further 5.1.
Notice of rescission motion 11.13 Upon a notice of motion to rescind a resolution being received by the secretary, all action to give effect to the resolution should be deferred immediately. Initially, the notice of motion may be given orally, either at the meeting at which the resolution was passed or subsequently, as a preliminary to a notice in writing. The latter should be insisted on as quickly as possible. Although notice of a motion to rescind a resolution may delay, obstruct and frustrate the intention of the majority at the meeting, and in some circumstances make the resolution of no avail, it is the duty of executive officers to suspend action upon learning of such notice, so that the matter may be properly determined by the body itself.
Form of motion 11.14 A motion of rescission takes the following form: ‘That the resolution regarding (or authorising, or appointing, and so on) … passed at the meeting held on … and recorded in minute no … be rescinded.’ When the motion is put to the vote, the Chair should state the insertion of the words ‘and is hereby’ immediately before ‘rescinded’. [page 148]
Rescission at same meeting? 11.15 As a general rule, a resolution cannot be rescinded at the same meeting at which it is passed, nor at an adjournment of that meeting, which is in fact a continuation of it: see 13.14. The basis for this principle is that, as a resolution is the considered judgment of a meeting on a particular matter, it may not therefore be brought into question again nor reopened by a later motion at the same meeting.
From a practical point of view, neither the unimpeachable nature and authentic function of meetings nor orderly administration would be possible if firm decisions were able to be cancelled later in the same meeting, perhaps after the departure of some people or the arrival of others. However, perhaps with a view to averting the complexity usually associated with procedures for rescission, the standing orders of some bodies provide that it is allowable for a meeting to receive a motion that reconsideration be given to a resolution passed earlier at that meeting; and if such a motion is carried, the meeting will then give renewed consideration to the motion that resulted in the particular resolution, in the same way as if that motion had not been carried.
Rescission at later meeting 11.16 However, in general, but with provisos, it is possible for a resolution to be rescinded at a later meeting. There may be good reasons for this to occur: unforeseen circumstances may have arisen to justify a reversal of the decision or a consequence of the decision may be undue expense or inconvenience. Rescission is not possible where the resolution has been fulfilled, that is, a decision is not able to be revoked after it has been put into force and given effect to in such a way that work has been undertaken, persons appointed to positions, or a decision embodied in the resolution communicated to another party that has acted on it. Hence, where a municipal council had passed a resolution granting permission to the owner of land to subdivide it, and the owner had incurred expense in complying with the requirements of the council, the purported rescission of the resolution was ineffective: Ex parte Wright; Re Concord Municipal Council (1925) 7 LGR 79; see also Ex parte Forssberg; Re Warringah Shire Council (1927) 27 SR (NSW) 200. However, where a municipal council approved a plan for subdivision, but rescinded the approval before any notification had been given to the applicant, it was held that the council had acted within its powers in rescinding the approval: Ex parte Renouf (1924) 24 SR (NSW) 463; 7 LGR 37. There is a useful analysis of the early New South Wales local government cases in Shanahan v Strathfield [page 149] Municipal Council [1973] 2 NSWLR 740 at 744; 28 LGRA 218 at 222, where Street CJ in Eq held: Running throughout this line of cases, is the requirement of a decision, and a communication of that decision, by a council before approval such as is here under consideration passes beyond the
subsequent control of the council, whether by way of rescission or alteration. And equally running throughout that line of cases is the necessity for the communication of the approval to have some formal character as being authenticated on behalf of the council. Admittedly it need not be under the seal of the council. But clearly enough it must be more than that which took place in the present case, namely a mere informal ascertainment by the second plaintiff, an alderman of the council, of what had taken place in the council meeting during his absence. I consider, accordingly, that the decision by this council that the building approval be granted had not gone beyond the recall of the council, in that it had not been the subject of notice to the applicants so as to tie the council’s hands.
In a more recent case, where a resolution passed by a municipal council to use land for park and recreation purposes had been acted upon or implemented for some 20 years, the council could not subsequently purport to rescind the resolution: Keough v Burnside City Corp (1992) 75 LGRA 163. Some decisions are by their very nature self-executing. So, for example, the courts have held that where directors are elected by resolution, the power to rescind resolutions does not include a power to rescind their election: Aberfeldie Gold Mining Co v Walters (1876) 2 VLR (E) 116; see also Schaw v Wekey (1870) 1 VLR (L) 205; 1 AJR 161. More recently it was held that the power to ‘reconsider’ a matter does not extend to rescinding a resolution to appoint a person to a casual vacancy: Ward v Williams (1982) 4 IR 78.
Procedure for rescission 11.17 It is usual for standing orders to contain a procedure to deal with rescission, often in detail. Such provisions are mainly designed in conformity with the customary rules of debate and at the same time to guard against obstructive or nuisance tactics, while enabling a rescission motion to be moved where it has numerous supporters or where circumstances have materially changed. Procedures are sometimes based on those used in parliament. Where specific provisions and a procedure are contained in rules or standing orders with regard to rescinding resolutions, these must be observed precisely; failure to do so will invalidate the rescission: R v Tralee Urban District Council [1913] 2 IR 59. If a body has not adopted standing orders or if these do not refer to rescission, that body, including a committee or board to which executive [page 150] authority has been delegated, will still have the power to rescind resolutions it passed previously. This is on the principle that the power a body possesses to decide to do something similarly enables it to reverse that decision.
In the absence of a defined procedure, the secretary should ensure that an inexperienced Chair has clear guidance should a rescission motion be encountered. The difficulties surrounding rescission are a good illustration of the benefits bodies may derive from adopting standing orders for the conduct of their meetings.
Principles to apply 11.18 The same principles regarding a rescission procedure apply whether the resolution in question was passed at a general meeting, or at a board or committee meeting. However, depending on the substance and significance of the particular resolution and the breadth of its effect, a decision made by a management committee or board of directors may usually be revoked with less formality and more expeditiously than a resolution of a general assembly. General principles to be followed in the absence of specific standing orders are: 1. A rescission motion should not be moved at the meeting at which the resolution was passed. 2. Notice of any such motion should be given in writing. 3. A notice of motion to rescind a specified resolution should be clearly referred to as such and fully stated in the notice of and agenda of the relevant meeting. If not a regular meeting, this should be convened for a time and at a place convenient to those entitled to attend. 4. A rescission motion may not be accepted by the Chair if the relevant resolution has been put into effect in a material way. 5. A rescission motion that is accepted should be dealt with according to the normal procedure for motions. 6. Preferably, following the Chair’s declaration of the result of the voting, the meeting should pass an associated resolution to the effect that a further motion to rescind either the original resolution (if the rescission motion was not carried) or the resolution to rescind (if it was carried), as the case may be, may not be moved for a suitable, reasonably lengthy period except by notice of motion in writing, unless by the unanimous consent of all present at the relevant meeting. 7. The proceedings should be recorded in the minutes; either the resolution of rescission (with a concise explanation if the meeting or the Chair decides this, so that reasons will be known in the future) or a minute that the motion of rescission, as recorded, was not carried. (No alteration, erasure or insertion is, of course, to be made in the
[page 151] earlier minutes that recorded the original resolution; but a note should be entered in the margin as a warning to guard against it being acted on.) 8. If the rescission motion is carried, this fact with suitable explanation should be communicated to all members and any other persons, organisations or departments affected.
Examples of appropriate rules 11.19 The suitability of provisions about rescission varies according to the nature of the body concerned. When standing orders are being drafted, consideration should be given to the principles set out in 11.18 and also others such as the following (some being alternatives) that have been adopted by certain organisations. This is a selection of specimens as a basis for drafting rules: 1. A notice of motion to rescind a resolution is acceptable only if signed by a specified number of members. 2. A special (or extraordinary) meeting needs to be convened to consider any rescission motion. 3. A motion to rescind is not permissible within a specified period (for example, six months) or for a stated number of meetings after the relevant resolution is passed unless a notice of motion to rescind is signed by a specified number or proportion of members. 4. A rescission motion is deemed to be carried only if a specified majority (that is, a proportion) of those present and voting (or of those present or of the whole membership) vote in favour. (The question of whether the Chair has a casting vote in such a rule should be clearly stated.)
Rescission of rescission 11.20 If a resolution is rescinded, and later the rescinding resolution is itself rescinded, the original resolution is restored: Weir v Fermanagh County Council [1913] 1 IR 63.
Recommittal 11.21 To cater for a situation where, following the Chair’s declaration of the result of a vote, one or more persons immediately claim that they were confused
and misunderstood what they were voting for, the standing orders of some bodies provide that: 1. It is permissible at the discretion of the Chair, after a vote has been taken on a motion and a result declared by the Chair, for an immediate motion to be received that the motion be recommitted (that is, put to the vote a second time). [page 152] 2. The question of whether or not such a motion is acceptable is for the sole decision of the Chair after hearing reasons for the proposed motion. 3. The result of a recommitted motion as declared by the Chair shall be final and conclusive.
Legal advice 11.22 Where resolutions, if passed, will have important legal significance, as with many of those dealt with at general meetings of companies and other corporations, they should normally be drafted by, or in conjunction with, the body’s legal advisers. This should be done prior to including or referring to them in the notice of meeting. Particular care is needed in the drafting of special resolutions, both because the subject matter is invariably important and because of doubt about the extent to which they may be amended: see 10.20.
Further reading 11.23 Information about the craft of drafting resolutions for particular purposes and of writing minutes is to be found in books devoted to the subject. They cover a wide range of practical and legal aspects of the matter. Some provide specimens of resolutions suitable to be utilised in connection with meetings of companies and other bodies, particularly those whose activities are regulated by a statute.
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12 Procedural Motions Introduction 12.1 There are a number of motions that may be moved with the intention of interrupting a debate that is proceeding. In general, such motions are moved with one of three objectives: (1) to bring about an immediate vote to achieve a prompt decision on the issue; (2) to prevent a vote and thereby shelve the matter; or (3) to postpone a decision for the time being. The proper use of these motions can expedite the transaction of business in an orderly way. Their strategic use, which may include misuse, can obstruct the intention of a proposal or the purpose for which a meeting has been called. The intention of the mover may be to interfere with the passage of debate continuing to a point where all or sufficient aspects of the issue have been raised for it to be appropriate for the vote to be taken. These motions fall into the category of ‘procedural motions’. A number of them are designated ‘formal motions’. Certain of them, depending on their main purpose, are styled ‘dilatory motions’. At times, each of these terms tends to be used to denote any or all motions of this general type. However, for clarity of understanding it is useful to distinguish between them and to ascribe a distinct meaning to each.
‘Procedural motion’ 12.2 A ‘procedural motion’ denotes a motion solely concerned with procedure at, and conduct of, a meeting. Such motions refer to not only those that interrupt or close a debate, but also others that affect the way in which the proceedings are conducted: for example, motions designed to change the sequence of items in the agenda or to insert or delete an item; a motion that a certain person be the next speaker; or that the meeting go into committee.
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‘Formal motion’ 12.3 A ‘formal motion’ is the designation given to certain procedural motions that have gained acceptance over a long period as to wording, purpose, effect and usage. This term uses ‘formal’ in its more basic meaning of ‘pertaining to a form (that is, a definite shape, an established mould); done in a way that accords with convention, namely, a set method of procedure’; and not in the secondary meaning that has uses in connection with meetings of ‘ceremonial, with an implication of being done mainly or merely as a matter of form’. The procedures for dealing with each of the formal motions are well recognised (despite a lack of complete unanimity of opinion) because of general uniformity and long acceptance throughout countries with legal and judicial systems based on British practices. They are regarded as having the authority of an unwritten rule, unless individual rules modify or exclude them, and may be followed during meetings with confidence that adherence to them as standard practice should provide convincing defence against a challenge as to the correctness of the procedures.
‘Dilatory motion’ 12.4 A ‘dilatory motion’ is one whose character and purpose is to delay, shelve or frustrate a motion, or to obstruct or prevent the meeting from making a decision about it. The descriptive term ‘suspensive motion’ is sometimes applied to those procedural motions whose aim is to suspend the particular debate with which the meeting is currently occupied.
Types of formal motion 12.5 The recognised formal motions are: 1. 2. 3. 4.
The Closure, namely, ‘That the question be now put.’ The Previous Question, namely, ‘That the question be not now put.’ ‘That the meeting do proceed to the next business.’ ‘That the matter do lie on the table.’
5. ‘That the debate be adjourned …’ 6. ‘That the meeting be adjourned …’ 7. ‘That the Chair leave the chair.’ While several of these are to be regarded as dilatory motions, the intention of a particular motion needs to be taken into account. For instance, a motion to adjourn the debate would not be considered a dilatory motion where the meeting is being adjourned to a specified future date in order to facilitate the transaction of the business involved. [page 155]
Basis of procedure 12.6 The formal motions have their basis in parliamentary procedures, common law and other longstanding practice that in some cases has been endorsed by judicial observations. They are part of the accepted law that guides the orderly dispatch of business at meetings and the conduct of Chairs and others who participate, unless different procedures or requirements are stipulated in the body’s own rules or in a relevant statute. Procedures for dealing with formal motions are seldom referred to in the constitutions of companies or other organisations or their rules, except where a body has formulated and adopted standing orders for the conduct of its meetings. Chairs look to the recognised procedures for guidance. Accordingly, there is value in an understanding of the nature of the formal motions and an appreciation of the particular purpose of each, and also of other procedural motions that occur. These latter motions are not in the category of recognised formal motions. Accordingly, their associated procedures, although to an extent customary and in some cases derived from parliamentary procedure, are not accorded wellrecognised authority: see 12.15. With formal motions, however, if a Chair departs from the recognised procedures, this may give rise to a legal challenge, and the possibility that subsequent decisions will be put at risk. The principle that places control of the proceedings of a meeting in the hands of the elected or appointed Chair so long as the meeting desires that person to be Chair, also places a duty on the Chair to conduct those proceedings in accordance with the rules of the body and recognised procedures: see further 6.5. Where rules or standing orders specify a procedure for certain of the formal motions but not all, wisdom is called for in adapting the recognised procedures
for the others, if they are moved, so that they are in keeping with the spirit reflected in the standing orders both specifically and generally.
Procedure generally 12.7 The proposing of these various motions that interrupt a debate is governed by the same general principle as the proposing of amendments during the debate. That is, that they may not be moved (or seconded, where this is required) by a person who has moved, seconded or spoken to the substantive motion or an amendment to it. On this principle, a person may not move more than one formal motion during the debate on a particular question. However, each procedural motion is a new and independent motion, and any person may speak to it in those instances where debate is permissible. No amendment is allowable to any of the formal motions, except that, as regards the two motions for adjournment, amendment is possible in respect of the time, date and place of the adjourned debate or meeting. [page 156] There is no right of reply to any of the formal motions. If a formal motion is lost and discussion is resumed on the main question, the mover and seconder of that formal motion are taken to have made their speeches, and may not speak again on the question. The Chair has discretion in deciding whether to accept the closure and the previous question, but needs to accept the other formal motions. The previous question needs to be seconded, but the others do not require seconding, although there is opinion that a seconder is warranted for the two motions to adjourn. The closure may be moved during a speech (that is, may interrupt it), but the others may be moved only at the close of a speech. When accepted by the Chair, each of the formal motions supersedes the existing discussion, which is suspended; the formal motion must be put to the vote before the meeting proceeds with discussion on any other matter. No debate is permitted on the closure or a motion that the meeting proceed to the next business, but is allowed on the others. Certain of the formal motions may be moved while certain other formal motions are being debated. It is important to recognise that the rules or standing orders of a particular body
may contain provisions that specify the procedures to be carried out in the event of certain formal motions being moved. Accordingly, the procedures and requirements regarding formal and other procedural motions as explained in this chapter are to be regarded as subject to the rules of the body not providing otherwise. When the vote is to be taken on a formal or any other procedural motion, the Chair should ensure that everyone understands exactly what the motion is that is about to be voted on, and what would be the alternative effects of it being carried or lost. In the case of certain formal motions, the immediately subsequent stage in the debate should also be made clear before the formal motion is put to the vote.
The closure 12.8 This motion is usually in the form, ‘I move that the question be now put’. It is sometimes stated as ‘I move that the vote be now taken’, ‘I move the closure’ or ‘I move the question’. It is not usual for any explanatory or supporting speech to be made in moving this motion. The closure is moved with a view to putting an end to the discussion and forcing an immediate vote. It is designed to bring about a decision without further delay on a question about which there has been adequate discussion. The closure provides a means of overcoming obstruction and undue delay brought about by prolonged speeches by a minority made in an attempt to prevent a vote being taken. [page 157] The closure as a procedural measure was introduced into the House of Commons by Prime Minister Gladstone in 1882 as a progressive measure to overcome difficulties in transacting the business of parliament because of ‘the disposition either of the minority of the House or of individuals to resist the prevailing will of the House otherwise than by argument’. The closure may be moved while another person (apart from the Chair) is speaking. In accordance with accepted procedure, it is the only formal motion that may be made as an interruption to a speech by another person. This is not to say that a motion ‘That the speaker be no longer heard’ may not be moved during a speech. However, the latter is not considered to be a ‘formal motion’. Hence, unless such a motion is promptly seconded, a Chair may prefer to decline
to accept it without feeling the need to observe procedural rules applying in the case of formal motions. As explained in Chapter 9, a ‘point of order’ by which a speech may be interrupted is not a motion. The Chair may exercise discretion as to whether to accept the closure motion; that decision is not open to dissent or challenge. In making a decision, which needs to be immediate, the Chair needs to consider whether the widely accepted procedure that enables the closure to be moved is being abused due to an intention of imposing the wishes of the majority on the meeting without regard to the rights of the minority to ventilate their arguments. It is within the authority and powers of a Chair to accept the closure motion after the views and arguments of the minority have had a reasonable airing, and, if a majority of votes favour the closure motion, to terminate discussion on the question before the meeting and put it to the vote: Wall v London & Northern Assets Corp [1898] 2 Ch 469. However, if the closure is accepted and carried before there has been a proper opportunity to discuss the substantive motion, the latter will not be validly carried: Gordon v Carroll (1975) 27 FLR 129. The closure may be moved by (and only by) a person who has not moved, seconded or spoken to the original motion or an amendment to it. The closure motion does not need to be seconded. It may be moved during discussion on an original motion, a substantive motion or an amendment. If accepted by the Chair, it is put to the vote immediately. There is no discussion nor questions asked before the Chair puts the closure motion to the vote. However, the closure motion is superseded by a motion for the adjournment of the meeting if this is moved immediately and seconded. [page 158] On the other hand, the closure motion supersedes a motion for the adjournment of the meeting if it is moved before the motion to adjourn is seconded. If the closure motion is carried where it is moved during discussion on an amendment, that amendment is put to the vote immediately. Then discussion reverts to the original or substantive motion. If the closure motion is carried on being moved during discussion on an original or substantive motion, the mover of the original motion is immediately allowed
to exercise the right of reply if wishing to do so (but see 10.25), and then the main motion is put to the vote forthwith. If the closure motion is lost when voted on, the debate resumes at the point where it was before the interruption. It is open to other members (eligible because they have not spoken to the motion or an amendment) to move the closure again after a reasonable amount of further discussion. If the closure is moved immediately after an amendment has been moved, but before being seconded, the closure supersedes that embryo amendment and relates to the original or substantive motion. If a formal or other procedural motion is already being considered when the closure is moved, it applies to that procedural motion, which, if the closure is carried, must be put to the vote immediately. If the closure has been moved and carried on an amendment, it is acceptable procedure for the closure to be moved immediately on the main motion as soon as debate resumes on the original or substantive motion. The Chair, as in all cases, has discretion as to whether to accept such a closure motion. It is open to Chairs (unless the body has standing orders to the contrary) to, in effect, themselves apply the closure by deciding and announcing that a vote will be taken immediately. There is some disagreement among authorities about sundry aspects of the closure, especially as to: (1) whether anyone at all may move it, whether or not that person has moved, seconded or already spoken to the motion under discussion; (2) whether it needs to be seconded; (3) whether or not a Chair may exercise discretion and decline to accept the motion; (4) whether it applies to the main question or only to the amendment, when moved during discussion on the latter; and (5) whether the mover of the original motion still has a right of reply in the event of the closure being carried. Viewpoints on these matters vary because the procedures and requirements differ in the standing orders that parliaments and prominent organisations have codified and published, being largely based on traditional practices during meetings and debates of their own bodies. This lack of agreement indicates the wisdom of certain aspects of the closure being specified in any rules that [page 159] a body draws up for the conduct of meetings. It has been noted that standing orders frequently give a Chair discretion as to whether to accept the closure
motion, and in some cases provide that the closure motion, if lost, must not be moved again for a specified period during continuation of the same debate; but other aspects are not usually referred to. There are two methods of closure normally confined to parliamentary debates. They are known as the ‘guillotine closure’ and the ‘kangaroo closure’. Each could have its uses in meetings of other organisations in appropriate circumstances, and has been introduced in some bodies. However, authorities agree that a meeting or its Chair may decide to apply either of these forms of closure only if the body’s rules or standing orders specifically provide for it.
Guillotine closure 12.9 Under this method of closure, the House, at the outset or during a debate on a Bill, agrees to allot stipulated periods of time to specified portions of the Bill. Thus, the House establishes a timetable for the debate on the entire or remainder of a Bill that, for instance, may be designed to amend numerous sections of an existing Act or may be introducing new legislation that has already been subjected to much explanation and discussion. Upon the expiry of each such period of time, the debate automatically ceases regardless of the stage of discussion. The vote is then taken immediately on the whole of the portion of the Bill allotted to that period of time, including any amendments to individual clauses. The Speaker has no discretion and must put all the specified clauses to the vote, although some of them may be ‘cut off ’ from — that is, voted for without — debate. The term ‘guillotine’ as a method of closure of debate came into use in the House of Commons in 1893, slightly more than a century after the national assembly in France introduced the apparatus in 1789 for more grisly purposes at the suggestion of physician Joseph Guillotin. This method of closure operates in the House of Commons and the parliaments in Australia and some other countries. An example of regulations governing its use, including a restricted time for speeches, is to be found in Standing Order 92 of the House of Representatives of the Commonwealth. In meetings of larger organisations, where specifically provided for in rules or standing orders, this procedure at times may assist the efficient dispatch of business in dealing with a series of interrelated motions or a number of recommendations contained in a report.
Kangaroo closure 12.10 This is a form of closure sometimes applied during the proceedings of parliamentary committees. It is useful where a committee is dealing
[page 160] with a number of proposals listed as amendments to a Bill or draft legislation. Under this method, committee Chairs are authorised to select those amendments that in their view justify discussion, and to ‘hop over’ and exclude others they decide do not warrant consideration, as being unimportant, repetitive, irrelevant, frivolous or perhaps merely obstructive. Because this procedure omits some amendments by jumping over them, it is appropriately called the ‘kangaroo closure’, a term that first came into use in 1913 in the House of Commons. In the conduct of meetings generally, some benefit may accrue from a limited use of this method of closure if the rules or standing orders of the body specifically provide for it. However, great care would be needed by the Chair to ensure that amendments reflecting the interests of some sections of the membership of the organisation were not jumped over unduly as compared with amendments relating to viewpoints of other groups, merely on the grounds of relative unimportance. In addition to jumping over amendments, a Chair may group or ‘star’ two or more amendments that deal with similar subject matter or policy and thus quicken the proceedings.
The previous question 12.11 The wording of this motion is: ‘I move that the question be not now put’, or sometimes it is merely ‘I move the previous question’. It is a device that came into use as a parliamentary procedure where its object was: … to withhold a motion from the vote, but without such interruption to the course of business as is caused by motions for the adjournment of the meeting or the debate. Direct opposition, though in an indirect way, being the intention of the ‘previous question’, its proposal does not debar advocates or opponents, during the debate that ensues, from entering fully into the merits or demerits of the motion on which the ‘previous question’ has been moved: Palgrave’s The Chairman’s Handbook, 24th ed, Dent, London, 1964, p. 43.
It is a rare example of a motion being expressed in the negative. The previous question derives its curious name from the intention of the mover of this voting device, which came into use in parliament in England in the seventeenth century at the time of the Civil War and the Protectorate. It was introduced for the purpose of restricting debate, and avoiding the need to vote on delicate, potentially injurious or diplomatic matters relating to personages of high standing. When first used, the form of the motion was ‘That the main question be put’,
which was moved in circumstances where the mover’s objective and expectancy were that the majority would cast a vote in the negative. Thus, the motion raised a previous (that is, prior or preliminary) question to be [page 161] decided, which was that ‘before determining how we shall vote on the main question, let us decide whether we shall vote on it at all, or whether we shall remove it from the scope of discussion of this meeting’. The intention of this previous question was to seek a negative answer, with the mover and seconder voting against their own motion. The original purpose of the previous question was that the main question would be suppressed for the complete parliamentary session. However, with a view to the same formal motion being used to restrain consideration of the main question during merely the current day, the word ‘now’ was introduced, and a modified form was evolved, namely, ‘that the main question be now put’. Consequent to this new wording, the word ‘now’ attracted an emphasis; and if the motion happened to be carried (instead of being defeated as the mover had intended) a procedure developed by which the vote was taken immediately (that is, ‘now’) on the main question. In the nineteenth century, a change was made to the wording of the motion as used in the House of Commons. The word ‘not’ was introduced, based on an early recorded precedent for this. The motion thus became ‘That the question be not now put’. The new form overcame the perplexing situation whereby the mover and seconder voted against their own motion, and also the confusion and misunderstanding that arose through the similarity with the wording of the closure motion, which, of course, was moved with a different intention. This is the wording used in the British Parliament, and is the recognised wording of the previous question as applied to meetings procedure generally. However, it may be noted that the earlier wording — that is, ‘That the question be now put’ — is the form in which the previous question continues to be moved in a number of parliaments. An example is found in the standing orders of the Legislative Assembly of New South Wales: 158. Any question may be superseded by a motion ‘That that question be now put’. This motion may not be moved in Committee of the Whole. 159. If the motion for the previous question is resolved: (1) In the affirmative — the original question shall be put forthwith without amendment or debate. (2) In the negative — the House shall proceed to the next item of business on the Business Paper.
Objectives in moving the previous question vary according to circumstances.
The prime purpose, as stated above, is to dispose of a motion being debated without it being put to the vote. However, as explained below, regardless of whether the previous question motion is carried or lost, no further amendment to the main question is permitted, and debate on the main question is limited to what may occur during discussion on the formal motion itself. Therefore, a reason why the mover selects [page 162] this particular formal motion is to forestall the moving of a compromise amendment that might be acceptable to the majority, in the event of which a desire by a minority for the complete defeat of the main motion would be thwarted. There are practical reasons for the previous question being moved at a meeting, some of which are: it may be desired to prevent the feeling of the meeting being tested for one reason or another: perhaps the issue has been raised at an unpropitious or inopportune time; it enables a motion to be shelved without its opponents needing to disclose who they are; it may not be expedient or in the best interests of the body for any decision at all to be made until later; it may seem beneficial to get rid of, or at least postpone to another day, a discussion that has become embarrassing to certain members, or become acrimonious with little chance of a compromise decision being achieved; the majority may prefer to dispose of a motion without the harshness of its overwhelming defeat where the mover declines to agree to a generally expressed wish that the motion be withdrawn. The Chair may exercise discretion as to whether to accept the previous question motion; that decision is not open to dissent or challenge. It should be noted that at a meeting required by statute or the body’s own rules to do certain things — for example, elect office-bearers, appoint an auditor or receive an annual report and accounts — this formal motion, if moved on such items and not rejected by the Chair, would prevent the meeting from performing its legal obligations. In such circumstances, the Chair should refuse to accept the motion. The previous question motion may not be moved while an amendment is being debated, but only while an original or substantive motion is before the meeting.
However, if, while an amendment is being discussed, a member foreshadows (that is, indicates to the Chair) that he or she proposes to move the previous question, this formal motion, if accepted by the Chair, must be accepted as soon as that amendment has been disposed of. The meeting then deals immediately with the previous question motion, and all further proposed amendments are superseded, even though they are listed on the agenda or have been foreshadowed by members present. If the previous question motion is carried, the main question — that is, the original or substantive motion — accordingly may not be put to the meeting, and all discussion on it automatically ceases. The whole question has been disposed of for that meeting. In declaring the result of the voting, the Chair’s words would be to the effect: ‘The ayes have it, the formal [page 163] motion is carried, and the main motion lapses’. The main motion may be revived at a later meeting (having regard to any requirements in the body’s standing orders) if properly placed on the agenda, or if notice of motion is given; it would be treated as a fresh motion and any person may speak to it. If the previous question motion is lost, this has the effect of a double negative, and accordingly the meeting is deemed to have decided ‘That the question be now put’. Therefore, the main question is put to the vote forthwith. No further debate is permitted. However, just prior to the main question being voted on, the mover of the original motion is allowed the right of reply if wishing to exercise it; but see 10.25. Thus, an important characteristic of this formal motion is that the main motion is not able to be amended in any way after the previous question has been moved and accepted by the Chair. The previous question may be moved and seconded by any person who has not moved, seconded or spoken to the original motion or an amendment. It may not be moved while another person is speaking, but only at the close of a speech. The previous question motion needs to be seconded. The previous question motion may not be amended. This formal motion may be debated, and the discussion may deal with the subject matter of the main motion. Such discussion is allowable under the recognised procedures on the basis that, as explained above, there will be no further opportunity to discuss the main question regardless of whether the
previous question motion is carried or lost. This is a significant factor as regards this formal motion because the previous question motion, when accepted by the Chair, is a new, distinct motion; therefore, anyone at all can speak to it, although having already spoken to the main motion. However, the mover of the previous question does not have a right of reply. The closure motion may be moved during the debate on the previous question motion. If accepted by the Chair, the closure applies to the previous question: if the closure is carried, the previous question motion is put to the vote immediately; then, if the previous question motion is lost, the main motion is voted on immediately after its mover’s right of reply has been exercised. A motion for the adjournment of the meeting or for the adjournment of the debate supersedes the previous question motion, further discussion on which is deferred until the adjournment motion is dealt with. If a motion to adjourn the meeting is carried, the discussion on the previous question motion is resumed immediately the adjourned meeting reassembles. If a motion to adjourn the debate is carried, the meeting proceeds to deal with the next item on the agenda; the time for resumption of discussion on [page 164] the previous question motion would be dependent on the terms of the adjournment resolution. The previous question may not be moved while another formal motion is before the meeting; nor would it normally be practicable for a Chair to accept this motion while any type of procedural motion is being dealt with. The previous question may not be moved during the election of the Chair of a meeting. The previous question should not be moved during meetings of committees. This is not permitted in committee proceedings under parliamentary procedure from which this formal motion is derived. In principle, committees are established to make decisions and achieve progressive accomplishment, being responsible for this to the body that appointed them. The previous question motion has connotations not necessarily in the interests of the delegated role inherent in committee work.
To proceed to the next business 12.12 This motion is usually in the form, ‘I move that the meeting do now proceed to the next business’ or words to that effect. Normally, no speech is
made when moving the motion. It may be moved during discussion on an original or substantive motion, or on an amendment. It may be moved at any time during the debate, but not while another person is making a speech. This is an example of what are styled as ‘dilatory’ motions when moved in relation to an original or substantive motion. If it is carried, it has the effect of putting the whole matter to one side until raised at a later meeting, rather than of disposing of it altogether. However, this motion is also regarded as a useful way to terminate a timeconsuming discussion of an insignificant, or possibly delaying, nature. It is also seen as a diplomatic way to bring to an end a discussion into which undesirable features are tending to creep, perhaps of a factional or personal type. This motion does not need to be seconded. The mover may not be a person who has moved, seconded or spoken in connection with the main motion or an amendment. The Chair must accept the motion. It may not be amended. There is to be no debate or discussion. The motion is to be voted on immediately. The mover has no right of reply, for which there is no scope in any case. However, it is superseded by a motion to adjourn the meeting, which, if moved immediately, must be dealt with first. The motion may be moved after the closure or the previous question motions have been moved, so long as it is prior to them being put to the [page 165] vote. In such a case, it supersedes either of those formal motions, and a vote on the ‘proceed to the next business’ motion is to be taken immediately. If the motion is moved and carried on an original or substantive motion, the item is dropped entirely for that meeting. However, it is shelved rather than disposed of, and, having regard to any requirements in standing orders, may be brought up at a later meeting, if properly included in its agenda, or if notice of motion is given. If the motion is moved and carried on an amendment, the ‘next business’ to which the meeting proceeds is the resumption of the discussion on the original or substantive motion. The Chair should make this clear to the meeting before putting the ‘next business’ motion to the vote, especially as differing views exist
about this. A further amendment in terms similar to what has been superseded — that is, in effect discarded by the meeting — may not be accepted by the Chair. If the motion is lost, the debate resumes at the point at which it was interrupted. The same formal motion should not be moved again during the resumption of the debate until after a suitable period of time. Where standing orders do not cover the matter, the Chair has a discretion in assessing what is an appropriate lapse of time. It will be noted that, while the purpose of the ‘proceed to the next business’ motion is to an extent similar to the objective of the previous question, there are three differences: 1. this motion may be moved during discussion on an amendment, whereas the previous question may not; 2. the Chair must accept this motion, whereas there is a discretion as to accepting the previous question; and 3. if this motion is lost, discussion on the main question is resumed, whereas, regardless of whether the previous question motion is carried or lost, there is no further debate on the main motion. Accordingly, from a practical and diplomatic point of view, in companies and other organisations this motion tends to be preferred to the previous question in cases where the mover feels confident that the motion will have the support of the majority of those likely to exercise their vote on it.
The matter (or question) to lie on the table 12.13 This motion takes the form, ‘I move that the matter (or question) lie on the table’ or ‘I move that the communication (or report, or other matter) be laid on the table’. It is another of the ‘dilatory’ motions. Its purpose, and effect if carried, are to defer consideration of the particular question, correspondence or report until (and if ) a further procedural motion is carried ‘to take the matter from the table’, either (and this is more frequent) at a subsequent meeting, [page 166] or later at the same meeting. This latter possibility draws attention to a difference between this formal motion and the ‘proceed to the next business’ motion,
which, if carried, precludes the main question being discussed again at the same meeting. If the motion to take the matter from the table is lost, if and when it is moved at a later stage, the matter continues ‘to lie on the table’ indefinitely. Thus, it remains competent for a subsequent meeting to decide to deal with it if and when this becomes desirable. There could be a variety of good reasons for postponing consideration of a report or letter or a question that has arisen. For instance, the meeting may consider it preferable to await the turn of events, or beneficial to wait for the return of an absent knowledgeable member, or it may appear on the surface that no decision or action will be necessary but that a ‘wait and see’ policy may be wise. This motion is not to specify a date or period of time. If the meeting desires to nominate a particular date for further consideration of the matter, the appropriate formal motion is for the adjournment of the debate until a stipulated date or for a specified period. It is more usual for this formal motion to be moved before the meeting has given any real consideration to the particular question or correspondence. However, it may be moved during some stage of the debate. If the motion is carried, the normal procedure applies when and if the matter is taken from the table; thus, persons who have already spoken to the main motion or any amendment to it may not speak again, and the mover of the original motion continues to retain the right of reply. This formal motion may be moved at any time during the debate, but not while another person ‘has the floor’; that is, it may only be moved at the close of a speech. It may be moved during discussion on an amendment. If it is carried in such a case, the whole main question is laid on the table; upon any resumption, the immediate item to be dealt with would be the amendment being discussed when the formal motion interrupted the debate. This motion does not need to be seconded. It may be moved by any person who has not moved, seconded or spoken to the substantive motion or an amendment. It may not be moved after the Chair has accepted a formal motion for the closure, the previous question or that the meeting proceed to the next business. The Chair must accept this formal motion. It may not be amended. It may not be debated, nor is any further debate permitted on the substantive motion before the meeting. However, it is regarded as acceptable practice to allow the mover of the original motion to exercise the right of reply, if
[page 167] wishing to do so, immediately before the formal motion is put to the vote. The mover of the formal motion does not have a right of reply. If the formal motion is lost, discussion is resumed. This formal motion may not be moved more than once during the debate on the original or substantive motion, nor more than once during discussion on an individual amendment. If the formal motion is carried, it is not unusual for the person who moved it to be permitted to open or reopen the debate if and when the matter is taken from the table. The procedural motion ‘to take from the table’ may be moved and seconded by anyone regardless of whether he or she has spoken to the main motion. If and when moved, it may not be amended nor debated, but is put to the vote immediately.
Adjournment motions 12.14 The other three formal motions, which relate to adjournment of the debate and the meeting, and ‘That the Chair leave the chair’, are examined in Chapter 13, which deals generally with adjournment.
Other procedural motions 12.15 In addition to the seven formal motions, there are various other procedural motions concerned with the conduct of proceedings and not the substance of the debate. Some general practices have developed in connection with a number of these, although they do not have the level of recognition accorded to the procedures relating to the formal motions. Where these motions are referred to in a body’s rules, a precise procedure is likely to be stated. The following six procedural motions are explained below, together with generally accepted practices: 1. 2. 3. 4. 5. 6.
‘That the motion being debated be withdrawn.’ ‘That the amendment being debated be withdrawn.’ The gag, namely, ‘That the speaker be no longer heard.’ ‘That (a person by name) be now heard.’ ‘That the matter be referred to a committee.’ ‘That the matter be referred back to the committee.’
There are various other motions within this category. Some are considered in
chapters that deal with particular procedures.
Withdrawal of a motion or amendment 12.16 Upon being accepted by the Chair, a motion is the property of the meeting, and may not be withdrawn by the mover unless the meeting permits this. Alternative procedures are possible; for example, a motion or a request. [page 168] Motions designed to effect withdrawal are worded along lines such as ‘That the motion being debated be withdrawn’ and ‘That the amendment being debated be withdrawn’. While an amendment is being debated, only the second of these procedural motions may be accepted by the Chair. If carried, the withdrawal applies only to the amendment. Discussion is then resumed on the original or substantive motion. If an amendment is being debated when the first of the above motions is moved, that amendment would need to be withdrawn (either as above, or by consent to a request as explained below) before the Chair may accept the motion for withdrawal of the main motion. If the first of the above motions is carried when moved during discussion on an original or a substantive motion, the whole question is withdrawn from the agenda and the meeting proceeds with the next item of business. The withdrawn item would be raised at a later meeting only if it is placed on an agenda as new business. These two procedural motions may be moved by any person who has not moved, seconded or spoken on the original motion or an amendment, nor moved or seconded a formal or other procedural motion during the debate. These motions for withdrawal need to be seconded. They may be moved at the close of, but not during, a speech. They may be debated. Any person may speak, as they are new, independent motions. The movers have no right of reply. There is another procedure. Withdrawal may be brought about as follows: prior to a vote being taken on a motion or an amendment to it, the mover may ask to be allowed to withdraw it. It is preferable that the seconder supports the request; otherwise, the Chair may feel that it is pointless to accept the request. The Chair then explains the situation, and invites those present to signify their consent to, or inquires if there is anyone who dissents from, the withdrawal. If no unfavourable voice is forthcoming, this is taken as unanimous agreement, which
is needed. The Chair then announces that the motion is withdrawn. Normally, this would be recorded briefly in the minutes of the meeting. If an amendment is being discussed when a request is made for withdrawal of the original motion, that amendment would need to be withdrawn (by this same procedure) before the Chair may deal with withdrawal of the main motion. If there is not unanimous consent to withdrawal, it is open to an eligible person to move a motion for withdrawal. Following the withdrawal of a main motion, it is competent (subject to standing orders) for an amendment that had been withdrawn prior to being voted on to be then submitted as a fresh, independent motion. [page 169] Unless standing orders provide otherwise, a withdrawn motion may be moved again at the same or a subsequent meeting. A request or motion for withdrawal may arise because a preferable alternative proposal arises during discussion, or because the motion or an amendment had been moved as a result of a misunderstanding. In the first instance, it may be imprudent for the motion to be voted on and lost, and unable to be revived prior to the alternative proposal being debated and voted on. In the latter case, no useful purpose may be served by a vote being taken. The Chair needs to exercise diplomacy in dealing with a motion or request for withdrawal. If the Chair can sense that a large majority would prefer the motion to be withdrawn, rather than put to the vote, it may be very appropriate to accept the motion or request, and leave it to the meeting to make a decision with as little delay as possible. The above unusual procedure that enables a meeting to make a decision without passing a resolution is based on an established procedure of parliament. As expressed in Erskine May’s Treatise on the Law, Privileges, Proceedings and Usage of Parliament, 23rd ed, LexisNexis UK, London, 2004, p 393: A Member who has made a motion can withdraw it only by leave of the House, granted without any dissentient voice. This leave is signified, not upon question but by the Speaker taking the pleasure of the House. He asks, ‘Is it your pleasure that the motion be withdrawn?’ If no one dissents, the Speaker says, ‘Motion by leave withdrawn’. However, if there is any objection, or if a Member rises to continue the debate, the Speaker must put the question at the end of the debate as, even if a dissentient Member no longer objects, the motion can no longer be withdrawn. An amendment can be withdrawn in the same way, but neither a motion nor an amendment can be withdrawn except by the Member who moved it.
The gag 12.17 This motion is usually in the form, ‘I move that the speaker be no longer heard’. It may be moved while a person is actually speaking; if moved, the speaker should stop talking immediately. The Chair has a discretion as to whether to accept this motion. It needs to be seconded. It may not be amended. It may be debated. If this motion is passed, the speaker says nothing further. Unduly lengthy speeches can result in unequal time being available for all sides of a question to be ventilated. Furthermore, an astute debater can dress the same supporting or unfavourable reason in various ways to give it the appearance of several arguments. An alert Chair is able to sense repetitive argument and also the mood of the meeting, and, where appropriate, request longwinded speakers to curtail their remarks, thereby [page 170] averting such a motion and the need for a vote on it, which could be embarrassing.
‘That (a person by name) be now heard’ 12.18 This motion may be moved only when no one is making a speech. It may occur when some other person is rising to get the Chair’s approval, or because of a tactical value if a certain person makes a contribution at a particular stage in the debate, or because the mover believes that the named person has helpful information and opinion through specialist experience. If seconded, the Chair should accept the motion. An amendment to it is possible, but only as to the name of the person. Debate is allowable, but should preferably be avoided. This is not the motion to be moved if it is desired that a person should speak a second time. The procedural motion for that purpose is to the effect that a named person be permitted to make a second speech, perhaps with a reason being expressed, and also, where pertinent, that standing orders be suspended to allow this. A different procedural motion would be needed in relation to a person who is present but is not entitled to speak: the wording would be along lines that the named person be invited to speak.
‘That the matter be referred to a committee’ 12.19 This motion requires a seconder. The mover or seconder may not have moved or seconded the main motion or an amendment or another formal or
procedural motion during the debate. The Chair needs to accept it. It may be debated, but the discussion should be confined to the suitability of committing the matter in this way, having regard to its significance and substance, the timetable for reports and action, the extent of the authority to be delegated, terms of reference and the committee’s personnel. Amendments are acceptable with regard to the committee’s terms of reference and modus operandi. It is a new motion and any person may speak on it. The mover has a right of reply. If this motion is moved and carried during discussion on an amendment or a formal motion, the whole question is referred to the committee, and all discussion on it ceases at that meeting. The subject of committees is dealt with in detail in Chapter 19.
‘That the matter be referred back to the committee’ 12.20 Words such as ‘for further consideration’ may be included. Such a motion, which is designed to suspend discussion on the question, may arise [page 171] where a report, which may contain a recommendation, has been received from a committee. The report may have originated from the committee or been submitted as a result of the matter having been referred to it previously. At the meeting, the report would be introduced by a motion (usually moved by the committee Chair) that it be received, and possibly that it and the recommendations in it be adopted. Various reasons could lead to this procedural motion. Further investigation and information may be desirable, new developments may have occurred, or additional or alternative implications may warrant consideration. It may also be a gentle way by which the main body rejects or at least expresses disagreement with the report, and requests the committee to look at the matter further with a view to submitting a more acceptable proposal. This is a useful procedural motion, and a Chair may exercise discretion in accepting it, regardless of whether the mover has already spoken on the main question. The committee Chair may wish to move it in the light of the debate. The Chair of the meeting may also feel it appropriate to move the motion. It may be debated. It is a new motion, and any person may speak on it, but discussion should be confined as far as possible to the suitability of referring it
back. The effect of this motion, if carried, is to negative the motion, ‘That the report be adopted’, without it being put to the vote. Thus, it is shelved. In these circumstances, it is not appropriate that the mover of either the ‘adoption’ motion or the ‘reference back’ motion should have a right of reply. If the committee’s report arises from a matter that the main body has referred to it, a further report (even if merely an endorsement of the one referred back) needs to be made later, and the item should be included in the agenda of an appropriate meeting. The general matter to which such a report relates remains a responsibility of the main body, which needs to make an eventual decision about it before it can be disposed of. When the committee submits its further report, it should be introduced with a new motion; it becomes fresh business and any person is entitled to speak on it. For a summary of the formal motions designed to bring discussion to a close, see Appendix I.
[page 173]
13 Adjournment Introduction 13.1 The adjournment of a debate or of a meeting is complicated by a number of matters of procedure additional to those that arise because the motions designed to bring about adjournment are among the formal motions discussed in the previous chapter.
Meaning 13.2 The word ‘adjournment’ tends to be used loosely in connection with meetings. Indeed, as a result, the word appears to be in the process of acquiring a further, derived meaning of ‘close, conclude or finish’, whereas a meeting or a debate is properly adjourned when its further proceedings are postponed to some subsequent time or to enable it to reassemble at some other place (to a later hour in the same day, to some future date or indefinitely). The business (of the whole meeting or of the debate respectively) is indeed suspended, but with an intention of deferring it until resumption at a later time. The true meaning of the word ‘adjourn’ lies in its derivation from the French jour (day): a day being nominated for some occurrence. The word has been in use for over five centuries in connection with meetings, with an early meaning of ‘to put off or defer further proceedings to another day’. This in due course gave rise to the added meaning ‘to break off for later resumption’. The word came into use to denote suspension of parliamentary proceedings and court sittings in order to meet elsewhere or at the next or some later session or sitting. This latter usage became common in judicial statements during court proceedings, and in connection with parliamentary committees on the basis that they operate in a continuous way with a committee adjourning from one session to the next.
[page 174] Such uses have led to a misinterpretation and casual misuse as though the word were synonymous with ‘conclude, close or finish’, which is misleading and tends to deprive it of its own precise meaning. When we consider the etymology of the word, such usage is a contradiction in terms. Misuse of the word in connection with meetings has become so frequent that caution is warranted when encountering the phrase ‘the meeting adjourned’, to ensure that the intention of the writer or speaker is properly understood. When a meeting concludes its business and finishes, the correct term is ‘closes’ (not ‘adjourns’), even if some agenda items have not been dealt with and are held over until a later meeting.
Basis of procedure 13.3 The guidance available on adjournment procedures tends to vary. This is because parliamentary practice with regard to adjournment, developed for its own particular purposes, became modified when brought into use for other types of meetings. While some provisions in rules and standing orders were shaped to meet individual philosophies and circumstances, others were merely copied. Differing procedures developed as a consequence. The generally recognised procedures are examined in this chapter. Adjournment of a debate and of a meeting are dealt with in turn. As their background lies in parliamentary practice, reasons for the procedures are clarified by some understanding of practices developed in the House of Commons and generally applying in parliaments in Australia.
Parliamentary practice 13.4 Adjournment procedures followed in parliament are along the following lines: A motion to adjourn takes priority over other business; if not, parliament might be kept sitting indefinitely against the majority will. A member who has already spoken to the question being debated may not move a motion to adjourn the debate. A motion for adjournment is confined to the words, ‘That the House do now adjourn’. No time is specified for resumption, on the basis that parliament is in session continuously or as scheduled, with an adjournment being to the next ordinary sitting session. No amendment is
permitted. A motion for adjournment of the debate (but not of the House) is confined to those words. It may not be amended. If carried, a second question arises, namely, when the debate is to be resumed. A motion to determine this may be amended. Motions for adjournment may be debated, but the [page 175] debate must be confined strictly to reasons for or against adjournment. However, if the Speaker is of the opinion that a motion to adjourn is for the purpose of obstruction or in abuse of the rules of debate, the Speaker may decline to permit any debate. When a motion for adjournment is lost, another similar motion may not be moved during the resumed debate until after some intervening motion (for example, an amendment) has been moved. This is on the basis that a motion, having been lost when voted on, may not be moved again as the next motion. However, there is no restriction on an unsuccessful motion for adjournment of the debate being followed by a motion for adjournment of the House, and vice versa. The mover of an unsuccessful motion to adjourn the debate is not entitled to speak again during the remainder of the debate on the substantive motion. The mover of a successful motion to adjourn the debate does not lose the right to speak upon resumption of the debate, provided that in moving that motion the speech is confined to reasons in favour of adjournment. Furthermore, the mover has the right to be the first speaker upon resumption of the debate.
Common law 13.5 There has been a considerable amount of litigation over the years regarding adjournment procedures at meetings of companies and other bodies. Decisions by the courts have included references to such things as the circumstances in which a motion for adjournment may be moved, and the powers and authority of the Chair. At common law, a meeting is deemed to be invested with the right to adjourn its proceedings at its own discretion: Stoughton v Reynolds (1736) Fortes Rep 168. A meeting has an inherent power to adjourn where it is not possible to transact all the business without adjourning: Kerr v Wilkie (1860) 6 Jur NS 383. There is an inherent power to adjourn a properly constituted meeting either to a specified
date or to a date to be fixed: Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corp (1975) 11 SASR 504; 33 LGRA 70. It is to be noted that the power of decision to adjourn lies with the meeting itself, that is, a majority of those present are able to pass a resolution to adjourn the meeting, or to defeat a motion to adjourn. However, the rules of a body may limit or exclude the common law right of adjournment. The courts have held that, where a company’s constitution provided that ‘the chairman with the consent of the meeting may adjourn the meeting’, the members present were thereby deprived of the right to pass an effective resolution to adjourn the meeting: Salisbury Gold Mining Co v Hathorn [1897] AC 268. The provision in that case may [page 176] be contrasted with the replaceable rule in s 249U(4) of the Corporations Act, which codifies the common law right as follows: 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.
Adjournment by the Chair 13.6 Some rules contain provisions that in specified circumstances a meeting may be adjourned on the Chair’s own initiative; for example, a rule that the Chair shall declare a meeting adjourned if the business has not been concluded by a particular time. Regulations governing a meeting convened for a particular purpose may give the Chair authority and power to adjourn the meeting. However, unless so authorised by the rules or statute, Chairs have no right or power to adjourn a meeting of their own volition without the consent of the majority of those present: Shaw v Thompson [1876] 3 Ch D 233; Wishart v Henneberry (1962) 3 FLR 171; Re Vouris (2003) 177 FLR 289; 47 ACSR 155. There are three exceptions to this general rule. They are: 1. Chairs have inherent power to adjourn a meeting on their own initiative where it is impossible for them to maintain order, that is, if the meeting is in danger of becoming so disorderly that it appears impossible for business to be transacted; such an adjournment may be for just a short time or until another day as announced by the Chair. However, any such adjournment must be in the interests of facilitating the progress of the business of the meeting, and
should not be for any longer period than the Chair considers necessary for the restoration of order: John v Rees [1970] 1 Ch 345. 2. Chairs have a common law power to adjourn a meeting if the place or places where the meeting is held are not such as to allow all the people who are entitled and wish to attend, to follow and participate in the debate (including possibly by the use of audio-visual links), and to vote: Byng v London Life Assurance Ltd [1990] Ch 170. 3. Chairs have a right to adjourn a meeting in order to take a vote by poll: R v D’Oyley (1840) 12 A&E 139; 113 ER 763.
Polls 13.7 As explained in 14.6 and discussed in detail in Chapter 15, a poll is a method of voting on a motion where votes are cast in writing. A poll enables: (1) votes to be cast in proportion to varying voting powers (for example, according to the number of shares or units held); and (2) proxies to be counted: see further Chapter 16. [page 177] A poll may be demanded on a motion to adjourn the meeting unless the rules provide otherwise. This is on the basis that at common law there is an entitlement to demand a poll on any motion proposed. With regard to a poll, rules frequently provide that it is to be taken as the Chair directs: at once, after an adjournment, or otherwise; also usually that a poll is to be taken immediately if demanded on a motion for adjournment or on an election of a Chair of the meeting. An adjournment to take a vote on a poll is solely for that purpose; no other business, further discussion, amendment or formal motion on the question is possible at that adjournment. In itself, it does not act as an adjournment of the meeting and where there is further business on the agenda this is proceeded with, and then, instead of the meeting being closed, the Chair declares it adjourned for purposes of the poll.
Vacation of chair 13.8 Where a Chair, acting in accordance with the rules of the body and the common law, adjourns a meeting and vacates the chair, it is not possible for that
meeting to be continued by others who remain, regardless of whether a quorum or even a majority of members is present; any purported further proceedings or resolution will be invalid. However, if a Chair attempts to declare a meeting adjourned without the consent of a majority of those present (except where the body’s rules authorise this — that is, in cases of real disorder, to relocate the meeting or to take a poll) — there is no true adjournment, and the meeting continues to exist even though the chair has been vacated: Shaw v Thompson [1876] 3 Ch D 233. The Chair is not able to terminate a meeting by leaving the chair before its proper business is disposed of: Oliver v North Nuggetty Ajax Co NL [1912] VLR 416. If the Chair leaves the chair or adjourns the meeting without the approval of a majority, there is no valid adjournment or termination of the meeting: Wishart v Henneberry (1962) 3 FLR 171. In such circumstances, those who continue to be present, provided that there is a quorum, may elect another Chair, and the meeting may continue to transact its business validly: National Dwellings Society v Sykes [1894] 3 Ch 159; Catesby v Burnett [1916] 2 Ch 325. Later cases suggest the position will be different where the Chair makes a bona fide ruling closing the meeting, particularly when there is no motion of dissent from that ruling. In such circumstances, those people who, hearing the Chair close the meeting, depart in reliance on that closure are entitled to do so, on the basis that no further business can be transacted validly: Johnson v Beitseen (1989) 41 IR 395. Similarly, where the Chair closes a meeting after making a bona fide ruling based on independent and expert legal advice that there is no valid business before the meeting, [page 178] that meeting cannot validly continue, even if the advice is wrong: Corpique (No 20) Pty Ltd v Eastcourt Ltd (1989) 15 ACLR 586.
Public meetings 13.9 Where an individual or body organises and convenes a meeting for a particular purpose, nominates a Chair to preside and invites persons to attend, the control and conduct of such a meeting remains in the hands of the convenor, or, to be precise, the Chair nominated by the convenor. This control includes an authority and power to adjourn the meeting in circumstances in accordance with the wishes of the convenor, regardless of the wishes of others present. The
proceedings of this type of meeting would generally have no legal substance, and thus the significance of such meetings and their adjournment differs materially from meetings of established bodies. However, if as a consequence of an illconsidered adjournment by the Chair of such a meeting, persons do not disperse and some breach of the peace occurs, the convenor and possibly the Chair may find themselves involved in other aspects of the law. For further discussion of public meetings, see 1.20 and 7.11; as to breach of the peace, see 7.13.
Postponement 13.10 As explained in 4.19, a meeting once properly convened cannot be postponed or cancelled unless express provision to do this is contained in the rules of the body: Smith v Paringa Mines Ltd [1906] 2 Ch 193; Bell Resources Ltd v Turnbridge Pty Ltd (1988) 13 ACLR 429; McPherson v Mansell (1994) 16 ACSR 261; McKerlie v Drillsearch Energy Ltd (2009) 74 NSWLR 673; (2009) 72 ACSR 288. The meeting must be proceeded with. However, where a postponement is desirable or essential, a procedure is often applied under which the only business done by those present is the consideration of a motion that the meeting be adjourned to a specified date. This, if carried, overcomes the problem. It is not legally possible to postpone a meeting without an adjournment, either by a resolution or because a quorum is not present (and in the latter case, relevant provisions in the rules apply). If entitled persons are present in accordance with the notice of meeting, and the number is sufficient to comprise a quorum, they may elect a Chair, and conduct a meeting in accordance with the notice. If a body’s rules specifically permit the postponement of a meeting after it has been convened but before it assembles, a notification of postponement needs to be sent to all persons to whom notice of the meeting was sent. Such rules should also provide for this. [page 179]
Defect in notice 13.11 A meeting may not be validly held if the period of notice convening it is insufficient to comply with the rules. If persons who have assembled in accordance with such a notice attempt to pass a resolution to adjourn the meeting to a later date as a means of prolonging the period of notice, this will not
validate the meeting or the proceedings. Any defect in the convening of a meeting that would cause that meeting to be invalid would render an adjournment of that meeting similarly invalid: Re Portuguese Consolidated Copper Mines Ltd (1889) 42 Ch D 160; see further 4.1 and Chapter 4 generally. Should it be found after notices of meeting have been sent out that the period of notice is insufficient, a suitable procedure would be to send out an explanatory notification immediately that both cancels the earlier notice and, if suitable and possible under the rules, embodies a notice of a meeting to be held at a later date.
Absence of quorum 13.12 Rules of bodies often contain a provision that if a quorum is not present within some stated period after the notified time for commencement, the meeting shall ‘stand adjourned’ to some specified future time (frequently the same time in the following week), and at the ‘adjourned meeting’ the members present shall be a quorum. This is an example of a meeting being adjourned by the rules, and there are examples of a meeting being similarly adjourned by a relevant statute; for example, the replaceable rule in s 249T(3) of the Corporations Act. In the absence of a rule of this type, the lack of a quorum at the start (but in practice a reasonable time after the appointed hour is usually allowed) means that a valid meeting has not assembled, as without a quorum a meeting is not properly constituted. Therefore, the assembly has no capacity to pass a resolution to adjourn: see 5.1. Statutes and rules use the phrase ‘the meeting shall be dissolved’ or ‘shall lapse’ to deal with such a situation. If during the course of a meeting at which a quorum has been present at the outset a quorum is no longer present, the meeting is no longer validly constituted unless the body’s rules provide differently, or are framed to require a quorum to be present ‘when the meeting proceeds to business’: see 5.11. Therefore, that meeting is unable to continue when the lack of a quorum becomes apparent: Henderson v Louttit (1894) 21 R (Ct of Sess) 674; Ball v Pearsall (1987) 10 NSWLR 700. This is the position at common law, and consequently rules frequently provide that a meeting ‘shall stand [page 180] adjourned’ in such circumstances. If not so provided, the meeting would no
longer have validity, that is, it would be deemed concluded or dissolved. If it were to be found a quorum is not present upon resumption after adjournment where there had been a quorum at the original meeting, reference needs to be had to the body’s rules regarding quorum. At common law, the adjourned meeting is still subject to any mandatory requirement in force as to quorum: Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corp (1975) 11 SASR 504; 33 LGRA 70; see further 5.12.
Action to bring about adjournment 13.13 Thus, in summary, a meeting may be adjourned: 1. by resolution of the meeting itself; 2. by the Chair: a. if so empowered by the rules; b. where necessary to maintain order; c in order to relocate to a more suitable venue; or d for the purpose of taking a poll; and 3. in accordance with a rule that provides a meeting stands adjourned in certain circumstances, including lack of a quorum at the commencement or during the proceedings.
One meeting only 13.14 The two or more parts of an adjourned meeting comprise one meeting only. An adjourned meeting when it is resumed is a continuation of the original meeting: Scadding v Lorant (1851) 3 HLC 418. It is not a new meeting: Jackson v Hamlyn [1953] Ch 577. Because it is the same meeting, it is not necessary for a new or further notice to be given of an adjourned meeting unless this is required by the body’s rules: Wills v Murray (1850) 4 Exch 843. For example, the replaceable rule in s 249M of the Corporations Act provides that notice of an adjourned meeting need not be given unless the adjournment is for one month or more. Where a date for the adjourned meeting is not fixed at the time of adjournment, it is, of course, necessary to give notice of it in the same way and to the same persons as for the original meeting. No business may be transacted at an adjourned meeting except the unfinished business of the original meeting without notice of the new additional business being given: R v Grimshaw (1847) 10 QB 747. Thus, unless rules provide
differently, the same agenda is proceeded with upon resumption, and new items of business may not be introduced. Members who did not attend the first part of a meeting that is adjourned may, of course, be present at any later session. [page 181] For practical purposes, it is generally beneficial and preferable for the same Chair to preside at both sessions of an adjourned meeting, and at all sessions if more than two. It has been held that, unless the rules of a body provide otherwise, the date of the original meeting is to be regarded as the date of a resolution passed at the adjourned part (that is, the continuation) of the meeting, even though this is held at a later date: Neuschild v British Equatorial Oil Co Ltd [1925] 1 Ch 346. To overcome the problem created by this common law principle, ss 249W(1) and 252U(1) of the Corporations Act provide that, in the case of meetings of members of companies and of registered managed investment schemes respectively, a resolution passed at a meeting resumed after an adjournment is passed on the day it was passed. A partial variant is to be found in s 498(4) in connection with the procedures during a creditors’ voluntary winding up of a company. See further 21.25 and 23.9.
Minutes 13.15 Each of the individual minutes that records the adjournment and resumption should indicate the circumstances concisely but clearly. The exact words of the adjournment resolution should be reproduced. The proceedings at each session should be minuted in separate parts, with the names (or numbers at a general meeting) of persons present on each occasion being recorded separately. At the commencement of the second session, it is a helpful procedure for minutes already drafted to record proceedings at the first part of the meeting to be read out or circulated as a reminder of what occurred prior to the adjournment. However, although the Chair may seek concurrence as to the correctness of those minutes, they are not to be signed by the Chair at that stage as they form only part of the minutes of the meeting.
Formal motions relating to adjournment
Formal motions 13.16 Four of the formal motions have already been discussed in Chapter 12. There are three further formal motions, each of which is moved with a view to securing an adjournment. They are: 1. ‘That the debate be adjourned …’ 2. ‘That the meeting be adjourned …’ 3. ‘That the Chair leave the chair.’ They are classified as formal motions because they have the power to interrupt proceedings, and accordingly have become subject to a specific procedure: see further 12.3. [page 182] However, a motion to adjourn a meeting or a debate may be moved for practical reasons, rather than with a deliberate intent to interrupt. For example, where a meeting has proceeded for a far longer time than anticipated without all the business having been completed, or because of abnormally unpleasant weather conditions without adequate airconditioning, or because of an emergency. Also, the adjournment of a meeting is a useful procedural device for deferring the entire proceedings where a meeting has been convened for a date that proves to be too early for practical purposes. Regardless of the reasons or circumstances, the same procedures apply for dealing with these formal motions for adjournment, each of which is explained below.
To adjourn the debate 13.17 The usual wording of this motion is ‘I move that the debate on this matter (or subject or item) be (now) adjourned’. Words nominating a date, time and place may or may not be included. The motion may include the words ‘sine die’, meaning ‘without day’, that is, indefinitely. The object of this motion is to defer further discussion on the matter until some future time with the facility for its eventual resumption, either later during the same meeting or at a subsequent meeting. The motion may include words such as ‘to the next (or annual or other specified) meeting’. In a lengthy meeting, the motion may nominate a later hour or a fixed point in the agenda; for example, to follow a certain item the outcome
of which could affect the matter being presently debated. If no time or date is referred to in the motion, the adjournment (if that motion is carried) is to the next regular meeting, on the basis that this is presumed to be what the mover of the motion had in mind. In such a case, it would be normal for the adjourned matter to be the first item listed for discussion on the agenda of that meeting. If such an adjournment motion — that is, without reference to a time — were to be moved at a meeting of a type not held regularly (for example, weekly, monthly or quarterly), the effect would be equivalent to the debate being adjourned sine die. This in the circumstances of, for instance, an annual general meeting or a specially convened meeting would be an unsatisfactory situation, and should be avoided. Where a motion for adjournment of the debate includes the words ‘sine die’, thus deferring it indefinitely, the effect is that the subject might possibly not be raised again at a subsequent meeting until or unless it is inserted on an agenda at the instigation of the Chair or secretary, or pursuant to a notice of motion. If and when this occurs, especially if a fair period has elapsed, it may be considered preferable for the matter to be treated as a new item rather than as adjourned business; however, circumstances alter cases. [page 183] If a motion to adjourn the debate is carried, the meeting then proceeds to deal with the next item of business on the agenda. If this motion is moved and carried during debate on an amendment, the effect is that the debate on the substantive motion as a whole is adjourned. In this connection, a motion to adjourn the debate would supersede and, if carried, bring about adjournment of the debate on any other formal motion if such had been moved and was being, or about to be, discussed concerning the substantive motion or an amendment to it. Where this formal motion is carried, and it so happens that there are no further items on the agenda, the Chair states that the business of the meeting is concluded, and the meeting is then declared closed. A motion to adjourn the debate may be amended, but only as regards the time, date and place for its resumption. Where a motion lacks reference to a time for the debate to be resumed, amendment could thus fix a time for this, or authorise, for example, the Chair to determine a time, with adequate notice of this to be given. This motion may be moved only at the conclusion of and not during another person’s speech. It may be moved or seconded by any person who has not moved,
seconded or spoken on the substantive motion or an amendment to it, or moved or seconded another formal motion in connection with the question. The Chair must accept a motion to adjourn the debate if it is seconded. This is the general view of those authorities who express an opinion about this, based on parliamentary procedure. Debate is permitted on the motion. As it is a new, independent motion, any person may speak to it. The mover does not have a right of reply. (The standing orders of some bodies specifically allow a right of reply, in some cases limiting the time of the speech.) If this formal motion is lost, the debate resumes at the point where it was interrupted. It may be moved again later during discussion on the same matter, but the Chair has discretion in assessing whether there has been a reasonably adequate period between the two similar motions. Upon the eventual resumption of the debate, in the event of this formal motion being carried, some authorities suggest that the mover of the motion to adjourn should be invited to speak first — that is, be given the privilege of reopening the debate — this being a useful parliamentary practice. Parliamentary usage also carries a proviso that, for entitlement to this privilege, the remarks of the mover of the adjournment of the debate must be confined to reasons for moving the adjournment; the mover is therefore deemed not to have spoken on the main question. As regards meetings generally, it is considered that this motion may not be moved as the closing words of a speech made during the debate; this is in keeping [page 184] with the principle indicated above that this formal motion may not be moved by a person who has spoken on the main question. During continuation of the debate, even where the period of adjournment is lengthy, the normal procedures apply. Thus, persons who have already spoken may not speak a second time, and the mover of the original motion retains the right of reply. A motion to adjourn the meeting itself is permitted during discussion on a motion to adjourn the debate, and would supersede it. In such circumstances, the later formal motion may not be moved by a person who has moved, seconded or spoken on the substantive motion, or moved or seconded the motion to adjourn the debate, nor any earlier formal motion during discussion on the whole
question. The reverse situation is not permitted, and a motion to adjourn the debate may not be moved during discussion on a motion to adjourn the meeting. For practical reasons alone, this would be undesirable. Apart from this one exception, a motion to adjourn the debate may be moved during a debate on any other formal motion or procedural motion, and at any stage of general debate, except during discussion on a motion for the election of a Chair of the meeting. Where an adjourned debate is spread over two or more meetings, the minutes of each such meeting should record the situation clearly, including the specific words of the formal resolution that brought about the adjournment.
To adjourn the meeting 13.18 The usual wording of this motion is ‘I move that the meeting be (now) adjourned’, ‘I move that the meeting do (now) adjourn’ or ‘I move that this meeting stand adjourned’. The motion may be confined to such words, or close with the words ‘sine die’, or include reference to a time, date and place for resumption. Thus, a motion for adjournment may: 1. be without any reference at all as to time, date or place for resumption; or 2. include suitable wording to adjourn: a. sine die, that is, indefinitely; b. to a specified hour later in the same day; c. to a nominated future date or for a specified interval of time; d. for a period that is not specified or is contingent; or e. for an indeterminate period not to exceed (or alternatively, or also, not to be less than) a stated period; and/or f. to a different place. [page 185] The object of this motion is to suspend the entire proceedings of the meeting, but with the apparent intention of resuming later. In practice, there are a number of situations where such a procedure may be desirable or even necessary. It may be that it is discovered the venue is too small to accommodate all those who wish
to attend. A short adjournment may enable the meeting to move to a larger room. Alternatively, the rules of the body may provide that meetings may not continue after a specified time. If there is important business, such as the hearing of disciplinary charges, which has not been completed by that time, adjournment of the meeting will be required: Rowling v Harding (1976) 27 FLR 369. If the meeting is adjourned to a date to be fixed by the Chair (or another person or body), the better opinion seems to be that any date so fixed must be reasonable having regard to the whole of the circumstances. In determining what is or is not reasonable, all matters that affect the capacity of the members to return to the meeting must be taken into account: Myer Queenstown Garden Plaza Pty Ltd v Port Adelaide City Corporation (1975) 11 SASR 504; 33 LGRA 70. If no time is referred to in the motion, the adjournment (if the motion is carried) is to the date of the next regular meeting, on the basis that this is presumed to be what the mover had in mind. In such a case, when the notice of the next regular meeting is being issued, it would need to carry, or be accompanied by, a notification that the adjourned meeting — that is, the adjourned session of the previous meeting — would be held prior to the regular meeting. The starting time of each would need to be clearly indicated; it may be convenient and prudent to specify the starting time of the second meeting as ‘immediately (or five minutes) after the conclusion of the adjourned meeting’. In the case of meetings convened for a particular purpose, including those where selected persons or the public are invited to attend, a motion that the meeting be adjourned sine die or without reference to a time for its resumption would be, if carried, tantamount to a dissolution of that meeting. Thus, such a motion is unsuitable at a body’s annual general meeting at which, under its rules, certain business legally needs to be transacted. This formal motion may be moved or seconded by any person who has not moved, seconded or spoken on the substantive motion being debated or an amendment to it, nor moved or seconded an earlier procedural motion during the discussion. It may be moved by the Chair, in which case a seconder is not necessarily required. A motion to adjourn the meeting may be moved at the conclusion of an item of business or at the close of, but not during, another person’s speech. [page 186] This motion may not be moved during the election of a Chair of the meeting.
It may be moved during the debate on any other formal motion or procedural motion. Upon its acceptance by the Chair, it supersedes the debate on that other formal or procedural motion. Except for the closure, no other formal motion or procedural motion may be moved while this formal motion is being debated. When moved and seconded, this motion must be accepted by the Chair. It may be debated. It is a new, distinct motion, and therefore any person may speak to it. However, the mover has no right of reply. The motion to adjourn the meeting may be amended, but only as regards the time, date and place of adjournment, that is, of resumption. Where such a motion does not include reference to a time, amendment could fix a time and place, or authorise the Chair to determine this, with adequate notice to be given. If defeated, this motion may be moved a second time (by some other person) after a reasonable period has elapsed, the Chair having discretion in assessing whether the time has been adequate between the two similar motions. Upon this motion being passed, the Chair should declare it carried, and then announce that the meeting stands adjourned, adding any details about the resumption included in the resolution.
‘That the Chair leave the chair’ 13.19 The usual wording of this motion is ‘I move that the Chair (now) leave the chair’ or ‘I move that the Chair do leave the chair’. This formal motion (if carried) has the effect of securing the adjournment of the meeting in an indirect way. The formal motion ‘That the Chair leave the chair’ is not moved with a view to replacing the Chair with another person. A motion to bring about that outcome should be worded as ‘That (another person by name) do take the chair’, or ‘That … vacate the chair in favour of …’. The latter are not regarded as formal motions, but are, of course, procedural motions. Upon this formal motion being carried, the meeting is thereby adjourned. If it is a regular meeting (for example, monthly or quarterly), the adjournment is to the date of the next regular meeting; if an extraordinary or special meeting, adjournment is to the date of the next ordinary meeting. In other circumstances, the adjournment is sine die. Should it be a single, special purpose meeting for invited people or the public, the Chair, secretary and organisers would need to make a decision, after the meeting, as to whether it would be reassembled. No valid business may be [page 187]
transacted from the moment this formal motion is carried and becomes a resolution; from that moment, the gathering is without a Chair, and therefore is not validly constituted as a meeting. In usual circumstances, this formal motion is not suitable as an alternative way of securing an adjournment or close of the meeting. In putting this motion to the vote, the Chair should make it clear that, if passed, the meeting is thereby instantly adjourned without the legal capacity to do anything further, regardless of any remaining items on the agenda. This motion may be moved by any person who has not moved, seconded or spoken to the substantive motion or an amendment to it. It is in order for it to be moved by the Chair, thus indicating a view by the Chair that adjournment is desirable. This formal motion may be moved, after the close of another person’s speech, at any time during the debate, including discussion on an amendment. It does not need to be seconded. It may not be amended, nor is further discussion permitted on the main motion. However, it is regarded as acceptable practice to allow the mover of the original motion to exercise the right of reply, if wishing to do so, immediately before the formal motion is put to the vote. If the motion is lost, it may be moved again later during the debate, the Chair having discretion as to whether there has been a suitable lapse of time between the two motions. For a summary of the formal motions designed to bring about adjournment, see Appendix II.
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14 Voting Introduction 14.1 One of the Chair’s most important responsibilities is to ascertain the sense of a meeting on each motion and amendment before it. The true sense — that is, the overall opinion, attitude, desire or intention of the meeting — is discovered and established by the Chair ‘putting’ the motion or amendment to the vote. Upon the vote being taken, the vote cast by each person is communicated to the Chair in one of the various ways described in this chapter. It is among the basic duties of the Chair to give all persons entitled to vote a reasonable opportunity of voting. Each person in favour of the proposition, each of those against it, and any person who has no definite view or who declines to express one, is thus able to vote for or against the motion or refrain from voting. The preponderance of votes either for or against the motion is regarded as demonstrating the predominant view. This majority judgment is taken to denote the true sense of the meeting: see further 14.18. Where the rules of the body provide for the procedure for voting, the Chair must follow that procedure and not some other. In particular, a vote should not be taken until the debate has concluded: Re Ryde Ex-Services Memorial & Community Club Limited (administrator appointed) [2015] NSWSC 226. After the votes have been cast and tallied, the total for is compared with the total against, and the result thus ascertained. It is part of the Chair’s duty to declare whether the motion has been carried or lost. In the event of equality of voting, it is not carried: see further 14.5. The declaration by the Chair that a resolution has been carried is conclusive in the absence of fraud or where the declaration is not in accord with the facts of the voting, and having regard to the body’s rules.
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Methods of voting 14.2 There are six methods of voting that are generally recognised, namely, voting by: 1. 2. 3. 4. 5. 6.
voices; show of hands; poll; ballot; acclamation; and division.
Use of the final method, division, is largely, but not solely, confined to parliament. In varying circumstances, the other five are utilised at meetings generally.
Parliamentary procedure 14.3 An understanding of the progressive stages of voting in parliament, including division, assists a comprehension of the voting procedures at meetings generally. It should be noted, however, that the validity of voting carried out at meetings of organisations rests largely on compliance with requirements of the organisation’s rules and with the common law, rather than following the voting procedure of parliaments. Concisely stated, parliamentary procedure is along the following lines (varying a little as between parliaments). The Speaker (or President in an Upper House) puts a motion (styled ‘the question’ in parliamentary parlance) to the House, initially by a vote on the voices. After reading the question, the Speaker says, ‘As many as are of that opinion say “aye” ’, and listens to the response. The Speaker then says, ‘As many as are of the contrary opinion say “no” ’, and notes that response. If, in the judgment of the Speaker, the voices voting in one way are more numerous than the other voices, the Speaker says ‘I think the “ayes” (or the “noes”) have it’. The Speaker pauses to give members an opportunity to challenge that opinion about the result. This would be done by two or more members calling ‘Divide’. If there is no challenge, the Speaker says firmly, ‘The “ayes” (or the “noes”) have it’.
Thereupon, unless at that stage there is a demand for a division, the Speaker’s announced result becomes a resolution of the House if the ‘ayes’ have it; or a question that is lost, if the ‘noes’ have it. However, if a division is called for, the ‘division bells’ ring for two minutes to alert absent, but nearby, members. The doors are then locked. The Speaker directs the ‘ayes’ to proceed to the right of the Chair, and the ‘noes’ to the left. A tally of each is taken by tellers appointed by the Speaker, [page 191] and the names of those voting are marked off on lists that are signed. The Speaker then announces the result. The standing orders covering the proceedings of some houses of parliament require each member to vote on a division in the same way as that member did when voting on the voices.
By voices 14.4 Although voting by voices is a common practice at meetings of companies and other organisations, the common law method of voting is by show of hands. This latter is the requirement as stated in most constitutions, rules and standing orders. The method of voting by voices is a simplified version of the procedure in parliament. The Chair directs, in turn, those in favour of the motion to say ‘aye’, and those against to say ‘no’. If the Chair considers the result is clearly demonstrated by the vote, the Chair states that the motion is carried (and thus a resolution is passed), or that it is lost. It is one of the quirks of meetings that ‘no’ usually seems to sound louder than ‘aye’. If the result is not clear, the Chair then directs a vote by show of hands, and exact counting is carried out. Any person present may call for a vote by show of hands. As previously stated, the rules of most bodies provide that a motion is to be voted on in the first place by a show of hands; and, where this is the case, a vote by any other method is an incorrect procedure. However, it is unlikely to be queried or challenged when utilised for motions that are of a routine, inconsequential or undisputed nature. When aware that a motion will attract a number of unfavourable votes, especially if the subject is of a contentious nature, a direction by the Chair that
voting on the question will be by show of hands (even if voting on earlier motions has been by voice) will forestall any demand from the floor for a vote by show of hands. It will also avert the possibility of rowdy disorder being sparked off by contentious voices during voting.
By show of hands 14.5 Under this method, the Chair first requests those in favour of the motion to raise their hand, and their votes are counted. Then those against the motion are asked to raise their hand, and their votes are counted. On a show of hands, each person personally present and entitled to a vote has one vote and only one vote. The Chair may seek the assistance of the secretary in counting the votes. If the attendance is large, the Chair may nominate two or more tellers to assist. [page 192] Where a majority of the votes is favourable, the Chair then announces that the motion is carried; and, where the majority is not in favour, that it is lost. Unless the rules provide that a specified majority or a specified proportion of those voting in favour is required for the particular resolution to be passed, it would not be usual for a Chair to state the precise numbers voting for and against the motion, unless requested to do so by one or more persons present. If the voting for and against happens to be equal, there is thus not a majority in favour of the motion, and it is not carried and must be taken to be lost: Bland v Buchanan [1901] 2 KB 75. In such circumstances, the Chair’s response will depend on whether or not the rules provide for a casting vote: see 14.14.
By poll 14.6 A poll by its nature has two main characteristics: 1. votes are cast in writing; and 2. the reasons for a poll being demanded are to enable votes to be cast: a. in proportion to varying voting power (for example, according to the number of shares held in a company, or the unit entitlement in a strata title property); a. on behalf of absent members who have appointed proxies; and a. by absent members presenting themselves and voting, where the poll is
held at a date later than the meeting at which it was demanded. Thus, a poll provides a method of voting that furnishes all entitled persons with an opportunity to exercise their vote. At the same time, where voting entitlements vary, it introduces a safeguard against a minority of persons with large shareholdings being outvoted by a majority who have small holdings. At common law, members are entitled to demand that motions are voted on by a poll, unless the rules of a body expressly provide otherwise: see 15.2. Upon the Chair declaring the result of a vote by show of hands, a poll can therefore be demanded by one or more members; the number required depends on the rules. When a poll is validly demanded, the announced result of the voting by show of hands is no longer of any effect. On a poll, the number of votes recorded by each voter depends on the number to which that person is entitled under the rules of the body. For instance, such an entitlement may be one vote for each member; in a company, one vote for each share held; in an association, one vote for each individual member, with increased votes for organisational or corporate members; or modifications of such entitlements. The term ‘poll’ — that is, ‘the head’ — has been used with reference to counting persons since the seventeenth century. This was first in [page 193] connection with a muster of people, and then with the counting of voters at the election of their parliamentary representatives. In practice, a poll is usually demanded when the result of a vote by show of hands, as declared by the Chair, seems different from the result likely to be achieved by a poll. It is thus a means of challenging such a declaration by the Chair. At a poll, votes are usually recorded in writing on a voting or ballot paper. Accordingly, the vote of each person is not disclosed to the other voters, although it is not a secret ballot in the normal sense. The voting papers are placed in a ballot box or other receptacle. Tellers (who count the votes) and scrutineers (who examine the papers and generally oversee the process) are appointed. On any doubtful aspects that may arise, they consult the Chair, who gives a ruling. When counting is complete, the scrutineers report the result to the Chair, who announces the result and declares the motion is
carried or lost. The procedure for conducting polls and the relevant cases are considered in detail in Chapter 15.
By ballot 14.7 This method of voting is frequently used for the election of office-bearers and committee members where such elections are contested, that is, where more persons are nominated than are required to be elected. Ballots are sometimes also used in connection with the election of new members in clubs and similar bodies, and also when expulsion of a member is being considered. The ballot is, of course, our established method by which citizens participate in a poll, and record votes at the time of election of members of parliament and local government councillors. Initially, the notion of secrecy in voting was to obviate the possibility that otherwise the way in which a person voted could be influenced by the knowledge it was being observed by some other particular person. The word ‘ballot’ is virtually synonymous with the term ‘secret ballot’. Originally, secret voting was carried out by the use of two coloured balls, one of which was placed in an urn or box; for example, a white ball signified ‘yes’ and a black ball denoted ‘no’ (the term ‘to blackball’ has been in use for two centuries to indicate exclusion from a club by this method, eventually widening its meaning to indicate social ostracism). In another secret system, voters inserted one hand into a long-necked ballot box and placed a ball into one of two compartments. A very ancient method of selecting or determining one’s lot or portion was by drawing or shaking out objects from a receptacle (the derivation of the word ‘lottery’). From the combination of ‘ball’ and ‘lot’, the word ‘ballot’ came into use to denote a secret voting method. In Table A of the initial English Companies [page 194] Act of 1862, the method of determining the retirement of directors with equal service (equivalent to reg 59 of Table A of the previous Australian companies legislation) was ‘by ballot’, replaced by the existing word ‘lot’ in 1906 during a general revision. In a ballot, each voter normally has only one vote equally with every other voter. This equality of votes is significantly different from voting on a poll, where it is usual for multiple voting entitlements to be exercised (that being one of the main reasons for holding a poll). Another characteristic difference between a ballot and
a poll is that the name of the voter is not disclosed in the former, whereas names are usually recorded on voting papers on a poll to enable entitlements to be checked and verified. The recording of votes by ballot involves the issue of a voting paper to each person entitled to vote. Such papers are usually prepared previously to help safeguard the integrity of the voting. Precautions are needed to ensure that only entitled persons receive the ballot paper and record a vote. The rules of a body often set out a detailed procedure for the conduct of a ballot. Where preferential voting applies to elections, the rules need to be explicit as to the method of voting, counting the votes, identifying and treating informal votes and determining the person or persons elected. Any such provisions must be observed strictly. A ballot among members may be conducted by post only if the rules provide for this. It is important that the ballot paper includes or is accompanied by clear directions to the person voting. The rules and the general administrative arrangements need not only to guard against any unentitled person lodging a completed voting paper, but also to ensure that the vote recorded by each person remains quite secret. The procedures for conducting elections and ballots and the relevant cases are considered in detail in Chapter 17.
By acclamation 14.8 This method of voting to carry a motion is usually effected by clapping. It is generally utilised when passing votes of thanks, appreciation and congratulation. The minutes usually refer to such a vote being ‘carried by acclamation’. It is deemed to be in the nature of unanimous, at times spontaneous, acquiescence; on occasions in past days, persons in public and ecclesiastical forums were elected by acclamation to important positions. Although, as regards voting at meetings, acclamation is associated these days with clapping, the word is derived from a combination of two Latin words meaning ‘to shout’ and ‘to claim’. The meanings of acclaim in connection with assemblies — namely, ‘to applaud’ and ‘to name with applause’ — came into use in the mid-eighteenth century, long after the original meaning of ‘applause’ — that is, ‘to clap hands to express [page 195] approbation’ — had given way to the wider meaning of ‘a loud expression of
approval, agreement or consent’. Thus, the method of voting by voices, especially as used in parliament (at least as regards those who vote ‘aye’) is a way of voting by acclamation in the sense in which the word was originally used to signify a loud shout of approval.
Vote of thanks 14.9 An expression of gratitude and appreciation passed by voting at a meeting, on behalf of those present or of the entire membership of a body, is no less a valid and legal decision of the meeting than any other resolution that it passes. Such a vote of thanks, whether to a guest speaker, a retiring president or some other person not necessarily present, should be proposed as a motion, usually with a speech of commendation and, as appropriate, indicating the esteem in which the person is held. The motion is often seconded where a very significant contribution is being accorded appreciation: such occasions offer opportunities for tributes to be paid by various people who wish to speak to the motion. Where the Chair is the recipient of the appreciation, this is the sole instance of a person other than the Chair putting the motion to the vote. The mover at the conclusion of the moving speech may invite another person to second the motion, and then others may speak to it. Usually it is put to the vote by the person who proposed the motion, not a later speaker. At the outset, that person should, as always, address the Chair, and, in principle, is seeking the permission of the Chair to proceed. Where the Chair of a meeting nominates and requests some person to express thanks to a guest speaker on behalf of those present, this is not intended to be in the nature of a resolution to be passed by voting, and should not be recorded as such. At the conclusion of those remarks, the speaker should invite all present to join in expressing their appreciation by acclamation.
Common law principles Casting of votes 14.10 As a general principle, every person who is present at a meeting and entitled to vote has one vote. Each voter has a discretion whether to exercise that vote, or to refrain from voting. A person’s vote is a right that may be exercised as the voter pleases, and it may be cast in a way that is even against the interests of the company or other body of which the voter is a member: Brown v British Abrasive Wheel Co Ltd [1919] 1 Ch 290. In particular, at general meetings every member of a body who has a voting
entitlement has a right to vote on all [page 196] motions, whether or not, in relation to some particular issue, a member has a financial or other interest that may be contrary to the interests of the body itself. However, the position of directors of companies and members of governing bodies generally is quite different: see ss 179–197 of the Corporations Act and Bennetts v Board of Fire Commissioners of NSW (1967) 87 WN (Pt 1) (NSW) 307. An agreement by a member with a third party that the member will vote in a particular manner on a motion at a meeting, if able to be enforced as between the parties, will be so enforced by the court, but it is not the duty of the secretary of the body conducting the meeting (or presumably the Chair) to ensure that such an agreement is implemented: Greenwell v Porter [1902] 1 Ch 530. The decision on each motion is arrived at by those persons who do vote, on the basis that it is carried if more votes are cast for the motion than against it; and it is lost if the reverse is the case. Generally, persons who refrain from voting do not affect the result. However, persons who abstain from voting on a motion may be taken, as regards the practical effect, not to be in favour of it; and where the rules require a favourable vote by a majority of those present to enable a motion to be passed, such a motion may be, and is, lost where a sufficient proportion of persons merely refrain from voting: Labouchere v Wharncliffe (1879) 13 Ch D 346. Further, the rules of a body, the constitution of a company or the provisions of a relevant statute may modify the general principles, and frequently do so. For instance, multiple voting for each person may be provided for in certain circumstances; votes may be recorded on behalf of absent members; a particular majority (for example, three-quarters) may be required to pass resolutions of special significance. Normally, there is no divergence in rules from the general principle that it is a preponderance of votes (that is, a majority one way or the other) that brings about the passing of a resolution or the loss of a motion. However, a majority (by its ability acting in combination to pass a resolution through sheer weight of numbers) is not entitled to practise a fraud upon or abuse the rights of the minority: Menier v Hooper’s Telegraph Works (1874) 9 Ch App 350; see further 14.18.
Declaration by the Chair 14.11 Where a constitution or rules provide that the decision of the Chair as to the validity of a vote is conclusive, that ruling, where made bona fide, is indisputable: Wall v London & Northern Assets Corp [1898] 2 Ch 469. Where a constitution or rules provide that any objections to the validity of votes must be made at the meeting itself, the ruling of the Chair as to [page 197] the validity of votes tendered, including votes by proxy, where the ruling is made bona fide, is final and not able to be reviewed: Wall v Exchange Investments Corp Ltd [1926] 1 Ch 143. The Chair’s declaration of the result is conclusive evidence of the counting of the votes, but it does not provide evidence of, nor overcome, any irregularity or informality in the meeting itself: Re Fraser & Co Ltd (1896) 22 VLR 385. If uncertain of the result of the voting, the Chair is entitled to have the votes counted again immediately, even if the Chair has already stated a result but is in doubt as to whether this declaration was right or wrong. A Chair who does this is not bound by the first statement of the counting, but may properly base the declaration on the result of the recount. If any persons refrained from voting on the first occasion, they may vote on the second count: Hickman v Kent & Romney Sheepbreeders’ Assn (1920) 36 TLR 528. It has been held that a person entitled to vote for or against a particular proposition may generally change or withdraw his or her vote before the result is finally announced: Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liq) (2001) 188 ALR 566 at 596 per Finkelstein J. However, the Chair’s declaration of the result of voting is regarded as having closed the voting process. It is then no longer possible for voters to change or retract their votes, and claim, with an explanation, that they had made an error, or for a person who had neglected to vote to make a late vote for similar reasons. There is no authoritative legal decision as to whether an error made when a person votes can be corrected, even immediately. In practice, if a voter were to advise the Chair, before the latter declares a result, that the voter had intended to vote the other way, the Chair might decide to exercise discretion as regards accepting a corrected vote. The Chair would be placed in an extremely delicate situation in such circumstances where voting is close, and a Chair would need to deal with each such case on its own merits, rather than on any principle of consistency in rulings. The rules and
standing orders of some bodies include a provision to deal with such circumstances. Where an applicable statute, rule or standing order provides that a majority greater than a simple majority is required to pass a specified kind of resolution, the Chair should, in declaring the result, state explicitly that the resolution has been carried by the requisite majority, and this fact should be recorded in the minutes: see further 14.15–14.17.
Voting by show of hands 14.12 Voting by show of hands is the primary common law method of ascertaining the sense of a meeting: R v Rector of Birmingham (1837) [page 198] 1 A&E 254. Voting by show of hands must be adopted in the absence of any provision to the contrary: Re Horbury Bridge Coal, Iron & Waggon Co (1879) 11 Ch D 109. It is the form of voting that constitutions, rules and standing orders usually state is to be applied when motions are first put to the vote. On voting by show of hands, it is necessary for each motion of a group of motions to be put to the vote separately, if any person present requires this. But it has been held that where a number of proposed resolutions are put to the vote en bloc, and where there was no demand for a poll, if there is a unanimous vote in favour such a procedure is effective and the resolutions are validly passed: Re R E Jones Ltd (1933) 50 TLR 31. However, if any of such multiple resolutions were ultra vires, these would be invalid, but the remainder would be validly passed: Thomson v Henderson’s Transvaal Estates [1908] 1 Ch 765. The common law provides the basis for voting by show of hands. That is, each person present and entitled to vote has one vote and one vote only, and those who wish to vote do so by a show of hands: Ernest v Loma Gold Mines Ltd [1897] 1 Ch 1. Under this method, the voting does not take into account variations in sizes of shareholdings or other entitlements, nor the presence of representatives of absent persons entitled to vote. Thus, a proxy cannot vote on a show of hands unless the constitution or rules state otherwise, or a relevant statute provides otherwise, either expressly (for example, as in strata titles legislation) or by necessary implication (for example, the replaceable rule in s 250J of the Corporations Act). However, even where rules permit a proxy to vote on a show of hands, a member who holds a proxy for
another member may exercise only one vote on a show of hands; this is on the same principle that the person exercising a vote on a show of hands must be personally present and can exercise only one vote. Where a corporation is a member of a body, the duly appointed representative of the corporation is to be treated, as regards voting rights, as if the corporation were personally present. Thus, a representative of a corporation whose appointment is by proxy may vote on a show of hands. If, however, the representative is already entitled to vote on the show of hands in another capacity, either as a member in his or her own right or as representative of another corporation, the representative will still only have the one vote on the show of hands: see 16.3. The result of a vote by show of hands as declared by the Chair may be challenged in law if evidence establishes that the declaration was incorrect, unless the rules of the body contain a provision that the declaration of the Chair is conclusive. In the absence of evidence of fraud or mistake, however, even if there is no presumption of conclusiveness contained in the rules governing a meeting, the Chair’s declaration of a result of a vote [page 199] on a show of hands, where a poll is not demanded, is binding: Re Horbury Bridge Coal, Iron & Waggon Co (1879) 11 Ch D 109. Where the rules do include a conclusiveness provision, the Chair’s declaration of the result is indisputable, unless there is evidence of fraud: Arnot v United African Lands Ltd [1901] 1 Ch 518. However, if according to the facts it is shown that there was not a majority vote in favour of the result as declared by the Chair, a declaration that the resolution has been passed or lost is not conclusive: Re Caratel (New) Mines Ltd [1902] 2 Ch 498. Under parliamentary procedure, in the event of a division, any member who abstained from voting on the voices is entitled to vote on the division, while there is no compulsion (except expressly in the case of every member who called for the division) to follow a vote on the voices with a vote on the division. However, the standing orders governing the proceedings of some houses of parliament do require members to vote on a division in the same way as they did when voting by voice. For example, standing order 100(3) of the Australian Senate: ‘A senator shall vote in a division in accordance with that senator’s vote by voice’ and standing order 185 of the Legislative Assembly of New South Wales: ‘A Member having called for one side cannot vote on the other and if the Speaker is satisfied
that this has occurred the vote shall be recorded accordingly’. There is no apparent authority for Chairs of meetings (unless the rules require this) to have any similar obligation or responsibility to see that persons vote in the same way on a second vote as on an earlier vote in the event of more than one vote occurring. However, the situations are different. Voting by show of hands is the primary common law method of ascertaining the sense of a meeting; furthermore, it is the form of voting that the rules of most bodies specify is to be applied when motions are first put to the vote. Therefore, should a Chair of a meeting attempt to apply the parliamentary practice, the validity of the first vote, being a vote on the voices, may be called into question.
Voting by proxy 14.13 A proxy is a person authorised to vote on behalf of another person. The term ‘proxy’ is also used to denote the document appointing that person. Voting by proxy is possible only if the body’s rules or a relevant statute permit it. Normally, proxy votes are cast only in the event of a poll, that is, not on a show of hands or voices. In accordance with the common law, the Chair should not regard the result of a vote by show of hands as denoting the will of the meeting if aware that proxies have been lodged in sufficient numbers to bring about a possibly different result if a poll is held. Proxies are dealt with in detail in Chapter 16. [page 200]
Chair’s casting vote 14.14 At common law, the Chair of a meeting does not have the power or right to exercise a casting vote if the voting is equal: Bishop of Chichester v Harward (1787) 1 Term Rep 650. In Nell v Longbottom [1894] 1 QB 767, it was held that the common law appears to have provided no way out of the difficulty when the numbers of those voting on either side become exactly equal. Accordingly, for the Chair to be able to exercise a casting vote, express power to do so must be given by the body’s rules or a relevant statute. In order to assist meetings to be able to arrive at decisions where voting is equally divided, it is usual for the rules of organisations expressly to provide that the Chair of a meeting has a second or casting vote where there is an equality of votes. Many
such rules state that the casting vote applies whether the equal voting is by show of hands or on a poll. Where the Chair is a voting member of the body concerned, he or she has a vote arising from that membership in the same way as every other member present at the meeting. This normal vote is termed a ‘deliberative vote’. There are two quite different views about when a Chair should exercise his or her deliberative vote as a member. Each approach has its own advantages and disadvantages. Which is chosen will depend on the nature of the body concerned and the circumstances of the particular meeting, and also perhaps the style of chairing preferred. The first approach, favoured by the original author of this work, is that the Chair when exercising a deliberative vote as a member should do so while the other members are voting on the issue. Horsley expressed his view as follows (4th ed): In practice, some Chairs prefer not to exercise their individual membership vote in the interests of appearing impartial in respect of matters being debated. In such an event, that is, where the Chair has refrained from exercising a vote as a member, if the voting is found to be equal, and the rules do not provide the Chair with a casting vote, it would be irregular at that stage for the Chair to cast a deliberative vote, thus making it operate as a casting vote in effect. It would not seem to be an invalid vote; but a deliberative vote at that stage may create the reverse of the desired appearance of impartiality that led the Chair to abstain from exercising the original right to vote. Such a circumstance illustrates the hazard that lies in a delay by a Chair in casting a personal vote, perhaps with a feeling that there may be no need to do so. Should it turn out that without that vote there is equality in voting: (1) if the rules do not give the Chair a casting vote, the omission to vote has prevented a decision being arrived at; (2) if the rules do give the Chair a casting vote, the omission to vote as a member unnecessarily obliges the Chair either to leave the matter undecided or to exercise a casting vote, thus forcing the Chair to indicate a decision that opposes the views of half those members who did vote.
[page 201] The principle behind the concept of the Chair’s casting vote, when it was first introduced into regulations and legislation as a ‘second vote’, was that it could be given only in the event of an equality of valid votes including the Chair’s own vote, and that it would be used so that a decision could be arrived at. The innovation was drawn from the practice in the House of Commons where the Speaker had a deciding vote when the voting was equal, although he or she was not voting in other circumstances.
As Horsley suggests, the alternative approach is that, in order to appear impartial, the Chair will normally refrain from voting, and only exercise his or her deliberative vote in the event of equality. Despite Horsley’s arguments, it is this second approach that has received judicial approval: The real question is whether a chairman exercising a deliberative vote is obliged to vote prior to the
completion of the counting of the other votes. In this respect, a passage from the judgment of the Divisional Court in Nell v Longbottom (1894) 1 QB 767 at 771 is of significance: ‘It is true that very often he does not vote until it has been ascertained that the other votes are equal; but, when that is the case, the chairman votes, not because he is chairman, and as such has a vote only in the case of an equal division among the other members of the meeting, but by reason of his right to vote as a duly qualified member of the meeting.’ This passage indicates that it is recognised that, for reasons of the perceived need for impartiality in a chairman, it is permissible for a chairman to refrain from voting while the votes for and against are being counted, and then to disclose his or her vote in the event of equality. The Court in Nell v Longbottom went on to describe how, after the chairman’s vote has been exercised in that manner, a chairman’s casting vote, if he or she has one, may then be used: Johnson v Beitseen (1989) 41 IR 395 at 414 per Gray J.
A Chair is not bound to exercise a casting vote, unless the rules expressly provide otherwise. The Chair may decide not to do so, and to announce that the motion has not been carried. In such a case, in accordance with the rules of debate, the meeting should then proceed to its next business, as the voting and declaration of the result has completed the meeting’s consideration of that particular issue. The whole item of business has been disposed of, at least for that meeting. After a main motion has been voted on, nobody may address the meeting further on the question. See, however, Montgomerie’s Brewery v Spencer (1899) 5 ALR 112, where it was held that a lost motion in the absence of any objection may be re-discussed and a subcommittee appointed. Depending on the rules of the body, the difference between a Chair’s declaration of ‘not carried’ and ‘lost’ may also have significance. At one time it was thought that, because the Chair has a duty to maintain impartiality, the casting vote should be used to preserve the status quo, or to keep a proposal alive in order to allow for further discussion. However, while in appropriate circumstances this may be a good guideline, there is no general rule to this effect. The better view is that expressed by the [page 202] English Court of Appeal in R v Bradford City Metropolitan Council; Ex parte Corris [1990] 2 QB 363 at 371; [1989] 3 All ER 156 at 160 and approved in Australia in Kirwan v Cresvale Far East Ltd (in liq) (2002) 44 ACSR 21 and Young v Sherman (2002) 170 FLR 86: A person who has a second or casting vote is clearly under a duty to exercise it honestly and in accordance with what he believes to be the best interests of those who may be affected by the vote. Subject to this, however, it seems to me that the person presiding at a meeting is fully entitled to use his vote as he thinks fit.
The courts have held on a number of occasions that, subject to any prohibition or restriction in the rules, Chairs may exercise a casting vote at the election of their successor in office: R v Deane (1890) 3 QLJ 195. If it happens that the Chair of a meeting does not have a deliberative vote, because he or she is not a member of the body, or for any other reason (for example, he or she is a neutral person presiding over a meeting of representatives of all states), and the rules give a casting vote, the Chair is empowered to exercise that casting vote. A Chair may give a casting vote contingently if certain votes have been or are likely to be challenged and perhaps disallowed, thus indicating the possibility of an equality of valid votes: Bland v Buchanan [1901] 2 KB 75.
Majorities Simple majority 14.15 Resolutions are passed when a ‘majority’ of votes are cast in favour of a motion. Motions are lost when a majority of the votes are against it. There are particular types of majority. A ‘simple majority’ is more than half the votes of those members of the body present at the meeting and choosing to vote, that is, not counting abstentions or absent members. Where a motion is favoured by a simple majority of those who vote at a meeting, this is sufficient for a resolution to be passed, unless rules specify a different requirement: Hascard v Somany (1693) 1 Freem KB 504. Rules usually provide for ‘a majority of those present and voting’. Under such a rule, any persons who are present but abstain from voting do not affect the decision. Other rules state, ‘a majority of those present’. This means the majority of all persons present who are entitled to vote. Where such a rule applies, persons who are present but do not vote are, in effect by their inaction, voting against the motion. Hence, where for a motion to be carried the rules require favourable votes to be cast by a majority of those present, it may be defeated by a sufficient number of those persons present abstaining from voting, and therefore being counted together with those voting against the motion: Labouchere v Wharncliffe (1879) 13 Ch D 346. [page 203]
It would be rare for a rule to be so imprecise as to state merely ‘a majority’, but in such a case it appears that this requires a majority of those present who are entitled to vote. Where rules refer to a ‘majority entitled to vote’ this means a majority of those who are present at the meeting either in person or by proxy (where proxies are permitted) and who are properly entitled to vote: Knowles v Zoological Society [1959] 2 All ER 595. Where entitled to a deliberative vote, the Chair of the meeting is counted when tallying the numbers present, even though the Chair has made it known while presiding that vote will not be exercised: R v Griffiths (1851) 17 QB 164. A simple majority of the members is the quorum for an incorporated body for which no quorum is prescribed. This principle is based on longstanding decisions of the courts in cases concerning corporations. It is unlikely that any corporate body today is without rules, and rules invariably prescribe a quorum. However, the principle may be relevant if a quorum provision has been omitted in error. In the case of unincorporated bodies, in the absence of a quorum specification all members would have to be present, unless the association has a sufficiently longstanding custom allowing a lesser number validly to transact business. In the case of committees, if there is no prescribed quorum, all the members comprise a quorum for its meetings, not merely a majority. For a detailed discussion of quorum requirements, see 5.4.
Absolute majority 14.16 A simple majority is to be compared with an ‘absolute majority’, which is a majority of all the votes entitled to be cast if all members were present and voted, that is, more than half of the total voting strength of a body. Each of these terms has an allied usage as regards procedure at meetings. ‘Simple majority’ is referred to for purposes other than voting; for example, a committee may be appointed with ‘the quorum to be a simple majority of its members’. ‘Absolute majority’ also applies in respect of elections where there are three or more candidates for one position; if one of them secures more votes than the total votes cast for all the other candidates, that candidate has gained an ‘absolute majority’.
Special majorities 14.17 Rules of bodies and relevant statutes often provide that a majority greater than a simple majority is required to pass resolutions relating to particularly important matters. The majority may be specified as a fraction or percentage, or as a particular number of votes. The rules or statute usually give such resolutions the designation of ‘special resolutions’ or ‘extraordinary resolutions’. The term ‘special resolution’ is used by the Corporations Act
[page 204] and the various state Acts governing incorporated associations, strata title bodies corporate and cooperatives. In the case of companies, incorporated associations and strata title bodies corporate, the majority required for a special resolution to be passed is generally that, of those members present and voting (including by proxy, where permitted), at least three-quarters vote in favour. In the case of cooperatives, the fraction is two-thirds (except for special postal ballots, where it is also three-quarters). For further discussion of special and extraordinary resolutions, see 11.5. Three meanings of ‘majority’ relevant in the context of meetings are found in The New Shorter Oxford English Dictionary, Oxford University Press, Oxford, 1993, namely, (1) the state or fact of being greater; (2) the greater number or part; a number that is more than half the whole number; (3) the number by which the votes cast for one party exceed those for the next in rank. The difference in meaning between the second and third definitions can create confusion, depending on the wording of the statute or rules in question. For example, until 1 July 1998 the companies legislation required a special resolution to be passed by ‘a majority of at least three-quarters’. Similarly, the new Cooperatives National Law continues to refer to ‘a two-thirds majority’ and ‘a threequarters majority’. These formulations are potentially ambiguous, in that it is not clear whether, based on the second dictionary definition, they simply require the specified majority of those voting to vote in favour, or alternatively, based on the third dictionary definition, that the difference between the votes cast in favour and those against must be at least the specified majority. More modern provisions — for example, the definition of special resolution in s 9 of the Corporations Act and s 64(4)(a)(i) of the Victorian Associations Incorporation Reform Act 2012 — avoid the use of the word ‘majority’ entirely, instead requiring the special resolution to be passed by a specified proportion of votes cast. Usually the words ‘at least’ or ‘not less than’ appear in rules dealing with requisite majorities; but, if not (unless the word ‘exactly’ or ‘precisely’ is included), those words are implied in relation to a majority. Accordingly, to take an example where a majority of three-quarters is required: regardless of whether the tally of votes cast is 29 or 30 or 31 or 32, the same minimum number of favourable votes — that is, 24 — is needed to pass the resolution.
Effect of decisions made by a majority 14.18 The principle has been long established that the will of a corporation
can only be expressed by the whole or a majority of the corporation, and the act of a majority is regarded as the act of the whole: Attorney-General v Davy (1741) 2 Atk 212. It is to be noted that this common law [page 205] principle applies to corporations, that is, bodies that are incorporated. An unincorporated body, however, in principle, can ‘express the body’s will’ only by unanimous resolution, unless its rules grant delegated authority and power to a majority to pass resolutions that bind the body. In connection with procedure at meetings, as the act of the majority is regarded as the act of the whole, a resolution passed by the majority is binding on the whole body, and thus on the minority, unless the body’s constitution happens specifically to provide otherwise. The principle that the majority decision is supreme is expressed in the decision in Foss v Harbottle (1843) 2 Hare 461. That case was concerned with companies, but the principle is relevant to incorporated bodies generally whose operations and activities are governed by the normal type of rules, regulations or statute. The principles regarding ‘majority’ involved in and arising from that case include the following: control of a body and its affairs is in the hands of the majority of its members; this control is effected by resolutions being passed at general meetings; where the majority, as long as it acts within its authority and the legal powers of the body, passes a resolution, the minority is not able to object to this (subject to protective exceptions that guard against fraud, oppression or unfairness). This principle of the supremacy of the majority is essential to the proper functioning of companies, associations and other bodies whose members collectively comprise that body. In the interests of the membership as a whole, statutes and rules often apply limits to what a simple majority is able to do validly, by requiring a more substantial majority to sanction very significant issues, for example, by a special resolution: see 14.17 and 11.5. Furthermore, a majority is not able to pass a resolution to do something illegal or invalid, nor to practise a fraud on the minority, and an individual member of a company may take legal action to restrain it from giving effect to such a resolution: Atwool v Merryweather (1867) LR 5 Eq 464.
[page 207]
15 Polls Introduction 15.1 The term ‘poll’ is used to distinguish formal methods of receiving and counting votes from summary and inaccurate methods such as show of hands: Ryan v South Sydney Junior Rugby League Club Ltd (1974) 3 ACLR 486. As explained in 14.6, voting at a meeting on a poll: (1) is in writing; (2) usually (depending on the rules) enables votes to be cast in proportion to varying voting rights, that is, some or all persons have more than one vote; and (3) often (if permitted by the rules) enables votes to be cast by proxy on behalf of absent persons. Furthermore, the poll may be held at a later time (thus enabling absent members to attend and vote), if it is not conducted as soon as it is demanded (a decision about this normally rests with the Chair).
Who may demand a poll 15.2 At common law, any voter has the right to demand a poll unless rules that apply to the meeting specifically exclude this right: Campbell v Maund (1836) 5 A&E 865. The right to demand a poll exists by the common law, and those entitled to vote cannot be deprived of this right except by express provision: R v Wimbledon Local Board (1882) 8 QBD 459. Thus, a proper demand for a poll must be accepted and agreed to by the Chair. Neither the Chair nor the meeting itself may refuse a poll that is properly demanded. If such is refused, this renders imperfect the purported resolution or election with which the demand for a poll is concerned: Ex parte Grossmith (1841) 10 LJQB 359. Any person present and entitled to vote at the meeting is entitled to demand a poll or join in a demand for a poll, unless the rules provide
[page 208] otherwise. While it would be unusual for a body’s rules to exclude the common law right of members to demand a poll, some restrictions to that right are usually introduced. Rules often require that, for a demand for a poll to be valid, it needs to be supported by a specified number of members, or those with a specified minimum proportion of voting rights. A proxy may not demand or join in demanding a poll, unless expressly permitted to do so in the body’s rules: Re Haven Gold Mining Co (1882) 20 Ch D 151. Where rules provide that a poll may be demanded by at least a specified number of members (as, for example, s 250L(1)(a) of the Corporations Act does), that number of demanders needs to be personally present, even if the rules permit proxies to join in the demand for a poll. The requirement is not met by a demand being made by less than the specified number being personally present, even though they hold sufficient proxies to amount to that number: Ernest v Loma Gold Mines Ltd [1896] 2 Ch 572 at 579–80; Re Rhodesian Manufacturing Co Ltd [1927] SASR 310. If he or she is a member of the body with an entitlement to vote, the Chair may in that capacity demand a poll. This right may be displaced by the rules of the body: Re Ryde Ex-Services Memorial & Community Club Limited (administrator appointed) [2015] NSWSC 226. However, the Chair has no such right if he or she is not a member, unless the rules specifically provide the Chair of a meeting as such with the right to demand a poll. If a statute or rules do empower the Chair as such to demand a poll (as s 250L(1)(c) of the Corporations Act does), this is an authority and power to be exercised, not in accordance with the personal wishes of the Chair but according to whether a poll is necessary in order to ascertain the true sense of the meeting on the particular question: Second Consolidated Trust Ltd v Ceylon Amalgamated Tea & Rubber Estates Ltd [1943] 2 All ER 567. It has been held that where a company’s constitution provides that a poll is to be taken in such manner as the Chair directs, there is no right to demand a poll upon the choice of the Chair, and voting on that question must be by a show of hands of those personally present: James v Rymill [1933] SASR 97. This case is contrary to the usual provisions found in many statutes and rules; for example, s 250M(2) of the Corporations Act. The demand for a poll may be communicated privately to the Chair: Re Phoenix Electric Light & Power Co (1883) 48 LT 260.
When a poll may be demanded 15.3 It is usual for a vote by show of hands to be taken before a poll is demanded. The rules of some bodies stipulate that each motion must be decided on in the first instance by a show of hands. Other rules (such as [page 209] reg 46(1) of Table A of the previous companies legislation) provide that a resolution must be decided on a show of hands, unless a poll is demanded either before or on the declaration of the result. However, unless rules provide otherwise, it is not essential that a demand for a poll should await a vote by show of hands. A poll may be demanded prior to a vote being taken by show of hands: Holmes v Keyes [1958] Ch 570. The Chair may validly demand and take a poll while omitting to take a vote on a show of hands, and even though a poll is not demanded but is objected to: R v Rector of Birmingham (1837) 7 A&E 254. The right to demand a poll must be exercised immediately, that is, as soon as (if not before) the vote by show of hands on the particular motion is over and the result declared: R v Vicar of St Asaph (1883) 52 LJQB 672. Otherwise, the Chair’s declaration of the vote by show of hands will be conclusive in the absence of fraud or manifest error: see 14.11 and 14.12. If a demand for a poll does not comply with the rules but despite this a poll is taken without objection, the irregularity is waived so far as those entitled to vote are concerned, and the poll is valid: Campbell v Maund (1836) 5 A&E 865. In the case of companies, s 250L(3) of the Corporations Act now provides that a poll may be demanded before a vote on a show of hands is taken, or before or immediately after the result on a show of hands is declared: see further 21.28.
Effect of demand for a poll 15.4 When a poll is properly demanded, the earlier vote by show of hands is superseded. The result from that voting is abandoned. The decision of the meeting will depend entirely on the result of the poll: Anthony v Seger (1789) 1 Hag Con 13.
Withdrawal of a demand 15.5 A poll, once properly demanded, may not be withdrawn by those who made the demand, unless the rules expressly provide otherwise. However, as in the case of withdrawal of a motion or amendment, the meeting may decide to consent to its withdrawal: see 10.15. If no person present objects, it is competent for a meeting to agree to a withdrawal of a poll, and for the Chair to put the motion again to a vote on a show of hands, even if some persons have left the meeting after a poll was demanded; provided that a fresh demand for a poll was not prevented and that it is clear there is no injustice: Montgomerie’s Brewery v Spencer (1899) 5 ALR 112. The two provisos in this case emphasise the care that a Chair [page 210] needs to exercise in such circumstances. It may be quite understandable as to why the person or persons who demanded the poll might have had second thoughts, or been encouraged or persuaded to request withdrawal; but by that time, other persons who intended to demand a poll, but who were forestalled and remained silent, may have already left the meeting, believing that a poll would be held. In any event, a demand for a poll cannot be withdrawn once the Chair declares that the poll will be taken at some later time, and adjourns the meeting for that purpose: R v Mayor of Dover [1903] 1 KB 668. If a demand for a poll is withdrawn, another vote by show of hands must be taken immediately, as the demand has nullified the earlier vote: see 15.4. If a poll is demanded, but not taken, the effect is that no decision on the matter has been made, as the result of the earlier vote is no longer of any consequence: R v Cooper (1870) LR 5 QB 457.
When a poll is to be held 15.6 Unless the rules provide otherwise, a poll may be conducted: (1) immediately; (2) on a subsequent date; or (3) later during the proceedings on the same day (for example, after the secretary has completed preparations for voting). If the poll is to be taken at a later time, remaining business on the agenda not affected by the poll or its result can be proceeded with and transacted forthwith. If a poll is demanded on a motion for the election of the Chair of the meeting,
or a motion for adjournment, the poll obviously needs to be taken immediately. Many constitutions and rules explicitly require this; for example, the replaceable rule in s 250M(2) of the Corporations Act. The decision as to when the poll will be conducted rests with the Chair, unless the rules state differently: R v D’Oyley (1840) 12 A&E 139; 113 ER 763. The time and place will be influenced by the particular circumstances, the nature and significance of the matter being voted on, coupled with reasons for the demand for a poll on the motion. It is a responsibility of the Chair to fix the time and place if the poll is not taken forthwith, and to ensure that suitable preparations and arrangements are made. Where the Chair decides to hold a poll on a later date, it is necessary that due notification of such polling day is given. Any requirements of the rules as regards such notification need to be complied with. For the convenience of the membership, it may be desirable for the period of that later part of the meeting to extend over several hours to facilitate the personal voting arrangements of those recording votes. The Chair needs to nominate a fixed hour at which the poll will close. When a poll is conducted on a later date, the meeting is not concluded until the poll is taken and the result declared. [page 211] In the absence of any rules to the contrary, a poll may be taken immediately the demand for it is made: Re Chillington Iron Co (1885) 29 Ch D 159. The Chair may order a poll to be held immediately at the close of other business: R v D’Oyley (1840) 12 A&E 139. It is competent for a Chair to adjourn a meeting for the purpose of taking a poll that has been demanded so as to give all entitled persons a reasonable opportunity to vote: R v Archdeacon of Chester (1834) 1 A&E 342. An immediate poll (that is, at the very meeting) will be illegal where a company’s constitution provides that the time and place of a poll are to be fixed by the directors (that is, not the Chair) within seven days from the meeting: Re British Flax Producers Co Ltd (1889) 60 LT 215. A poll taken on a later date is to be regarded as an enlargement or continuation of the meeting at which it was demanded, and not as an adjourned meeting in the usual sense: Shaw v Tati Concessions Ltd [1913] 1 Ch 292; compare 13.14.
Conduct of a poll
15.7 A poll is not restricted to any particular formal process of taking, receiving, counting or recording votes of members. If rules do not specify a particular method of taking a poll, it is for the meeting to decide the procedure: Ryan v South Sydney Junior Rugby League Club Ltd (1974) 3 ACLR 486. Apart from any provision in rules, a poll needs to continue for a reasonable period, regard being had to the number and situation of the voters and other relevant factors: R v Bishop’s Consistory Court of Winchester (1806) 7 East 573. When the Chair, acting within power, announces that a poll will continue for a certain time, the Chair may not prolong it beyond that time: R v Churchwardens & Overseers of Sutton (1864) 29 JP 56. A Chair is not entitled to close a poll while voters are coming in. However, a Chair may direct the continuance of the poll at a later time in order to give an opportunity to other voters to come in: Shaw v Tati Concessions Ltd [1913] 1 Ch 292. Where a proxy inadvertently fails to vote before the poll has closed, the Chair should still accept those votes by proxy where they affect the result. The purpose of the powers conferred upon the Chair with respect to the conduct of a poll is to facilitate the voting and counting of votes in order that the will of the majority of members, eligible to vote and voting, may be reliably ascertained. A ruling by the Chair not to accept the late votes cannot be said to give effect to that purpose: Link Agricultural Pty Ltd v Shanahan [1999] 1 VR 466; (1998) 28 ACSR 498. [page 212] The Chair has no power to close a poll on account of a disturbance: R v Graham (1861) 25 JP 437; compare 13.6.
Entitlement to vote 15.8 Any member properly entitled to vote may do so on a poll, even though that member was absent from the meeting at which the poll was demanded: Campbell v Maund (1836) 5 A&E 865. Thus, when a poll is conducted at a date subsequent to the meeting, it has the effect of an approach to the whole membership to express a view, although all members were not present at the earlier meeting. The right of an individual member to vote either on a show of hands or a poll is determined by reference to the register of members. If any member properly
entitled to vote is excluded, it may invalidate a poll: R v Rector of St Mary’s Lambeth (1838) 8 A&E 356. But the validity is not affected if the exclusion would not have changed the result of the poll: Ex parte Mawby (1854) 3 E&B 718. If the rules provide that no objections to any vote shall be received except at the meeting or poll when such a vote is cast, and that every vote not then disallowed shall be valid for all purposes, a vote that is, in fact, irregular will stand and may not be challenged later: Colonial Gold Reef Ltd v Free State Rand Ltd [1914] 1 Ch 382.
Method of voting 15.9 On a poll, voting must be recorded in written form: R v How (1863) 33 LJMC 53. This does not mean secret voting, nor necessarily individual voting papers: votes may be recorded on a voting list, possibly with crosses or ticks, or in some other manner as decided by the Chair, unless the rules (or perhaps a longstanding convention of the body) specify a procedure. A poll may not be validly taken by means of voting papers signed by members being left at or posted to the office of the body, that is, postal voting is not permitted, unless the rules expressly provide for this. Members desiring to vote on a poll must attend personally, or by proxy (where the rules provide for proxies), and record their votes at the place and time appointed by the Chair: McMillan v Le Roi Mining Co [1906] 1 Ch 331. Where a poll is demanded on several proposed resolutions, each motion must be voted on separately: Blair Open-Hearth Furnace Co v Reigart (1913) 108 LT 665. A poll taken on a number of motions all together is invalid: Patent Wood Keg Syndicate v Pearse [1906] WN 164. Accordingly, even if a poll has not been demanded, the safest procedure for the Chair to adopt in dealing with a group of related motions is to put each motion separately, whether or not this is requested. If some such motions are, [page 213] in fact, contingent on others having been carried or lost, care will be needed in the sequence in which they are put to the vote; but this factor should have been foreseen when the agenda was prepared. There is no necessity to appoint scrutineers at a poll, unless the rules provide for this: Wandsworth & Putney Gaslight & Coke Co v Wright (1870) 22 LT 404.
However, it may be desirable that this be done in the interests of a poll being fair and efficient, and seen to be so.
Date of resolution 15.10 The effective operating date of a resolution passed on a poll is the date on which the result of the poll is determined: Holmes v Keyes [1959] Ch 199. That date is the day on which voting closes. On that date, the poll is completed, and the result thus ascertained. If a delay were to occur in the declaration of the result by the Chair, this would not defer the operation of the resolution, which would still come into effect immediately; a declaration of the result of a poll is an essential affirmation and announcement of the result of the voting, but it is not the passing of a resolution or the loss of a motion.
Suggested procedures 15.11 The conduct of a poll may be a fairly straightforward operation. On the other hand, it may entail a prolonged and complex procedure. There is no system suitable for all occasions: needs and arrangements depend upon circumstances. Intelligent planning and good organisation are essential. Ingredients of a welladministered poll include: suitable physical arrangements; adequate communication of information to those voting; and a person who it is obvious to all is knowledgeable and in charge. A poll that proceeds in an orderly, smooth fashion, without an appearance of undue haste, helps to convey to the voters a sense of efficiency and confidence that the ultimate result will be an accurate one. This is always important; it is particularly so when there is substantial opposition to a proposal by the board or governing committee, with a poll being held in a contentious atmosphere. Certain aspects regarding polls are provided for in the Corporations Act (see 21.28) and, with regard to listed companies, in the ASX listing rules (see 24.4). As a paramount consideration, any specific requirements and procedures contained in the rules and standing orders of the body or a relevant statute or other binding rules must be complied with strictly. Directions given by the Chair must be followed. In the conduct of a poll, requisite and suitable [page 214]
procedures, including the Chair’s decision as to the time and place of the poll, are influenced by, and will need to take into account, the following: the number attending the meeting, and the relative proportion of the membership present when a poll is demanded; the significance of the motion in question, and reasons lying behind the demand for a poll; whether, on a poll, members have varying voting rights according to their shareholdings or other entitlements; whether the rules allow voting by proxy; whether the rules permit further proxies to be lodged where a meeting is adjourned for the purpose of conducting a poll; whether the rules require proxy forms to be sent out with notices of meeting; in any case, whether proxy forms have been sent out to all persons entitled to vote; whether a large proportion of proxy forms lodged prior to the meeting disclose the way in which the proxy is to vote; whether preparations already made in anticipation, or, alternatively, lack of preparations, make it feasible for an immediate poll to be held; whether the premises where the meeting is being held will continue to be at the disposal of the meeting for a sufficient period for an immediate poll to be conducted; whether the secretary, with foresight, has made a provisional reservation of adequately large premises at a suitable future date to which the Chair can adjourn the meeting for the purpose of taking a poll; and whether circumstances, including the completion of an accurate tally of voting, by proxy as well as personally, will enable the result to be determined quickly enough for its announcement while the meeting is still assembled. This may be of practical importance, for example, if a further proposal is not able to be discussed and decided until the result of the poll is known. When a poll is held immediately after it is demanded, the Chair is able to explain the procedure and give instructions directly to those present. However, where a poll is held at some later date, the meeting does not necessarily reassemble, and voters may call at a polling point open over a prolonged period: written instructions are therefore necessary. Where voting by proxy is permitted, especially where persons other than members may be proxies, the circumstances and the atmosphere differ from the situation where votes can be lodged only by members who attend personally. Where a poll occurs in an organisation in which the members have only one vote each, and it is held at a later date to encourage
members to attend personally and vote or to lodge proxies, the procedure is different again, and in such a case is simplified. [page 215] Procedures along the following lines need to be adapted to the circumstances below: Where a poll is held on a date subsequent to the meeting at which it was demanded, admission cards may be issued (either posted or ready at the polling point) to members and those proxies entitled to vote. A voting list may be prepared prior to the original meeting or the date of a poll held later. It lists every name on the register of members and the number of votes to which each member is entitled. This is followed by several columns: ‘for’ and ‘against’; ‘proxy’; ‘remarks’. Additional columns are needed if more than one motion is being voted on. Details are filled in by poll clerks or scrutineers as the poll proceeds, thus facilitating the tally of votes. Upon arrival at the polling place, those who intend to vote, either on their own behalf or as a proxy, may be requested to sign a polling list. In addition, or alternatively, their names (including the name of the principal, where a proxy attends) are ticked off on a previously prepared list containing the names of members and those proxies that have been lodged. A simple style and format of voting paper (slips or cards) facilitates voting and should obviate informal votes. They should be prepared beforehand, but could possibly be prepared expeditiously for an immediate poll where only a moderate number of persons are present to vote. The voting paper should state the motion in its exact words. Adjoining should be two well-separated spaces or small squares, one clearly marked ‘for’ and the other ‘against’, or ‘yes’ and ‘no’. An explicit instruction should be included as to how to record a vote. In addition to recording their vote, voters, as directed, enter on the card their names in block letters, signature, ‘proxy for …’ (where applicable), and number of votes, shares or entitlements (where multiple votes apply); however, where full poll preparations have been made in advance, the secretary may have arranged for most of this latter detail to be already on the card, which is then officially initialled or rubberstamped upon its issue to the person voting. Where the meeting is assembled as a meeting when a poll is taken, it is most important the Chair gives clear directions as to how to record a vote either for or against the motion. If there is more than one motion to be voted on, explicit instructions are needed.
Where the meeting is assembled, and voting cards have been issued, the Chair should announce that this has been done; any person without a voting card can then bring this to the Chair’s attention. The Chair should explain precisely the situation with regard to voting by proxy, and, where this is permitted, state the date and time the [page 216] rules stipulate for lodgment of all proxies (frequently 24 or 48 hours before the start of the meeting). Scrutineers are appointed: either two scrutineers (one representing each of the opposing groups) are nominated and appointed by the meeting, or the auditors of the body may be appointed in suitable cases, especially where an announcement of the result is deferred to a date later than the poll itself. The tasks of scrutineers vary. In general, in conjunction with the Chair of the meeting and the secretary of the body, they check all proxies and any powers of attorney, verify the validity of all votes cast, ensure that each vote is correctly executed and conforms to the rules, and watch for duplication of voting by both a proxy and the principal (something not done as a deception, but a mischance that does occur when a poll is held at a date later than the meeting for which the proxy was given). The scrutineers refer any doubtful matter to the Chair for a ruling. At the conclusion of voting, they prepare a concise factual report showing the totals of votes cast for and against the motion, and of informal votes. The Chair (and not the secretary or a scrutineer) announces the result of the poll, and then declares that the resolution (stating the exact words) has been passed or, alternatively, that the motion has been lost. There is no need for the Chair to state the number of votes each way, unless the rules require this. However, many Chairs choose to announce such figures and also state the number of informal votes, and should do so if requested by any person at the meeting. Where the meeting is no longer assembled when the result becomes known, a circular should be sent to every member immediately advising the result; where appropriate, a newspaper advertisement is often inserted and a press release issued.
[page 217]
16 Proxies Introduction 16.1 A proxy is a person who is a lawfully constituted agent of another person: Re English, Scottish & Australian Bank [1893] 3 Ch 385. ‘Proxy’ is not a technical word; but the appropriate meaning seems to be that suggested in the Oxford Dictionary of (2b) ‘a writing authorizing a person to vote instead of another, at an election, a meeting of shareholders, &c., or as formerly in the House of Lords’: Davison v Vickery’s Motors Ltd (in liq) (1925) 37 CLR 1. As these two judicial definitions suggest, the term ‘proxy’ is used in the context of meetings in two distinct but related ways: 1. a person appointed to represent another person at a meeting or a number of meetings, and authorised to vote on behalf of the latter person; and 2. the instrument in writing containing such an appointment, that is, the document by which a proxy (in the first sense) is appointed. The word, in use in connection with meetings since the fifteenth century, is a contraction of ‘procuracy’; procuration is the action of taking care of or looking after. Initially used for a written authorisation, and then for a vote given under that authority, the word later came to apply to the person who had received such an authority. Sometimes, the terms ‘proxy paper’ or ‘proxy form’ are used to denote the document. The Corporations Act now uses the term ‘appointment of proxy’ or simply ‘appointment’: see s 250A.
Agency principles 16.2 A proxy (the person) is the agent of the principal (that is, the person making the appointment), and the general law of agency applies to proxies. It is a
general principle of law that what people may do [page 218] themselves, they may do by an agent. However, at common law there is no right to appoint another person to act and vote on a person’s behalf, that is, there is no common law right to vote by proxy: Harben v Phillips (1883) 23 Ch D 14. Accordingly, in order that such a right is available, the rules of a body need to contain a provision that gives members a right to appoint proxies to act for them at meetings and vote on their behalf, and to set out specific requirements regarding proxies. The Corporations Act, Strata Titles Acts and certain other legislation stipulate that members are entitled to appoint proxies to act for them at meetings. Rules usually require a proxy to be appointed in writing signed by the member, and often include a specimen form that must be followed at least approximately. But rules frequently do not require the principal’s signature to be attested (that is, witnessed), nor usually require that the proxy’s signature be appended. All regulations that create a right to vote by proxy must be strictly observed, for, apart from them, there can be no right at all to vote vicariously: McLaren v Thomson [1917] 2 Ch 261. An appointment of a proxy involves a specific appointment being made for a precise purpose that is to be stated, for example, to attend and vote on behalf of the principal at a certain meeting or at specified meetings, or at all meetings of one or more specified bodies. An appointment to act generally as agent does not in itself provide authority to be a proxy at a meeting on behalf of the principal: Sheldon v Phillips (1894) 15 LR (NSW) Eq 98.
General principles 16.3 A proxy has no power at a meeting beyond that specified in the rules of the body or a relevant statute. Frequently, the rules limit the rights of a proxy to being present at a meeting and voting on a poll if such is demanded; some rules give a proxy the right to join in a demand for a poll. Rules may provide that a proxy counts in making up a quorum, and may give further rights. They often stipulate that a proxy needs to be a member of the body. In the context of meetings of companies, the rights of proxies have been extended steadily through the years as the companies legislation has been amended from time to time: see
21.28. The eligibility of persons to be appointed as proxies depends upon the provisions in the rules. It is not uncommon for this to be restricted to persons who are members of the body, but this is not necessarily the case. Where the sole right of a proxy is limited to exercising a proxy vote on a poll, a restriction of the kind referred to ensures that attendance at meetings will be confined to members. [page 219] Where proxies are allowed to vote on a poll, all proxy votes (in the same way as all personal votes) are counted in accordance with their voting rights as set out in the rules. For example, the replaceable rule in s 250E(1) of the Corporations Act provides that, on a poll, each member has one vote for each share they hold. In practice, proxies given by various members are held by members who are present at the meeting (often by the Chair), that is, by people who already have a personal vote. In such circumstances, even if the rules were to permit a proxy to vote on a show of hands, these proxies would become operative only if and when a poll is demanded. Where a corporation is a member of a body, the presence at a meeting of the body of its representative (provided that person has been duly appointed and authorised) is to be regarded in the same way as if the corporation is personally present as a member for purposes of entitlement to vote on a show of hands, join in demanding a poll and be counted in tallying the quorum. This is provided that the person is not attending the meeting and acting either on his or her own behalf as a member or as the representative of another corporation as well: Re Kelantan Coco Nut Estates [1920] WN 274. A person holding a power of attorney given by a member may act as a proxy. Most powers of attorney also confer the right to such a person to appoint a proxy: see further 16.12.
Common law principles 16.4 A considerable amount of litigation regarding proxies has come before the courts, and consequently there is a large body of principles to be found in the common law. Where the rules permit a proxy, as such, to vote on a show of hands, the vote cast by that proxy counts as one vote only, even though that person may also be
entitled to a personal vote as a member or may hold the proxies of more than one member: Ernest v Loma Gold Mines Ltd [1897] 1 Ch 1. Thus, unless or until a poll is demanded, a person present is counted as recording only one vote — that is, on a show of hands — however numerous may be persons whose proxies are held. Where the constitution or rules stipulate that only another member of the body may be appointed as proxy, it is no objection that the nominated person is not a member when named as proxy or when the instrument of proxy is lodged. This is provided that the proxy has become a member by the time of attending the meeting and voting; the nomination as proxy does not become an appointment until the named person is qualified to be a proxy: Bombay-Burmah Trading Corp Ltd v Shroff [1905] AC 213. [page 220]
The proxy document 16.5 The proxy document should indicate who is appointed the proxy, and at which meeting or meetings it is to apply. However, provided that the person appointed as proxy can be identified although not actually named in the instrument of proxy, that is a sufficient description of the nominated person for the proxy to be valid: Bombay-Burmah Trading Corp Ltd v Shroff [1905] AC 213. If a proxy is invalidly given or irregularly employed, any vote cast by the person appointed proxy will be void: McLaren v Thomson [1917] 2 Ch 261. A proxy, in the first instance, may be given with a blank left for the name of the person entitled to vote, if there is an authority to some person to fill in the blank, and it is no objection that the blank is subsequently filled in: Sadgrove v Bryden [1907] 1 Ch 318. Such a blank proxy as subsequently filled in is valid where some person was authorised, orally or otherwise, to fill the blank: Re Lancaster (1877) 5 Ch D 911. A proxy may be signed in blank so long as it is properly completed by the time it is used: Ernest v Loma Gold Mines Ltd [1897] 1 Ch 1. In that case, the court held, on the facts before it, that the secretary acting for the board of directors had an implied authority to fill in the date omitted by the appointor. That case may be contrasted with New Pinnacle Group Silver Mining Co v Griffiths (1897) 18 NSWLR Eq 159, where it was held that proxies that are undated should not be
accepted. In the case of companies, s 250A(3) of the Corporations Act deems an undated proxy to be dated on the day it is given to the company. A proxy document may nominate alternative persons or more than two; one to act as proxy in the event of one or more of the nominated persons not being present at the meeting when the proxy is exercised. The proxy document should make it clear that each person is appointed as an alternate, and not jointly. If a joint appointment is desired, the proxy document should specify the proportion of votes to be exercised by each person appointed, failing which the appointment may be invalid unless saved by a provision such as s 249X(3) of the Corporations Act. If rules require the signature to a proxy to be attested, the attestation must not be omitted: Harben v Phillips (1883) 23 Ch D 14. Attesting (from the Latin attestari, meaning ‘to bear witness’) means merely, as regards signed documents, witnessing the action of a person signing and thereby executing a document. The signed attestation bears witness to the fact that the document was indeed signed, and in the presence of the witness. Attestation, as such, does not involve a statutory declaration, but it does call for the attesting signatory to be actually present to witness [page 221] the execution. Where the rules require proxies to be attested, they must be witnessed at the time they are signed, and the signatures may not be certified subsequently: Ansett v Guinea Airways Ltd [1945] SASR 94. When attestation is required, a holder of a proxy may not be the witness to the signature of the principal on the form appointing the holder as proxy: Re Parrott; Ex parte Cullen [1891] 2 QB 151. It is advisable that, where attestation is required, the witness to the signature of a principal on any document establishing agency, which includes proxies and powers of attorney, should be other than the agent or the spouse of the principal. If a form of proxy is set out in the rules, that form needs to be substantially followed, unless the rules permit proxies to be in any other form that the directors or governing committee may approve. Where a right to vote by proxy is given by the regulations, the exercise of this right must conform exactly to the requirements of the regulations: Howard v Hill (1888) 59 LT 818. However, a misprint or some palpable mistake on a proxy document does not entitle the body to refuse to accept the proxy: Oliver v Dalgleish [1963] 3 All ER 330. In the case of companies, a proxy will be valid if it contains the information required by
s 250A(1) of the Corporations Act, whether or not any form provided by the company is used. The right of rejection of a proxy document that does not comply with the requirements of the rules is vested in the Chair of the meeting for which the proxy has been lodged. However, a court of competent jurisdiction will correct a Chair who makes an error of law that deprives a member of the right to vote by proxy, and may itself determine the validity of proxies ruled invalid for reasons wrong in law: ANZ Nominees Ltd v Allied Resources Corp Ltd (1984) 2 ACLC 783.
Lodgment of proxy documents 16.6 It is customary for rules to require that all proxies must be lodged at the body’s registered office or with its secretary not later than a stipulated number of days or hours prior to the commencement of the meeting to which they relate. In any case, unless the rules happen to state otherwise, the governing committee of a body has inherent power to decide on a short time before the start of the meeting by which proxy documents are to be produced so that they may be examined and the voting entitlement marked on each proxy: Campbell v Australian Mutual Provident Society (1906) 7 SR (NSW) 99. In this way, a meeting may commence its business without delay. In the case of companies, the effect of s 250B(1) of the Corporations Act is that a company cannot require proxies to be lodged more than 48 hours before the meeting. [page 222] Any director is entitled to inspect the proxy forms that have been lodged, but only to the extent that this does not unreasonably interfere with preparation for the meeting: Armstrong v Landmark Corporation Ltd [1967] 1 NSWR 13; Re Coles Myer Ltd; Lew v Coles Myer Ltd (2002) 43 ACSR 432. A document that purports to appoint a proxy but is lodged other than by the time specified in the rules is not a valid proxy instrument. Where the rules require proxies to be lodged before the time of the meeting, further proxies may not be lodged after an adjournment of that meeting and prior to the adjourned meeting: McLaren v Thomson [1917] 2 Ch 261. This prohibition applies unless the rules contain words to the effect of ‘lodged before the time for holding the meeting or adjourned meeting’ or ‘whether such meeting
be an original or adjourned meeting’. The adjournment of a meeting to take a poll is not deemed to be adjournment of a meeting in the usual sense, but is regarded as ‘a mere enlargement’ or ‘a continuation’ of the meeting: see 15.6. Therefore, where the rules require proxies to be lodged before the time for holding the meeting or adjourned meeting, further proxies may not be lodged after the meeting at which the poll was demanded and prior to the poll: Shaw v Tati Concessions Ltd [1913] 1 Ch 292. The rules of many bodies abrogate this principle by including words to the effect of ‘or lodged before the time appointed for the taking of the poll’. In a later case, where the body’s rules provided that a poll on a motion to adjourn must be taken forthwith, such a poll was conducted but the tally had not been completed, and therefore the result was unknown when it became necessary for the meeting to quit occupancy of the hall where it was assembled. The Chair thereupon explained that all must leave, and announced a date for an adjourned meeting if the result of the poll showed that the motion to adjourn had been carried; the Chair also nominated another date for the continuation of the meeting if the motion was shown to be lost. The question to be decided by the court was whether the reassembly of the meeting was an adjourned meeting, because, if so, further proxies could be lodged. The court held that the reassembled meeting was ‘a continuation’ and that there had not been an adjournment; therefore, fresh or additional proxies might not be lodged. The court held that no resolution had been passed to adjourn, nor did the rules contain authority for adjournment otherwise; accordingly, there had been no adjournment of the meeting. It had been deferred, although the rules contained no specific provision to deal with the contingency that had arisen because of physical impossibility to continue it without interruption: Jackson v Hamlyn [1953] Ch 577. [page 223] It is not essential that proxies are produced at the meeting itself, unless the rules require this. If proxies are duly lodged at a place required by the rules, the voting entitlements and tally, after the proxy documents have been adequately checked, may be suitably communicated to the Chair of the meeting: Re English, Scottish & Australian Bank [1893] 3 Ch 385.
Revocation of a proxy
16.7 As in any relationship of principal and agent, the authority to vote contained in an instrument that appoints a proxy may be revoked before being exercised. A proxy is revoked by a written notice of revocation (that is, a document withdrawing the authority), the death of the principal, the termination of the principal’s membership of the body, or the lodgment (provided the rules are complied with) of a later proxy relating to the same meeting and affairs as the earlier proxy document. If a principal attends a meeting for which a proxy has been appointed, and the principal casts a vote personally prior to the proxy casting a vote, such an action retracts the authority of the proxy to vote on that particular motion, and any vote by the proxy on that issue would be nullified: see further 16.8. To guard against practical problems, the rules of many bodies provide that a vote given in accordance with a properly lodged instrument of proxy will be valid notwithstanding the death of the principal, or revocation or cessation of membership (including by transfer of shares), unless notice in writing regarding such has been received by the body prior to the meeting or adjourned meeting: see, for example, the replaceable rule in s 250C(2) of the Corporations Act. Some rules require that a notice of revocation must be given to the body a specified time prior to the meeting. A company is to disregard notice of revocation of a proxy where it receives the revocation later than the time stipulated in the rules: Spiller v Mayo (Rhodesia) Development Co Ltd [1926] WN 78. If the rules provide that a notification of revocation of a proxy must be received by the body ‘before the meeting’ and a meeting is adjourned, a revocation received after the original meeting, but before an adjourned meeting for taking a poll, is of no effect: Spiller v Mayo (Rhodesia) Development Co Ltd [1926] WN 78. A revocation received before an adjourned meeting adjourned for any other reason is also of no effect: Cousins v International Brick Co [1931] 2 Ch 90. Any such attempts at revocation are ineffectual, because an adjourned meeting is, in law, a continuation of the original meeting: Scadding v Lorant (1851) 3 HLC 418; see further 13.14. However, the person who appointed the proxy may attend the adjourned meeting, whether for a poll or otherwise, and vote personally instead of the proxy. [page 224] Should unofficial or indefinite information about the death of a member come
to the notice of the secretary of a body, suitable inquiries should be made before the meeting to try to establish the facts. The secretary should then advise the position to the Chair, who would need to ensure that the rules were complied with, if necessary accepting a vote of a proxy appointed by a person whose death has possibly occurred, but proper evidence of which is lacking. In accordance with the general principles of the law of agency, revocation as between a member and proxy is effective immediately the principal notifies the proxy of this. At that point, if a proxy has not yet voted, but disregards the revocation and does vote, the principal has a claim in law against the proxy. However, any such breach does not affect the result of voting at a meeting, and is of no concern to the body conducting the meeting, unless such revocation had come to its notice in accordance with its rules.
Voting by principal 16.8 A principal may personally attend a meeting and vote instead of the proxy previously appointed: Knight v Bulkeley (1859) 5 Jur NS 817. A proxy is given on the basis that the member giving it intends not to vote in person; however, if the member does in fact attend the meeting and vote personally, that member is taking a step that obviates the necessity of the proxy being used, and retains the right to attend the meeting and vote personally: Cousins v International Brick Co [1931] 2 Ch 90. If a principal votes personally before the proxy votes, it is unnecessary for the proxy document to be utilised for that particular vote. The principal is exercising the option, given by the body’s rules, of voting in person on the motion, instead of leaving it to the appointed proxy. The principal does not thereby revoke the appointment of the proxy, who may continue to act and vote on behalf of the principal on later occasions (that is, later at the same meeting or at further meetings) as authorised in the proxy instrument; that is, the proxy remains valid for subsequent use: Ansett v Butler Air Transport Ltd (No 2) (1958) 75 WN (NSW) 306.
Exercising a proxy vote 16.9 A proxy given for a specific meeting may not be used for a different meeting: Howard v Hill (1888) 59 LT 818. When members who have been appointed as proxies exercise their vote as such, they need to indicate that they are voting as proxies, and not only on their own
behalf: Clifton v Mount Morgan Ltd (1940) 63 CLR 329. [page 225] A proxy that gives authority to vote ‘for or against a proposed scheme of arrangement’ includes authority to vote on an incidental question that may arise for decision before the main question is voted on: Re Waxed Papers Ltd [1937] 2 All ER 481. Where under the constitution of a company the votes of members are to be ascertained by ballot, a proxy has the same right to vote as at a poll: Ryan v South Sydney Junior Rugby League Club Ltd (1974) 3 ACLR 486.
Obligation to exercise a proxy vote 16.10 The question arises as to whether a person appointed a proxy is under an obligation to exercise the vote, or all the votes, the proxy has been authorised to cast. This may be a matter of importance for the Chair of a meeting or the secretary of a body where some members have appointed these officers as their proxies. As regards other persons who have been appointed proxies, the question arises as to whether they need to attend the meeting or a poll, as otherwise, of course, they are unable to vote. Apart from any statutory provisions, the general opinion regarding a possible obligation on the part of a proxy is as follows: 1. if the proxy is remunerated or to be remunerated for so acting, there may be a binding contract, and the proxy must vote; 2. otherwise, there is no definite legal obligation on the proxy to vote; 3. however, a person appointed a proxy as a consequence of proxies being solicited (for example, where a board of directors does this by posting blank proxy forms to members with arguments in favour of a motion, or where an individual director or member does the same but in opposition to the proposal) is thought to be under a legal obligation to exercise that proxy vote; 4. when directors are appointed proxies, it appears that they are liable to exercise their proxy votes; and 5. a proxy is under an obligation not to vote contrary to any instructions given by the principal as to which way to vote.
However, the effects and repercussions if any, legal or otherwise, of such inaction or apparent breaches of obligation, apart from 5 (that is, voting contrary to an instruction contained in a proxy document), are of concern only to the principal and the proxy, and do not affect the result of the voting at the meeting in any way. In the case of companies, some guidance is provided by s 250A(4) of the Corporations Act and the decisions in Whitlam v Australian Securities and Investment Commission (2003) 57 NSWLR 559; 46 ACSR 1 and Re Jervois Mining Ltd; Campbell v Jervois Mining Ltd [2009] FCA 401; BC200903150: see further 21.28. [page 226]
Soliciting of proxy votes 16.11 It is the right and duty of directors to advise members as to the prudence of proposed changes, and it is within their power to circulate among members, at the body’s expense, arguments and statements in favour of such changes and proxy papers. There is no obligation to do similarly on behalf of dissentient members: Campbell v Australian Mutual Provident Society (1908) 77 LJPC 117; 24 TLR 623 (PC). In the case of companies, proxy papers should be sent to every member entitled to vote: see s 249Z of the Corporations Act.
Powers of attorney 16.12 The appointment of a proxy may be effected by a power of attorney, instead of by the usual proxy instrument, if permitted by the rules of the body or statute. As with the term ‘proxy’, the term ‘power of attorney’ is used in two ways: 1. an authority one person confers on another person with power for the second to act in the first’s name; 2. the formal document — that is, the legal instrument — by which that authority is conferred. A person who is so appointed is called an ‘attorney’; the one document may
appoint two or more attorneys to act jointly or severally. A person who confers the authority is termed a ‘donor’ or ‘principal’. Any of the parties may be a ‘natural person’ — namely, an individual — or a corporation, that is, an incorporated body. A power of attorney needs to be conferred in writing: Steiglitz v Eggington (1815) Holt, NP 41. The word ‘attorney’ has a long history of meaning a person appointed to act for another person. Today, the use of the term tends to apply to a limited situation of agency by which a person is appointed with legal power to represent, and act for and in the name of, another person in either specific or general matters that have a legal effect. This type of agency is convenient, and often necessary in circumstances of prolonged absence overseas or incapacity of the donor. The earlier, wider meaning of the word — that is, a general representation of another person in legal matters — is perpetuated in the parliamentary office of AttorneyGeneral, and in its widespread use in the United States of America. In connection with meetings, the term ‘power of attorney’ tends to be used mainly to refer to the legal document, that is, employing the derived meaning of the term. The scope of the powers and authority of the attorney depend on the donor’s intentions. Some powers of attorney give wide powers, while others [page 227] confer only limited powers. Many documents that grant wide, general powers to the attorney more or less follow a recognised form giving fairly comprehensive powers. The document commences with a declaration appointing an attorney by name to do any of the things set out, and confers power on the attorney to do this. It concludes with an authority for the attorney to sign and execute documents and take over relevant actions as effectually as the principal could do if personally present. Powers of attorney frequently contain clauses along the following lines: In connection with any shares, debentures and other investments, to attend and vote or appoint any person to attend and vote as my proxy at meetings of holders thereof and to effect, sanction or oppose any exercise or modification of rights;
or To attend and vote or appoint any person to attend and vote as my proxy at any meetings of creditors;
or
(with or without limitations) to deal with my rights and interests …;
or To delegate in such manner as my said attorney may think fit all or any of the powers hereby conferred and to revoke or vary any such delegation.
Thus, a person holding a power of attorney containing such clauses has authority both to be a proxy, and to appoint a proxy in connection with meetings. However, as with proxies, there is no common law right to vote through an attorney, and accordingly voting by attorney will only be permitted if also authorised by the rules of the body or statute. In the case of companies, the provisions of the Corporations Act relating to voting by proxy are sufficiently wide to permit voting by attorney; however, the requirements of s 250B relating to the lodgment of proxy documents must be complied with for the attorney to be entitled to vote: New South Wales Henry George Foundation v Booth (2002) 54 NSWLR 433; 167 FLR 287. 16.13 Where two or more persons are appointed attorneys jointly and are given power to appoint a proxy, the proxy document needs to be signed by them jointly, that is, by all of them. Where they are appointed jointly and severally (that is, individually), on the basis that each of them can act on their own and bind the principal, the signature of one attorney is sufficient. 16.14 A power of attorney, unless expressed to be irrevocable, can be terminated in a number of ways. As a general rule, a person dealing with an attorney in good faith is entitled to assume that the power continues to exist unless: (1) that person has knowledge the power has been revoked; or (2) information has come to the notice of that person that could imply [page 228] revocation, or raises a reasonable suspicion that the power of attorney is no longer in force. However, where a power has been revoked by some operation of law (death, insanity or bankruptcy), a person without knowledge of this is likely to be adversely affected if continuing to act on an assumption it is still in operation. Termination of a power of attorney may come about by: 1. revocation by the principal; 2. the expiry of a fixed or identifiable period, if the document is so expressed; 3. the fulfilment of an expressed condition (for example, absence overseas); or
4. the completion of specified transactions, or when such completion has become impossible. It is not essential that revocation by the principal be in writing; it may be revoked orally, or by some act that demonstrates that the donor has revoked it: The Margaret Mitchell (1858) 1 Sw 382.
Proxy by power of attorney 16.15 With regard to a vote by proxy or an appointment of a proxy pursuant to a power of attorney, the actual document (or a certified copy) needs to be produced to the secretary of the body and examined in detail: see, for example, s 250B(1)(b) of the Corporations Act. The procedure adopted by the secretaries of many companies is to sight both the power of attorney and a declaration in writing by the attorney that the power has not been revoked. This precaution is taken for general purposes of company administration in view of the usual inclusion in a power of attorney of an authority to sell, buy and sign transfers of shares in the name of the shareholder; such a procedure is automatically followed even though the power of attorney may be produced to the company (at least for the moment) only for proxy purposes in connection with a meeting.
Representatives of corporations 16.16 An incorporated body (or ‘body corporate’ or ‘corporation’) is an artificial legal entity, which has no physical presence. As such, it can only exercise its rights as a member of a body at meetings of that body through individuals appointed to represent it. In the case of companies, s 250D of the Corporations Act specifically authorises a body corporate to appoint an individual as its representative to exercise all the powers of membership at general meetings. The appointment may be a standing one: s 250D(1). Such a representative is not to be regarded as a proxy; [page 229] unless otherwise specified, the representative may exercise the same rights as an individual shareholder who is present in person: s 250D(4). In this way, the companies legislation provides a corporation, which is an artificial person, with a body and vocal personality enabling it to vote on a show of hands and speak and act at a meeting in any way that a personal member can. Alternatively, a corporation may appoint a proxy in the same way as other
members by means of a proxy document, or may appoint its representative by a power of attorney. In the case of meetings of bodies that are not companies registered under the Corporations Act, either of these courses may be necessary to enable a corporation that is a member of the body to appoint a representative to attend the meeting on its behalf, unless the rules of the body or another statute provide for some other method of representation (which is often the practice in trade associations).
Suggested procedure on receipt of proxies 16.17 Aspects of proxy documents to be checked as they are received to ensure that they satisfy the various requirements are as follows: Confirm that the proxy document has been lodged at the place and by the time stipulated in the rules, having regard to provisions about adjourned meetings. Carefully examine each proxy document to confirm that: 1. it is properly signed: individual members sign personally; corporations sign by seal or signature of an authorised officer according to the corporation’s rules; joint members sign according to the body’s own rules; if signed under power of attorney, the latter document requires examination; 2. signatures are witnessed, if the rules require this; 3. it is dated and with a relevant date, if required by the rules; 4. it refers to the particular meeting, any limitations or restrictions being noted; and 5. it is in a form substantially the same as any specimen form contained in the rules, if they require this. For each proxy document, confirm that: 1. each person appointed a proxy is eligible to be a proxy under the rules; 2. the member is entitled to vote under the rules (for example, annual subscriptions or calls on shares not being in arrears) and therefore entitled to vote by proxy; and 3. the proxy has not been revoked in any manner, either before or after its lodgment. [page 230] Ascertain the voting entitlement of each proxy from the register of members,
and record the voting entitlement on the document and on a voting list. Where the proxy forms disclose the manner in which votes are to be cast (if the proxy is exercised), separately tally the favourable and unfavourable votes to provide the Chair with some indication of the weight of likely voting in the event of a poll being demanded.
[page 231]
17 Elections and Ballots Introduction 17.1 In connection with meetings, elections of persons to hold offices or other positions are usually for the purpose of electing: 1. 2. 3. 4. 5. 6.
the Chair of a meeting; office-bearers of the body — president, secretary, and others; members of a board, council or committee; the Chair of that board; persons to fill casual vacancies on committees; or delegates to serve on external committees, or to represent the body at conferences. Such elections are a form and method of voting.
General principles 17.2 As with meetings generally, it is important that the rules and any provisions of a relevant statute be precisely followed in conducting elections. For example, s 201E of the Corporations Act imposes important restrictions on the election of directors of public companies. Rules often specify that elections of office-bearers, councillors and committee members are to be by secret ballot. This is because disclosure of each person’s vote can bring embarrassment, and may also lead some members to refrain from voting, or to allow their vote to be swayed by friendship rather than being a frank assessment of the merits of rival candidates. Although secret ballots find favour in relation to elections, the common law method of voting is by show of hands, as previously explained: see 14.5 and 14.12. Accordingly, where rules do not specify an election procedure, strictly,
voting should be by show of hands: James v Rymill [1933] SASR 97. In such a case, the procedure is that the person who is presiding announces the names of all the persons nominated for the [page 232] particular office, preferably stating the names in the sequence in which nominations were received. Then, in that order, the person presiding states each name separately, calling for a show of hands by members who wish to vote for that candidate. Each person may vote only once. The candidate who receives the greatest number of votes is thereby elected. The person who is presiding declares this to be so. Where voting is by ballot, and the rules give candidates the right to appoint a scrutineer, the following apply: 1. The returning officer must give scrutineers all necessary facilities for overseeing the proceedings and all relevant information, consistent with the orderly conduct of the proceedings and the discharge of the returning officer’s duties. 2. Scrutineers are entitled to be present and observe what is being done, and to draw attention to and object to courses that they regard as irregular or doubtful. 3. Specifically, scrutineers are entitled to examine proxies from the point of view of their validity, and this is a right that cannot be denied by directors fixing time limits and conditions for an election that do not permit a proper opportunity for scrutiny. 4. However, it is for the returning officer to establish the procedure to be followed in the conduct of the ballot and the count, to determine how objections are to be decided and generally to supervise the conduct of the election: Ryan v South Sydney Junior Rugby League Club Ltd (1974) 3 ACLR 486. Where elections of a body’s office-bearers are carried out at meetings, such elections come into effect immediately the person is elected, unless the rules provide that the successful candidate is to assume office at some future time; for example, at the close of the meeting, or at the commencement of the next calendar year or financial year: Thorpe v Adelaide University Post Graduate Students’ Assn Inc [2003] SASC 438; BC200308490. In the latter case, the new
office-bearer’s designation would be, for example, ‘president-elect’. In the case of companies, it is not possible subsequently to overturn the election of directors by attempting to rescind the resolution making the appointment: see 11.16. The definition of two terms commonly found in rules in connection with elections has been considered by the courts. Thus, ‘casual vacancy’ means a vacancy not occurring by effluxion of time, that is, any vacancy occurring by death, resignation or bankruptcy (York Tramways Co Ltd v Willows (1882) 8 QBD 685), or a vacancy in office arising otherwise than by retirement in rotation in accordance with the company’s constitution (Munster v Cammell Co (1882) 21 Ch D 183); while ‘eligible’ means [page 233] ‘legally qualified’, as opposed to ‘suitable’: Faramus v Film Artistes’ Assn [1964] 1 All ER 25.
Election of the Chair 17.3 The general principles, authorities and practice that apply to the election of the Chair of a meeting are considered in 6.4. There are some additional matters that should be noted here in the context of elections. Any irregularity in the election of the Chair must be challenged immediately, otherwise any defect will be overcome by tacit acquiescence: Cornwall v Woods (1846) 4 Notes of Cases 555. Where the designated Chair is absent, or if it is undesirable that that person should preside at a meeting because of particular circumstances, those present are entitled to elect another person as Chair for that meeting: Dickason v Edwards (1910) 10 CLR 243. Where this occurs, the person elected as Chair (except where the election specifically covers the period of absence of the designated Chair) is entitled to preside throughout the meeting in the event of the designated Chair arriving later, unless there is a rule or traditional practice to the contrary. However, in this event it is usual for the person temporarily presiding to relinquish the chair in favour of the designated Chair. Many rules, in effect, give the designated Chair a short period beyond the scheduled time for commencement in which to arrive, before the meeting is permitted to elect another Chair so that it may commence business.
A retiring Chair, if seeking re-election, may vacate the Chair before the election takes place, and appoint a deputy to preside during the election: R v White (1867) LR 2 QB 557. The deputy would, of course, need to be a person unlikely, perhaps ineligible, to be nominated for election; the secretary is often appointed for this purpose, unless there is present a former office-bearer who is not eligible for, or who would decline, nomination. The Chair may exercise a casting vote in connection with the election of a successor, where the rules provide for the Chair’s casting vote, and do not forbid it in connection with elections: R v Deane (1890) 3 QLJ 195. Similarly, where rules give the Chair a casting vote without restrictions, it appears that a person who is presiding solely to conduct the election of the Chair is entitled to a casting vote in the event of equality of votes. This would apply even if the temporary Chair does not have a deliberative vote. However, the Chair has the option of declining to exercise a casting vote (unless rules specify otherwise), and may prefer to avoid embarrassment by suggesting that the candidates concerned draw lots, and then that a resolution be passed electing the successful person. The Chair’s casting vote is considered in more detail in 14.14. [page 234]
Voting methods 17.4 For the election of the Chair, office-bearers and committee members, there are several methods of voting that may be used at, or in conjunction with, meetings. Rules usually prescribe the method. Occasionally, rules state that an election is to be conducted as directed by the Chair of the meeting, if there are more candidates than there are office-bearers or committee members to be elected. If there are no rules governing the situation, the method of election rests with the Chair, who would normally have regard to any precedent within the body. Whatever method is utilised, there are two procedures usually applied in practice unless the rules specify differently: 1. If there are fewer nominations than vacancies in an election for multiple positions (for example, election of a committee of six), all the nominated candidates are treated as being elected. Unless a ballot has already been held, their election should be put to the vote, if the rules do not provide differently. The Chair then declares them elected before the meeting proceeds to consider
the remaining vacancies. 2. In the event of votes for two or more candidates being equal, it is customary for the successful candidate from among them to be chosen by lot, even where the rules give the Chair a casting vote (which, if so, the Chair is entitled to use regardless of any customary practice). The two main methods used in connection with elections are: (1) the ‘first past the post’ system, where each voter signifies a vote for only one candidate; and (2) preferential voting, where the voter indicates an order of preference for candidates.
‘First past the post’ system 17.5 Under the ‘first past the post’ system, each person voting signifies a vote for only one of two or more candidates, usually by placing a cross or a tick opposite the name of the preferred candidate, sometimes by striking out all other candidates’ names. The candidate who receives the greatest number of votes is thereby elected. This is the only practicable method where an election is conducted by voting on a show of hands. It is suitable where ballot papers are used for voting, either at a meeting (including on a poll) or by postal voting. It is appropriate whether only one person is being elected or several persons (for example, to form a committee of six); in the latter case, the six candidates who receive most votes are thereby elected. [page 235] The defects of this method are: 1. A candidate supported by only a minority of voters can be elected where two other candidates split the majority’s votes. 2. Where multiple positions are to be elected, a bare majority of voters can elect all positions, denying the minority any representation. Its principal advantage is its simplicity.
Preferential system 17.6 Under this method, voters indicate the order of their preference for
candidates by placing ‘1’ next to their first choice, ‘2’ next to the second choice and so on. The preferential voting system may be utilised where voting is by ballot paper, and there are more candidates than there are vacancies to be filled. It is the method used for the Commonwealth House of Representatives and the lower houses of the states (other than Tasmania). Where only one person is to be elected from among more than two candidates, the successful candidate needs to obtain an absolute majority of votes — that is, more than half of the total votes cast — at one of several stages of calculation. Thus, the candidate who secures more than half of the first preferences is thereby elected. If this does not occur, the candidate who receives the smallest number of first preferences is eliminated from the count. Thereupon, the votes initially received by the eliminated candidate are allocated to the remaining candidates according to the second preference of those voters who gave their first preference to the now eliminated candidate; this number is now added to the number of first preferences obtained by the remaining candidates. If, as a result, some candidate now has an ‘absolute majority’, that person is thereby elected. If not, a third stage of calculation occurs, the same process being applied in respect of the candidate who has the smallest aggregate of first preferences plus allocated second preferences; and so on, until some candidate has an ‘absolute majority’. Some explanations of the preferential voting method tend to give an impression that the third stage of calculation calls for the elimination of the candidate who receives the second smallest number of first preferences (that is, without having distributed second preferences arising from the eliminated candidate), but such a procedure could thwart the principle of the preferential voting system. This is obvious if a few examples are worked out of, for instance, four candidates all closely contesting a ballot for two positions, and where the two who obtain most first preferences share each other’s second preferences, the same thing happening in the case [page 236] of the other two. This emphasises the value of rules and standing orders setting out precisely the voting method specified for elections. Where one ballot paper is used for the election of several persons (for example, members of a committee), a variation of the same principle applies. Any candidate who obtains more than half of the first preferences is thereby elected; there can be only one such candidate, of course, and indeed there may not be
any. If not, the candidate who receives the fewest first preferences is ‘eliminated’, but only for the purposes of the immediate count; the candidate is not eliminated from the contest. Preferences are allocated (as explained above) until one candidate has an ‘absolute majority’ and is thus elected. To ascertain the next successful candidate, all the others are brought into consideration again, including those eliminated for the first count, but excluding the successful candidate. To the number of first preferences obtained by each of the remaining candidates is now added a distribution of the second preferences of those voters who gave their first preferences to the successful candidate. If this does not produce an ‘absolute majority’ for any candidate, the candidate with the lowest aggregate number is eliminated (as explained above), and so on, until the next successful candidate is identified and thus elected. This process continues until the required number of persons is elected. When allocating second or third, and so on, preferences during this calculation process, it may be found that ballot papers accord some such preferences to an already successful candidate or to one eliminated from that particular count; if so, the allocation is made to the candidate to whom the voter had given the next highest preference. This method is sometimes called ‘multiple preferential’, and is used in some local government elections. It has the same defect as first past the post for multiple positions, namely, the majority can take a ‘clean sweep’ of all positions, denying the minority any representation on the body.
Other systems 17.7 Other methods of voting for elections conducted at meetings include the following: 1. ‘Exhaustive balloting’, by which a series of ballots is taken in succession at a meeting, resulting in the elimination, in turn, of the candidate who receives the fewest number of votes in each ballot, until there are only two candidates left. While this method has similarities with the preferential system, an important difference is that voters are free to change their support for candidates in the course of the balloting. This is the method normally used in Australia to elect the leaders of political parties within meetings of the parliamentary party. [page 237]
2. ‘Proportional representation’, which is a preferential system for multiple positions designed to cure the defect referred to in the first past the post and multiple preferential systems. Under proportional representation, a ‘quota’ is calculated equal to (or fractionally more than, depending on the precise system) the total votes cast divided by one more than the number of positions to be elected. The rationale for the quota is that, if such a number of candidates equal to the number required to fill all positions each obtain a number of votes equal to the quota, they will prevent any other candidate from obtaining a quota. A quota is thus the number of votes a candidate needs to obtain in order to be elected. Once the quota has been calculated, the first preference votes are counted. Those candidates who have more than a quota are declared elected, and their ‘excesses’ then distributed. The excess is the total votes a successful candidate has at the time of election, less the quota required to be elected, that is, it represents the spare votes that the candidate did not need in order to get elected. The excess is distributed according to the second preferences of the elected candidate, at a ‘transfer value’ equal to the excess divided by the number of second preferences. The value of the votes thus distributed is added to the first preferences (or ‘primary votes’ or simply ‘primaries’) of the remaining candidates. If, as a result, any further candidates have obtained a quota, they are declared elected. If not, the candidate with the least number of votes (including distributions from other candidates) is eliminated, and that candidate’s votes distributed in accordance with the next highest preference on each ballot paper. The whole process is repeated until all the required number of candidates has been elected. While proportional representation is more complicated than the other systems referred to, it is generally regarded as the fairest and most democratic system for multiple position elections. It has the great virtue of allowing representation of differing viewpoints within an organisation proportional to the support that each group enjoys. Proportional representation is the system used for the Australian Senate; it has been extensively used at all levels of government in Tasmania for many years.
Secret ballots 17.8 Voting by ballot is described in 14.7. Where a secret ballot is conducted at a meeting, a voting paper is supplied to each person entitled to vote. Depending on the circumstances, this may have been prepared beforehand, or may be constructed by each voter as directed by the Chair.
[page 238] Where rules require nominations for election to be lodged prior to the date of a ballot for election, this not only enables ballot papers to be ready for the meeting, but also enables the unquestioned eligibility of each nomination to be verified. Prior nomination is essential, of course, where the rules provide for a postal ballot. It is usual, and very desirable from a practical point of view, that all persons nominated give their written consent to stand for election. Rules often state that retiring office-bearers who are eligible for re-election are deemed to be nominated and to consent to such, unless they notify the secretary otherwise. Ballot papers should list the name of each candidate showing exactly similar types of details about each. Rules that specify what personal details are to be shown contribute to harmonious elections. Rules may (and preferably should) stipulate the sequence of the names (for example, alphabetic or determined by lot), and specify whether (or not) retiring office-bearers are to be indicated on the ballot paper, for example, by an asterisk. If the rules are silent on these matters, there should be no special indication next to any name, and the order should be decided by lot. Concise but explicit instructions as to how to record a vote should be stated at the head of the ballot paper. No place is provided on the ballot paper for the name or signature of the voter; it is a secret vote.
Postal ballots 17.9 A postal ballot to elect office-bearers may be conducted only if this is provided for in the rules: Keep v Hurstville Soldiers’ Memorial Hall Club Ltd (1963) 80 WN (NSW) 1497; McMillan v Le Roi Mining Co Ltd [1906] 1 Ch 331. A carefully planned timetable is essential, having regard to cardinal dates and periods as required by the rules, as well as practical considerations. The vagaries of the postal system need to be borne in mind when calculating timelines. Various methods are adopted. Some rules include very precise detail. All such requirements must be strictly observed. In principle, the procedure for a postal ballot is along the following lines: Nominations are received by the secretary in the manner provided for in the rules, no doubt by a stipulated date and time; eligibility of each person nominated to be checked and verified; and possibly tabled and noted at a committee or general meeting. A returning officer is appointed in accordance
with the rules; if the rules are silent about this, the appointment would be made by the chief office-bearer, or by resolution of an appropriate meeting; the body’s auditor may be a suitable appointment. [page 239] The overall duties of the returning officer are to: supervise the posting out of blank ballot papers with voting instructions; receive them back by direct postal or personal delivery from the individual voters; supervise the counting of votes; make decisions about votes of doubtful validity; and provide a statement of the result to the appropriate office-bearer, who may be the Chair presiding at the meeting at which the election results are made known. The latter will announce the result and declare that the successful candidates are elected. Before being posted out, each blank ballot paper is initialled or stamped by the returning officer. One ballot paper is posted to every member in the register of members who is entitled to vote in accordance with the rules. A tally of ballot papers posted is recorded and reconciled with the register of members and the number of papers printed. The ballot papers are accompanied by: 1. instructions about voting, stating the number of crosses or ticks to be inserted, or names to be struck out; or the numbering system, if preferential voting applies; 2. explanation about informal votes and mailing; and 3. a stated date and time by which votes must be received by the returning officer to be valid. A small envelope is included (possibly labelled ‘Ballot Paper’) for the voter to seal after inserting the marked ballot paper. The small envelope is, in turn, inserted by the voter into a larger pre-addressed envelope provided. Voters sign their names (and preferably also print them), but not on the ballot paper itself. This is included as evidence, which can be verified, of the voter’s eligibility to vote. The signature may be on the reverse of the pre-addressed envelope, on a detachable slip adhering to the smaller envelope, or on a separate signature form to be placed in the larger envelope. Nothing that can identify the voter is to be written on the smaller envelope, and thus the secrecy of the ballot is preserved. If necessary, this should be explained to voters. The ballot-paper envelopes remain unopened until checking and verification of the eligibility of all voting papers received has been completed. The returning officer is usually the officer with responsibility for checking eligibility, and with
authority to make decisions and rulings about votes of doubtful validity. Unless the rules provide otherwise, destruction of the ballot papers or their retention for a specific time after the result is announced is a matter for decision by the governing committee of the body. This is on the basis that legally the ballot papers are the property of the organisation. [page 240] The rules of certain bodies provide that elections may be conducted by ballot at a meeting under a procedure by which the votes of those who are present are added to other votes recorded by postal ballot and received prior to the meeting. Administrative precautions to avoid duplication of voting are essential in such circumstances.
Declaration of election 17.10 At the conclusion of an election, the Chair (or the returning officer, if the rules so provide) announces the name of each successful candidate, and declares that person elected as Chair of the meeting or to the particular office for the ensuing period, as the case may be. Unless rules require the actual figures to be made known, it is preferable that there be no announcement (and therefore no record in the minutes) of the number of votes for each candidate. If such figures are requested, the Chair may prefer to invite the meeting (by means of a vote) to consent to the information not being divulged in the interests of harmony and to avoid embarrassment for some candidates. The acclamation that often follows a Chair’s announcement of an election is to express congratulations, and is not to be confused with voting by acclamation: see 14.9.
[page 241]
18 Minutes Introduction 18.1 Previous chapters have referred to the minutes prepared after each meeting to record the proceedings. Preparation of the minutes is one of the secretary’s principal duties. Being satisfied that they provide an accurate record is among the Chair’s important responsibilities.
Definition 18.2 Minutes may be defined as the official, permanent record in writing, expressed in formal terms, of the business transacted at a meeting. The purpose of minutes is to provide an accurate, objective account of the proceedings of a meeting, that is, of important things that occurred and were done at the meeting, in particular, the decisions made. The New Shorter Oxford English Dictionary, Oxford University Press, Oxford, 1993, among several meanings of the word ‘minute’, includes ‘(in pl.), a brief summary of the proceedings at a meeting’. This meaning has had currency since the fifteenth century. The word has its origins in the Latin minutus, meaning, in effect, ‘made small’. It is the same word (in the sense of ‘brief summary’) as the minute that is the 60th of an hour or a degree, or that, as an adjective with a different pronunciation, signifies ‘tiny’. The definition of ‘minutes’ in Osborn’s Concise Law Dictionary, 9th ed, Sweet & Maxwell, London, 2001 is: ‘(1) Notes or records of business transacted at a meeting. (2) Copies of a draft order or decree before being embodied in a formal judgment of the court’. These definitions explain the nature of minutes. They are factual and concise, and may be (and often are) confined simply to recording the persons present (not necessarily by name) and the decisions reached, expressed in the form of
resolutions. [page 242]
Must minutes be kept? 18.3 There is no common law requirement for minutes of meetings to be kept. However, the statutes that regulate the proceedings of bodies usually require minutes to be kept, while constitutions and rules invariably do this. From a practical point of view, it is expedient, indeed virtually essential, that decisions made at meetings of a body be recorded precisely and maintained securely, because all new and developing policies, and significant changes in procedure are to be found in those decisions. Accordingly, minutes should be prepared of all formal meetings of a duly constituted body. The importance of and need for such documents are illustrated by the use since the sixteenth century of the term ‘keep’, meaning ‘to maintain continuously in proper form and order’, in connection with such records as diaries, records and other equivalents of minutes.
Form of minutes 18.4 Traditionally, minutes have been required to be ‘in writing’, so as to be able to be read and kept in a book, thus providing a record able to be verified as being correct, and permanently available for reference: see 18.19. There is no reason, however, why minutes should not be kept in suitable electronic form, provided the relevant data is secure both from destruction and tampering, and that access is freely available to those entitled to it (and not others). In the case of companies, s 1306 of the Corporations Act specifically contemplates minutes being kept in electronic form, so long as they can be reproduced in written form.
Minutes contrasted with reports 18.5 The distinction between minutes and reports of meetings needs to be recognised, and the differences appreciated. For the most part, minutes record no more than the occurrence of the meeting, essential details of the proceedings, and the decisions that were made, couched in a factual, affirmative way. They are confined to recording the things that were decided. In general, minutes comprise resolutions (discussed in detail in Chapter
11), with explanatory narrative only where necessary to provide essential information, or desirable to describe the circumstances leading to a resolution or clarify the reasons for, or a background to, a particular decision. They are concise, yet clear as to the pertinent points, and are presented in a traditionally formal format. [page 243] Minutes have other uses and values in addition to providing a continuing, permanent official record of the business transacted at every meeting, whether general or committee, held by an organisation. Signed minutes serve as legal evidence acceptable in court proceedings: see 18.16. Furthermore, minutes are available for inspection by persons who are involved and interested: usually members may inspect minutes of general meetings, including past meetings as well as recent ones; and directors (or committee members) may inspect minutes of board (or committee) meetings, past or recent. Reports of meetings are prepared for other purposes: generally, for a particular purpose; for example, to send to all the members by way of information, to issue as a press statement, to provide the background to a submission and recommendations to officials, or for the consideration of a meeting of a senior group in the body or a general meeting, or to summarise the results of a series of meetings. Where a meeting is attended by representatives of several organisations, a report is often prepared for the information of each and possibly of other bodies that may interest themselves in any agreement reached at the meeting on certain proposals. The objective of a report influences its content and structure. In addition to recording decisions arrived at, a report may include explanations or summaries of opinions expressed, arguments ventilated, speeches delivered, facts brought to light during discussion and so on; the advantages and drawbacks of proposals may be analysed; recommendations may be included. As well as containing the decisions arrived at, a report may include extracts from or a précis of what was said and perhaps each person’s contribution. A report should always be in narrative style, that is, it should take the form of a properly constructed and grammatical passage of prose, even though it may set out facts, conclusions and recommendations in a classified or analysed way with headings and lists. It may reproduce material quoted or produced at the meeting. A speech or part of it may be recorded verbatim, that is, exactly word for word. It should be sufficiently complete to form a reliable account of what occurred at the
meeting. However, a report should not be regarded as satisfactorily taking the place of minutes: each has its own function. Minutes should always be a factual record expressed objectively; but when a report of a meeting is prepared, this is often done with a particular aim in view. A report has no legal significance unless it becomes incorporated into, or is formally identified and attached to, the minutes of either the same meeting or some other meeting at which the report is received and dealt with. [page 244]
Types of minutes 18.6 There are two styles or classes of minute: (1) minutes of resolutions, and (2) minutes of narration. It is often useful and appropriate to combine elements of the two. The term ‘minutes of resolutions’ is self-explanatory. Such minutes are confined to the actual words of the resolutions that have been passed. This is often all that is necessary. The precise words of each resolution are preceded by two opening words, namely, ‘Resolved that’. The word ‘Resolved’ is often emphasised; for example, it is all in capital letters, underlined or in italics. This emphasis ensures that it is brought immediately to the attention of each person who reads the minutes, including anyone absent from the meeting, that these decisions were made, each having a consequential effect, some of them involving action to be taken; this procedure also assists the prompt location of earlier resolutions, so that the exact terms of any resolution can be referred to quickly at some later meeting in the event of a motion being moved that appears to be in conflict with the existing resolution. Minutes of narration are used in various circumstances; for example: to record proceedings not of a type to culminate in a resolution; to refer to a motion not carried, if it is desirable that the minutes contain some record of the matter; to cover a preliminary discussion about an item to be pursued at a later meeting; to record the substance of an oral or other report made to the meeting; to place on official record such things as instructions to officers, terms of a contract or agreement, financial amounts, and dates, where the precise detail is
important but was not embodied in the actual resolution; and to make a permanent record of expressed appreciation, thanks and tributes for special service. Circumstances may make it desirable for the minutes to record a summary of reasons that led to a resolution or to general agreement not to come to a decision at that stage; such a résumé calls for skilful drafting, and a very responsible approach by the secretary to ensure that any explanatory background is recorded quite objectively. These are examples of proceedings that can be recorded in narrative style in the minutes. Many instances occur where it is useful for a minute to include both styles of drafting. Some preliminary words written in a narrative style may be helpful in stating reasons for or explaining circumstances leading up to the resolution, or in providing a link with a minute recorded at an earlier meeting. Such introductory words may form one or more complete sentences; if so, the next sentence would be the minute of resolution. If the preliminary words were to comprise only one or two clauses as an opening [page 245] to the sentence, the balance of the minute would then commence with ‘(and) it was Resolved that’.
Contents of minutes 18.7 The principles applying to the contents of minutes have been summarised by Young J in John J Starr (Real Estate) Pty Ltd v Robert R Andrew (Australasia) Pty Ltd (1991) 6 ACSR 63 at 89–90 as follows: While there is no reported case exhaustively defining what should go into company minutes, the textbooks do give uniform guidance and the following propositions are accurately stated in the various textbooks: 1. Minutes must note the nature and type of meeting, the time of commencement and like details. 2. Minutes must contain a full and accurate record of all business done including a list of who was present and all resolutions passed at the meeting. 3. At least where disqualification follows from non-attendance, the minutes should contain a list of apologies accepted. (The distinction between a tendered apology and an accepted apology may be significant: see Ryan v Heiler (1990) 69 LGRA 307.) 4. Minutes must be as concise as circumstances permit. Thus reasons for resolutions etc are seldom recorded.
5. 6. 7. 8. 9.
10. 11.
12.
13.
Minutes must be phrased in non-emotive language and on the face of them must appear impartial and above suspicion. A minute is not a report. Therefore speeches and arguments normally do not appear in minutes. Minutes must contain a record of all appointments made and the terms of reference of any committee that is set up. Normally failed motions need not be recorded. At least in the case of large meetings, there is no necessity to record the name of the mover or seconder or the voting, though the secretary may consider it appropriate to record these matters. A person present may insist that his or her vote or abstention be recorded. Incidents occurring at the meeting which may be significant should be recorded, but not unrelated incidents. Thus in Colorado Constructions Pty Ltd v Platus [1966] 2 NSWR 598, the minutes should have read ‘At this point another director knocked Mrs Hermann unconscious and she sank to the floor’. However, minutes of a conference I recently attended which was interrupted by an intrusion of some entertainers, need not have recorded ‘At this point the meeting was invaded by Santa Claus and some mini-skirted elves!’ Reports of committees etc are not summarised in the minutes. A copy should be initialled or otherwise identified by the chairman and copy may be circulated with the minutes and/or attached to the original minutes. The time of closure of the meeting and, unless on a regular day the time and place of the next meeting are noted.
[page 246] 14. Minutes must be prepared within a reasonable time after the meeting: Toms v Cinema Trust [1915] WN 29. See the full discussion of the usual rules in Horsley’s Meetings, …
The full discussion referred to by his Honour is as follows. Minutes should be an accurate account of the proceedings at the meeting, a correct record of those present, the important things that occurred, including everything agreed upon, and the transaction of all business for which the meeting was convened. Only such things as are said or done at a meeting of a body by the members of that body in their capacity as members should be entered in the minutes of the meeting. Thus, the fact that a person attended the meeting as a member, or that as a member, proposed or seconded a resolution, should be recorded, but not the fact that the member misbehaved at the meeting. The minutes are evidence of such things only as are properly recorded therein: R v Staples (1893) 19 VLR 47. Minutes are not a transcript of what occurred at a meeting. They are a record of resolutions and matters ancillary thereto, not of every word used in the course of a meeting. A body has a discretion as to how it keeps its minutes, provided it
faithfully records all that is required to be recorded, namely, how the business of the meeting was conducted and what resolutions were passed. The fact that a member of a body is entitled to a copy of the minutes of a meeting of the body does not entitle that member to a copy of a transcript of that meeting made by the body: August Investments Pty Ltd v Poseidon Ltd (1971) 2 SASR 60. Minutes should be concise. However, each minute should be clear. Any possibility of misinterpretation or more than one interpretation is to be avoided: this is a possible hazard in striving for brevity. Where detail is significant, minutes need to be explicit. Minutes should contain sufficient information to be intelligible to a member who was not at the meeting and who, as a member of the body or committee, has a requisite knowledge of its operations. The contents of the minutes should enable such a person to gain a correct impression of the nature of the proceedings, what was done, and the relevance and effect of resolutions passed. Constitutions, rules or standing orders may specify requirements relating to the contents of minutes of meetings, but that is not usual, perhaps because the traditional, formal style of minutes is well understood. The contents of minutes should include the following, as appropriate to the circumstances: The minutes should be headed with the name of the body, fully (except for customary abbreviations) and exactly — where the meeting is of a section of the organisation, this needs to be shown (for example, [page 247] a particular state, division, branch, group). A heading will not be necessary where the minutes are written into a bound minute book, although this is not usual now. The nature and type of meeting, using the designation contained in the rules: annual general, ordinary, special or extraordinary; board of directors, council, management (or other) committee or executive; inaugural, final and so on, should next be stated. It is good practice to number annual meetings (for example, ‘17th annual general meeting’) and the meetings of the governing council or committee of associations and similar bodies: from time to time, the progressive number draws attention to a significant anniversary of the body. Day and date of the meeting. Time of commencement (the true time may be later than the hour stated in the notice of meeting).
Place. If held at the officially ‘registered office’ of a company or other registered body, that description is sufficient without a full address. Names of those present, under a heading, ‘Present’. First, the Chair, stating ‘Chair’ after the name. Then the names of all others present, except at a general or other very large meeting, where the number should instead be recorded (for example, seven members of the committee and 68 other members; 44 members of the public; representatives of 17 bodies). The name of the secretary of the meeting should be recorded, stating ‘Secretary’ after the name. The term ‘in attendance’ would normally precede or follow the name; this wording indicates that the secretary (and similarly any other officers; for example, auditor, solicitor, general manager, who are recorded as present) is not to be counted in the quorum, nor entitled to a vote. Where the names of all present are recorded (as at committee meetings), it is good practice to place them in strict alphabetic order with consistency as regards their initials or first names, unless custom decrees otherwise; for example, the names of past presidents may precede others. Apologies. Where received before or during a meeting, apologies should be recorded (in alphabetic order) at meetings of committees and any other meetings where non-attendance endangers continuing membership or attracts other penalties under the rules. Unless the rules or custom provide otherwise, the recording of apologies in minutes of general meetings should preferably be confined to the number of apologies, rather than each name, but this is a matter of preference for each body. However, if decisions of serious importance, set out in the notice of meeting, are to be undertaken by a general meeting, the names of all those who tendered apologies before or at the meeting should be recorded in the minutes. If warranted by the type of meeting, it is appropriate for minutes to record that the Chair announced a quorum was present, and that [page 248] the meeting was duly constituted (provided, of course, that such an announcement was made). There should be reference to the minutes of the previous meeting, and the signing of them as a correct record of the proceedings of that meeting. Every resolution passed must be recorded accurately. The following should be recorded according to events:
examination and approval of proxies by the Chair; notices of motions to be moved at a later meeting that are notified to the meeting; authority given or matters referred to a committee or subcommittee; leave of absence for a specified period granted to a member; and date, time and place of an adjournment of a debate or the meeting. Appointments should be recorded: of committees (with terms of reference, unless already recorded elsewhere); of persons to committees; and of officers and of persons to represent the organisation for any purpose. Where reports of committees or from officers are received by a meeting, this should be recorded. Each report, or any document, should be described in the minutes in an identifiable way (by reference to its heading or subject matter) and its date recorded; preferably, the document should be initialled by the Chair, with reference to this in the minutes. Alternatively, the document may be incorporated into the minutes. Where a resolution is passed that enters into or approves a contract or other agreement, the minutes should record the nature and main terms of the transaction, and the parties to it, and also specify the relevant monetary amounts, quantities, areas and dates. If a meeting gives directions (whether or not in the form of an actual resolution) in respect of any item that the minutes are to record certain details or reasons involved in the debate and its outcome, it is necessary, of course, for such to be effected by the secretary. On appropriate occasions, it is customary for the minutes to record that a resolution is ‘carried unanimously’ or ‘without dissent’ where the Chair declares such a result: see 11.7. Where a statute or the rules require a resolution to be passed by a specified majority, the minutes should record the Chair’s declaration that the motion was carried by the requisite majority, or, for example, that the resolution was passed as a special resolution. Otherwise, it is not necessary nor usual (unless the rules provide differently) for minutes to record the numbers or proportion that voted for or against the motion. [page 249] An individual or group of persons voting against a motion carried may ask for
their names to be recorded in the minutes as voting against it. Also, they may perhaps voice their dissent from and objection to the decision that has been made, and request that this be recorded. Any such request should be made immediately. Voters are entitled at common law to have their vote against, or dissent in, a resolution recorded, and the secretary should comply with the request in preparing the minutes. Should the Chair at the meeting decline such a request, the recourse open to the voter is to treat this as a ruling by the Chair, and to move a motion of disagreement with it: see 9.5. Those persons who abstain from voting for a stated reason (for example, that they have a financial or some other personal interest in the proposal) are similarly entitled to request the minutes record this fact with that reason. Minor matters and trivialities, although part of the proceedings, may be omitted from minutes, although everything on which a definite decision is made needs to be recorded. If the secretary experiences doubt or uneasiness as to whether to include an item or not, it may be wise to include it. If a date and time for the next meeting are determined during the proceedings, this should be recorded. As a final item, the minutes should state that the meeting closed at … am/pm, this being the conventional way in which the Chair’s declaration of the close of the meeting is recorded. Because the purpose and intention of minutes is to provide a correct record of the proceedings at a meeting, there must be no attempt to insert in minutes anything that occurs or develops after the close of the meeting, or is not known until then. Any inclusion of such a nature would be irregular, and could put into question the reliability of the whole minutes.
Minutes of adjourned meeting 18.8 The basic principle that the two or more parts of an adjourned meeting comprise one meeting only (see 13.14) applies equally to minutes. Accordingly, the minutes of a meeting that is adjourned cover the complete meeting. They are drafted after each section of the meeting, but are not to be regarded as a completed record until the meeting concludes. The resolution that brings about the adjournment should be recorded. While the minutes are a continuous record of the whole meeting, the proceedings of each session should be in separate parts. For each session, the names of the Chair and of each person present should be recorded, as well as the place, date and commencing and closing times. It is a helpful procedure at the start of an adjourned session for the draft minutes of the previous
[page 250] session to be circulated or read out as a reminder of what occurred, but they are not verified or signed as a correct record until after the whole meeting has concluded.
Recording of resolutions 18.9 Minutes must record the exact words of each resolution passed at the meeting. Unless the rules or standing orders provide otherwise, it is usual, and good practice, for only the resolution as finally passed to be recorded in the minutes; amendments, whether carried or lost, are not recorded; nor is the original motion, if it becomes amended. Thus, minutes record only the substantive motion, in the form of a resolution. In principle, the minutes do not refer to the motion at all unless it is carried, that is, lost motions are not normally recorded. However, in some circumstances, it may be wise to record that a decision was made not to do something; and there are many occasions when in practice it is prudent to make some reference in the minutes to proposals important enough to be voted on. Similarly, depending on the nature of the organisation and the type of meeting, it may be appropriate to record amendments in the same way as motions. In general, minutes should not attempt to record the reasons for decisions made. The reasons may differ from person to person, particularly when the ultimate resolution results from one or more amendments, and thus sometimes represents a compromise. This emphasises the importance of minutes being expressed objectively. However, the meeting may decide that reasons for decisions should be recorded, and give directions accordingly. It is unlikely that a court would uphold a challenge to minutes as evidence solely on the basis that because the minutes omitted to record argument propounded during debate they did not provide an accurate record. However, minutes are open to challenge on the basis of being incomplete, and, in some circumstances, a minute of narration will assist in clarifying the purpose and intention of a resolution. Where a meeting resolves to take a certain action that is carried into effect immediately (for example, to elect a person to office), this needs to be made clear in the minute, which should read, for example, ‘… be, and is hereby, elected’, or ‘… rate of subscription be, and it is hereby, increased from … to …’. This form of wording is used only when the transaction is entirely completed upon the
resolution being passed.
Names of movers and seconders 18.10 It is not necessary to record the names of the movers and seconders of motions, unless rules or standing orders require it. However, this tends [page 251] to be the practice with the minutes of general meetings of members, particularly annual general meetings. Each resolution is recorded as a decision of the meeting as a whole, regardless of who initially proposed it. Indeed, where the ultimate resolution embodies amendments moved and seconded by other persons, the resultant substantive motion does not have an individual proposer and seconder: it is a creation of the meeting itself. Accordingly, the inclusion of names of individual persons would appear to serve little useful purpose. However, the practice may please some persons when their names appear in minutes, although the procedure of reading out minutes of general meetings at subsequent meetings or circulating them is diminishing. The practice of recording names doubtless originated through the minutes of meetings conforming to the parliamentary method, under which each person speaking during a debate is identified in the record. Similar inclusions in draft notes made during a formal debate at a meeting (and at times produced as progressive minutes during an extended debate) thereby provided the Chair with a reminder of: who had moved the motion, and could therefore exercise a right of reply; who had seconded it, and possibly reserved speaking rights; and each other person who had spoken, and was therefore not entitled to move or second an amendment; and so on. Today, similar notes need to be made by the secretary and Chair in such circumstances, but modern practice does not reproduce the variations of the debate, nor names of those who speak, except where standing orders require this.
Writing up the minutes 18.11 Minutes should be written up as soon as possible after the conclusion of the meeting. At that stage, events are fresh in the mind of the secretary, and also of the Chair, to whom the draft minutes should be submitted promptly for
comment and approval. The courts have held it is proper for minutes to be transcribed into the minute book from rough notes taken during the meeting: Re Jennings (1851) 1 I Ch Rep 236. It has also been held that minutes must be written up within a reasonable time after the meeting: Toms v Cinema Trust Co Ltd [1915] WN 29. In the case of companies, s 251A(1) of the Corporations Act requires minutes both of general meetings and of directors’ meetings to be recorded in the company’s minute books within one month of the meeting. If facilities were to exist and time permitted, in principle, it would be ideal if the minutes could be completed immediately before the close of the meeting. Then they could be read, or multiple copies circulated to all present, and the accuracy of the minutes as a record of the proceedings could be verified immediately under the direction of the Chair. Although the notion is largely theoretical in most cases, such an ideal procedure [page 252] can serve other purposes as well. Sir Walter Puckey’s The Board Room, Hutchison, London, 1969, includes in a section on minutes: [I]t is important that minutes are produced quickly after the meeting, and I have already mentioned the chairman who ensured that after the board lunch we took away the minutes of the morning’s meeting. We had little excuse for any subsequent failure to follow upon decisions.
As evidence that the author in making this comment had no illusions about the time and effort needed to prepare minutes and get them typed, the following passage is found in the preceding paragraph: The chairman and secretary should devote much care to the minutes. It is unwise to give undue prominence to personalities, or to discuss in too much detail the discussions that led to a particular decision. It is more important to explain why the final decision was made. Minutes are company history, and directors should be encouraged to consult them, particularly to understand ‘trends’ more fully. Subject to this they should be as precise as possible, because if the ‘intention’ is clear the detail is usually redundant. Writing board minutes is a skilful task …
Verifying the minutes 18.12 The opening agenda item at most meetings deals with the minutes of the previous meeting. The item frequently, but misleadingly, refers to ‘confirmation of the minutes’, and sometimes ‘approval of the minutes’. At that stage, the minutes of the previous meeting, as drafted by the secretary
and usually already approved by the Chair of the previous meeting, have normally been entered in the minute book. The purpose of this opening item of business is to enable the meeting to verify that those minutes are an accurate record of the proceedings, prior to their being signed by the Chair of the current meeting. In many instances, the minutes have already been signed by the Chair of the previous meeting, who has thus personally verified that they are a correct record. This latter procedure is provided for in the rules of many bodies and by certain statutes (for example, s 251A(2)(a) of the Corporations Act) and is adopted by many bodies as their normal procedure. A longstanding decision of the courts is that, where rules do not provide otherwise, it is not necessary that the minutes be signed at the meeting of which they are a record, and that verification at the subsequent meeting with signature by its Chair is adequate: Southampton Dock Co v Richards (1840) 1 Man & G 448. In the case of companies, this latter procedure also receives statutory endorsement in s 251A(2)(b) of the Corporations Act. The purpose of the time-honoured procedure of signing at the start of the following meeting is in the nature of a safeguard. The traditional procedure [page 253] is to enable the Chair, prior to signing the minutes, to ascertain whether those present at the current meeting are satisfied as to the accuracy of the minutes of the previous one, as drafted. Thus, if there is any objection or query forthcoming, it can be raised before the minutes are signed. If the accuracy of a minute is queried, the matter can be attended to immediately, the item altered and initialled if the draft record proves to be erroneous, and the Chair can sign with confidence that the meeting has signified its assent that the minutes are a correct record of the proceedings. Although signed minutes are still open to later challenge, the procedure described helps to avert the likelihood of this, and the practice of minutes being circulated or read at the next meeting prior to their being signed is a means of avoiding the possibility of legal proceedings. The use of the word ‘confirm’ in connection with the approval of minutes for signature is unfortunate. It can be misleading, in that the word ‘confirm’ could imply to some people that the minutes are not fully authoritative until they are endorsed, with the added inference of possible revision and alteration. This is not the case, and the sole object of the procedure is to achieve agreement that the
minutes are an accurate account of what occurred at the meeting. The decisions recorded in the minutes need no confirmation, nor is it possible for them to be confirmed. As soon as the decisions were made, they were firm and binding, and capable of being put into effect. No additional force is given to the decisions by the ‘confirmation’ of the minutes. Minutes are ‘formally verified’ rather than ‘confirmed’. Sometimes, the term ‘adopted’ is used; this is not entirely acceptable either, as the word ‘adopt’ has another shade of meaning when used in minutes. However, the expression ‘to confirm minutes’ has grown to be an established term, and is judicially recognised in relation to meetings, even though the more regular meaning of ‘confirmation’ in law is closer to its ordinary meaning of ‘to establish more firmly, to ratify, to corroborate’ (that is, to confirm by further evidence). As Lord Campbell CJ put it in R v Mayor of York (1853) 1 E&B 588 at 594: [W]hat does the word confirm … mean? That word sometimes means merely ‘verify’: it is commonly used in that sense at the meetings of public bodies, who confirm the minutes of their last meeting, not meaning thereby that they give them force, but merely that they declare them accurate.
And, in a more recent Canadian case, it was said: The word ‘confirm’ in English has many and varied meanings. In respect of wills it usually means that the will confirmed is republished. As regards minutes of meetings, confirmation verifies the accuracy of the minutes. It sometimes implies a knowledge of a defect in the act to be confirmed and the right to reject or ratify it. Confirmation has been defined as the action of making firm or sure strengthening, settling, establishing institutions, opinions, etc,
[page 254] and where by-laws are required to be confirmed by shareholders, by their confirmation the shareholders make the by-law their own act: R v Jasperson; Ex parte Knights [1958] OWN 360.
Thus, while the use of the word ‘confirmed’ is undesirable because of possible misconceptions, the fact is that the term is in almost universal use in relation to minutes, including by the courts. It is only sensible to accept the use of the term by Chairs and others, but it is nevertheless preferable for secretaries to refrain from using the word ‘confirm’ when writing up minutes and preparing agendas. Wording that correctly signifies the procedure is along the following lines: ‘… the minutes were signed as a correct record of the proceedings’. There are instances where standing orders include an interpretation of the term ‘confirm’ in relation to minutes, and in such cases the word is properly used in minutes of such bodies. It is usual for the Chair to propose that the minutes of the previous meeting be
verified. Often, the Chair will put it as a question, asking if it is the wish of the meeting that the minutes be signed as a true and complete record of the previous meeting, or, if in the opinion of the meeting the minutes as drafted are a correct record, that they be signed.
Altering draft minutes 18.13 A member who believes that the minutes do not constitute an accurate record needs to say so immediately, stating clearly how that member believes the particular minute should read. In principle, the member concerned should move an amendment that before being signed the draft minutes be altered along specific lines. Where the proposed alteration involves a correction of an obvious mistake, omission, oversight or spelling or grammatical error, agreement will be indicated readily, but there may not be full agreement in some circumstances, and the matter may be briefly debated; but the only allowable discussion is on the question of accuracy or otherwise of the record of what occurred at the previous meeting. It is not an opportunity for reopening the debate. If the meeting agrees that the minutes are not accurate, an alteration should be made by the Chair striking out in ink the words at fault and inserting the correct wording, clearly indicating the new wording and the place of insertion. The Chair needs to initial every alteration made, including the correction of a minor spelling error. It is important that no erasures be made in minutes, either during their preparation or to make an alteration. Erasures of any sort, including more modern methods of typewriting corrections, could put into question the reliability of the minutes as legal evidence. [page 255]
Signing the minutes 18.14 When the meeting is in accord that the minutes (as amended, if necessary) do constitute a correct record, it signifies assent, and the Chair signs the minutes at the end, adding the date and initialling each page. It is good practice for the signature to be inserted under the words ‘Signed (or verified) as a correct record’ with the word ‘Chair’ below and the date adjacent. Thereafter, no alteration may be made to the minutes: see 18.15.
The minute recording the signing tends to take varying forms: ‘The minutes of the previous meeting held on … were read (or taken as read, having been circulated), and signed as a correct record of the proceedings of that meeting’ or ‘Resolved that the minutes … having been circulated be taken as read and signed by the Chair as a correct record’. This minute of verification should include reference to any alteration made (for example, ‘after amendment to minute …’); if it is a significant alteration (for instance, the correction of an omission or a material error), the substance of the amendment should be stated very briefly. Although, as indicated previously, the verification minute is often written up without the formality of an actual resolution being passed, it is preferable that the correct procedure of a motion and voting be applied. Some Chairs follow their initial question with a motion that becomes an actual resolution. Sometimes, the motion is moved by someone other than the Chair. It is usual and preferable, though not essential, that it be moved by a person who was present at the previous meeting. But it is not necessary for the Chair, nor any others present, to have actually attended the previous meeting. Whether they were there or not, it is quite proper for all members present at the current meeting to vote on the motion. A person who votes in favour of verifying minutes of a previous meeting does not thereby become responsible for what was done at that meeting: Burton v Bevan [1908] 2 Ch 240. The Chair of the meeting that verifies the accuracy of the minutes is the Chair to sign the minutes (unless the Chair of the earlier meeting signs the minutes without awaiting verification at the next meeting, a procedure that is in order unless the rules provide otherwise). In certifying the accuracy of the minutes, the Chair is entitled to rely on the collective sense of responsibility of all present in being satisfied that the minutes are a correct record. The circumstances place much responsibility on both the secretary and Chair to safeguard the integrity of minutes. In this procedure of verification or confirmation, any specific requirements contained in rules or standing orders need to be observed strictly. [page 256]
Later amendment 18.15 Once minutes have been signed, whenever this may be done, they must not be altered for any reason or at any stage: I trust I shall never again see or hear of the secretary of a company, whether under superior directions
or otherwise, altering minutes of meetings, either by striking out anything or adding anything: Re Cawley & Co (1889) 42 Ch D 209.
However, at a later stage, some error may be discovered that was unnoticed at the time of verification; for example, the mention of a wrong year or an incorrectly named person, department or body. If so, the record may be rectified by a resolution being passed that identifies the faulty minute, concisely states the correct detail and provides that an amendment, as specified, be made as regards that minute. If significant, it may prove useful for the corrected minute to be reproduced in full in the minutes of the later meeting. The wording of the original minute must not be interfered with in any way. A cross-reference should be written in the margin next to each individual minute. If, while minutes are being verified, it is apparent that a decision made at the previous meeting was unwise or untimely, or has become undesirable, this is not the time for discussion about that aspect. Depending on circumstances and the rules, action may be possible to remedy the situation. Later in the meeting, a motion could be moved to the effect that the decision made at the earlier meeting be not at present acted on, or a suitably worded motion may be moved with a view to rescinding a resolution: see 11.11–11.20. If rescission is effected at a later meeting, marginal cross-references should be made (as referred to above), but the original minute must remain untouched, although its effect had been nullified.
Minutes as evidence 18.16 The minutes of a meeting, signed in accordance with any provisions of rules or a relevant statute, are accepted by the courts as prima facie evidence that the meeting was held, and that the proceedings, business transacted and decisions made were as recorded in those minutes. Provisions in rules and statutes usually refer to the minutes being ‘signed by the Chair of the meeting or the next succeeding meeting’. Where not so required, a signature is not actually essential if another record (for instance, the minutes of the following meeting) provides evidence that the minutes were verified as a correct record. However, a signature not only authenticates the verification but also identifies the document, preferably with each page initialled; and there are legal difficulties in relying on unsigned documents to serve as evidence in support of other unsigned documents. [page 257]
Minutes thus provide evidence, accepted in law, of what occurred at the meeting until and unless the contrary is proved. A record in the minute book of the fact that a particular proceeding took place at a meeting is, if the minute is properly authenticated, evidence that it did take place: Potts v Miller (1940) 40 SR (NSW) 351; 57 WN 135. An entry in the minutes by the Chair of the result of a poll or of a decision on incidental questions that arise, although not conclusive, is prima facie evidence of the result. The omission from minutes of any reference at all to an item is less likely to be noticed than an inaccuracy. This draws attention to the need for the secretary and the Chair to check separately the draft minutes against the agenda and notes taken at the meeting. Omissions from minutes may have serious consequences — for example, committees or officers may be left without proper authority to take certain action decided on but not recorded — and action taken without such authority may be hazardous for the individuals concerned, while lack of timely action may disadvantage the organisation. From a legal point of view, a lack of any reference in minutes to a particular matter is treated as evidence that the matter was not considered by the meeting. However, specific evidence may be accepted by the court to prove otherwise, and if it can be proved that a resolution was passed but not recorded, it may be held by the court to be a valid resolution. If minutes do not record a resolution that was passed, an unrecorded resolution may be proved notwithstanding: Re Fireproof Doors Ltd [1916] 2 Ch 142. An unminuted resolution may be proved by the production of other admissible evidence: Knight’s case (1867) LR 2 Ch 321. An unminuted resolution or the inclusion of an incorrectly recorded minute can be proved by other evidence, the onus of proof resting with the person who claims that the minutes are not correct: Re Indian Zoedone Co (1884) 26 Ch D 70. The onus of disproving the truth and correctness of minutes lies with the person who alleges they are inaccurate: Ex parte Stock (1864) 33 LJ Ch 731. It is thus open to a person (for instance, a member or director) who challenges the accuracy of some aspect of the minutes to bring forward other evidence of a type acceptable to the court. If it were proved that the minutes were not correct, the court may order the disputed resolution to be set aside and a correction made to the minutes; the way in which this would be dealt with as regards a meeting and minutes of the body concerned would be influenced by the circumstances. The courts have held that where rules provide that ‘minutes of any meeting purporting to be signed by the chairman shall be conclusive evidence without any further proof of the facts’ then, in the absence of fraud, the
[page 258] minutes are conclusive evidence as between the parties who are bound by the minutes. Evidence inconsistent with the minutes is not admissible: Kerr v John Mottram Ltd [1940] Ch 657; Rana v Survery [2013] NSWCA 234; BC201311248. Further, the fact that minutes were verified at a subsequent meeting adds weight to their cogency, because, if the minutes contained an incomplete record of proceedings, it would be expected they would be corrected at the subsequent meeting: Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345 at [59], [69] and [206]. In the case of general meetings of companies, the replaceable rule in s 250J(2) of the Corporations Act provides that ‘… a declaration by the chair is conclusive evidence of the result … Neither the chair nor the minutes need to state the number or proportion of the votes recorded in favour or against’. While the minutes may record correctly what transpired at a meeting, inquiry may be made as to whether sufficient and proper notice of the meeting was given, having regard to the business transacted, notwithstanding any declaration by the Chair to the effect that the notice was adequate: Betts & Co Ltd v Macnaghten [1910] 1 Ch 430. If ambiguity exists in minutes, oral evidence of what took place at the meeting may be admissible to explain the meaning of the minute that is ambiguous and thus resolve the situation: Westralia Pty Gold Mining Co NL v Long (1897) 23 VLR 36. Where no minutes exist to record that a meeting was held, other evidence is admissible as proof of the proceedings of a meeting of a company: McLean Bros & Rigg Ltd v Grice (1906) 4 CLR 835. In the case of companies, if no minutes are forthcoming, it is to be presumed that whatever ought to have been submitted at any general meeting was so submitted: Re British Provident Life & Fire Insurance Society (1863) 1 De G J & Sm 504.
Circulation of minutes 18.17 The prompt circulation of minutes after board and committee meetings is a desirable procedure. The minutes are sent to every director or committee member, whether or not present at the meeting. Circulation of the minutes
should occur without delay after the Chair has approved (with or without modification) the secretary’s draft. The minutes can then be studied at individual convenience while the proceedings are fresh in mind. Any serious query as to accuracy is likely to be brought to the secretary’s attention at that time. Furthermore, the minutes provide reminders to Chairs of subcommittees and others of matters with which to proceed. [page 259] Then, at the commencement of the following meeting, the minutes can be ‘taken as read’ with confidence, and the procedure to verify and sign them be carried out in a responsible way, but swiftly. Any lapses from accuracy may have already been brought to the Chair’s attention and alterations can be agreed to and made promptly. The minutes of the previous meeting are normally dealt with at the start because numerous items of business flow from one meeting to the next. The minutes thus provide a reminder of what eventuated at the last meeting, and immediate verification ensures that the record is correct and can be acted on without hesitancy. In the case of annual general meetings, unless general meetings are held regularly through the year, a good procedure is for the minutes to be read out at (or circulated prior to) the next meeting of the board or committee. That meeting has no power officially to verify them and authorise their signature unless the rules expressly provide for this, or the particular annual meeting gave that authority by resolution. However, it enables responsible people to check and informally endorse the accuracy of the minutes at the first opportunity. In many cases (in view of provisions in rules or a statute), minutes do not become evidence until they are signed. Therefore, early signature is prudent, and such rules usually provide that the Chair of the annual meeting itself may sign them. This could be done with confidence at or after the first committee meeting. That Chair may sign them at any time, not necessarily at a meeting. No practical purpose is achieved by awaiting the next annual meeting, when, in the meantime, officers who were appointed at the meeting have been acting and probably other actions taken. At the following annual meeting, the Chair could announce the circumstances of the signing of the year-old minutes, and they could then be read or taken as read, according to the wish of the meeting.
Circulating resolutions
18.18 In connection with the affairs of boards of directors and governing committees, constitutions and rules often contain a provision that a resolution in writing signed by all (or a specified, large proportion of ) the directors or committee members shall be as valid and effectual as if it had been passed at a duly constituted meeting. Such a resolution is variously termed a ‘circulating resolution’, ‘resolution without meeting’, ‘(unanimous) resolution in writing’ or ‘flying minute’: see further 11.8. Usually, a circulating resolution may comprise more than one document, each being a replica of the other, and each containing one or more signatures. Each signature needs to be dated. Witnessing of signatures is not necessary unless this is stated in the rules. Where the rules require signatures by only a proportion of the persons entitled to a vote (and not all of them), it is essential that every such person knows the terms of and [page 260] is given an opportunity to sign the draft resolution before it is deemed to be passed. The requirements of a rule that provides for a circulating resolution would appear to be fulfilled when the document or documents containing the requisite number of signatures come into the hands of the Chair, secretary or some other member of the board or committee. Thereupon, the resolution becomes a minute of the proceedings of the board or committee. The document or documents need to be inserted into the minute book. A concise explanatory notation prepared by the secretary should also be inserted; the effective date for its inclusion as a minute is the date on which the final member signs or, if only a proportion of signatures are needed, the date by which that proportion of members has signed. The circulating resolution should be referred to in the agenda of the next meeting, noted (but without need to verify or confirm) and a reference to it made in the minutes. The procedure of the circulating resolution enables a matter of urgency to be dealt with very promptly without the necessity for an actual meeting being convened and assembled at short notice at a time that may be inconvenient to the members. However, the procedure should not be used as a substitute for meetings: it is only at a meeting that the debate necessary for the proper consideration of complex issues can occur. Unless the rules expressly authorise circulating resolutions or some procedure of similar intent, it is only by physical attendance at meetings that a board or committee can conduct its proceedings. Thus, the minutes of a body and its
committees, divisions, branches and other sections comprise and are confined to the recording of the proceedings at duly constituted meetings and any other proceedings conducted to arrive at decisions specifically provided for in the constitution and rules of the body or a relevant statute (for example, postal ballots, referendums and resolutions in writing).
Minute books 18.19 Minutes need to be entered in minute books and maintained securely. The authenticity of minutes is dependent to an extent on the safeguarding of the minute book, and all reasonable precautions must be taken by the secretary or other responsible officer. Traditionally, both bound books and loose-leaf books have been used. In bound books, the minutes will be either handwritten (and possibly be the sole copy) or typed on sheets of paper that are pasted on the serially numbered pages of the bound book. When pasted-in minutes are being signed by the Chair, the signature (and initials on any other pages) should be written to overlap the typed sheet and the page of the book. [page 261] In earlier times, loose-leaf books were not allowed because of the ease of falsification: Hearts of Oak Assurance Co Ltd v James Flower & Sons [1936] 1 Ch 76. However, the Corporations Act (and previous companies legislation) and certain other statutes enable minutes (and various other records) to be kept validly in loose-leaf books. Section 1306(1) specifically provides: ‘A book that is required by this Act to be kept or prepared may be kept or prepared … by making entries in a bound or looseleaf book …’. Section 1306(3) goes on to require a company ‘to take all reasonable precautions … for guarding against damage to, destruction of or falsification of or in, and for discovery of falsification of or in’ such books. A spring-back binder with a lot of loose sheets that are unnumbered, and where there is no precaution taken to prevent substitution and falsification of records, probably breaches s 1306(3) of the Corporations Act: Re RM (No 13) Pty Ltd (1995) 17 ACSR 758. From a practical point of view, locking devices are available with the key being kept by the secretary; some devices have two keys. Each minute and every sheet
of paper should be numbered consecutively throughout the book. Every page should be initialled by the Chair. Outside the companies context, loose-leaf minute books are probably now generally acceptable, provided sufficient precautions against falsification are taken. However, increasingly minutes are being kept in electronic form: see 18.4. Separate minute books should be kept for general meetings and board or committee meetings. While, at least in the case of companies, the former is available for inspection by any member, the latter may not normally be inspected by other than directors and the auditor. An index of each minute book, covering a series of minute books, should be maintained. The established headings and subheadings should be used, and the marginal numbers utilised. The index does not need to be elaborate: reference to it would normally be by a person generally familiar with matters dealt with by past meetings.
Permanent retention 18.20 Minutes of meetings of companies and other bodies are documents that need to be retained permanently; as a general principle, they should never be destroyed. This includes minutes of general meetings, class or sectional meetings and meetings of the board of directors, council or governing committee, and of any committee of a board or council or subcommittee of a governing committee. Court orders regarding the disposal of the effects and records of defunct companies and other organisations include, where appropriate, permission [page 262] for the destruction of minutes of meetings. If there is uncertainty or a problem, an advisable course is to consult with a government department that has official responsibility for archives and the general preservation of records of historical and other value.
Writing minutes in practice Introduction
18.21 There are numerous points of good practice to be observed in drafting minutes, some in the interests of correct grammar, avoidance of ambiguity, and good style, and some with a view to avoiding possible legal uncertainties and complications. The drafting of minutes calls for skill and care. The art of framing resolutions and minutes of narration needs to be cultivated. Painstaking effort with attention to detail in striving to produce good minutes is a usual characteristic of secretaries who give the appearance of having a particular talent and flair in this field. While minutes are normally concise and expressed in a fairly formal way — precise, crisp and to the point, rather than discursive — they can be written in ordinary, straightforward English. They need not be abrupt, nor tedious. Minutes are prepared for the purpose of being read: immediately and also, possibly, in the future. Accordingly, as with any communication in writing, minutes should have a clarity that conveys essential information quickly: they should be expressed in words, phrases and sentences that carry along the interest of the reader and are free from errors of grammar, syntax and diction; preferably, they should be without clichés, jargon, fashionable words, legalese (except where it is essential) and undue pedantry.
Note-taking 18.22 During the meeting, the secretary needs to make adequate notes from which to prepare the minutes. In some cases, these can be made on a copy of the agenda, but there are often circumstances when rather full notes are needed. A problem in taking notes at board and committee meetings arises from the relatively informal way in which the discussion often proceeds. Some statements and comments made form the nucleus of a resolution while others do not. The secretary cannot be confident as to what may emerge as significant, and the notes may need to touch on much that is said before the secretary is able to sift what is of lasting importance as regards the minutes. [page 263] Each actual resolution needs to be written out in full and precisely; any refinements of grammar, style and exact wording may be tidied up after the meeting. If in doubt about a decision arrived at, the secretary should request that it be read out so the meeting can endorse the wording before the resolution is finally passed.
Sequence 18.23 In principle, events should be recorded in the order in which they occur. This is partly in the interests of the minutes being an exact and accurate record. Also, it guards against decisions appearing in the minutes out of consequential sequence; for example, it may not be proper, nor even valid, for some particular motion to be dealt with unless and until some other resolution has been passed that affects the situation. However, in minutes of committee and board meetings, there is practical value in grouping items under headings (for example, finance, membership, buildings and so on); and because of the way in which committee and board meetings operate, a matter might arise and a decision be made where it would be convenient to record that item under some specific heading that has already been minuted. Furthermore, a decision may be made late in a meeting that arises from, and needs to be coupled with, an earlier resolution. Such circumstances may call for one or more items to be recorded out of sequence; namely, when otherwise one or more headings would be repeated in the minutes, with the danger of ineffective communication and creating a future hazard when minutes are being checked for information; or, alternatively, a new heading would have to be introduced that differs from that under which the particular item is normally to be found or should logically appear.
Procedural motions 18.24 Unless the particular circumstance (that is, the event that follows a procedural motion) makes it necessary to record the decision, procedural motions are not usually recorded in the minutes, except where this is provided for in standing orders. If a procedural motion (for example, the previous question) puts an end to any further debate on the particular item, it may be desirable, indeed imperative, that this occurrence and the consequence is recorded. However, where formal or other procedural motions occur during a debate that then proceeds to its ultimate conclusion, they are not normally minuted, as they add nothing of practical value or benefit to the record of the proceedings. [page 264]
Headings 18.25 As each minute is drafted, it should be given a suitable short heading to
indicate the subject matter. Standard headings should be allocated to items that appear regularly. Closely associated items can be grouped under one heading, using subheadings where helpful, and numbering each sub-item. It is good practice to regard such headings and subheadings as primarily reference indicators, and for the wording of the minute to be complete and clear in itself without having to rely on the heading for it to be understandable or grammatically correct.
Numbering 18.26 Each minute should be consecutively numbered in the left margin. It is useful practice to pencil in above that distinguishing number the number allotted to the last minute on that subject; and, at some later date, to pencil in below it the number that in due course will be allotted to the next minute on the subject. This facilitates ready reference.
Style 18.27 Minutes are always written in an impersonal form. Thus, the words ‘we’ and ‘they’ are not used in the body of the minutes. The terms ‘the Chair’, ‘the secretary’, ‘the Chair of the … Committee’ and so on should be used rather than those persons’ names. This is recognised minute practice. The use of the first two of the above terms should be confined to the Chair and secretary of the actual meeting. Similarly, the term ‘the meeting’ should be used to mean the meeting itself and no other meeting. Minutes are a record of events that have already happened. Therefore, the present tense is not used. The past perfect tense is used for recording what occurred at the meeting. The past pluperfect tense is used to refer to things that occurred or were said prior to the meeting. It is grammatically correct to refer to a board, a council or a committee in the singular. For example, ‘its report’ rather than ‘their report’; similarly in referring to a corporation or any other body. Abbreviations should be used only when they are of the type that is universally understood. The use of initials for organisations or committees and so on needs care. In principle, such initials should not be used except where the body is referred to more than once; in such a case, the initials, within brackets and quotes, should be inserted immediately after the full name and used thereafter in the minutes. Tact and graciousness are embodied in minutes by expressions such as ‘is succeeded by’ rather than ‘is replaced by’; ‘decline’ rather than ‘refuse’;
[page 265] ‘request’ rather than ‘demand’; ‘invite’ rather than ‘ask’; and so on. However, overly flowery language should be avoided.
Periods of time 18.28 It is preferable to use expressions that avoid uncertainty. Hence, ‘until and (not) including’, rather than simply ‘until’; ‘not later than (a stated period) after (a stated date or happening)’, or ‘before (that stated date or happening) or within (that stated period) after (that stated date or happening)’, rather than merely ‘within (that stated period) after (that stated date or happening)’. Expressions of time are interpreted as follows: ‘commencing with (or on) (a stated date)’ includes that date, similarly ‘on or before (a stated date)’; ‘from (a stated date)’ excludes that date unless ‘both days included’ is added; ‘on and after (a stated date or happening)’ includes that date or event; ‘after (a stated date or happening)’ excludes it; ‘ending with (or on) (a stated date or happening)’ includes that date or happening. If minutes refer to a period before the expiration of which an act may not be done (for example, closing a list of nominations for election), both the day from which the period runs and the day on which it expires are to be excluded in tallying the number of days in the period and identifying the date on the calendar: Blunt v Heslop (1838) 8 A&E 577; Thompson v Stimpson [1961] 1 QB 195. The action may not be done before midnight of the final day: Page v More (1850) 15 QB 684. Similarly, where a period is stipulated within which an act must be done, the general rule is that the day from which the period runs is not to be counted as part of the period. Year: for most purposes, the word ‘year’ means 12 calendar months commencing with some stipulated day. It runs through the 365 days, with an extra day if the ‘year’ being referred to includes a complete (that is, 29 days) leap year February. However, a ‘calendar year’ or the ‘historical year’ commences on 1 January, rather than, for example, the anniversary of registration of a company: Gibson v Barton (1875) LR 10 QB 329. The term ‘financial year’ needs additional identification when referred to in minutes. On a national basis, it commences on 1 July throughout Australia, but for a company or other organisation it is as stated in its constitution or rules. Month: a ‘calendar month’ ends upon the beginning of the day in the following month that has the same number as that on which the computation began; but, if that following month does not contain a day having that number, the ‘calendar
month’ ends on the final day of that following month. The word ‘month’ is defined in various statutes to mean ‘calendar month’ unless the contrary intention appears, and this, in general, applies to legal documents. It would appear to apply in the case of [page 266] resolutions and minutes unless the context requires otherwise. However, at common law, ‘month’ means ‘lunar month’ (that is, four weeks) in the absence of provision to the contrary: Bruner v Moore [1904] 1 Ch 305. In Australia, this interpretation has been applied comparatively recently: see Development Underwriting (Qld) Pty Ltd v Weaber [1971] Qd R 182. Accordingly, care is needed when the word ‘month’ is used in minutes where dates and exact periods are significant in decisions made and agreements settled at meetings. Week: while strictly meaning the period between midnight on each of two successive Saturdays, the term ‘week’ has been applied for some centuries to the period of any seven successive days, and some statutes define the word in that way. In resolutions and minutes, where the hour of the final day of ‘a week’ may be pertinent as regards, for example, a nomination document to be lodged or acceptance of an offer to be received, the inclusion of details more specific than merely ‘a week’ may be advisable. Day: similarly to the way in which ‘month’ and ‘week’ are interpreted, the word ‘day’, while strictly meaning from midnight to midnight, is regarded in law as denoting a period of a consecutive 24 hours (Cornfort v Royal Exchange Assurance Corp [1904] 1 KB 40) as well as its ‘daylight’ meaning of from sunrise to sunset. In minutes, reference to specific times is often needed to avoid a question arising as to whether a portion of a day is intended to be included in a stated period.
[page 267]
19 Committees Introduction 19.1 It is usual for the rules of bodies to make provision for one or more committees to be appointed. Rules nearly always provide for the establishment of a governing committee to have authority and responsibility for managing or superintending the day-to-day conduct of the body’s affairs. There are various titles for such a governing committee: board of directors, council, committee of management, management committee, executive committee and executive. This is the committee, by whatever name, that receives its authority and powers from the membership in general meetings, and from the body’s constitution, which defines its composition and the general way it is to operate. Committees for particular purposes may be established by the constitution or by resolution of a general meeting, or by the governing committee, if it has been given authority to do so. The arrangement is often that each of the other committees is responsible to the governing committee. Where the governing committee is designated as a board of directors or a council, it establishes ‘committees’. Where its own title is committee, it establishes ‘subcommittees’.
Definition 19.2 A committee may be defined as a group of people (or, rarely, one person), elected or appointed, to whom a specific item or a range of matters is referred for consideration, report or action. The designation ‘committee’ connotes that it is responsible to another group, that is, into the committee’s hands a task or function has been committed and entrusted.
[page 268] One of the definitions of ‘committee’ provided by The New Shorter Oxford English Dictionary, Oxford University Press, Oxford, 1993, is: ‘A body of two or more people appointed for some special function by, and usually out of, a (usually larger) body’; another is ‘A person to whom some charge, trust or function is committed’. While the first of these definitions is particularly appropriate to the processes of meetings, it has been held that one person may constitute a committee. ‘The term “committee” means an individual or a body to whom others have committed or delegated a particular duty, or who have taken on themselves to perform it in expectation of their act being confirmed by the body whom they profess to represent or act for’: Reynell v Lewis (1846) 15 M & W 517. ‘A committee means a person or persons to whom powers are committed that would otherwise be exercised by another body’: Re Taurine Co (1883) 25 Ch D 118. In the case of companies, it has been held that where a company’s constitution gives the directors power to fix a quorum they may fix a quorum of one for a meeting of the board: Re Fireproof Doors Ltd [1916] 2 Ch 142. In the same case it was held that provisions such as reg 76(1) of Table A of the previous companies legislation (now repealed by the Corporations Act) empower directors to appoint a committee comprising only one member of the board. Originally, each individual person was called a committee, that is, a person to whom the matter was committed (as in legatee, or donee). ‘A committee is he to whom the consideration or ordering of any matter is referred either by the Court, or consent of the parties to whom it appertains’: Terms de la Ley. Coke’s Instructions refer to ‘These committees, when they meet, they elect one of them to sit in the chair in the likenesse of the speaker’. Thus, a committee is a group of people appointed to perform a particular task. It may be only one person. However, a committee usually comprises several people, thereby preserving the intention of joint thinking drawn from a combination of experiences and varying opinions, which, in general, is a characteristic of many bodies of the type that set up committees. In practice, it is only through discussion and conclusions reached at meetings of small to moderate size committees that the objectives of the majority of bodies can be translated into plans and then into action.
Types of committees
19.3 Standing committee: this is a general way to describe a permanent committee. Its members and Chair will change from time to time; it may be reconstituted annually in accordance with the rules. It administers a continuous responsibility. Arrangements may be that the chief office-bearer [page 269] or secretary refers directly to a standing committee any matters with which it was established to deal. Executive committee: this is a standing committee that is responsible for the actual management of the body. It may have this or some other title. A company’s board of directors is the company’s executive committee; but the council or governing committee of an association or similar body often appoints an executive committee to attend to the body’s affairs between meetings of the council or governing committee. Ad hoc committee: this is a general way to describe a committee appointed for a limited, specific purpose. The Latin term means ‘arranged for this purpose’. It ceases to exist when it has completed its task and submitted its report to the body that appointed it. Committee of the whole: this is the term used when a board, council, governing or other committee, or an entire deliberative assembly, resolves to ‘go into committee’, that is, to form a committee of the whole board and so on. This mechanism permits informal discussion without minutes being recorded or rules of debate being observed. It enables some matters to be considered without restraint, where this is deemed appropriate because of difficult or embarrassing circumstances, or when it is not advisable or there is insufficient time to refer the matter to a committee. At the conclusion of the discussion, the meeting resumes its normal character and receives a report (possibly a recommendation) from the committee of the whole. Committee of one: there may be circumstances where one person, perhaps a particular person, is the most efficient form of committee to accomplish a certain job. A committee of one is in order unless the body’s rules provide otherwise: see 19.2. Joint committee: this usually refers to a committee set up by two or more bodies to deal with matters they have in common. Normally, each body elects an equal number of members, although the number of representatives may be in proportion to, for example, relative membership. One of the members may be
elected as the permanent Chair, or appointed as such before the joint committee is formed. Alternatively, the meetings may be chaired by the senior office-bearer or a representative of each body in turn, or for a fixed period followed by a change. Permanent joint committees are usually styled ‘joint standing committees’, while ad hoc joint committees are called ‘special joint committees’.
Establishment of committees Initial considerations 19.4 Before a committee is established, the body or its governing committee should give attention to the following points if the proposed [page 270] committee or subcommittee is to contribute effectively to the efficient administration of the organisation: Be certain that a committee is required and necessary, that there is an important job to be done or a real problem to be solved. Be cautious about appointing a committee instead of tackling and coming to a decision about a difficult or unpleasant problem. Guard against the formation of numerous committees on some assumed principle that an active network of committees indicates a vigorous body. Committee meetings should not be mistaken for action. Ensure that members of a special purpose committee are not kept unnecessarily involved after its task is completed.
Size of committees 19.5 It is also important before a committee is established to give proper consideration to its optimum size. The desirable size for any committee is influenced by its nature and purpose. In some cases, especially where speed is essential, a large committee can be subdivided into sectional groups working simultaneously under a control group. A small committee has the following characteristics: Meetings are more easily arranged and communications are simplified. A few people working together tend to function efficiently, but this depends
on every member being constantly available. Proceedings at meetings can be less formal, resulting in freer discussions. Every person has a chance to speak, explain views, exchange information, and share in arriving at each decision and carrying the task through to conclusion. Where detail needs to be discussed and decided on, a small committee will complete the task more expeditiously. A large committee has the following advantages: A greater range of relevant interests can be represented. There are benefits to be derived from a wider range of experience and knowledge, with an increased facility for the blending of youth and age, enthusiasm and experience, and the ventilation of new and imaginative ideas. A majority decision or opinion of a large committee, as compared with a small one, is likely to be accepted more readily as reflecting a representative view of the members of the body. It provides the facility to enable members who are inexperienced in committee methods or the administration of the body to gain this experience. [page 271] Absences from meetings are less likely to result in the numbers present being too few to conduct a satisfactory meeting; however, when serving on a committee that is small, conscientious persons tend to go to all meetings, and thus ensure there is a quorum. In determining the size of committees and subcommittees, regard should also be given to the personal characteristics of those who will be the Chair and members. A large committee calls for a Chair who needs to be prepared to introduce formality into proceedings of meetings so that, although they conclude at the scheduled time after dealing with the complete agenda, every member has had the opportunity to speak on each item. A small committee of only three or four may encounter a power problem if it includes two or more dominant personalities. An odd number is preferable in a small committee, with a view to avoiding a tied vote on contentious issues.
Terms of reference 19.6 It is essential that a committee be clear from the outset about its purposes and powers. The committee needs to understand the scope and limitations of the
task and responsibilities delegated to it. It needs to know definitely what is expected of it. It must appreciate its aims and function in relation to the body’s whole operation. Accordingly, clear ‘terms of reference’ should always be formulated in conjunction with, and at the time of, a decision to establish a committee or a subcommittee. Neglecting to attend to this important administrative starting point can give rise to serious problems that may interfere with successful accomplishment. Effective terms of reference are more than a mere statement of a procedure and timetable worked out after the particular assignment has been decided on. They need to state clearly what the task is, and what action the committee is authorised to take. In certain cases, they may include reference to reasons leading to the particular decision, as this can help the committee to appreciate the aims of the task. The formulation of clear terms of reference before the task is actually delegated may show that it needs to be given to a committee that possesses some particular competence. Also, it may indicate that the task could be combined beneficially with something already being considered by an existing committee. Furthermore, it may disclose that the task may overlap the operations of another committee, and care is needed to guard against resultant problems. Terms of reference should be in writing, and preferably embodied in the minutes that record the resolution appointing the committee. [page 272]
Practical guidelines 19.7 Points as follows may be considered for inclusion in terms of reference as appropriate: For a new committee — what is the name? What are the purposes of the task being delegated? What are the responsibilities of the committee, defined as to both scope and limitations? What are the powers and authorities being delegated? Are there any specific requirements: to make a recommendation; or to come to a decision and then initiate action; or some other specified objective? What is the period for completion of the task?
Are there dates for progress reports to be submitted? Is there authority to co-opt others, including non-members? For a committee, but not a subcommittee — is there authority to delegate to a subcommittee? What is the quorum, or how is the quorum to be determined? Is there a nominated Chair, or is the committee to elect its own Chair (following the procedure in the rules, if applicable)? Who is the nominated convenor? What are the general administrative arrangements, including responsibility for drafting reports, taking minutes, incurring necessary expenses, authorising travel and so on (unless a standard procedure covers this)?
Proceedings of committees General characteristics 19.8 Proceedings at committee meetings are generally characterised by a freedom from restraint, with discussion rather than debate. There is an easing of the formalities; in particular, persons may speak more than once and motions do not need to be seconded. However, the degree of formality to be exercised at committee meetings depends on circumstances, including the seriousness and nature of the business. Recourse to the rules of debate is always at the disposal of the Chair, who has a discretion to apply and require compliance with at least a degree of formality. The recognised rules that govern the conduct of meetings and voting are designed to facilitate the orderly dispatch of business without an undue display of emotion, and, in some circumstances, adequate formality is appropriate for meetings of committees. [page 273]
General principles 19.9 A body of precedent has developed regarding the operations of committees. Although, in practice, the affairs and accomplishments of committees and subcommittees may make progress partly through informal discussions, communications and activity, the correct procedure by which they arrive at valid decisions involves properly conducted meetings, unless the rules
provide otherwise. In general, committee meetings are to be held, and their proceedings to be conducted, so as to comply with the normal formalities. The proceedings at meetings of committees and subcommittees should follow the procedures the rules prescribe for general meetings (and for senior committees, where these are specified) in so far as far as they are applicable, unless other procedures are specified.
Quorum 19.10 Unless the rules, or the resolution appointing a committee or subcommittee, specify a quorum or give it power to fix its own quorum, all the members of the committee or subcommittee need to be present for its business to be conducted validly: Re Liverpool Household Stores Assn (1890) 59 LJ Ch 616. However, the position is different with the boards of companies. Here it has been held that if the constitution does not fix the quorum for meetings of the directors, nor provide that the directors may themselves fix that quorum, then a majority of the directors must be present before a meeting of the board can be properly constituted, notice having been given to all directors entitled to attend: York Tramways Co v Willows (1882) 8 QBD 685. That case should be contrasted with the earlier Lyster’s case (1867) LR 4 Eq 233, where it was held that, in the absence of provision in the constitution, the number of directors usually present, even if less than a majority, will constitute a quorum. In the case of companies, the problem of no provision being made for a quorum in the constitution of the company generally will not arise these days, as the replaceable rule in s 248F of the Corporations Act provides for a quorum of two in the absence of contrary determination by the directors.
Proxies and alternates 19.11 Unless specifically provided in the rules, proxies or alternates are not able to attend committee meetings and vote in place of a member who is absent. However, subject to the rules, there may be changes in the authorised representative of a corporation or other body who, as such, is a member of a committee. [page 274]
Co-option
19.12 A committee has no authority to add to its numbers or co-opt other persons unless authorised to do so: Lane v Norman (1891) 66 LT 83; R v Sunderland Corp [1911] 2 KB 458. Nor has it power to change its personnel. Where it is empowered to co-opt, it may not co-opt nonmembers of the body unless this is specifically authorised. Care is needed as to the number of cooptions, lest co-opted members outnumber the appointed members at a meeting, thus being able to outvote them.
Resignation and vacancies 19.13 A person appointed to a committee has the right to resign from it: R v Sunderland Corp [1911] 2 KB 458. A vacancy occurring in a committee or subcommittee must be reported promptly to the parent body. Unless authority to fill the vacancy has been delegated, it is filled by the parent body in accordance with the procedure in the rules. If the rules state ‘the body (or committee) shall fill the vacancy’ the matter should be acted on before other business is transacted. Where such a rule operates, neglect to fill a vacancy at the earliest opportunity may bring into question the validity of all subsequent acts of an incomplete committee.
Executive versus non-executive committees Executive committees 19.14 Some committees have an executive function, that is, their decisions take effect without the approval or ratification of another body. Most governing committees by their very nature are of this type. Where a committee performs an executive function, formal minutes of its meetings are submitted to the body to which the committee is responsible. In such cases, confirmation of action taken and of the minutes is neither necessary nor appropriate (unless the committee’s function is not truly executive). However, when such minutes are received at meetings of the senior body, it is good practice for the minutes of those meetings to be phrased in a suitable way to demonstrate that the senior body exercises permanent authority in the affairs delegated to the committee. And, in any case, the committee minutes will, from time to time, normally include recommendations that require the approval of the senior body, thus maintaining an awareness of the relationship.
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Non-executive committees 19.15 Many committees do not have an executive function. Their role is to investigate, consider, come to conclusions and submit recommendations. In connection with committees, references are sometimes found to the power of ‘veto’ being retained by the appointing body. The word ‘veto’ is Latin for ‘forbid’, and a more appropriate explanation of the power that remains with the appointing body is the authority to withhold approval or endorsement of, or consent to, recommendations and proposals arrived at by the committee. A ‘veto’ is a right that — in accordance with legislation, a body’s rules, or an agreement between bodies acting jointly — may be exercised by a competent body or person (for example, the Chair, a specified number of delegates, or a national council over a regional committee) to refuse to sanction a course of action decided on by a body at the same or a subordinate level. The term is more properly applied in relation to national and international affairs at a high level: examples are the veto vested in the President of the United States of America in connection with certain parliamentary decisions, and the power of veto exercisable by certain countries in the deliberations of the Security Council of the United Nations. A committee that does not have executive powers will make recommendations by way of a report or minutes to the parent body.
Reports and minutes Recommendations and reports 19.16 Unless the terms of reference include the power to take or initiate action (that is, executive powers), a committee’s or subcommittee’s decisions, recommendations and reports are not operative until adopted or approved by the parent body. The latter may amend, reject, refer back for further consideration or adopt. In practice, where appropriate, action based on a subcommittee’s recommendation is sometimes taken, or at least commenced, with the informal (but it should be unanimous) approval of each member of the parent committee (that is, without a meeting being convened) and then properly approved by a resolution at the earliest subsequent meeting. Reports from a subcommittee, including progress reports, when received by its parent committee should be attached to the minutes of that committee, with
reference to this in these minutes. Depending on the terms of reference, reports and minutes that initiate or support a proposal that would entail substantial expense should include suitable reference to financial aspects of the proposal. This enables the parent body to note [page 276] how the proposal would affect finances. Also, it ensures that a committee suggesting or investigating a proposal gives some realistic consideration to the cost, how it would be met, and generally whether the proposal is practicable from a financial point of view. Where a report covers the proceedings of several committee meetings, it is useful for progressive sections to be drafted between meetings as soon as each particular aspect has been dealt with fully by the committee. Where a report is complex, there may be benefit in appointing a drafting subcommittee. It is generally helpful and realistic for a report to list both the pros and cons of a proposal, and not just express arguments that support the viewpoint favoured by the committee. When, at a meeting, a committee is in the process of settling a lengthy report for submission to its parent body, it is helpful if each section of the draft is considered in turn (an occasion for operating as a ‘committee of the whole’) and, after any modifications are embodied, is approved separately before moving on to settle the next section. Finally, the report as a whole is approved. A committee report should be dated and signed by its Chair or secretary. If by the former, the signature should appear above the words ‘Chair of the committee’; if by the latter, it should be below ‘on behalf of the committee’ and above ‘secretary’. The proceedings (including decisions, recommendations, reports and minutes) of a committee or subcommittee should be regarded as confidential until the matters have been submitted to its parent body, especially where subcommittees are appointed for particular purposes.
Minutes as reports 19.17 Often it is more effective for subcommittees and special purpose committees to submit reports to their parent bodies in the form of reports rather than minutes, but rules may stipulate the latter. However, in the case of standing committees it is usual, and good practice, for their proceedings to be recorded in
minutes. These are then submitted to the next meeting of the parent body, which receives them, though not necessarily approving every recommendation therein. The drafting of minutes of meetings of committees needs to take into account that one of their major purposes is to provide useful reports to parent bodies. Therefore, they should record not only what was decided (that is, minutes of resolutions), but also, where appropriate, information (that is, minutes of narration) to explain adequately the reasons that led to the particular decision. However, minutes should refrain from including views of individual members, unless this is relevant or requested by the members concerned, [page 277] and from expressing general or philosophic views under the guise of reasons. Recording of the relevant points drawn from the discussion leading to a decision should be condensed and this calls for skilful drafting. The inclusion of these details in the minutes is to enable the parent committee to understand why a particular decision was arrived at; it is not to enable individual points of view to be known. As a general principle, it is preferable that minutes should not include reference to names of members except for recording their presence at the meeting. The concept of a committee is that all its members collectively are responsible for its decisions, which are arrived at after full discussion and voting. Each member is then assumed and expected to accept the group decision and abide by it. A consistent method by which minutes of all meetings of each committee are recorded in an anonymous way reflects and emphasises this notion of collective responsibility.
Minority reports 19.18 If there are marked differences of opinion among the members, particularly on a matter of principle, there may be value in a committee report recording those who supported and those who opposed the recommendation or finding. However, in principle, a minority report (that is, an explanatory addendum signed by one or more committee members who disagree with the majority decision) should not be presented unless authorised by the terms of reference or in standing orders. The grounds for this principle is that the committee was delegated the task of bringing forward a view, opinion or recommendation — not differing views. An
exception is justified when a minority of members sincerely believes that the majority view is based on a wrong principle that is not in the interests of the membership or for the good of the body.
Delegation General considerations 19.19 A parent body or committee may delegate particular executive powers to a committee or subcommittee. Alternatively, in some organisations, a committee system of administration is adopted, whereby various standing committees, and possibly subcommittees, are given wide discretionary power to take action, though often within a limited scope of their activity. As a general principle, caution needs to be exercised in delegating a degree of authority that approaches autonomy of action. There are practical reasons for such caution. The governing committee should not abdicate its responsibilities, or appear to do so. Other committees may resent a lack of similar authority. Committee Chairs and members are not all [page 278] conversant with various aspects of policy, and could make statements or take actions that are in conflict with policy or at variance with those of other committees. At the same time, it is desirable that each committee be given as high a degree of responsibility as possible, with suitable arrangements to ensure that it operates within its own area of responsibility and the body’s objectives and policy. Specific terms of reference and good two-way communication provide safeguards.
Legal principles 19.20 A committee (including a board of directors or other governing committee) does not have power to delegate any of its powers or responsibilities to a subcommittee unless authorised to do so by the constitution or rules, or the resolution appointing it or a subsequent resolution: Howard’s case [1866] LR 1 Ch 563. The principle involved is expressed in the Latin maxim delegatus non potest delegare, that is, subdelegation is not possible unless specific power to do this is given.
Further, a committee derives its authority and powers solely from the resolution that appoints it. Accordingly, a committee has no power to do anything the body appointing it cannot do: Bean v Flaxton Council [1929] 1 KB 450. A corollary of this principle is that a subcommittee goes out of existence when its parent committee ceases to exist. The members of a committee must act in concert, and cannot apportion among themselves duties delegated to the committee: Cook v Ward (1877) 2 CPD 255. Delegation to a subcommittee (where authorised) must be bona fide and not used for the purpose of excluding one or more members from the committee’s work: Robinson v Imroth (1917) WLD 159. The power that rests in a parent body to revoke the authority of a committee appointed by it implies that there must be power for it to revoke the authority of a single member of the committee: Manton v Brighton Corp [1951] 2 KB 393. It is important that the significance of the power delegated be made clear to the committee or subcommittee receiving the delegation: My own view is that for there to be a delegation of a statutory duty it must be made clear that it is a statutory duty that is being delegated, and that what is being said is not mere instruction common to all workmen as to how the workmen should carry out the work: Manwaring v Billington [1952] 2 All ER 747.
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Practical guidelines 19.21 Preliminary thought and care are needed when delegating functions or tasks to committees. Delegation confers an authority to do things that otherwise the parent (that is, appointing) body would do itself. Delegation signifies trust in the subordinate committee to carry out the task, and therefore confidence in its capacity to do this. An obligation on the part of the subordinate committee is created, and this responsibility needs to be recognised by it. The necessary authority and requisite freedom to act must be given, but the degree of delegation should not be such that control can no longer be exercised. The subordinate committee needs to be aware of overall policy, in particular, those areas affected by the delegated function or task. The subordinate committee should be responsible to only one party, normally the body itself, a senior committee or the senior officer of the body. All parties need to be clear about the arrangement, and also to appreciate that the senior body or committee that decided to delegate remains responsible and accountable
for any action taken by the subordinate committee. When a task is being delegated, the objectives, targets, dates for completion and progress reports should be specified. It should diplomatically be made clear that the task is expected to be completed. It needs to be understood that withdrawal of delegation remains open to the senior body, if this should seem desirable; or that the delegated authority may be limited or extended at any time. There should be a reassurance that the senior body is available and ready to assist with information and guidance, and in other ways, if needed. Delegation means the delegation of authority and powers, including authority to make decisions and submit recommendations. However, it does not necessarily refer to, for example, the engagement of a person for a fee, or the appointment of a working party to undertake research, prepare a draft and so on, on its behalf, although this may depend upon the nature of the task in relation to the overall task of the committee. A committee or subcommittee may not evade or omit to do business delegated to it by passing a resolution to suspend proceedings (where the committee or subcommittee was formed for a special purpose) or to defer indefinitely consideration of a particular item. Its duty to the parent body must be performed, even if this is confined to submitting a report that progress has not been made for a reason as explained. At meetings of committees dealing with specifically delegated work, the Chair should look unfavourably on formal or other procedural motions designed to delay progress or unnecessarily adjourn proceedings. [page 280]
Committees in practice General observations 19.22 An important function of committees is to provide channels of two-way communication. In many cases, their function is consultative, advisory, problemsolving, and involves coordinating, gathering or conveying information, or securing acceptance of changes in policies and procedures. They tend to be involved in decision-making to a lesser degree. Leadership is a vital ingredient to enable committees to achieve the essential group participation. Usually the Chair holds that appointment as a senior position; the Chair’s capacity and skill, or lack of it, will greatly influence the committee’s performance.
Judicious selection of the committee’s members fosters productive results. The following should be sought: variety in experience; a blend of technical and administrative people; graded levels as regards seniority; and some members with the precious attributes of imagination, creative ideas and initiative. Alert administration, a flow of information, and constant motivation are important. Also significant is the development of a friendly atmosphere at meetings; good manners, mutual respect and confidence engender harmonious human relations and teamwork. The degree of formality during meetings and the style of recording proceedings in minutes or reports vary; but, as with meetings of all types, firm control, an adequate, logical agenda and an orderly procedure are elements of those committee meetings likely to be productive.
Practical guidelines 19.23 Practices to assist productive and pleasant committee meetings include: Start on time. Set deadlines. Finish on time. However, hasty action is to be avoided in committee work unless unavoidable. There should be enough time for adequate discussion before decisions are made. Planning and organisation at the start will assist the correct sequence of events and timing of developments. The agenda for each meeting should have regard to the committee’s long-term objectives as well as immediate action. Sufficient information should be available to ensure pertinent discussion. Where convenient, the agenda together with useful reports and data should be sent out prior to each meeting. This is not always possible unless meetings are at regular dates, and one of the values of [page 281] setting up subcommittees is to encourage informality and flexibility in arranging meetings. Subject to the rules, meetings are often called without great formality as regards notice, which is sometimes quite short. Notices should be issued if possible, in writing or by telephone, as this encourages regular maximum attendance; but, it is important to be consistent, and committee members should feel they can rely on getting a notice of each meeting or know that they need to organise their own reminders. The chief office-bearer, if an ex officio member of the committee under the rules, should receive a copy of all notices sent out.
It is good in principle for committee meetings to be held frequently enough to preserve continuity of work; and for each agenda to include a limited number of items, perhaps only one, which can and will be completely dealt with at that meeting. Such an ideal arrangement depends on whether it is convenient for all the members to attend regular meetings, each reasonably short. Wise decisions and effective action flow from committee meetings as a result of solid work, tact and courtesy, efficient thinking directed to the practical outcome for the body and its membership as a whole, plus a recognition that, except on matters of principle, compromise is generally needed to make things work. Where problems are especially troublesome, embarrassing or contentious, solutions may be found by referring them to a subcommittee so all aspects can be discussed in a round-table atmosphere with a minimum of formality, resulting in a recommendation to achieve a practicable result.
Value of committees 19.24 Committee work has been subjected to much critical, and some cynical, comment. However, in certain types of bodies, committees are an essential feature of operations, and, increasingly, the organisational design of undertakings of many types includes committees at various levels of management. Inherent in committee work are the hazards of delay and lack of decision. Accordingly, the value of committees tends to be disparaged because of their sometimes slow productivity despite the cost of administration and, especially, the opportunity cost of the hours contributed by numbers of high-level people. They suffer from dilatory preliminaries, and at times become pigeonholes and resting places for unsolved thorny problems. They are accused of frustrating reform because of their tendency to look for compromise decisions, rather than to seek constructive, perhaps drastic, solutions to problems. Yet, when intelligently used, committee work provides opportunities for organisations to reap benefits from the varied experience of internal people subjected to collective thought, and the ventilation and interplay of fresh [page 282] ideas coupled with a practical approach and wisdom. Committees enable the overall work to be divided among people who are intimately concerned with the organisation’s affairs. Furthermore, through committees, members are enabled to participate actively in a wide range of operations. Committees are used both to assist in making policy and to implement policy. The difference between these
functions needs to be understood by individual people. The effectiveness of a committee is influenced greatly by the characteristics and role of its Chair and also by the efficiency and personality of its secretary. These important leadership and administration factors are examined in Chapters 6 and 2.
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20 Companies — Introduction Introduction 20.1 The four chapters that follow describe the particular requirements in relation to meetings that need to be complied with by companies. These arise from: (1) the Corporations Act 2001 (Cth), see 20.3; (2) the company’s constitution, see 20.9; (3) in the case of companies whose shares are listed on the stock exchange, the listing rules of the Australian Securities Exchange Limited, see 20.13; and (4) case law that is specifically relevant because it contains decisions of the courts on company legislation. Unless otherwise stated, the references in these chapters to sections are to the provisions of the Corporations Act.
Applicability of general meeting procedure 20.2 The following four specific chapters regarding company meetings need to be read in conjunction with the previous general chapters. As a general rule, the common law and recognised meeting procedure apply to company meetings unless the Corporations Act or the company’s constitution contain a provision that is different or that is worded so as to exclude some common law principle. As will be apparent in these chapters, there are numerous provisions in the Corporations Act and the constitutions of individual companies that have been drafted deliberately in such a way as to avoid certain common law principles being applicable. However, in most instances, the cases and principles applicable to meetings in general will also apply to meetings of companies.
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The Corporations Act 20.3 The companies to which these chapters refer are companies registered and incorporated under and regulated by the Corporations Act 2001 (Cth). For constitutional reasons, it has been impossible for the Commonwealth to enact a single piece of legislation governing all companies in Australia. Instead, since the late 1950s there has been a series of attempts to enact uniform and reciprocal legislation in each of the states and territories. The Corporations Act is the fourth such attempt, its predecessors having been: 1. the uniform Companies Acts of 1961 (New South Wales, Victoria, Queensland and Western Australia), 1962 (South Australia, Tasmania and the Australian Capital Territory) and 1963 (Northern Territory); 2. the Companies Codes of each of the states and territories under the cooperative scheme in place from 1982 to 1990; and 3. the Corporations Law of each of the states and territories under the first national scheme in effect from 1 January 1991 to 14 July 2001. The Corporations Act together with the Australian Securities and Investments Commission Act 2001 (Cth) form the current national scheme of company law that came into operation on 15 July 2001. The two Commonwealth Acts were enacted by the Commonwealth Parliament in 2001 following High Court challenges to the validity of the previous national scheme in 1999 and 2000. Much of the previous Corporations Law has been re-enacted without change in the Corporations Act. However, the constitutional weakness of the previous scheme has been overcome by references of power from each of the states under s 51(xxxvii) of the Commonwealth Constitution. Each state has passed a Corporations (Commonwealth Powers) Act 2001 to formally refer the corporations power to the Commonwealth. In the case of the territories, the operation of the two Commonwealth Acts is based directly on the Commonwealth’s territories power under s 122 of the Commonwealth Constitution. In this way, the national companies scheme including the Corporations Act applies uniformly to all states and territories throughout the Commonwealth. Companies incorporated under the previous Corporations Law are deemed by s 1378 of the Corporations Act to be registered under the Corporations Act, and
are accordingly regulated by it. There are similar provisions in the previous national scheme, the cooperative scheme and all earlier state legislation, the effect of which is that companies incorporated under earlier legislation are all registered under and regulated by the Corporations Act. Under s 1364 of the Corporations Act, regulations may be made for the purposes of the Act. Those regulations are known as the Corporations Regulations 2001 (Cth), and also commenced on 15 July 2001. [page 285] The Corporations Regulations are similarly uniform between the states and territories. They contain subordinate legislation, including forms for use under the Corporations Act, and provisions regulating creditors’ and other meetings in the external administration of companies: see Chapter 23. Under the Australian Securities and Investments Commission Act, the Corporations Act is administered in each state and territory by the Australian Securities and Investments Commission (ASIC), a Commonwealth statutory body with offices in each capital city as well as in major regional centres.
‘Company’ defined 20.4 The word ‘company’ has, of course, wider meanings, including its use in the name of unincorporated bodies, such as partnerships; for example, Smith & Company. However, the term is commonly used to mean a company incorporated under the Corporations Act, or taken to be so incorporated by virtue of incorporation under earlier companies legislation. This is the primary definition of company in s 9, and the sense in which company is used in these chapters.
‘Corporation’ contrasted 20.5 The title ‘Corporations Act’ is something of a misnomer, as there are many corporations and types of corporation that are not companies, and to which the Corporations Act does not apply, even in its most extended applications. A corporation is simply an incorporated body, or ‘body corporate’. As such, it is a form of artificial legal person, which may be contrasted with natural legal persons (that is, individuals) and with unincorporated bodies, such as unincorporated associations and partnerships. A company is one type of corporation.
There are, however, many other types of corporation, such as statutory corporations (incorporated under their own Act of Parliament), municipal councils (incorporated under the various state Local Government Acts), trade unions and employer organisations (incorporated under the Fair Work (Registered Organisations) Act 2009 (Cth)), incorporated associations (incorporated under the various state Associations Incorporation Acts) and cooperatives, friendly societies and building societies (incorporated under various state Acts). The Corporations Act does not in general apply to the types of corporations just mentioned, and the meetings of these bodies are instead governed by the provisions of the Acts and regulations under which they are incorporated, their own rules and the common law. An important exception is that Pt 5.7 of the Corporations Act applies the provisions [page 286] of the Corporations Act relating to winding up in insolvency or by the court to what are termed Pt 5.7 bodies. Under the rather complicated definition of that expression in s 9, the Corporations Act will apply to the non-voluntary winding up of various bodies that are not companies, including incorporated associations that carry on business outside the state or territory in which they are incorporated.
Types of company 20.6 Under s 112 there are four specific types of company: Company limited by shares: the liability of members of the company is limited to the amount (if any) unpaid on the shares respectively held by them. The shares provide the company with capital by which it finances its operations. The shareholders are the members of the company. The company’s name ends with ‘Limited’ or ‘Ltd’. Most companies are of this kind. Company limited by guarantee: the members do not contribute any capital to the company, but undertake to contribute up to a specified amount towards its debts and liabilities in the event that the company is wound up. The liability of members of the company is limited to the amount of that guarantee, which these days is often nominal. Companies limited by guarantee are usually formed as non-profit organisations (for example, associations, clubs and professional bodies), although not-for-profit organisations are now more normally incorporated under the various state
Associations Incorporation Acts. With the exception of the Victorian Associations Incorporation Reform Act 2012, the Associations Incorporation Acts all contain restrictions on the extent of the trading activities of incorporated associations; if trading, albeit on a not-for-profit basis, will be the primary purpose of the organisation, incorporation as a company limited by guarantee is required. The company’s name ends with ‘Limited’ or ‘Ltd’, unless it has been permitted by ASIC to omit the word ‘Limited’ under s 150. That omission is now only available where the company has objects that are charitable and prohibits the payment of directors’ fees. Section 150 is narrower than s 383 of the former Corporations Law, which required the objects of the company merely to be ‘useful to the community’, rather than strictly charitable. Company unlimited with shares: unusual in Australia. The members may become liable for the company’s debts without limit. The company’s name is not required to contain the word ‘unlimited’. No liability company: only for mining companies. A member has no liability (that is, no legal compulsion) to pay calls on shares; but, if not, the shares are forfeited and sold by the company. Its name ends with ‘No Liability’ or ‘NL’. [page 287] Since 1 July 1998 it has no longer been possible to register a company limited by both guarantee and shares.
Proprietary and public companies 20.7 In addition to the four specific types of company just mentioned, under s 112 each company must be one of two general types, namely, either a ‘proprietary company’ or a ‘public company’. All companies limited by guarantee and no liability companies must be public companies. Companies limited by shares and unlimited companies may be either public companies or proprietary companies. Proprietary company: the term ‘proprietary’, denoting ‘held in private ownership’, indicates its nature. The word ‘Proprietary’ or ‘Pty’ is part of the company’s name just before ‘Limited’. Such a company needs to have a share capital, either as a company limited by shares or as a company unlimited with shares. Under s 113, it must have no more than 50 nonemployee shareholders, and must not engage in fund-raising activities that would require disclosure to
investors under Ch 6D of the Corporations Act. The constitution of the company will nearly always restrict the transfer of its shares. This was a requirement under the Corporations Law and earlier legislation until 9 December 1995. The members of the company may include or comprise other companies, and not only individuals. Proprietary companies are not subject to many of the obligations of and restrictions on public companies under the Corporations Act. In some other jurisdictions — for example, the United Kingdom and Hong Kong — such companies are known as private companies. Small proprietary company: under s 45A(2), a proprietary company will be a small proprietary company if it (including the entities that it controls) meets at least two of the following criteria: consolidated revenue for the financial year of the company of less than $25 million; consolidated gross assets at the end of the financial year of less than $12.5 million; and fewer than 50 employees at the end of the financial year. A small proprietary company is subject to less stringent accounting and reporting requirements. Prior to 9 December 1995, the exempt proprietary company was the equivalent of the small proprietary company, and enjoyed many of the same privileges. Large proprietary company: proprietary companies that are not small proprietary companies will be large proprietary companies: s 45A(3). Public company: under s 9, a company other than a proprietary company is a public company. Contrary to what may be the popular impression, many public companies are not listed on the stock exchange. As previously [page 288] noted, all companies limited by guarantee and no liability companies are public companies. There are a number of provisions of the Corporations Act that specifically apply to the meetings of public companies, and that may not be excluded by the company’s constitution. These are discussed in the following chapters.
Subsidiaries, holding and related companies 20.8 Subsidiary company: under s 46, one company will be the subsidiary of a second company if the second company
controls the composition of the first company’s board; controls the casting of a majority of votes at a general meeting of the first company; or holds a majority of the shares of the first company; or if the first company is a subsidiary of a subsidiary of the second company. Holding company: under s 9, one company will be the holding company of a second company if the second company is a subsidiary of the first. Related company: under s 50, one company will be related to a second company if the first company is either a subsidiary or the holding company of the second.
Constitution 20.9 Companies registered after 1 July 1998 may either adopt a constitution or rely instead on the ‘replaceable rules’ contained in the Corporations Act: see further 20.10. Under s 136, companies choosing to adopt a constitution may do so either on registration, by the first members of the company each agreeing in writing to its terms, or after registration, by passing a special resolution (see 21.23 and 21.24), or as the result of a court order. Companies registered before 1 July 1998 were required to have a constitution, comprising two separate documents, a ‘memorandum of association’ and ‘articles of association’: see further 20.11. Under ss 135 and 136, that constitution will remain in force until repealed or modified by special resolution: see 21.23 and 21.24. Under s 140 the constitution of a company has the effect of a contract between the company and each member, between the company and each director and secretary of the company, and between each member and each other member of the company. The constitution is therefore binding on the company and its directors, secretaries and members. [page 289]
Replaceable rules 20.10 Some 42 sections or subsections of the Corporations Act are identified by their heading in the statute as replaceable rules. Nearly half of those provisions deal with company meetings. A complete table of the replaceable rules is to be found at s 141. Under s 135, the replaceable rules apply to all companies
registered after 1 July 1998, except to the extent that they are displaced or modified by the company’s constitution. The replaceable rules will also apply to a company registered before 1 July 1998 that repeals its constitution after that date. Uniquely, s 249X, which gives members the right to appoint proxies for general meetings, is a replaceable rule for proprietary companies, but a mandatory rule for public companies: see further 21.28. In the case of companies registered after 1 July 1998, even if the company has adopted a constitution, the replaceable rules will continue to apply to the company to the extent that they are not displaced or modified by the constitution. Many constitutions will contain a clause that expressly displaces all the replaceable rules. In the absence of such a provision, it will be necessary to consider the extent to which each of the replaceable rules continues to apply to the company in addition to the specific provisions of its own constitution. Under s 140 any replaceable rules that apply to a company also have the effect of a contract, in the same way as the company’s constitution. Accordingly, they are also binding on the company and its directors, secretaries and members. Many of the replaceable rules are based on or derive from the standard articles formerly contained in Table A of the former Corporations Law: see further 20.12.
Memorandum and articles of association 20.11 Companies registered before 1 July 1998 were required to have a constitution comprising a ‘memorandum of association’ and ‘articles of association’ (often abbreviated to ‘memo and arts’ or simply ‘M&A’). Traditionally, the memorandum included the basic elements of the company’s constitution, such as name, objects, powers, share capital, limitation of liability and distribution of assets on winding up, while the articles contained the machinery for regulating the internal affairs of the company, including its meetings. It was usual for the articles to make extensive provision for general meetings of the members of the company and for meetings of its directors. As previously noted, the memorandum and articles of companies registered before 1 July 1998 will remain in force until repealed or modified by special resolution. [page 290] Technically, the articles are regulations of the company, initially prescribed by its first members as subscribers to the memorandum. It is therefore strictly
correct to refer to individual provisions of the articles as regulations; commonly, however, the term ‘article’ is used, as in ‘article X’.
Tables A and B 20.12 Prior to 1 July 1998, Sch 1 of the then Corporations Law comprised Tables A and B. These were sets of ‘regulations for management of ’ a company limited by shares and a no liability company respectively. The Tables were standard or model articles of association, each in substantially similar form. Under the Corporations Law, a no liability company could adopt all or any of the regulations in Table B, and any other company could adopt all or any of the regulations in Table A. In practice, many companies adopted the articles in Table A, with more or less extensive modifications. In addition, the regulations in Table A were deemed by the Corporations Law to be included in the articles of a company other than a no liability company except in so far as they were excluded by the company’s own articles; Table B applied similarly in the case of no liability companies. Hence, Tables A and B were in effect default articles of association. This was particularly significant because, prior to the introduction of the replaceable rules (see 20.10), the Corporations Law itself did not contain a comprehensive code regulating meetings of companies, especially directors’ meetings. The Tables, which did contain a largely complete set of regulations governing company meetings, were therefore nearly as important in practical terms as the Corporations Law. The uniform Companies Acts of the early 1960s and the Companies Codes under the cooperative scheme of the 1980s contained Tables A and B in very similar form. There were also Tables A and B in the earlier Australian Companies Acts, although these regulations differed in some respects from the present ones. Companies incorporated under earlier legislation that adopted one or other Table wholly or in part continue to be bound by that earlier Table as it then was, to the extent that any of those regulations are not overridden or varied by mandatory provisions of the current Corporations Act. Careful research may therefore be required to ascertain the exact provisions of the articles of some older companies. Because Tables A and B were in similar form for many years, and because most articles derive to a greater or lesser extent from them, there are numerous decisions of the courts interpreting and applying the individual regulations in Tables A and B. The cases on Table A, in particular, form a large body of law applicable to company meetings, given that the overwhelming majority of companies are limited by shares, and no liability companies are comparatively rare. Because most of the replaceable rules
[page 291] relating to meetings derive from the regulations previously contained in Table A, many of those cases will also be relevant to the interpretation of the replaceable rules and provisions of constitutions based on the replaceable rules. Accordingly, the Table A articles will continue to be referred to frequently in the companies chapters that follow.
Australian Securities Exchange listing rules 20.13 Companies whose shares are listed on the stock exchange (listed companies) must comply with the listing rules of the Australian Securities Exchange Limited (ASX). Those rules are binding on the company, both as a contract with the ASX, and under ss 793C and 1101B. Chapter 14 of the listing rules contains requirements in relation to the meetings of listed companies additional to those contained in the Corporations Act. These requirements are discussed in detail in Chapter 24.
Companies that are registered charities 20.14 Since 3 December 2012 various provisions of the Corporations Act do not apply to companies that are charities registered under the Australian Charities and Not-for-profits Commission Act 2012 (Cth). Importantly, nearly all of the general meetings provisions of the Corporations Act do not apply to companies that are registered charities: see further 21.3.
Types of company meetings 20.15 The various types of meetings held by companies as they are discussed in the following chapters are set out here. Chapter 21 — General meetings (that is, meetings of members, including shareholders): annual general meeting: Pt 2G.2, Div 8; other general meetings of companies (that is, ‘special’ or ‘extraordinary’ general meetings): Pt 2G.2; class meetings; and meetings called by order of the court. Chapter 22 — Directors’ meetings: meetings of boards of directors: Pt 2G.1; and
meetings of committees of directors. Chapter 23 — Creditors’ meetings: meetings in connection with arrangements and reconstructions; meeting of creditors and shareholders to approve compromise or arrangement: s 411; meetings in connection with voluntary administration: — first meeting of creditors: s 436E; [page 292] — —
meeting to approve deed of company arrangement: ss 439A–439C; meeting to consider variation or termination of deed of company arrangement: s 445F; meetings in connection with winding up: — winding up by the court; — meeting to ascertain wishes of creditors or contributories: s 479(2); — voluntary winding up; — creditors’ meeting in members’ voluntary winding up: s 496; — first meeting of creditors in creditors’ voluntary winding up: s 497; — annual meetings of members and creditors: s 508; — final meeting of members and creditors: s 509; — winding up generally; — meetings of committees of inspection: ss 548 and 549; meetings of debenture holders: Pt 2L.5 — meetings called at direction of debenture holders: s 283EA; — meetings called by trustee: s 283EB; — meetings called by order of the court: ss 283EC, 283HA and 283HB; — meeting to approve release of trustee from liability: s 283DB; and meetings of members of registered management investment schemes: Pt 2G.4.
[page 293]
21 Companies — General Meetings Introduction 21.1 A general meeting of a company is a meeting of the members of the company. In the case of a company having shares, these are the shareholders. General meetings are to be contrasted with other types of company meetings, and in particular directors’ meetings: see Chapter 22. Even though the shareholders and directors of a company may be the same, there is certain business that under the Corporations Act and the company’s constitution is only permitted to be transacted at a general meeting, and not at a directors’ meeting; for example, the passing of special resolutions: see 21.23. Further, the requirements under the Corporations Act and constitution for notice, quorum and so on will usually be quite different as between general meetings and directors’ meetings. It is therefore always necessary to bear in mind what type of meeting is under consideration.
Meetings of the members 21.2 It is essential that a company have members: it is not permitted to own itself (although a company may now have one shareholder only: see 21.30). The rights of membership include the right to participate in its meetings (although the constitution may restrict the rights of particular classes of members). A register of members must be kept, the contents to include names and addresses: ss 168 and 169. These are the persons to whom and addresses to which notices of meetings are sent. The common law recognises, and the Corporations Act codifies, the need for and the right of members of companies to assemble at meetings, receive reports from the directors, and give consideration to and pass resolutions about
[page 294] significant aspects of the affairs and welfare of their companies. Minutes of all meetings of members must be kept, and when properly signed are prima facie evidence of the proceedings, which members may inspect: ss 251A and 251B; see further 21.29. While the proper method for a company to make decisions will normally be by resolutions passed at meetings of its members and directors, it has been held that ‘where it can be shown that all shareholders who have a right to attend and vote at a general meeting of the company assent to some matter that a general meeting of the company could carry into effect, that assent is as binding as a resolution in general meeting would be’: Re Duomatic Ltd [1969] 2 Ch 365; [1969] 1 All ER 161. The principle in Re Duomatic is often referred to as the ‘doctrine of unanimous assent’. It is said to be a doctrine of the waiver of formalities: Herrman v Simon (1990) 4 ACSR 81. The principle has been both applied and distinguished by the courts in Australia in numerous cases, depending on the circumstances: see, for example, Herrman v Simon; Brick and Pipe Industries Ltd v Occidental Life Nominees Pty Ltd [1992] 2 VR 279; (1991) 6 ACSR 464; Re A Ffrost & Co Pty Ltd [1993] 1 Qd R 1. Because of the uncertainty that may well result, informal decision-making processes are best avoided by companies. Either the necessary meeting should be held, or the provisions of the Corporations Act or constitution with respect to resolutions without meeting should be complied with: see 21.30.
Companies that are registered charities 21.3 Since 3 December 2012 under s 111L the general meetings provisions in Part 2G.2 of the Corporations Act (other than ss 250PAA and 250PAB) do not apply to companies that are charities registered under the Australian Charities and Not-for-profits Commission Act 2012 (Cth).
Annual general meeting: ss 250N and 250P 21.4 All public companies with more than one member (other than registered charities) must hold an annual general meeting (or ‘AGM’) at least once in each calendar year and within five months of the end of the company’s financial year: s 250N(2). Public companies that have only one member are not required to hold an annual general meeting: s 250N(4). Proprietary companies are no longer required by statute to hold an annual general meeting, although their constitutions may still require them to do so. While companies that are registered
charities are not required by the Corporations Act to hold an annual general meeting, the holding of annual general meetings is consistent with the requirement for accountability to members under governance standard 2 of the Australian Charities and Not-for-profits Commission Regulation 2013 (Cth). [page 295] The first annual general meeting need not be held during the calendar year in which the company is incorporated, nor even in the following calendar year, provided that it is held within 18 months of the date of incorporation and within five months of the end of the company’s financial year: s 250N(1). A calendar year is the 12 months that commences on 1 January, and is not the period of 12 months beginning with the date of incorporation of the company and each anniversary of that date: Gibson v Barton (1875) LR 10 QB 329; see also the definition in s 9. Under s 250P, ASIC is authorised to grant an extension of time for the holding of the annual general meeting. The application should be in the prescribed form (Form 2501), and must be signed by a director or secretary. It must be lodged before the latest date on which the annual general meeting is due to be held: s 250P(2). ASIC may impose conditions on the granting of the extension, which must then be complied with by the company: 250P(4). In practice, ASIC requests applications be lodged at least one month before the due date, and requires applications to contain full information as to why the company is unable to comply with the statutory requirements: see ASIC Policy Statement 44. ASIC has a discretion as to whether an extension should be granted, but the refusal of an application for extension may be reviewed by the Commonwealth Administrative Appeals Tribunal and then by the Federal Court: Exicom Ltd v Futuris Corp Ltd (1995) 61 FCR 337; 18 ACSR 711; compare Re Gem Exploration & Minerals NL [1975] 2 NSWLR 584; (1975) 1 ACLR 317. Default in calling the annual general meeting results in the company and each officer who is in default being guilty of an offence and liable to penalty: s 1311.
Notice of annual general meeting 21.5 The same notice must be given of the annual general meeting as any other general meeting: see 21.14, but also see 21.6 regarding notice of business and circulation of financial reports.
Business of annual general meeting: ss 250PA–250T 21.6 Section 250R(1) provides that the business of the annual general meeting may include: 1. consideration of the annual financial report, directors’ report and auditor’s report; 2. election of directors; 3. appointment of auditor; and 4. fixing of auditor’s remuneration; [page 296] even if no notice of those items has been given. Thus, s 250R(1) abrogates the common law rule that, in the case of general meetings, notice must be given of every item of business (see 4.16, and also s 249L(1)(b), which would otherwise require notice of that business to be given: see 21.15). The items exempted from the normal notice requirements by s 250R(1) are usually referred to as the ‘ordinary business’ of the annual general meeting, in contrast to ‘special business’ of which notice must be given in the normal way. In practice, notice should nonetheless be given of the ordinary business of the annual general meeting, so that members are aware of what the full business of the meeting will be. Section 250R(1) is based on Table A, reg 41. Unlike the former provision, however, the new section does not include the declaring of a dividend as a matter of which is not necessary to give notice. This is presumably because the replaceable rule in s 254U now gives the directors power to declare dividends, unlike Table A, reg 86, which required dividends to be declared by a general meeting of the company on the recommendation of the directors. Two important new provisions in relation to the business of the annual general meeting were introduced by the Company Law Review Act 1998 (CLRA) with effect from 1 July 1998. Under s 250S(1), the Chair of the annual general meeting 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. Under s 250T(1)(a), if the auditor is present or represented at the annual general meeting, the Chair must allow a reasonable opportunity for the members as a whole at the meeting to ask the auditor or representative questions about:
1. the conduct of the audit; 2. the preparation and content of the auditor’s report; 3. the accounting policies of the company; and 4. the independence of the auditor. Paragraph 10.77 of the Explanatory Memorandum to the Bill for the CLRA points out that there is no obligation under ss 250S and 250T for the directors or auditor to answer any questions they may be asked by members. Paragraph 10.78 of the Explanatory Memorandum suggests that the use of the words ‘members as a whole’ in ss 250S and 250T does not mean that each individual member has a right to ask a question, and that what is a ‘reasonable opportunity’ will depend on the circumstances of the meeting. The Business Council of Australia has published a code of conduct for general meetings: media release 23 September 2003, available at . The code provides practical guidance on the conduct of the general meetings of public companies, especially where there are a large number of shareholders wishing to speak or ask questions. [page 297] In the case of public companies, s 317 requires the directors to lay before the annual general meeting the company’s financial report, the directors’ report and the auditor’s report for the previous financial year. These reports must be sent to members within four months after the end of the financial year and at least 21 days before the annual general meeting: s 315. A concise financial and auditor’s report may be sent instead of the full reports (s 314); however, members may request the full reports: ss 314(2)(e) and 316. There are separate requirements for companies limited by guarantee under s 316A. Usually, in practice, the three reports will be circulated with the notice of the annual general meeting as part of the company’s annual report. The directors’ obligation under s 317 is merely to lay the reports before the annual general meeting. There is no requirement under the Corporations Act that the annual general meeting approve the reports. Normally, however, there will be a motion to approve the reports (or, perhaps more correctly, to note them, the reports having already been finalised). In the case of listed companies, s 250R(2) requires the business of the annual general meeting to also include a ‘resolution’ (that is, a motion) that the remuneration report under s 300A in relation to the remuneration of directors be adopted. Notice of the proposed resolution must be given in the normal way: s
249L(2). The resolution, if passed, will be advisory only and will not bind the company or its directors: s 250R(3). In addition, s 250SA requires the Chair of the annual general meeting to allow a reasonable opportunity for the members as a whole specifically to ask questions about or make comments on the remuneration report (in addition to the general requirement under s 250S). A further requirement that applies to listed companies is that s 250PA(1) gives members the right to submit written questions to the company’s auditor in relation to the content of the auditor’s report and the conduct of the audit. The questions for the auditor must be given to the company at least five business days before the annual general meeting. The company is entitled to look at and make a copy of the questions, but not withhold them from the auditor: ss 250PA(2) and (3). The auditor must prepare a ‘question list’ of all questions the auditor considers relevant to the content of the auditor’s report and the conduct of the audit: ss 250PA(4) and (6). Questions that are ‘the same in substance’ as one that has already been asked need not be included, nor questions where the auditor has not had sufficient time to include the question or decide whether to include it: s 250PA(8). The company must then make copies of the question list available to members attending the annual general meeting at or before the beginning of the meeting: s 250PA(9). Section 250RA makes it mandatory for the auditor of a listed company or a suitably qualified representative who [page 298] is in a position to answer questions about the audit to attend the annual general meeting. As previously noted, s 250T(1)(a) gives members the right to question the auditor or representative about the audit. The Chair must also allow the auditor or representative a reasonable opportunity to answer the questions on the question list (s 250T(1)(b)), and may permit the auditor or representative to table written answers (s 250T(3)), which must then be made available to members after the meeting: s 250T(4). Finally, in the case of all companies, the rights of members under ss 249N and 249P to put motions on notice and circulate statements for consideration at general meetings (see 21.15) apply equally to the annual general meeting as to other general meetings.
Election of directors 21.7 The question of whether or not directors or any given proportion of them retire at the annual general meeting depends on provisions in the
company’s constitution. These should also cover the eligibility or otherwise of retiring directors to stand for election, the procedure for nomination of a new director, and the election procedure. Constitutions often provide that a certain proportion (commonly one-third, as in Table A, reg 58) of the directors shall retire from office at each annual general meeting, and that a retiring director is eligible for re-election: see also 24.10. In the case of public companies, s 201E requires the appointment of each director to be voted on separately, unless a resolution to allow two or more directors to be appointed at the same time is first passed without a single vote against. However, this does not preclude the election of two or more directors at the same time by ballot (including postal ballot) or by poll, if the constitution so provides: s 201E(2). In the case of public companies, prior to 11 April 2003, s 201C contained onerous restrictions on the appointment and continuing in office of directors who had turned 72. Those requirements have now been removed from the Corporations Act, and the only age restriction now is that a director must be at least 18: s 201B(1). Elections are dealt with in detail in Chapter 17. In particular, the general principles that will apply to all elections are discussed in 17.2.
Other general meetings 21.8 The early Companies Acts (including Table A) referred to three classes of general meeting, namely, ‘statutory’, ‘ordinary’ and ‘extraordinary’. An ‘ordinary’ meeting was the one that needed to be held annually; all other meetings, apart from the statutory meeting, were ‘extraordinary’ meetings. By the time of the uniform Companies Acts of 1961–63, the three classes had become ‘statutory’, ‘annual’ and ‘extraordinary’. When the [page 299] Companies Codes under the cooperative scheme were introduced in 1982, all reference to ‘extraordinary’ general meetings was deleted, both from the statute itself and from Table A. The Corporations Law initially continued the Companies Code terminology, but then removed the requirement for a statutory meeting. The net result is that under the Corporations Act there are now just ‘general meetings’, one particular type of which is the ‘annual general meeting’. However, the articles of companies registered before 1982 will often continue to
refer to extraordinary general meetings, as will many constitutions adopted since 1982 where the drafter has found continuation of an express dichotomy useful. Some drafters prefer ‘special’ to ‘extraordinary’ on the ground that there are no longer ‘ordinary’ general meetings. ‘Special general meeting’ will be used in this chapter to mean a general meeting other than the annual general meeting.
Calling of general meetings by directors: ss 249C and 249CA 21.9 In addition to the annual general meeting, it may be necessary for the company to hold a special general meeting to transact some item of business that can only be dealt with by a general meeting and that cannot wait until the next annual general meeting; for example, the passing of an urgent special resolution. The replaceable rule in s 249C provides that any director may call a general meeting. In the case of listed companies, s 249CA provides that any director may call a general meeting, despite anything in the company’s constitution. The power of a director to call a general meeting must be exercised: (1) bona fide in the interests of the company as a whole, and not in the interests of a particular shareholder or group of shareholders; and (2) in the director’s capacity as a director, and in the course of the proper exercise of the director’s functions and powers as a director. If not, the calling of the meeting will be invalid: Australian Innovation Ltd v Petrovsky (1996) 21 ACSR 218. Theoretically, ss 249C and 249CA apply equally to the annual general meeting as to special general meetings. Usually in practice, however, both the annual general meeting and special general meetings will be convened by resolution of the board of directors, rather than by an individual director. Sometimes, the notice of meeting will be under the name of a secretary of the company ‘by resolution (or order) of the Board’. This is appropriate provided a resolution of the directors to hold the meeting has in fact been passed. However, a secretary of a company has no power to convene a general meeting unless specifically authorised by the constitution. A notice sent out by a secretary without authority may nonetheless subsequently be ratified by resolution of the directors: Hooper v Kerr, Stuart & Co Ltd (1900) 83 LT 729. [page 300]
Calling of general meetings at request of members: ss
249D and 249E 21.10 Under s 249D, the directors must call and arrange to hold a general meeting if the company receives a request from its members that complies with the terms of the section. The requirements are: 1. The request must be made by members holding at least 5 per cent of the votes that may be cast at a general meeting: s 249D(1). The percentage of votes that members have is to be worked out as at the midnight before the request is given to the company: s 249D(4). 2. The request must be in writing (s 249D(2)(a)), and state any ‘resolution’ to be proposed at the meeting: s 249D(2)(b). 3. It must be signed by all the members making the request: s 249D (2)(c). In the case of joint shareholders, each must sign unless the constitution authorises one to sign on behalf of all: Patent Wood Keg Syndicate v Pearse [1906] WN 164. The request may consist of more than one document provided the wording of the request is identical in each case: s 249D(3); compare Fruit & Vegetable Growers Association Ltd v Kekewich [1912] 2 Ch 52. 4. It must be given to the company (s 249D(2)(d)), by leaving it at or posting it to the company’s registered office, or delivering it personally to a director of the company residing in Australia: s 109X. Prior to 19 March 2015, s 249D and its statutory predecessors also enabled 100 members entitled to vote at a general meeting to request a general meeting, no matter how large the company. The ‘100 member rule’ was the subject of widespread criticism over many years, and was finally abolished by the Corporations Legislation Amendment (Deregulatory and Other Measures) Act 2015 (Cth). The directors must proceed to call the meeting within 21 days after the company receives the request, and the meeting must be held within two months after the request is received: s 249D(5). ‘Call’ means the actual sending of notices to members, not merely the passing of a resolution of directors to do so: NSX Ltd v Pritchard (2009) 178 FCR 151; 72 ACSR 122. ‘Held’ means the meeting must be commenced and concluded by that time, rather than merely commenced and then adjourned to a date after the specified time: Australian Securities and Investments Commission v National Roads and Motorists’ Association Ltd (2002) 43 ACSR 451. If within 21 days the directors do not proceed to convene the meeting, members
who hold more than half of the votes of all members making the request may convene the meeting: s 249E(1). They must do so in the same way ‘so far as is possible’ that meetings are to be convened by directors: s 249E(2). In order to call the meeting, the members who made the request may ask the company for a copy of the register of members, which must be [page 301] supplied without charge: ss 173 and 249E(3). The meeting must be held no later than three months after the date the company received the original request: s 249E(2). The company must pay the reasonable expenses the members incurred in convening the meeting: s 249E(4). A meeting cannot be convened by the members prior to the expiry of the 21-day period. A meeting called by them before then is invalid, and is not validated if the directors fail to call the meeting: Aberfeldie Gold Mining Co v Walters (1876) 2 VLR (E) 116. If the request includes a proposed resolution to remove a director under s 203D or an auditor under s 329, then the special notice requirements of those sections will also need to be complied with (see 21.16), in addition to the general notice requirements of ss 249H–249M: see 21.14 and 21.15. If on receipt of a request the directors convene a special general meeting in respect to some but not all the matters stated in the request, this does not meet the requirements of the statute, and the members are entitled to convene a separate meeting: Isle of Wight Railway Co v Tahourdin (1883) 25 Ch D 320. If the request deals with matters that may be lawfully carried out even though expressed in a way that makes them appear irregular or unable to be done legally or validly, the directors are still bound to comply with the request: Isle of Wight Railway Co v Tahourdin. Further, if parts of the request are valid and parts not, then the directors are obliged to convene a meeting for the valid parts, but are entitled to omit those that are invalid: Turner v Berner [1978] 1 NSWLR 66; 3 ACLR 272; Windsor v National Mutual Life Association of Australasia Ltd (1992) 34 FCR 580; 7 ACSR 210; Totally and Permanently Incapacitated Veterans’ Association of New South Wales Ltd v Gadd (1998) 146 FLR 161; 28 ACSR 549. If, however, the whole of the proposed resolution for which the meeting is to be called is not one that can properly be dealt with by a general meeting, the directors are entitled to decline to act on the request at all: National Roads & Motorists’ Association v Parker (1986) 6 NSWLR 517; 11 ACLR 1; Queensland Press Ltd v Academy Investments No 3 Pty Ltd [1988] 2 Qd R 575; (1987) 11 ACLR 419.
The power that the statute gives to requisitionists to convene a meeting if directors default in doing so is conferred on them as quasi-officers of the company. Accordingly they will be restrained by the court should they deliberately attempt to call a meeting in circumstances where many shareholders will be unable to exercise their votes: Adams v Adhesives Pty Ltd (1932) 32 SR (NSW) 398. Further, the right of minority shareholders to request a general meeting must be exercised bona fide for the purpose for which it was conferred (namely, to have the proposed resolutions passed), and not simply to harass the company and its directors. The court should, however, interfere only where it is clear that the purpose for calling the meeting is something other than the passing of the resolutions [page 302] contained in the request: Humes Ltd v Unity APA Ltd (No 1) [1987] VR 467; (1986) 11 ACLR 641. The wording of requests should be construed with regard to the possibility that ambiguities can be debated and modified. Oppression or abuse of power should not be presumed, it must be clearly proved: NRMA Ltd v Snodgrass (2001) 52 NSWLR 383; 39 ACSR 260. Even if one or more of the members making the request subsequently withdraws their request, it continues to be obligatory on the directors to convene the meeting: South Norseman Gold Mines (NL) v Macdonald [1937] SASR 53. Further, once properly convened the meeting cannot be cancelled by the company, even if all the members requesting the meeting no longer wish it to proceed, unless express provision to do this is contained in the company’s constitution: see 4.19 and 13.10. If, however, the court is satisfied that none of the members who made the request any longer wish the meeting to proceed, and that it would be contrary to the interests of the members as a whole for the procedure for convening the meeting to continue any further, the court may make an order under ss 232 and 233 cancelling the meeting: Turnbull v National Roads and Motorists’ Association Ltd (2004) 50 ACSR 44. A special general meeting convened at the request of members is not competent to discuss a matter (in this case, a proposal to remove a director) that is not covered in the objects of the meeting as set out in the request: Ball v Metal Industries Ltd [1957] SC 315. However, such a meeting may consider other business than that specified in the request, provided that proper notice is given of that other business: Holmes v Life Funds of Australia Ltd [1971] 1 NSWLR 860.
Calling of general meetings by members: s 249F 21.11 Under s 249F, members holding at least 5 per cent of the votes that may be cast at a general meeting may themselves call and arrange to hold a general meeting. The percentage of votes that members have is to be worked out as at the midnight before the meeting is called: s 249F(3). Unlike the position under s 249E(4) where the members convene a meeting after the directors have failed to act on their request, under s 249F(1) the members calling the meeting must pay the expenses of calling and holding the meeting. The meeting must be called in the same way, as far as possible, in which general meetings of the company may be called: s 249F(2). Unlike s 247 of the Corporations Law, the right of members to directly convene general meetings under s 249F cannot be excluded by the company’s constitution. Where the constitution of the company gives the directors powers to postpone, change the venue or cancel a general meeting, those powers may [page 303] be exercised even when the meeting has been called by members under s 249F. However: [T]he circumstances in which it will be proper for the board to postpone or change the place for a meeting called pursuant to s 249F, or to cancel such a meeting, will be limited and such powers must, of necessity, be exercised extremely sparingly so as not to frustrate the right conferred by s 249F. If the directors change the place, as well as the time, they must have some justification for doing so. The directors cannot arbitrarily postpone or change the place for the meeting: Central Exchange Ltd v Rivkin Financial Services Ltd (2004) 213 ALR 771; 51 ACSR 441 at [33] per Emmett J.
Class meetings 21.12 Companies may issue shares with differing rights and obligations. If a category of shares in a company has different rights and obligations from other shares in the company, it will constitute a class of shares: Clements Marshall Consolidated Ltd v ENT Ltd (1988) 13 ACLR 90. Examples of different classes are ordinary shares, bonus shares, partly paid shares, preference shares, redeemable preference shares, and deferred or founder’s shares. The classes of shares will be specified and their rights set out in the company’s constitution. It is usual for constitutions to contain provisions to enable a company to issue and administer different classes of shares, in addition to the statutory provisions contained in ss 254A and 254B and Pt 2H.1 generally. The reasons why a company may issue different classes of shares are usually connected with the
company raising further capital while ensuring that the existing shareholders retain control; for example, the flotation of a family firm into a company. Variations in rights and obligations may refer to entitlements to or priority in payment of dividends, voting rights (sometimes only in particular circumstances), repayment of capital, priority of repayment of capital in a winding up, participation in a distribution of surplus assets and so on. Section 246C deems certain actions in relation to the division of classes and the variation of rights to correspondingly vary rights and create new classes as specified in that section. Under s 246B(1), if the constitution sets out a procedure for varying or cancelling class rights, that procedure must be followed, and the procedure itself may only be changed by following the procedure. Such procedures will usually provide for the holding of a class meeting; for example, Table A, reg 4. A ‘class meeting’ is a meeting of the holders of a particular class of share. They are separate meetings, with attendance and voting entitlements limited to holders of that class. The provisions of Table A reg 4 are to the following effect: 1. Where the share capital is divided into different classes of shares, the rights attached to a class (unless otherwise provided in the terms of [page 304] issue) may be varied with the sanction of a special resolution passed at a separate general meeting of the holders of shares of that class, or with the consent in writing of the holders of three-quarters of the issued shares of that class. 2. The provisions of Table A relating to general meetings are, with such variation as is necessary, to apply to separate general meetings of classes of shareholders, with the proviso that the quorum is two persons holding or representing by proxy at least one-third of the issued shares of the class. A holder of shares of a class, present in person or by proxy at a separate general meeting of holders of that class, may demand a poll. In general, the convening and proceedings of class meetings will follow the procedure for general meetings of the company. However, where all the shares of a class are held by one person, that person constitutes a valid meeting of the class: East v Bennett Bros Ltd [1911] 1 Ch 163; see further 1.15. Under s 246B(2), if the company does not have a constitution, or the
constitution does not make provision for the variation or cancellation of class rights, the company may only vary or cancel those rights by special resolution (see 21.23) passed at a class meeting, or with the consent in writing of members holding at least three-quarters of the votes in the class. The company must give written notice of the variation or cancellation to all class members within seven days: s 246B(3). Under s 246D, if there is not unanimous agreement to the variation or cancellation of class rights or the modification of the constitution to allow this, members holding at least 10 per cent of the votes in the class may apply to the court to have the variation, cancellation or modification set aside on the basis that it would unfairly prejudice those members. The members claiming to be prejudiced may appoint in writing one or more of their number to make the application of their behalf: s 246D(4). The application must be made within one month: s 246D(2). The variation, cancellation or modification will take effect: 1. if there has been unanimous agreement — on the date the relevant resolution was passed or the necessary consents were given, or on a later date as specified in the resolution or consent; 2. where there was not unanimous agreement, but no application to the court has been made — one month after the variation, cancellation or modification was made; and 3. where an application to the court has been made — when the application is either withdrawn or finally determined by the court. A company must give ASIC notice in the prescribed form (Form 211) within 14 days if it divides shares into classes or converts shares from one class to another: ss 246F(1) and (2). Where an application to the court [page 305] has been made, the company must lodge a copy of any order made by the court with ASIC within 14 days: s 246D(6). Public companies must also lodge copies with ASIC within 14 days of all new documents and resolutions that alter class rights: ss 246F(3) and (5). The company must within seven days send a copy of any document or resolution referred to in s 246F if requested in writing by a member: s 246G. Section 411 also specifically contemplates the holding of class meetings, in the context of the approval of compromises and other arrangements: see 23.2.
Calling of meeting of members by the court: s 249G 21.13 Under s 249G(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. This may be done on the application of any director or of any member entitled to vote at the meeting: s 249G(2). The court may give consequential directions for the calling, holding or conducting of the meeting under s 1319. This may include a direction that merely one person present in person or by proxy shall be deemed to constitute the meeting: Re El Sombrero Ltd [1958] Ch 900; Re Totex Adon Pty Ltd [1980] 1 NSWLR 605; (1980) 4 ACLR 769. Section 251 of the Corporations Law previously gave the court power to order a meeting where it was otherwise impracticable to convene or to conduct the meeting. It has been held that impracticability for the purposes of s 249G will similarly extend not just to the calling of the meeting in the sense of giving notice, but also to the whole process of convening and conducting the meeting: Beck v Tuckey Pty Ltd (2004) 49 ACSR 555. The court also has a general power under s 547(1) to direct general meetings of creditors and contributories to be convened for the purpose of ascertaining their wishes in a winding up: see 23.9.
Notice of meeting: ss 249H–249M 21.14 As a general rule, s 249H(1) now requires 21 days’ notice to be given of all meetings of the company’s members. Prior to 1 July 1998, the minimum notice period for general meetings was 14 days, unless a special resolution was proposed, in which case 21 days’ notice was required. The company’s constitution may require a longer notice period: s 249H(1). The 21-day period may be reduced if: in the case of the annual general meeting — all members entitled to vote; and in the case of other general meetings — members holding 95 per cent of the votes that may be cast, ‘agree beforehand’: s 249H(2). [page 306] It would therefore appear that agreement must be reached before the meeting purports to commence, unlike previously under s 247(3) of the Corporations Law. The members are not required to actually attend the meeting in order to signify their agreement to the short notice: Parker & Cooper Ltd v Reading [1926]
Ch 975. The company may obtain the consents of those members not attending the meeting in writing in advance. Those who agree to a resolution being passed on short notice must know and appreciate that it is being placed before the meeting on less than the proper notice, and be aware of this when agreeing to it being passed: Re Pearce, Duff & Co Ltd [1960] 3 All ER 222. For a general discussion of waiver of notice, see 4.7. The 21-day notice period cannot, however, be reduced in the case of general meetings at which a resolution will be moved to remove a director of a public company under s 203D, to appoint a director in place of one so removed, or to remove an auditor under s 329: ss 249H(3) and (4); see also 21.16. In the case of listed companies, the minimum notice period is 28 days, and that period cannot be reduced: s 249HA. Section 249J(1) requires written notice to be given individually to each member entitled to vote at the meeting and to each director. This is a mandatory requirement that cannot be displaced by the company’s constitution, as it could previously under s 247(4) of the Corporations Law. In the case of joint members, notice need only be given to one: s 249J(1). This will be the member named first in the register of members, unless the constitution provides otherwise: s 249J(2) (replaceable rule). Under s 1072C(2), the trustee of the estate of a bankrupt shareholder, on production of appropriate evidence to the company’s directors, becomes entitled to the same rights in relation to meetings, including notice and voting, as those enjoyed by the shareholder. The trustee also has the same rights to transfer the share as the shareholder: s 1072C(3). These are non-replaceable provisions. Under the replaceable rule in s 1072B, a person entitled to shares because of the bankruptcy of a shareholder may elect to become registered as the holder of the shares or transfer the shares to another person. The replaceable rules in ss 1072A(2)(b) and 1072D(1)(b) similarly give the personal representative of a deceased shareholder and a person entitled to shares because of the mental incapacity of a shareholder, respectively, the same rights, including in relation to meetings, as the shareholder on production of appropriate evidence to the directors. Those persons may also elect to become the registered shareholder or transfer the shares: ss 1072A(2)(a) and 1072D(1)(a). In the absence of provisions such as ss 1072C(2), 1072A(2)(b) and 1072D(1)(b), the representatives would not [page 307]
be entitled to receive notices of meetings unless they registered themselves as holders of the shares (that is, as ‘members’) in place of the shareholder: Allen v Gold Reefs of West Africa Ltd [1900] 1 Ch 656. Under s 249J(3), notice may be given personally, by post to the address in the register of members or any alternative address nominated by the member, by fax or email to any address nominated by the member, by another electronic means nominated by the member, or by any other means permitted by the company’s constitution. The effect of s 249J(3A) is that, if a member agrees, instead of sending notices of meeting to the member, the company may make them available on a website and notify the member when they become available. Unless the constitution provides otherwise, notices sent by post are deemed to be given three days after posting, and notices sent by fax, email or other electronic means are deemed to be given on the business day after sending: ss 249J(4) and (5) (replaceable rules). It was held in an early Australian case that the references to service by post in Table A reg 95 meant that notice only needed to be served on members who were within the postal area under the control of the Commonwealth of Australia, that is, not on members whose address was overseas: Re Merchants & Shippers’ Steamship Lines Ltd (1917) 17 SR (NSW) 146. With the advances in methods of transport and communication since 1917, it must be doubted whether this case is still good law: see further 4.5. Notice must also be given to the company’s auditor: s 249K. The auditor or nominated representative is entitled to attend and be heard at any general meeting: s 249V. Section 249L(1) provides: (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.
[page 308]
Under s 249R, the meeting must be held at a reasonable time and place. This codifies the common law: see 4.9. The use of technology to conduct meetings is discussed in 21.19, the business of the meeting in 21.15, special resolutions in 21.23 and proxies in 21.28. Under the replaceable rule in s 249M, unless the constitution provides otherwise, if the meeting is adjourned for one month or more, fresh notice must be given of the resumed meeting. Once notice has been properly given, the directors of a company have no power to postpone a general meeting of members, absent express authority in the constitution: Bell Resources Ltd v Turnbridge Pty Ltd (1988) 13 ACLR 429: see further 13.10.
Business of the meeting: ss 249L and 249N–249P 21.15 As we have seen, s 249L(1)(b) requires the notice to ‘state the general nature of the meeting’s business’. Even without such a provision, a general meeting is confined to dealing with the business specified in the notice of meeting: Efstathis v Greek Orthodox Community of St George [1989] 1 Qd R 146, sub nom Ephstathis v Greek Orthodox Community of St George (1988) 13 ACLR 691. In addition, the information included in the notice must be worded and presented in a clear, concise and effective manner: s 249L(3). For a detailed discussion of what constitutes adequate notice of business, including relevant company cases, see 4.16 and 4.17. In the case of business in the form of a special resolution, s 249L(1)(c) requires the notice to include the text of the proposed resolution, and to state that it is intended that the resolution be proposed as a special resolution: see further 21.23. In the case of listed companies, s 249L(2) requires the notice of the annual general meeting to state that the resolution to adopt the directors’ remuneration report required by s 250R(2) will be put to the meeting: see further 21.6. In addition to their rights under ss 249D–249F to request or call general meetings themselves (see 21.10 and 21.11), under ss 249N–249P members also have the right to put resolutions and distribute statements to general meetings called at the initiative of the directors. Under s 249N, members holding at least 5 per cent of votes that may be cast at a general meeting, or at least 100 members entitled to vote at a general meeting, whichever is fewer, may give the company notice of a resolution they propose to move at a general meeting. The percentage of votes that members have is to be worked out as at the midnight before the notice is given to the company: s 249N(4). 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: s 249N(2). It may consist of more than one document, [page 309] provided the wording of the notice is identical in each case: s 249N(3). The company must give notice of the resolution at the same time or as soon as practicable afterwards and in the same way as notice of the next general meeting that occurs more than two months after the notice is given to it: ss 249O(1) and (2). If the notice is received by the company in time for notice of the resolution to be given to members with notice of the meeting, the company bears the cost (s 249O(3)); if not, the ‘members requesting the meeting’ are jointly and individually liable, unless the general meeting resolves that the company meet the cost: s 249O(4). Presumably ‘members requesting the meeting’ means the members requesting or giving notice of the resolution. Under s 249O(5), the company does not have to give notice of a resolution that is more than 1000 words long or defamatory, or if the members are required to meet the cost of giving notice and do not give the company reasonably sufficient funds. If the notice includes a proposed resolution to remove a director under s 203D or an auditor under s 329, then the special notice requirements of those sections will also need to be complied with: see 21.16. As well as putting resolutions to general meetings, s 249P entitles members in similar terms to request the distribution by the company of a statement provided by the members about a resolution that is proposed to be moved at a general meeting or any other matter that may properly be considered at a general meeting. Finally, s 249Q imposes an overriding requirement that the meeting be held for a proper purpose. It will not be a proper purpose of a general meeting to do something that is not within the power of the meeting, such as to attempt to interfere in the directors’ management of the company when no power to do so is given in the company’s constitution: Dhami v Martin (2010) 241 FLR 165; 79 ACSR 121 at [9]; see also 21.10.
Special notice: ss 203D and 329 21.16 The Corporations Act no longer uses the expression ‘special notice’ as s 254 of the Corporations Law previously did. However, two matters under the Corporations Act still effectively require special notice. These are:
1. A resolution at a general meeting for the removal, or removal and replacement, of a director of a public company before the end of the director’s period of office: s 203D. 2. A resolution at a general meeting for the removal of the auditor: s 329. Special notice involves three stages: 1. The members wishing to move the motion to remove the director or auditor must give at least two months’ notice to the company of an intention to do so: ss 203D(2) and 329(1A). This is the sense in [page 310] which special notice is required, that is, notice of intention to the company, not notice of meeting by the company. If the company calls a general meeting after special notice has been given, the meeting may nonetheless pass the resolution even though it is held less than two months later: ss 203D(2) and 329(1A). The 21-day period for notice of the meeting may not, however, be reduced: ss 249H(3) and (4); see further 21.14. 2. The company (through its board of directors) then has two responsibilities: a) As soon as practicable after the notice is received, the director concerned or auditor must be supplied with a copy of the notice: ss 203D(3) and 329(2). In the case of the auditor, a copy must also be lodged with ASIC: s 329(2). b) The proposed resolution must then apparently be included in the notice of the next general meeting of the company (unless a special general meeting has been requested by members under s 249D: see 21.10). This was formerly a requirement of s 254(2) of the Corporations Law. Paragraph 10.29 of the Explanatory Memorandum to the Bill for the Company Law Review Act 1998 states that, ‘If a meeting is not specifically called, a resolution to remove an auditor or a public company resolution to remove or replace a director will be considered at the next general meeting that occurs more than two months after the members give notice of the resolution to the company’. However, there is currently no explicit requirement in the Corporations Act for this to occur. There is also no requirement that the board of directors convene a general
meeting for the particular purpose of considering the proposed resolution upon receiving a special notice of intention. In practice, special notice is likely to be given two to three months prior to the annual general meeting, the approximate date of which tends to be predictable by members, in which case it has the effect of being a notice of intention to propose the resolution at the next general meeting. It is good practice for the notice of the meeting to refer to the fact that special notice as required by the statute has been received. The director concerned or auditor may submit written representations of reasonable length (the auditor, within seven days) with a request that copies be sent, at the company’s expense, to members prior to the meeting: ss 203D(4)(a) and 329(3). Representations from the auditor, unless ASIC decides otherwise on application by the company, are to be sent to all members: s 329(4). Representations from the director are to be circulated to everyone to whom notice of the meeting is sent if there is time to do so, or, if not, distributed to members attending the meeting and read out before the proposed resolution is voted on: s 203D(5). In the case of a [page 311] director, the representations do not have to be circulated if they are more than 1000 words long or defamatory: s 203D(6). The director or auditor is entitled to be heard at the meeting during consideration of the resolution: ss 203D(4)(b) and 329(4). The auditor may also require the representations to be read out: s 329(4). With regard to directors, under s 203D(1), a public company may by resolution in general meeting remove a director before the end of the director’s term of office, despite anything in its constitution (for example, a requirement for a special resolution) or any agreement between the company and the director. If the director was appointed to represent the interests of particular shareholders or debenture holders, the resolution does not take effect until a replacement director representing those interests has been appointed: s 203D(1). It is important to note that s 203D(1) does not require a special resolution, that is, the resolution is an ordinary resolution: see 21.22. Further, the fact that s 203D(1) applies ‘despite anything in … the company’s constitution’ precludes the company’s constitution from setting out an alternative (and additional) method by which directors may be removed: Scottish & Colonial Ltd v Australian Power & Gas Co Ltd (2007) 215 FLR 100; 65 ACSR 313; compare Holmes v Life Funds of Australia Ltd [1971] 1 NSWLR 860.
Finally, s 203E provides in absolute terms that a resolution, request or notice by the directors of a public company that purports to remove a director from office or require the vacation of that office is simply void. With regard to the auditor, s 327D regulates the appointment of a new auditor to replace one removed under s 329, and requires: 1. notice of nomination of a new auditor and circulation of the notice in accordance with s 328B(3); and 2. a special resolution appointing the new auditor at the meeting at which the auditor is removed: s 327D(2); or 3. an ordinary resolution appointing the new auditor at an adjourned meeting held between 20 and 30 days after the original meeting: ss 327D(3) and (4). It is important to note that special notice has nothing whatsoever to do with special resolutions: see 21.23.
Accidental omission to give notice: s 1322(3) 21.17 Under s 1322(3), the accidental omission to give notice to every member does not of itself invalidate the meeting, subject to a contrary declaration of the court. The courts have construed ‘accidental’ narrowly. Where the abstention from giving notice is a deliberate act, whether based on a mistake of fact, or of law, or of mixed law and fact, it is not an [page 312] ‘accidental omission’: Re Compaction Systems Pty Ltd [1976] 2 NSWLR 477; (1976) 2 ACLR 135; Australian Hydrocarbons NL v Green (1985) 10 ACLR 72 at 80. However, a more liberal interpretation has been given to the general validation provisions of s 1322(2), as a result of which a meeting will not necessarily be invalid, even if proper notice has deliberately not been given: see further 21.31.
Representative of corporation: s 250D 21.18 Under s 250D, a body corporate — that is, any incorporated body — may appoint an individual to exercise all or any of its powers at meetings of members, creditors and debenture holders, and relating to resolutions to be passed without meetings. If the appointment is by reference to a position held,
the position must be identified: s 250D(2). More than one representative may be appointed, but only one representative may exercise the body’s powers at any one time: s 250D(3). The appointment may be a standing one: s 250D(1). The appointment may set out restrictions on the representative’s powers (s 250D(2)); but, if not, the representative may exercise all powers of the body corporate: s 250D(4). Under the replaceable rule in s 249T(2), unless the constitution provides otherwise, body corporate representatives are to be counted towards quorum, but only if not already counted as a member in their own right or as a proxy: see further 21.20. Under ss 128 and 129, a company that is notified of the appointment of a representative by another company is entitled to assume that the appointment by the second company has been validly made in accordance with its constitution, unless the first company knew or suspected the assumption was incorrect. Instead of appointing a representative, a body corporate may exercise the same right as any other member to appoint a proxy under ss 249X–250C: see 21.28.
Use of technology: s 249S 21.19 Section 249S is an important new provision introduced by the Company Law Review Act 1998 (CLRA) with effect from 1 July 1998. It provides that a company may hold a general meeting at two or more venues using any technology that gives the members as a whole a reasonable opportunity to participate. Under s 249L(1)(a), the technology to be used for this purpose must be specified in the notice of the meeting. Paragraph 10.43 of the Explanatory Memorandum to the Bill for the CLRA states that: s 249S does not require that each individual member have an opportunity to participate; and [page 313] for most companies, a reasonable opportunity to participate will mean that each member is able to communicate with the Chair and be heard by other members attending the meeting, including those at other venues. Paragraph 10.44 of the Explanatory Memorandum suggests that, if a company proposes to use technology to hold its meetings in more than one place, it will need to take into account factors such as: the ability of the Chair to conduct and control the proceedings;
the number of persons attending the meeting; the nature of the business of the meeting (for example, it may include a visual presentation); the voting processes available (for example, it will be necessary to have procedures in place to count members’ votes from all venues); and whether persons at the meeting can communicate with the Chair and follow the proceedings. Section 1322(3A) provides that a general meeting held at two or more venues will only be invalid on the ground that a member did not have a reasonable opportunity to participate in the meeting (or part of it), if the court is of the opinion that a substantial injustice has been or may be caused, and that the injustice cannot be remedied by any order of the court. Paragraph 10.45 of the Explanatory Memorandum suggests that, if the technology fails part way through the meeting, the meeting or that part of the meeting affected by the technology failure will still be valid unless s 1322(3A) applies.
Quorum: s 249T 21.20 Under the replaceable rule in s 249T(1), unless the constitution provides otherwise, the quorum for a general meeting is two members, and that quorum must be present at all times during the meeting. The requirement that a quorum must be present at all times during the meeting should be contrasted with Table A reg 42(1), which required a quorum to be present only at the time the meeting proceeded to business. Under such a provision, it is possible for a meeting that commences with a quorum present to continue to transact business validly even though the number present falls below the quorum through the departure of one or more members: Re Hartley Baird Ltd [1955] Ch 143; see further 5.11. The specific power of the court under s 251(1) of the Corporations Law to direct that one member be deemed to constitute a quorum has been repealed and not replaced; however, s 1319 gives the court a general power to give directions with respect to the convening, holding and conduct of meetings ordered by the court: see further 21.13. Under the replaceable rule in s 249T(2), individuals attending as proxies and body corporate representatives are counted towards quorum: see [page 314]
further 21.28 and 21.18. However, if a member has appointed more than one proxy or representative, only one is to be counted; further, individuals attending in multiple capacities — that is, as members in their own right, proxies and/or body corporate representatives — are only to be counted once: s 249T(2). Absent a provision such as s 249T(2), the expression ‘shareholders present at a meeting’ will still include both those personally present and those present by proxy: Giblin v British-Australian Land & Banking Co Ltd (1891) 1 BC (NSW) 77. Similarly, at common law, proxies who are also members may only be counted once in tallying the quorum: Re Prain & Sons Ltd [1947] SC 325. If a quorum is not present within 30 minutes, the meeting is adjourned to a date, time and place specified by the directors; if the date is not specified, it is the same day in the next week; if the time is not specified, it is the same time; and if the place is not specified, it is the same place: s 249T(3) (replaceable rule). If a quorum is not present within 30 minutes at the resumed meeting, the meeting is dissolved: s 249T(4) (replaceable rule). The trustee of the estate of a bankrupt shareholder, and (subject to the company’s constitution) the personal representative of a deceased shareholder and a person entitled to shares because of the mental incapacity of a shareholder have the same rights as those shareholders in relation to meetings, and are therefore counted towards the quorum: ss 1072C(2), 1072A(2)(b) and 1072D(1)(b); see further 21.14. The replaceable rule in s 250F provides that in the case of joint shareholders only the vote of the member whose name appears first in the register of members is to be counted. It is usual for the constitution to make it clear that only one joint shareholder may vote, although the other joint holder is or holders are entitled to be present at meetings (unless the constitution specifically states otherwise). Thus, joint holders, if more than one is present, are counted as a single member when reckoning the quorum. Sometimes joint holdings are split so that in the register some of the shares show the name of one joint holder appearing first, while other shares show the name of another joint holder appearing first. In such cases each of the first-named joint holders receives a notice of meeting, each is entitled to vote, and accordingly each is counted towards the quorum. It has been held in a case where the quorum was two members that the presence of two of four persons who were registered as joint holders of all the shares in the company was sufficient: Re Transcontinental Hotel Ltd [1947] SASR 49. In the case of class meetings, Table A reg 4(2) formerly provided for a quorum of two persons holding or representing by proxy at least one-third of the issued shares of that class: see further 21.12.
Finally it should be noted that under the doctrine of unanimous assent, a resolution may be validly passed at a meeting at which a quorum is not [page 315] present, if those present comprise all of the members of the company for the time being: Re Johnston, Dunster & Co (1891) 17 VLR 100; see 5.3, compare 21.2.
Chair of general meeting: s 249U 21.21 Under the replaceable rule in s 249U(1), unless the constitution provides otherwise, the directors may elect any individual to chair general meetings. That election must occur at the general meeting itself if the directors have not already elected a Chair, or if the Chair is not available or declines to act for the meeting or part of it: s 249U(2). If the directors have not elected a Chair as required by ss 249U(1) and (2), the meeting must elect a member present to chair the meeting or part of it: s 249U(3). Paragraph 10.51 of the Explanatory Memorandum to the Bill for the Company Law Review Act 1998 suggests that s 249U(1) will give the directors an opportunity to appoint an independent person to chair general meetings. Normally, a person who is not a member of a body is not entitled to attend or participate in its meetings: see 7.8. Presumably it was considered that s 249U(1) implies those rights in the case of an individual who is not a member of the company but who is elected to chair its meetings. Many constitutions contain a provision in similar form to Table A reg 44: (1) If the directors have elected one of their number as chairman of their meetings, he shall preside as chairman at every general meeting. (2) Where a general meeting is held and: (a) a chairman has not been elected as provided by subregulation (1); or (b) the chairman is not present within 15 minutes after the time appointed for the holding of the meeting or is unwilling to act; the members present shall elect one of their number to be chairman of the meeting.
As a result, it is usual for the Chair of directors to also chair general meetings.
Resolutions 21.22 Two types of resolutions at general meetings are contemplated by the Corporations Act, namely, ‘ordinary resolutions’ and ‘special resolutions’. Unless otherwise required by the statute or the constitution, resolutions at general meetings of companies are passed by a simple majority of votes. Such resolutions
are commonly termed ‘ordinary’ resolutions. The term is not defined in the Corporations Act. An ordinary resolution is not defined nor used in the body of the [Companies] Act although the phrase occurs in some of the articles in Table A … But its
[page 316] meaning is, in my opinion, clear. An ordinary resolution is in the first place passed by a bare majority on a show of hands by the members entitled to vote who are present personally or by proxy and on such a vote each member has one vote regardless of his or her shareholding. If a poll is demanded then, for an ordinary resolution, still only a bare majority is required. But whether a share or class of shares has any vote on the matter, and, if so, what is its voting power on the resolution in question, depends entirely on the voting rights attached to that share or class of shares by the articles of association: Bushell v Faith [1970] AC 1099; [1970] 1 All ER 53 per Lord Upjohn.
As pointed out in 21.16, special resolutions have nothing to do with special notice, and the two matters requiring special notice (namely, to remove a director under s 203D or an auditor under s 329) require an ordinary resolution only to be passed. However, as a matter of general principle, a company’s constitution could require a special resolution for matters where the statute allows an ordinary resolution.
Special resolutions 21.23 The Corporations Act requires the following matters to be done or authorised by special resolution passed at a general meeting, stated in the order in which they are referred to in the statute: approval of mining on tribute by no liability company: s 112(4); adoption of constitution by company after registration: s 136(1)(b); modification or repeal of constitution: s 136(2); change of company name: s 157; change of type of company: s 162; issue of shares by company limited by guarantee changing to company limited by shares: ss 163(2)(b)(ii) and 167; variation or cancellation of class rights: s 246B(2); approval of rights attached to preference shares: s 254A(2); approval of rights attached to preference shares converted from ordinary shares: s 254G(2); limited company restricting calls on shares to when externally administered: s
254N; public company providing for different dividend rights: s 254W(1); approval of selective reduction in share capital: s 256C(2); approval of selective buy-back of shares: s 257D; approval of financial assistance by company’s own shareholders: s 260B(1); approval of financial assistance by shareholders of listed holding corporation: s 260B(2); approval of financial assistance by shareholders in ultimate Australian holding company: s 260B(3); appointment of replacement auditor at same meeting at which auditor removed: s 327D(2); [page 317] winding up by the court: s 461; voluntary winding up: s 491; sanctioning exercise of liquidator’s powers: s 506(1)(f ); approval of compromises and agreements by liquidator in members’ voluntary winding up: s 506(1A)(b); sanctioning acceptance by liquidator of shares for sale of property: s 507; sanctioning arrangement with creditors binding on company: s 510; transfer of registration to law of state or territory: s 601AI; conversion of foreign currency amounts in constitution of former noncompany: s 601BH(2); and modification or replacement of constitution of registered scheme: s 601GC(1) (a). Section 9 defines ‘special resolution’ to mean, in relation to a company, a resolution of which notice as set out in s 249L(c) has been given and that has been passed by at least 75 per cent of the votes cast by members entitled to vote on the resolution. The reference in s 9 to s 249L(c) is presumably intended to be to s 249L(1)(c), which, if a special resolution is to be proposed at a general meeting, requires the notice of meeting to ‘set out an intention to propose the special resolution and state the resolution’. The words ‘set out an intention to propose the special resolution’ presumably mean set out an intention to propose the special resolution as a special resolution,
as was the case under s 253 of the Corporations Law and its predecessor provisions. If the notice does not specify an intention to propose the resolution as a special resolution as required by the statute, the resolution will be invalid: Re North Victoria Deep Leads Gold Mines Ltd [1934] ALR 221; Re Stanley W Johnson Pty Ltd [1936] VLR 59; [1936] ALR 124. However, it is sufficient if the notice makes the requisite intention clear; the precise wording of the section does not have to be followed: Vawdon v South Sydney Junior Rugby League Club (1975–76) CLC 40–248. It is nonetheless prudent to follow the wording of the provision closely, as this will lessen the possibility of any subsequent challenge. Under the definition in s 9, the resolution will not be a special resolution unless it is passed by at least 75 per cent of the votes cast by members entitled to vote on the resolution. The members entitled to vote will include proxies, where proxies are permitted under the Corporations Act or the company’s constitution: see 21.28. In calculating whether the requisite majority has been obtained, the votes of those who vote in favour and the votes of those who vote against are added together, and the resulting total multiplied by three-quarters. The votes of those members who do not vote, either because they are absent and have not given a proxy or because they abstain from voting, are not counted. The words ‘votes cast’ make it [page 318] clear that it is a simple three-quarters majority, rather than (as is sometimes thought) three-quarters of the total membership. In addition to the specific notice requirements for special resolutions in s 249L(1)(c), the notice must also comply with the general requirements of ss 249H–249M. In particular, under s 249H(1), at least 21 days’ notice of the meeting must be given, unless sufficient members agree to shorter notice under s 249H(2). In the case of listed companies, at least 28 days’ notice must be given and there is no provision for shorter notice: s 249HA. As to these general notice requirements, see 21.14. As to calculation of time, see 4.12. As to the amendment of special resolutions, see 10.21. Similarly, the general provisions of Pt 2G.2 in relation to the declaration by the Chair of the result of the vote and demands for a poll in ss 250J(2) and 250K– 250M respectively apply equally to special resolutions, unlike the specific provisions for these matters under the Corporations Law: see further 21.26 and 21.27.
The provisions of Pt 2G.2 in relation to special resolutions apply equally to special resolutions of classes of shareholders as to general meetings of members. In addition, under ss 246F(3) and (4) public companies must lodge with ASIC within 14 days a copy of each special resolution affecting share rights. As to class meetings generally, see 21.12. Proprietary companies may now also pass special resolutions by ‘resolution without meeting’ under s 249A: see 21.30.
Amendment of constitution 21.24 The most common use of special resolutions is to amend the constitution of a company. As explained in 20.9, companies are no longer required to have a memorandum and articles of association, but may have a constitution. There are no requirements as to the content of the constitution, if the company chooses to adopt one. However, under s 135 the replaceable rules contained in the Corporations Act will apply to companies registered after 1 July 1998 and to companies that repeal their constitutions after that date to the extent that the company’s constitution does not displace or modify the replaceable rules: see further 20.10. Accordingly, most constitutions will at a minimum deal with the matters otherwise covered by the replaceable rules, as well as those fundamental matters previously included in the memorandum of association, such as name, limitation of liability and share capital. The constitution may be adopted by agreement of the first members at the time of registration (s 136(1)(a)), or by special resolution after registration: s 136(1) (b). Subsequent modification or repeal of the constitution also requires a special resolution: s 136(2). Under s 137(1), a special resolution adopting, modifying or repealing a constitution takes effect when the [page 319] resolution is passed, unless a later date is specified in the resolution. The constitution may provide that a special resolution modifying or repealing the constitution does not take effect unless some further specified requirement has been complied with (s 136(3)); if so, that provision itself may only be modified or repealed if the requirement is complied with: s 136(4). In the case of public companies, s 136(5) requires the company to lodge with ASIC within 14 days a copy of each special resolution adopting, modifying or repealing its constitution, together with a copy of any constitution adopted or
modification. ASIC may require a company to lodge a consolidated copy of its constitution: s 138. Under s 139, companies must send a copy of their constitution within seven days to any member who requests in writing and pays any fee required by the company, up to the prescribed maximum of $10.00. Special resolutions are also required for a change of name under s 157 and change of type of company under s 162. Unless the constitution provides otherwise, the variation or cancellation of class rights under s 246B also requires a special resolution: see 21.12. In the case of reductions in share capital, if there is an equal reduction, shareholder approval by ordinary resolution only is required: s 256C(1). However, under s 256C(2), a selective reduction in share capital requires either a resolution agreed to by all ordinary shareholders, or a special resolution passed without any votes in favour being cast by any person who is to receive consideration as part of the reduction or whose liability to pay amounts unpaid on shares is to be reduced, or by their associates. If the reduction involves the cancellation of shares, it must also be approved by special resolution of those shareholders whose shares are to be cancelled: s 256C(2). Further, under s 256C(4), the notice of a meeting for the purposes of s 256C(2) must include a statement setting out all information known to the company that is material to the decision on how to vote on the resolution, except for information previously disclosed to shareholders. A copy of the notice and all documents relating to the reduction that will accompany it must be lodged with ASIC before notice of the meeting is sent to shareholders: s 256C(5). Under s 256C(3), the company must lodge a copy of any resolution under s 256C(2) with ASIC within 14 days, and the reduction must not be made until 14 days after lodgement.
Adjournment 21.25 Replaceable rules in three different sections deal with issues relating to the adjournment of general meetings as follows: The Chair must adjourn a general meeting if the members present with a majority of votes at the meeting agree or direct that the Chair must do so: s 249U(4). [page 320] New notice of the resumed meeting must be given if the meeting is adjourned for one month or more: s 249M.
Only unfinished business is to be transacted at the resumed meeting: s 249W(2). Under s 249W(1), resolutions passed at a meeting resumed after an adjournment are deemed to be passed on the day of the resumed meeting. This is not a replaceable rule, and reverses the common law position: see 13.14. As to adjournment generally, see Chapter 13.
Voting: ss 250E–250J 21.26 The replaceable rules in ss 250E–250J provide for voting at general meetings as follows: In the case of companies with shares — on a show of hands each member has one vote, and on a poll each member has one vote for each share held, subject to any class rights or restrictions: s 250E(1). In the case of companies limited by guarantee — each member has one vote, both on a show of hands and on a poll: s 250E(2). The Chair has a casting vote, in addition to any deliberative vote: s 250E(3). In the case of jointly held shares, only the vote of the member whose name appears first in the register of members is to be counted: s 250F. Any challenge to a right to vote must be made at the meeting, and must be determined by the Chair, whose decision is final: s 250G. Voting is on a show of hands, unless a poll is demanded: s 250J(1). On a poll, a person entitled to more than one vote is not required to cast all their votes, and may cast their votes in different ways: s 250H. 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: s 250J(1A). On a show of hands, the Chair’s declaration is conclusive evidence of the result, provided the declaration reflects the show of hands and the votes of the proxies received: s 250J(2). On a show of hands, neither the Chair nor the minutes need to state the number or proportion of votes recorded in favour or against: s 250J(2). In 2006, the Commonwealth Government released an exposure draft of the Corporations Amendment Bill (No 2) 2006, which included an amendment to repeal s 250J(1A), which had been the subject of widespread criticism. However, the Bill failed to receive the support of the states and territories, and did not proceed.
[page 321] Despite s 250J(2), in the case of listed companies s 251AA requires the minutes to record specified information in relation to votes cast by proxy. Voting by proxy is discussed in 21.28, polls in 21.27 and minutes in 21.29. Company constitutions will usually define the voting rights of members. The constitution may confer specified voting rights in respect of particular classes of shares. For example, where preference shares have been issued, one of the conditions of their issue may be that the holders are not entitled to a vote unless dividends payable on the preference shares have fallen into arrears. Equally, the constitution may restrict the voting rights attached to particular classes of shares. For example, in the case of partly paid shares, members may not be entitled to vote unless all calls have been paid, as under Table A reg 52. Any additional rights or restrictions in relation to voting will need to be expressed in the constitution. Table A reg 49 formerly provided: Subject to any rights or restrictions for the time being attached to any class or classes of shares: (a) at meetings of members or classes of members each member entitled to vote may vote in person or by proxy or attorney; and (b) on a show of hands every person present who is a member or a representative of a member has one vote, and on a poll every person present in person or by proxy or attorney has one vote for each share he holds.
Many company constitutions still make provision to similar effect. As can be seen, in addition to allowing members to vote in person or by proxy, the provision also purports to permit members to vote by attorney: see further 16.12. It has been held that the scheme of the Corporations Act is that members may only vote in person (including, in the case of members that are corporations, by representative: see 21.18) or by proxy, and that provisions permitting voting by attorney must be read down accordingly; as a result, the attorney will only be entitled to vote if the requirements of s 250B in relation to the lodgement of proxy documents have been complied with: New South Wales Henry George Foundation v Booth (2002) 54 NSWLR 433; 167 FLR 287. Under the replaceable rule in s 250F, if there are joint shareholders, only the vote of the member whose name appears first in the register of members is to be counted. It has been held that joint shareholders are entitled to require their holding to be split if they so wish, the shares to remain in their joint names, but with each of the split holdings commencing with the name of a different holder. Each shareholder will then be entitled to vote: Byrne v Siemens Bros Dynamo Works Ltd [1919] 1 Ch 225.
The trustee of the estate of a bankrupt shareholder, and (subject to the company’s constitution) the personal representative of a deceased shareholder and a person entitled to shares because of the mental incapacity [page 322] of a shareholder have the same rights as those shareholders in relation to meetings, and are therefore entitled to vote: ss 1072C(2), 1072A(2)(b) and 1072D(1)(b); see further 21.14. Where a company takes security over its own shares or shares in its holding company in accordance with s 259B, any voting rights attached to those shares cannot be exercised by the company while it continues to hold them: s 259B(5). Similarly, if a company obtains control of an entity that holds shares in the company, any voting rights attached to those shares cannot be exercised while the company continues to control the entity: s 259D(3). As to voting generally (including voting by show of hands and the Chair’s casting vote), see Chapter 14.
Polls: ss 250K–250M 21.27 Polls are provided for in ss 250K–250M. While s 250M is a replaceable rule, ss 250K and 250L are not, that is, they are mandatory provisions, which apply despite anything to the contrary in the company’s constitution. Under s 250K(1), a poll may be demanded on any resolution. However, under s 250K(2), the company’s constitution may exclude a demand for a poll on any resolution concerning the election of the Chair or the adjournment of the meeting. A demand for a poll may be withdrawn: s 250K(3). The use of the word ‘resolution’ in s 250K(1) may be contrasted with the corresponding provision of the Corporations Law, s 248(1), under which a poll could be demanded on any ‘question or matter’ other than election of the Chair or adjournment of the meeting. A question in meeting parlance includes an amendment (see 10.4), and a poll could therefore previously be demanded on an amendment; this right has disappeared under s 250K. Under s 250L(1), a poll may be demanded by at least five members entitled to vote, or by members holding at least 5 per cent of the votes that may be cast. The company’s constitution may specify fewer members or a smaller percentage: s 250L(2). The percentage of votes that members have is to be worked out as at the midnight before the poll is demanded: s 250L(4). Under s 249Y(1)(c), proxies
may join in the demand for a poll. Under s 250D(4), body corporate representatives may join in the demand for a poll, subject to the terms of their appointment. Under s 250L(3), the poll must be demanded before the vote is taken, before the result is declared on a show of hands, or immediately after the result is declared on a show of hands. Under the replaceable rule in s 250M, unless the constitution provides otherwise: a poll on the election of the Chair or on the question of an adjournment must be taken immediately: s 250M(2); and [page 323] a poll on any other matter must be taken when and in the manner the Chair directs: s 250M(1). Under s 250H, on a poll a person entitled to more than one vote is not required to cast all their votes, and may cast their votes in different ways. Thus, such a member is empowered to cast some votes for and some against the motion. This may result in practice because the member holds a proxy under which the proxy holder is directed to vote contrary to the member’s own views. See further 21.28 as to the requirements in relation to the casting of proxy votes under s 250A(4). As to the lodging of proxies on a poll, see 21.28. As to polls generally, see Chapter 15.
Proxies: ss 249X–250C 21.28 Proxies are provided for in ss 249X–250C. Section 249X is a replaceable rule for proprietary companies, but a mandatory rule for public companies. Under 249X: Each member who is entitled to attend and vote at a general meeting may appoint any person as proxy and to attend and vote for the member at the meeting: ss 249X(1) and (3). The proxy may be an individual or a body corporate: s 249X(1A). (A proxy that is a body corporate will exercise its rights as proxy by appointing a representative under s 250D: see 21.18.) If the member is entitled to cast two or more votes at the meeting, the member may appoint two proxies: s 249X(3). The appointment may specify the proportion or number of votes that the
proxy may exercise: s 249X(2). If the member appoints two proxies and the appointment does not specify otherwise, each proxy may exercise half the votes: s 249X(3). Fractions of votes are to be disregarded: s 249X(4). Prior to 1 July 1998, under s 250(1)(a) of the Corporations Law, a member of a company limited by guarantee could only appoint another member of the company as proxy, unless the articles provided otherwise. As a result, companies limited by guarantee could prevent non-members from being appointed as proxies and participating in its general meetings. However, section 249X(1), which is a mandatory rule for public companies (including all companies limited by guarantee: see 20.7), entitles a member to appoint ‘a person’ as proxy. Accordingly, companies limited by guarantee can no longer require proxies to be members of the company: New South Wales Henry George Foundation v Booth (2002) 54 NSWLR 433; 167 FLR 287. [page 324] If members are entitled to appoint proxies, s 249L(1)(d) requires notices of general meetings to state: that the member has the right to appoint a proxy; whether or not the proxy needs to be a member of the company; and that a member entitled to cast two or more votes may appoint two proxies, and specify the proportion or number of votes each proxy is appointed to exercise. As to notice generally, see 21.14. In the case of listed companies, s 250BA also requires the notice of meeting to specify a place and a fax number for lodging proxy appointments, and optionally an email address or other electronic means of lodgement. Under s 249Z, if members request a proxy appointment form for a general meeting or a list of persons willing to act as proxy at the meeting, the company must send the form or list to all members making the request who are entitled to appoint a proxy; if the company chooses to send a proxy appointment form or a list of persons willing to act as proxy, it must do so for all members entitled to appoint a proxy. Under s 250A(1), appointments of proxies will only be valid if they are signed by the member and state:
1. the member’s name and address; 2. the name of the company; 3. the proxy’s name or the name of the office held by the proxy (for example, Chair of the meeting); and 4. the meeting or meetings at which the appointment may be used. The company’s constitution may provide that an appointment is valid even if it only contains some of the information required by s 250A(1): s 250A(2). Appointments of proxies may be standing appointments, that is, appointments applying to more than one meeting: s 250A(1). Undated appointments are deemed to be dated on the day they are given to the company: s 250A(3). Appointments do not have to be witnessed: s 250A(6). A later appointment revokes an earlier inconsistent one: s 250A(7). An appointment lodged electronically must, in lieu of being signed by the member, be authenticated in accordance with reg 2G.2.01 of the Corporations Regulations 2001. It is common practice for appointments to provide for alternative proxies, that is, one person is named as proxy, with a second as substitute. Thus, if the firstnamed is prevented from attending, the alternative person can attend (or may be present in any case) and vote on behalf of the member. Under s 250BB(1), appointments of proxies may specify the way the proxy is to vote on a particular resolution. If so: on a show of hands the proxy need not vote, but, if they do so, must vote as directed; [page 325] if the proxy holds two or more appointments specifying different ways to vote, the proxy must not vote on a show of hands; if the proxy is the Chair, the proxy must vote on a poll as directed; and if the proxy is not the Chair, on a poll the proxy need not vote, but, if they do, must vote as directed. The company’s constitution may provide that proxies are not entitled to vote on a show of hands: s 249Y(2). Section 250BB(1) does not affect the way that members who are also proxies cast their own votes: s 250BB(1). There are strict liability offences for not complying with s 250BB(1): ss 250BB(2)–(5). Further, at common law, a director (including the Chair) who accepts appointment as a proxy will, as agent for the member who made the appointment, have the
fiduciary duties of an agent towards the member as principal. If the member has directed the director as proxy to vote in a particular way, then generally those fiduciary duties will require the director as proxy to do so: Whitlam v Australian Securities and Investment Commission (2003) 57 NSWLR 559; 46 ACSR 1; Re Jervois Mining Ltd; Campbell v Jervois Mining Ltd [2009] FCA 401; BC200903150. Under s 250BC, if the appointment specifies the way the proxy is to vote, and the proxy is not the Chair, and is either not present or does not vote, then the Chair is deemed to have been appointed as the proxy for the purposes of voting in a poll on the resolution. Section 250BD restricts proxy voting by key management personnel and closely related parties of the company. Section 250B(1) requires appointments of proxies to be received by the company at least 48 hours before the meeting if they are to be effective; if the appointment is signed by the member’s attorney, it must be accompanied by the authority under which it was signed or by a certified copy. In the case of adjourned meetings, appointments and authorities received at least 48 hours before the resumed meeting will be effective for the resumed meeting: s 250B(2). In each case, the company’s constitution or the notice of meeting may reduce the 48-hour period: s 250B(5) (there is no s 250B(4)). Under s 250B(3), appointments and authorities are received by the company when received at: its registered office, including by fax; or a place, fax number or email address, or by other electronic means, specified in the notice of meeting. The Governance Institute of Australia (formerly Chartered Secretaries Australia) has prepared a best practice proxy form that complies with these provisions and provides useful guidance to shareholders. The form has been endorsed by the ASX Corporate Governance Council. It is reproduced here by permission of the Governance Institute and Computershare Investor Services Pty Limited, Victoria. [page 326]
[page 327]
[page 328] Under s 249Y(1), the proxy has the same rights as the member to attend and speak at the meeting, to vote (but only to the extent allowed by the
appointment), and to demand a poll. The company’s constitution may provide that proxies are not entitled to vote on a show of hands; however, they may still demand a poll: s 249Y(2). Under s 250C(1), members who are not entitled to vote as members on a resolution can still vote as proxies, if their appointment specifies the way they are to vote. Unless the constitution provides otherwise: the proxy’s rights are suspended if the member is present at the meeting: s 249Y(3); and even if the member appointing the proxy has died, become mentally incapacitated, revoked the appointment or their attorney’s authority, or transferred their shares, votes subsequently cast by the proxy will be valid, unless the company has received written notice of the matter before the start or resumption of the meeting: s 250C(2) (replaceable rule). As to proxies generally, see Chapter 16. As to polls, see 21.27 and generally Chapter 15. As to voting methods generally, see Chapter 14.
Minutes: ss 251A–251B 21.29 Section 251A(1) requires a company (other than a registered charity) to keep minute books in which it records within one month: all proceedings and resolutions of general meetings; and all resolutions passed by members without a meeting (that is, circulating resolutions): see further 21.30. The same requirements apply to directors’ meetings: see 22.13. In earlier times, loose-leaf minute books were not allowed because of the ease of falsification: Hearts of Oak Assurance Co Ltd v James Flower & Sons [1936] 1 Ch 76; although minutes appearing on typed or written sheets of paper that were then pasted into a bound book and duly signed were held to comply with the statutory requirements: Donohoe v Joynton-Smith (1948) 22 ALJ 62. Now, however, ss 1306(1) and (3) permit minute books to be kept in a loose-leaf book and also in electronic form, provided all reasonable precautions against falsification, damage and destruction are taken. A spring-back binder with a lot of loose sheets that are unnumbered and where there is no precaution taken to prevent substitution and falsification of records probably breaches s 1306(3): Re RM (No 13) Pty Ltd (1995) 17 ACSR 758. As to the form of minute books generally, see further 18.19. In the case of minutes of a meeting, the minutes must be signed within a reasonable time after the meeting by the Chair of that meeting or the Chair of the next meeting: s 251A(2). In the case of minutes of a resolution
[page 329] without meeting, the minutes must be signed by a director within a reasonable time after the resolution is passed: s 251A(3). Under s 251A(6), a minute recorded and signed in accordance with s 251A is evidence of the proceeding or resolution to which it relates, unless the contrary is proved. In the case of listed companies, s 251AA requires the minutes to record in respect of each resolution in the notice of meeting: the total number of proxy votes exercisable by all proxies validly appointed; in the case of resolutions decided on a show of hands — each of the total number of proxy votes directed to vote for the resolution, against the resolution, to abstain on the resolution, or to vote at the proxy’s discretion; and in the case of resolutions decided on a poll — as for a show of hands, plus each of the total number of votes cast on the poll in favour of the resolution, against the resolution and abstaining on the resolution. The company must include this information with any resolution required to be lodged with the ASX: s 251AA(2). The minute books must be kept at the registered office or principal place of business in Australia of the company, or another place approved by ASIC: s 251A(5). Under s 251B(1), members may inspect free of charge the minutes of general meetings and of resolutions passed by members without a meeting. Under s 251B(2), members may request the company in writing to send them a copy of any minutes or extracts of minutes of general meetings or of resolutions passed by members without a meeting. Under s 251B(4), the company may charge up to a prescribed maximum of $0.50 per A4 page or 100 words (whichever the company wishes). The company must send the minutes within 14 days, or any longer period approved by ASIC, of: if there is a charge — payment being received: s 251B(4); or if there is no charge — the request being made: s 251B(3).
Resolutions without meeting: ss 249A and 249B 21.30 Under the Corporations Act there are two situations where a resolution of the company will be deemed to have been validly passed, even though no meeting has been held. In the case of proprietary companies, any resolution that may validly be passed at a general meeting, other than a resolution to remove an auditor under s 329,
may be passed by resolution without meeting in accordance with s 249A. Hence, (in the case of proprietary companies) special resolutions (see 21.23) may now be passed by resolution without meeting, unlike the position that previously applied under s 255 of the Corporations Law. [page 330] Under s 249A(2), a resolution may be passed without a general meeting being held if all 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; in the case of joint shareholders, each must sign. Separate copies of the document may be used for signing, provided the wording of the resolution and statement is identical in each copy: s 249A(3). The resolution is passed when the last member signs: s 249A(4). Any information or document that in the case of a general meeting would be included in or with the notice of meeting is to be given to members with the document to be signed: s 249A(5). It should be noted that s 249A applies only to proprietary companies, and that public companies are not able to pass special resolutions by resolution without meeting: Sipad Holding ddpo v Popovic (1995) 61 FCR 205; 18 ACSR 436, referred to at (1996) 70 ALJ 199b. In the case of a company that only has one member (including a public company), a resolution may be passed by the member recording the resolution and signing the record: s 249B. In Sheahan v Londish (2010) 244 FLR 64; 80 ACSR 337 at [213], Young JA and Lindgren AJA held (Hodgson JA dissenting) that to be effective the resolution must be signed by the member as a resolution of the company, and that notice of intention to propose the resolution (even if in writing signed by the sole member) was insufficient. While a special resolution (see 21.23) may be passed by resolution without meeting, there are some provisions of the Corporations Act that would appear to require a meeting to be held, despite s 249B. It is doubtful, for example, whether a public company may remove a director under s 203D (see 21.16) without a meeting being held, even if the company has only one member: CIC Insurance Ltd v Hannan & Co Pty Ltd (2001) 38 ACSR 245; cf Gosford Christian School Ltd v Totonjian (2006) 201 FLR 424. Resolutions without meeting must be recorded in the company’s minute books and verified by a director: see 21.29. As to circulating resolutions generally, see 11.8.
Validation of meetings: s 1322 21.31 Section 1322 provides some relief from the inflexibility of the requirements of the Corporations Act in relation to meetings. Section 1322(3) specifically applies to meetings, and provides: 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
[page 331] 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.
As can be seen, s 1322(3) has the effect of automatically validating a company meeting in circumstances where there has been an accidental failure to give notice to, or the notice is not received by, every member. In those circumstances the proceedings of the meeting will still be valid despite the failure to give notice, unless the member concerned, another member or ASIC applies to the court and obtains an order declaring the proceedings to be void. Under s 1322(6), such an order may only be made if the court is satisfied that no substantial injustice has been or is likely to be caused to any person. While s 1322(3) is a useful provision, it has two important limitations. First, it only applies to defects in the conduct of a meeting occasioned by failure to give notice to every member. Second, it only applies to the ‘accidental omission’ to give notice, and not to deliberate but mistaken omissions: see further 21.17. Neither of these limitations apply to the general validation provision in s 1322(2): see below. Section 1322(3AA) is a provision in similar form to s 1322(3), but applies in circumstances where the failure to give notice is due to the inability of the member to access the notice electronically under s 249J(3A): see 21.14. Section 1322(3A) similarly automatically validates a meeting held at two or more venues using technology under s 249S (see 21.19) in circumstances where one or more members do not have a reasonable opportunity to participate in the meeting or part of it. The court may only declare the meeting or that part of it invalid if it is of the opinion that a substantial injustice has been or may be caused, and that the injustice cannot be remedied by any order of the court. Similarly, under s 1322(3B), where voting rights in a company are exercised by an entity controlled by the company contrary to s 259D(3), the meeting and any resolution passed will nonetheless be valid unless the court declares otherwise on
the same bases as under s 1322(3A). Section 1322(2) is a general validating provision, which applies both to meetings and more broadly. It provides: 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.
Proceeding is defined in s 1322(1)(a) to include a proceeding that is not a legal proceeding, while under s 1322(1)(b) procedural irregularity specifically includes lack of quorum and a defect in notice or time. A meeting can be a proceeding for the purposes of s 1322: Australian Hydrocarbons NL v Green (1985) 10 ACLR 72; Re Broadway Motors Holdings Pty Ltd (in liq) (1986) 6 NSWLR 45; 11 ACLR 495. [page 332] As can be seen, s 1322(2) has the effect of automatically validating irregularities in company proceedings, unless a contrary order is made by the court on the basis that a substantial injustice that cannot be remedied by any order of the court will or may otherwise be caused. Being a remedial provision, s 1322 should be given a liberal construction: Re Australian Koyo Ltd (1984) 8 ACLR 928; North Sydney Brick & Tile Co Ltd v Darvall (1989) 17 NSWLR 327; 15 ACLR 706. However, there is a divergence of judicial opinion as to whether s 1322 can cure a procedural irregularity that has been deliberately caused. In Re PW Saddington & Sons Pty Ltd (1990) 19 NSWLR 674; 2 ACSR 158, Young J held that s 1322 did not apply to a deliberate choice to convene an invalid meeting; the contrary view has been expressed by Byrne J in Re Pembury Pty Ltd [1993] 1 Qd R 125; (1991) 4 ACSR 759 and Underwood J in Whitehouse v Capital Radio Network Pty Ltd (2002) 21 ACLC 17; affirmed (2004) 48 ACSR 569. It is not clear whether all acts in relation to meetings are to be regarded as proceedings under the Corporations Act for the purposes of ss 1322(2) and (3), nor whether all irregularities in relation to meetings are necessarily procedural for the purposes of s 1322(2). In cases of doubt, it will be prudent to make application to the court under s 1322(4). Under s 1322(4), the court has very broad powers to make orders on the application of any interested person: to validate contraventions of the Corporations Act or of a company’s constitution that are essentially of a procedural nature, where the persons concerned have acted honestly and it is in the public interest to do so; and
to extend the time for doing any thing. The provisions of ss 1322 are all subject to s 1322(6)(c), under which the court may only make an order if it is satisfied that no substantial injustice has been or is likely to be caused to any person.
[page 333]
22 Companies — Directors’ Meetings Introduction 22.1 A public company must have at least three directors, at least two of whom ordinarily reside in Australia: s 201A(2). A proprietary company must have at least one director, and at least one director must ordinarily reside in Australia: s 201A(1). Only individuals who are at least 18 years old are eligible to be directors: s 201A(3). Accordingly, a body corporate (for example, another company) is not able to be a director. The appointment and removal of directors is largely governed by the replaceable rules (see 20.10) in ss 201G–201K, and 203A, 203C and 203F respectively, subject to the company’s constitution. In the case of public companies, however, there are important mandatory provisions in ss 201E and 203D respectively in relation to the appointment and removal of directors at general meetings of the company: see further 21.7 and 21.16. Under the company’s constitution, the directors are invariably responsible for its management. The default provision is the replaceable rule in s 198A, which provides (omitting notes): 1. The business of a company is to be managed by or under the direction of the directors. 2. The directors may exercise all the powers of the company except any powers that this Act or the company’s constitution (if any) requires the company to exercise in general meeting. The directors in managing the company will only be subject to resolutions of the members in general meeting if there is a specific provision in the constitution to this effect. The members by passing resolutions in general meeting cannot usurp powers delegated to the directors by the constitution except by amending the constitution to achieve this: Quin & Axtans Ltd
[page 334] v Salmon [1909] AC 442. However, as pointed out in 21.1, there is some business that under the Corporations Act and the company’s constitution may only be transacted at a general meeting of members, and not at a meeting of directors. Under the Corporations Act, directors owe the company important duties. In particular, under Pt 2D.1 Div 1, directors: 1. must exercise their powers and discharge their duties: a. with reasonable care and diligence: s 180, b. in good faith in the best interests of the company: s 181(a), and c. for a proper purpose: s 181(b); and 2. must not make improper use of: a. their position: s 182, or b. information obtained in their position: s 183, so as to gain an advantage for themselves or someone else, or to cause a detriment to the company. Directors also have common law duties to act with reasonable skill and to avoid conflicts of interest. Directors may become personally liable if these and other duties under the Corporations Act are breached. It is essential that directors bear these duties in mind when deliberating at meetings of directors.
Meetings of directors 22.2 It is implicit in the Corporations Act that the normal method for the directors to make decisions will be at meetings duly convened and held. While there is provision in the Corporations Act for the directors to unanimously make decisions by ‘resolutions without meeting’ (see 22.14), any significant or contentious matter will always require a formal meeting. As to what constitutes a meeting, see 1.14–1.16. In practice, many of the disputes within companies arise because meetings of directors have not been properly held or conducted. It is very common for the directors collectively to be called ‘the board of directors’ or simply ‘the board’, and for meetings of directors to be called ‘board meetings’, even though the expression ‘board of directors’ is not used at all in the Corporations Act and the word ‘board’ is only used occasionally and not at all in
relation to company meetings. The use of the word ‘board’ illustrates the nature of the method by which directors customarily operate. ‘Board’ was a word for table, being a board or plank supported on trestles. As the table at which a council sat when it gathered, the term became applied to council meetings, and by early in the seventeenth century was being used to denote the persons who met at the [page 335] council table: hence, not only ‘board of directors’, but also longer standing terms such as ‘board of trade’ and ‘board of governors’. This terminology emphasises the principle that the powers of directors are possessed by them as a whole, not as individuals: their duties are performed and their progressive activity is accomplished only by decisions that they arrive at and make collectively as a board of directors.
Conduct of meetings: Pt 2G.1 22.3 The conduct of directors’ meetings was formerly largely regulated by the default articles in Table A: see 20.12. Those regulations have now been replaced by a more limited set of provisions in Pt 2G.1 of the Corporations Act, most of which are replaceable rules (see 20.10), which will only apply to the extent that they are not displaced or modified by the company’s own constitution.
Convening of meetings: s 248C 22.4 Under the replaceable rule in s 248C, unless the constitution provides otherwise, directors’ meetings may be called by a director giving reasonable notice individually to every other director. As to what is reasonable notice, see 4.11. In the case of alternate directors, under s 201K(2) the director appointing the alternate director may ask for the notice to be sent to the alternate director: see further 22.16.
Notice of meeting 22.5 Apart from the minimal requirements of the replaceable rule in s 248C (see 22.4), there are no provisions in the Corporations Act governing the giving
of notice of directors’ meetings to directors. The common law rules therefore apply: see 4.1–4.15, especially 4.11.
Notice of business 22.6 There is no requirement under the Corporations Act that notice be given of the business intended to be transacted at a directors’ meeting. Accordingly, no notice of that business needs to be given, unless the constitution provides otherwise: see further 4.16 and 4.17. As a matter of good corporate governance, however, it is obviously preferable that directors are given as much notice of the business proposed for board meetings as the circumstances will allow: see further 3.10. [page 336]
Use of technology: s 248D 22.7 Under s 248D, directors’ meetings may be called and held using any technology consented to by all directors; the consent may be a standing one, and may only be withdrawn a reasonable time before the meeting. Paragraph 10.8 of the Explanatory Memorandum to the Company Law Review Act 1998, which introduced the provision, suggests that the company’s constitution may require directors to consent to specified technologies. In order to prevent directors from refusing to consent to the use of appropriate technology (or withdrawing their consent), it will be prudent for the constitution to include a requirement to this effect.
Quorum: s 248F 22.8 Under the replaceable rule in s 248F, the quorum for directors’ meetings is two directors, unless the directors determine otherwise (or, as a replaceable rule, the constitution provides otherwise). That quorum must be present at all times during the meeting: s 248F. In the case of alternate directors, the replaceable rule in s 201K(3) provides that the exercise of a director’s powers by an alternate director is just as effective as if the powers were exercised by the director. Further, under the definitions in s 9, ‘director’ includes a person who is appointed to the position of an alternate
director and is acting in that capacity. It would therefore appear that alternate directors count towards the quorum. Directors who are prohibited under the Corporations Act or the constitution from voting on a matter because of a conflict of interest are not to be counted towards the quorum: see further 22.12 and 5.10. However, the same rule does not apply to general meetings of members and, unless the constitution expressly provides otherwise, an interested director who is debarred by the constitution from voting at a board meeting is nonetheless entitled as a shareholder to vote at a general meeting on the matter if it arises: North-West Transportation Co v Beatty (1889) 12 AC 589. In the case of public companies, s 195(4) contains special rules that apply in circumstances where a quorum cannot be obtained for consideration of a matter at a directors’ meeting because directors are prohibited from attending and voting by virtue of their interest in the matter: see 22.12. Under the replaceable rule in s 201H(1), a person can be appointed as a director in order to make up a quorum for a directors’ meeting even if the total number of directors of the company is not enough to make up a quorum. In the case of public companies, the appointment must be confirmed at the next annual general meeting, failing which the person ceases to be a director: s 201H(3) (replaceable rule); in the case of [page 337] proprietary companies, the appointment must be confirmed by a general meeting within two months, failing which the person ceases to be a director: s 201H(2) (replaceable rule). It is important that a company’s constitution contain a provision along the lines of s 201H(1), as otherwise no valid board meeting can be held where the number of directors remaining is less than the quorum: Faure Electric Co v Phillipart (1888) 58 LT 525. Instead, the continuing directors will need to arrange for a general meeting of members to be convened, if necessary by requisition under s 249F: see 21.11. Alternatively, if the directors have power under the constitution to fill vacancies or to fix quorum, and all remaining directors agree, a resolution without meeting in accordance with s 248A could be passed: see 22.14.
Chair: s 248E
22.9 Under the replaceable rule in s 248E, unless the constitution provides otherwise: the directors may elect a director to chair their meetings, and determine the period for which that director is to be Chair: s 248E(1); and the directors must elect a director present to chair a meeting or part of it if a director has not already been elected to chair, or the previously elected Chair is not available or declines to act for the meeting or part of it: s 248E(2). The Chair must be properly appointed or elected in accordance with the constitution: see 6.3. As to chairing generally, see Chapter 6. Under the replaceable rule in s 248G(2), the Chair has a casting vote, unless the constitution provides otherwise: see 22.11.
Adjournment 22.10 Table A reg 69(1) previously provided that ‘[t]he directors may adjourn and otherwise regulate their meetings as they think fit’. There is no equivalent provision under the Corporations Act; however, there is an inherent power at common law to adjourn a properly constituted meeting: see 13.5. Section 257 of the Corporations Law previously provided that a resolution passed at an adjourned general meeting, class meeting or directors’ meeting was for all purposes to be treated as having been passed on the day on which it was in fact passed, and not on any earlier day. That section abrogated the common law rule, under which such a resolution was taken to have been passed on the day the meeting originally commenced: see 13.14. The equivalent provision of the Corporations Act, s 249W(2), applies only to [page 338] general meetings: see 21.25. As a result, directors’ meetings are now subject to the common law rule. As to adjournment generally, see Chapter 13.
Voting: s 248G 22.11 Under the replaceable rule in s 248G, unless the constitution provides otherwise:
a resolution of the directors may only be passed by a majority of the votes cast by directors entitled to vote on the resolution: s 248G(1); and the Chair has a casting vote, in addition to any deliberative vote: s 248G(2). Section 248G(1) requires a majority only of the votes that are actually cast by directors, rather than a majority of all directors, that is, it is a ‘simple majority’: see 14.15. The principles that apply to the exercise of the Chair’s casting vote are discussed in 14.14. There is no provision in the Corporations Act for directors to vote by proxy, although the constitution of the company could allow for this. Instead, s 201K contemplates the appointment of alternate directors: see 22.16. As to voting generally, see Chapter 14.
Disclosure of interest and voting by interested directors: ss 191–196 22.12 Section 191(1) requires directors of companies (other than registered charities) who have a material personal interest in a matter that relates to the affairs of the company to give the other directors notice of the interest, unless s 191(2) applies. The expression ‘material personal interest’ is not defined in the Corporations Act. Some assistance is provided by the cases, especially McGellin v Mount King Mining NL (1998) 144 FLR 288 at 304, where Murray J said of the expression as it was used in similar terms in s 232A of the former Corporations Law: ‘Material’ in this context, I think, means that the interest involves a relationship of some real substance to the matter under consideration or the contract or arrangement which is proposed. In that way the nature of the interest should be seen to have a capacity to influence the vote of the particular director upon the decision to be made, bearing in mind that both the article and the section are concerned with that aspect of a director’s fiduciary duties which relates to the resolution of conflict of interest which must, of itself, be of a real or substantial kind. The interest with which both the article and the section are concerned should be of a kind as to give rise to a conflict of that character. If that test is met, it seems to me not to matter that the nature of the interest
[page 339] may be described as direct or indirect, or vested in interest or contingent. It is the substance of the interest, its nature and capacity to have an impact upon the ability of the director to discharge his or her fiduciary duty which will be important.
See also Kriewaldt v Independent Direction Ltd (1995) 14 ACLC 73; Grand
Enterprises Pty Ltd v Aurium Resources Ltd (2009) 256 ALR 1; 72 ACSR 75. The notice must give details of the nature and extent of the interest, and its relation to the affairs of the company: s 191(3)(a). It must be given at a directors’ meeting as soon as practicable after the director becomes aware of the interest: s 193(3)(b). The details must be recorded in the minutes of the meeting: s 193(3). Under subsection 191(2), notice is not required in a number of specified circumstances, including where: 1. the interest is as a member of the company and is one that the director holds in common with other members of the company; 2. the interest is as a guarantor of a loan to the company; 3. the interest is as a director of a related body corporate with which the company proposes to contract; 4. the interest relates to directors’ remuneration, insurance or indemnity; 5. the company is a proprietary company, and the other directors are aware of the nature and extent of the interest and its relation to the affairs of the company; 6. the director has previously given notice to the other directors and individually gives notice to a newly appointed director; 7. the director has given standing notice under s 192. Section 192 enables a director to give standing notice for the purposes of s 191. The notice may be given at any time, including before the matter relates to the affairs of the company or has become a material personal interest for the director: s 192(1). It may be given orally or in writing at a directors’ meeting, or individually in writing to every director: s 192(2). If the latter, the notice must be tabled at the next directors’ meeting: s 192(3). The director must ensure that the nature and extent of the interest are recorded in the minutes of the meeting at which the notice is given or tabled: s 192(4). The same notice must be given to each new director, otherwise the standing notice ceases to have effect: s 192(5). In the case of proprietary companies, the replaceable rule in s 194 provides that a director who has a material personal interest in a matter that relates to the affairs of the company may nonetheless vote on matters relating to that interest if the interest has been disclosed as required by s 191. The constitutions of many proprietary companies are more restrictive than s 194. For example, Table A reg 71 previously provided: A director shall not vote in respect of any contract or proposed contract with the company in which he is in any way, whether directly or indirectly,
[page 340] interested or in respect of any matter arising out of such a contract or proposed contract and, if he votes in contravention of this subregulation, his vote shall not be counted.
Such a director may not be counted towards a quorum: see 22.8. However, some constitutions displace the common law by specifically providing that interested directors may still be counted towards a quorum, although not entitled to vote or indeed be present for that matter. In the case of companies that are charities registered under the Australian Charities and Not-for-profits Commission Act 2012 (Cth), since 3 December 2012 under s 111L ss 191–194 do not apply (although, curiously, s 195 continues to apply). Instead, under governance standard 5 of the Australian Charities and Not-for-profits Commission Regulation 2013 (Cth) the company is required to ensure that its directors ‘disclose perceived or actual material conflicts of interest’. Whether a ‘material conflict of interest’ in governance standard 5 is intended to be different from a ‘material personal interest’ in ss 191–195 is not clear. However, the requirement to disclose perceived conflicts is certainly new. In the case of public companies, s 195(1), which is a mandatory provision, provides that a director who has a material personal interest in a matter that requires disclosure under s 191 must not: 1. be present while the matter is being considered at a directors’ meeting; or 2. vote on the matter; unless s 195(2) or s 195(3) applies. Under s 195(2), the director may be present and vote if directors who do not have a material personal interest in the matter pass a resolution that: 1. identifies the director; 2. includes the same details as required by s 191; and 3. states that those directors are satisfied that the interest should not disqualify the director from voting or being present. Under s 195(3), the director may be present and vote if ASIC has made a declaration or order under s 196: see below. Section 195(4) provides that where a quorum cannot be obtained for consideration of a matter at a directors’ meeting because of s 195(1): 1. one or more of the directors, including those disqualified from voting on the
matter, may call a general meeting; and 2. the general meeting may pass a resolution to deal with the matter. Alternatively, under s 196(1), ASIC has power to make declarations exempting directors from s 195(1) in circumstances where s 195(4) would otherwise apply, but, because of the urgency of the matter or some other compelling reason, it needs to be dealt with at a directors’, rather than general, meeting. ASIC also has a general power under s 196(3) to make [page 341] orders (including class orders) exempting companies and directors from s 195(1). For the purpose of s 195, ‘public company’ is given an extended meaning by s 9 so as to include some listed bodies that are not incorporated under the Corporations Act.
Minutes: s 251A 22.13 Section 251A(1) requires a company to keep minute books in which it records within one month: all proceedings and resolutions of directors’ meetings, including meetings of committees of directors: see further 22.15; all resolutions passed by directors without a meeting (that is, circulating resolutions): see further 22.14; and in the case of proprietary companies with only one director — all declarations made by the director for the purposes of the Corporations Act: see further 22.14. The same requirements apply to general meetings: see 21.29. As to the form of minute books, see 18.16 and 21.29. In the case of minutes of a meeting, the minutes must be signed within a reasonable time after the meeting by the Chair of that meeting or the Chair of the next meeting: s 251A(2). In the case of minutes of a resolution without meeting, the minutes must be signed by a director within a reasonable time after the resolution is passed: s 251A(3). In the case of minutes of declarations by sole directors, the minutes must be signed by the director within a reasonable time after the declaration made: s 251A(4). Under s 251A(6), a minute recorded and
signed in accordance with s 251A is evidence of the proceeding, resolution or declaration to which it relates, unless the contrary is proved. The minute books must be kept at the registered office or principal place of business in Australia of the company, or another place approved by ASIC: s 251A(5). Unlike the minutes of general meetings of members (see 21.29), the minutes of directors’ meetings are not available for inspection by members of the company without an order of the court: R v Mariquita & New Grenada Mining Co (1858) 28 LJQB 67.
Resolutions and declarations without meeting: ss 248A and 248B 22.14 Under the Corporations Act, there are two situations where a resolution of directors will be deemed to have been validly passed or a [page 342] declaration by directors validly made, even though no meeting has been held. In the case of companies with more than one director, under the replaceable rule in s 248A(1) a resolution may be passed without a directors’ meeting being held if all directors 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. Separate copies of the document may be used for signing, provided the wording of the resolution and statement is identical in each copy: s 248A(2). The resolution is passed when the last director signs: s 248A(3). In the case of a proprietary company that only has one director, under s 248B(1) a resolution may be passed by the director recording it and signing the record, and under s 248B(2) a declaration may similarly be made for the purposes of ss 295 and 494. The recording and signing of the declaration is specifically deemed to satisfy any requirement in the Corporations Act that the declaration be made a directors’ meeting: s 249B(2). Resolutions without meeting and declarations must be recorded in the company’s minute books and verified by a director: see 22.13. As to circulating resolutions generally, see 11.8.
Committees of directors: s 198D 22.15 Under s 198D(1), unless the constitution of the company provides otherwise, the directors may delegate any of their powers to a committee of directors. The delegation must be recorded in the company’s minute book: s 198D(1). The committee must exercise the delegated powers in accordance with any directions of the directors: s 198D(2). The committee’s exercise of the delegated powers is as effective as if the directors had exercised them: s 198D(3). As to committees generally, see Chapter 19.
Alternate directors: s 201K 22.16 Under the replaceable rule in s 201K, unless the constitution provides otherwise, a director may, with the approval of the other directors, appoint an alternate to exercise some or all of the director’s powers for a specified period: s 201K(1). The director may terminate the alternate’s appointment at any time: s 201K(4). Both the appointment and the termination must be in writing; a copy must be given to the company; and ASIC must be notified: s 201K(5). The alternate may exercise the director’s powers as effectively as the director: s 201K(3). It would therefore [page 343] appear that alternate directors count towards quorum: see further 22.8. The company must give notice of directors’ meetings to the alternate if the appointing director so requests: s 201K(2); see further 22.4.
Validation of meetings: s 201M 22.17 Under s 201M(1), an act done by a director is deemed to be effective even if the appointment of the director was invalid under the company’s constitution or the Corporations Act. The note to s 201M states that it is intended to validate acts such as the calling of a meeting of the company’s members or the signing of minutes of a meeting, but only if the act would have been valid if the person doing it had been properly appointed as a director. Section 201M(1) will therefore not assist where the act in question would have been invalid whether the person doing it had been properly appointed as a
director or not. Nor does it affect whether the act binds the company in its dealings with outside parties or makes the company liable to them: s 201M(2). See further 21.31 as to relief under s 1322 from other irregularities in connection with meetings.
[page 345]
23 Companies — Creditors’ Meetings Introduction 23.1 This chapter deals with a variety of different meetings provided for by the Corporations Act. The common thread is that in each of the contexts under discussion there is provision for meetings of creditors of the company (or those in an analogous position, such as debenture holders and members of registered managed investment schemes) to be convened and conducted. The first part of the chapter deals with meetings held in connection with the external administration of a company in accordance with Ch 5 of the Corporations Act, under compromises, arrangements and reconstructions, under voluntary administration, or in winding up. The next part sets out in full the provisions of regs 5.6.11–5.6.36A of the Corporations Regulations, which apply generally to the meetings discussed in the previous part, subject to the specific requirements of the Corporations Act, Corporations Regulations and court rules in relation to those meetings. The final part of the chapter discusses meetings of debenture holders and meetings of members of registered managed investment schemes, which are also effectively meetings of creditors, but not in the context of external administration.
Compromises, arrangements and reconstructions 23.2 The Corporations Act makes provision for procedures that enable a company to vary existing arrangements in relation to the rights of holders of shares and debentures, and to reduce or postpone its obligations to creditors in circumstances where the company may be unable to continue
[page 346] to operate actively unless there are changes. Part 5.1 of the statute contains procedures for what are termed arrangements and reconstructions. Both involve the calling of meetings for particular purposes. Sections 411 and 412 provide a procedure for compromises and other arrangements between a company and its creditors. Those two sections together with s 413 also provide a procedure for internal arrangements and reconstructions, whereby variations are made in rights of shareholders or alterations are made in the capital structure. An ‘arrangement’ includes a reorganisation of the share capital by consolidating shares of different classes or by dividing shares into different classes: s 9. Under s 411(1), a meeting of creditors or a class of creditors of a company, or a meeting of members or a class of members, can be called by the court upon receiving an application from the company, a creditor or a member, or (in the case of a company being wound up) the liquidator. The purpose of such a meeting is to consider a proposed compromise or arrangement. Under s 412(1), the notice of any such meeting needs to include a statement explaining the terms of the compromise or arrangement, and also the effect of it on any material interests of the directors; and where the rights of debenture holders are affected a statement along similar lines, but referring to the effect of it on any material interests of the trustees for the debenture holders, must be included. Any advertisement of the notice of the meeting must either contain the statement, or a notification of where and how copies of it are available free of charge to those entitled to attend the meeting: s 412(4). A copy of the draft explanatory statement must be given to ASIC at least 14 days before the hearing of the application: s 411(2). Under s 411(4), to become effective, a compromise or arrangement needs first to be approved by a resolution passed at the meeting by: a simple majority in number of those (being creditors or a class of creditors, or members or a class of members) who are present either personally or by proxy and who vote; and who represent at least 75 per cent in value of amounts due to creditors (or class) or of the shareholdings of members (or class). Following the resolution, the compromise or arrangement then needs to be approved by the court. If so approved, with or without alteration, it will be binding on the creditors or members (or respective class), and on the company: s 411(4). The court order is of no effect until a copy is lodged by the company with ASIC; and the arrangement commences to operate on that date unless the
order specifies an earlier date: s 411(10). A copy of the court order must be attached to every copy of the constitution of the company issued after that date, unless a further court order exempts the company from this: ss 411(11) and (12). [page 347] Under s 411(5), the court can order two or more meetings of the same group to be conducted, with the votes to be aggregated as if a single meeting had been held. Under ss 411(1A)–(1C), the court has power to order consolidated meetings in respect of a holding company and its subsidiaries where the compromise or arrangement relates to a group of companies.
Voluntary administration 23.3 What used to be known under Pt 5.3 of the Corporations Law as ‘official management’ has since 23 June 1993 been replaced by ‘administration of a company’s affairs with a view to executing a deed of company arrangement’ under Pt 5.3A, commonly known as voluntary administration. Like official management, voluntary administration is intended to assist companies to extricate themselves from financial difficulty. However, the procedures for voluntary administration are quite different from those formerly applying to official management. Under voluntary administration an administrator may be appointed to a company for approximately one month only. The administrator may be appointed by the company through its directors, by a liquidator or provisional liquidator, or by a secured creditor holding a charge over the whole or substantially the whole of the assets (a ‘chargee’): ss 436A–436C. The administrator is responsible for control of the company, and carrying on and managing its business (s 437A) and the powers of the company’s directors are suspended: s 437C. During the period of administration there is effectively a moratorium against the creditors taking further action against the company, subject to the rights of a chargee to elect to take direct control of the company under the terms of the charge. The administrator must investigate the company’s affairs, and recommend to its creditors whether it would be in their interests for the company to execute a deed of company arrangement: s 438A. Such a deed will usually provide for the timing and amount of payments to creditors. Alternatively, the administrator may recommend that the company be wound up: see 23.4.
Within the period of administration, two general meetings of creditors are required by Pt 5.3A. A committee of creditors may also be appointed. Under reg 5.6.11, the convening and conduct of these meetings are governed by regs 5.6.12–5.6.36A, subject to the specific provisions of the statute: see 23.11. Under s 436E(2), the administrator must convene a first meeting of creditors within five days of appointment. The administrator must give at least two business days’ notice of the meeting to as many creditors as reasonably practicable: s 436E(3). The notice to creditors must be in [page 348] accordance with Form 529A (reg 5.6.12(6)(b)), and it must also be published in a national newspaper, or a daily newspaper circulating generally in each state or territory in which the company carries on business: s 436E(3). The purpose of the meeting is to determine whether to appoint a committee of creditors, and, if so, who are to be its members: s 436E(1). The meeting may also (by ordinary resolution) replace the administrator: s 436E(4). If a committee is appointed, its functions under s 436F(1) are: 1. to consult with the administrator; and 2. to receive and consider reports by the administrator. The committee cannot direct the administrator (s 436F(2)); it can, however, require the administrator to report as and when it reasonably requires: s 436F(3). Under s 439A, the administrator must within 21 days of appointment (28 days if Christmas or Easter intervene) convene a second meeting, to be held within five business days after the end of that period. The period may be extended by application to the court: s 436A(6). Notice must be similarly given as for the first meeting (s 439A(3)); the notice must be accompanied by a report from the administrator about the business, property, affairs and financial circumstances of the company, together with the administrator’s recommendation (including reasons) as to whether a deed of company arrangement should be executed (details to be included), the administration should end, or the company be wound up: s 439A(4). Under s 439B(1), the administrator is to chair the meeting, which may under s 439B(2) be adjourned for up to 60 days from the day the meeting commenced. If a deed of company arrangement is executed, there is provision under s 445F for a further meeting of creditors to be held to vary or terminate the deed. The
administrator may convene such a meeting, and must do so if requested in writing by at least 10 per cent in value of the company’s creditors: s 445F(1). Notice must be similarly given as for the first and second meetings (s 445F(2)); the notice must set out the proposed resolutions to be put to the meeting: s 445F(3). The administrator is to chair the meeting (s 445F(4)), which may be adjourned from time to time: s 445F(5).
Winding up 23.4 The winding up of a company is a procedure under the Corporations Act that enables a company to be dissolved, thereby ceasing to exist. Winding up is commonly also referred to as liquidation. The most usual reason for winding up is found in a company’s financial difficulties, which have led to a deficiency of assets or insolvency. There are two basic types of winding up: (1) winding up by the court, and (2) voluntary winding up. Voluntary winding up falls into two [page 349] further categories: (a) members’ voluntary winding up, and (b) creditors’ voluntary winding up. Parts 5.4, 5.4A and 5.4B of the Corporations Act deal with winding up by the court, with Pt 5.4 applying to winding up on the ground of insolvency, Pt 5.4A applying to winding up by the court on other grounds and Pt 5.4B applying generally to winding up by the court, that is, on insolvency or other grounds. Part 5.5 deals with voluntary winding up, and Pt 5.6 with winding up generally. While a company is being wound up it continues to be a legal entity, and needs to comply with requirements of the statute and its constitution regarding meetings. Upon dissolution it ceases to be a legal entity. It should be noted that in numerous instances companies are dissolved without a winding up procedure occurring. ASIC has power to deregister a company that has become defunct, thereby dissolving it, either of its own initiative or an application by the company or a member of the company: Pt 5A.1. In many cases this procedure will be a quicker and cheaper option than winding up. The winding up procedure involves various meetings, depending on the type of winding up, from the initial meeting in a voluntary winding up, and in some instances where winding up is by a court order, until the concluding stages. While certain specific requirements in relation to these meetings are set out in the
Corporations Act, detailed provisions are contained in the Corporations Regulations, which apply generally to the extent not otherwise provided by the statute. The regulations include such matters as: eligibility to attend and vote at creditors’ meetings; notices, including advertisements; quorum, proxies and voting rights; and values at certain meetings including joint meetings: see further 23.11. The pattern of events during a winding up is based on the same general principles for each type of winding up, although the control and procedure vary with each. A liquidator is appointed, and the directors no longer have any power. The liquidator is responsible for the company’s operation during the winding up. The liquidator proceeds to take charge of the company’s assets; recover any assets that may have been improperly disposed of; realise the assets; ascertain the creditors and their claims; arrive at priorities in claims according to law; ascertain who are the contributories, if any; determine the amounts, if any, they are liable to contribute; secure payments from them; pay the creditors and liquidation expenses according to the statutory priorities; and where there is a surplus, distribute it among the contributories according to their rights. The contributories are those persons liable to contribute to the assets of a company in the event of it being wound up, namely, the present members, and perhaps some previous members under the terms of the company’s constitution: s 9. Usually the company is then dissolved. However, in favourable circumstances, where [page 350] suitable and beneficial, the winding up procedure ceases, and control is returned to the directors and the company resumes its business. The winding up procedure may commence: (1) by order of the court as the result of an application based on insolvency or other grounds (ss 459A and 461); or (2) as a consequence of a general meeting of the company passing a special resolution that the company (a) be wound up by the court, or (b) be wound up voluntarily: ss 461(a) and 491(1). A winding up by the court is often referred to informally as a compulsory winding up. Under s 494, the directors of a company that it is proposed be wound up voluntarily may make a declaration of solvency (see 23.6), in which case the winding up will commence as a members’ voluntary winding up: s 9. If no declaration is made, the winding up will be a creditors’ voluntary winding up: s 9. If a declaration is made, but the company later turns out to be insolvent, the winding up may proceed as if it were a creditors’ voluntary winding up: s 496.
A compulsory winding up commences on the date when the court order is made (subject to various exceptions): s 513A. A voluntary winding up commences immediately upon the passing of the special resolution at a general meeting of the company (subject to limited exceptions): s 513B. As from then, every document issued and thus every notice of meeting and related papers, must include the words ‘in liquidation’ immediately after the name of the company where it first appears in the document: s 541.
Winding up by the court 23.5 Under s 479(2), the liquidator may convene general meetings of creditors or contributories for the purpose of ascertaining their wishes, and must do so whenever requested in writing by at least 10 per cent in value of the creditors or contributories and at such times as directed by resolution of the creditors or contributories. Under s 548, a committee of inspection may be appointed, comprising creditors and contributories: see 23.10. The liquidator must have regard to any directions given by resolution of the creditors or contributories in general meeting or by the committee of inspection; resolutions passed at a general meeting override those of the committee of inspection: s 479(1).
Members’ voluntary winding up 23.6 Where the directors decide to propose that a general meeting of the company should pass a special resolution to wind up voluntarily, s 494(1) provides that a ‘declaration of solvency’ may be made. This is a declaration in writing by a majority of the directors that they have made [page 351] an inquiry into the company’s affairs, and at a meeting of directors have formed the opinion that the company will be able to pay its debts in full within a period not exceeding 12 months after the commencement of the winding up. The declaration must be made by way of a resolution passed at a meeting of directors: s 494(3)(a). A statement of affairs in the prescribed form (Form 520) must be attached to the declaration: s 494(2). Form 520 includes both the declaration of solvency and the statement of affairs, and must be signed by a majority of the directors. In the case of a company with only two directors, one director will not be a majority, and both will need to sign. The form must be lodged with ASIC
before the notice convening the general meeting is sent out: s 494(3)(b). Then, to enable the declaration to effect its purpose, the resolution that the company be wound up needs to be passed within five weeks after the date of the resolution embodying the declaration: s 494(3)(c). These periods may be extended by ASIC. From a practical point of view the declaration of solvency is necessary to enable a voluntary winding up to be a members’ voluntary winding up. Where no declaration of solvency is lodged by the directors, the proposed special resolution will need to provide for a creditors’ voluntary winding up: see 23.7. Usually the general meeting to be convened will be a special or extraordinary general meeting: see 21.9. However, if the annual general meeting was becoming due (see 21.4), the special resolution for winding up could be included as special business (see 21.6); alternatively, the two meetings could be contiguous, the special meeting following immediately after the close of the annual meeting. Following the resolution to wind up, it is usual for the same meeting to pass another resolution appointing a liquidator. This appointment is a requirement of s 495(1), although it could be made by a resolution at a later general meeting. It does not require a special resolution: it is an inevitable statutory consequence of a resolution for a members’ voluntary winding up. It is not essential that a proposal or intention to appoint a liquidator (if the special resolution is passed) is referred to in the notice convening the meeting to consider the proposal to wind up; however, it would be usual and preferable for the notice to refer to an intention to make such an appointment by a proposed further resolution (an ordinary resolution) in the event of the special resolution being passed. A resolution for a company to be wound up is not invalidated by being coupled with a resolution for the appointment of a liquidator: James v Evening Standard Newspaper Co (1895) 21 VLR 399. Under s 496(1), if the liquidator is of opinion that the company will not be able to pay its debts within 12 months (or any lesser period stated in [page 352] the declaration of solvency) the liquidator must: (1) apply to the court for the company to be wound up in insolvency (see 23.5); (2) appoint an administrator (see 23.3); or (3) call a meeting of creditors. If the latter course is adopted (as is usual), the notice of meeting must be in accordance with Form 521 (reg 5.6.12(6)(a)), and include a list of creditors showing names, addresses and estimated claims (s 496(2)), except in the case of creditors whose debts do not
exceed $1000, where the list is to be available on request and the notice is to specify this (s 496(3)). The liquidator must lay before the meeting a statement of the assets and liabilities of the company: s 496(4). The creditors have the right to appoint another person as liquidator if they prefer this; the notice of meeting must draw attention to that right: ss 496(4) and (5). As from that meeting, the winding up is to proceed as if it were a creditors’ (and no longer a members’) voluntary winding up (ss 496(6) and (8)); but if no change in the liquidator is made, it is not necessary for an annual meeting of creditors to be convened at the end of the first year of winding up as otherwise required (see 23.8), if the meeting of creditors is held more than nine months after the commencement of the winding up: s 496(8).
Creditors’ voluntary winding up 23.7 In the case of a creditors’ voluntary winding up, the company is required to convene two meetings as the initial step. Section 497(1) provides that a meeting of creditors is to be called for either the same or the following day as the day on which the general meeting of the company is to be held with a view to passing the special resolution for a creditors’ voluntary winding up. The notices for the two meetings need to be posted simultaneously. The notice of the general meeting of members needs to comply with requirements of the Corporations Act and the company’s constitution. Because under s 491(1) a special resolution is required to wind up the company, 21 days’ notice will be required, unless the members agree to waive notice: see 21.14. Under s 497(2), the creditors’ meeting must be held at a date, time and place convenient to the majority in value of the creditors. At least seven days’ notice by post of the meeting must be given: s 497(2)(a). The notice must be in accordance with Form 529 (reg 5.6.12(6)(c)), and must be accompanied by a summary of the affairs of the company in accordance with Form 509, together with a list of creditors showing names, addresses and estimated claims: s 497(2)(b). A copy of the notice and accompanying documents must be lodged with ASIC at least seven days before the meeting (s 497(2)(c)), and between seven and 14 days before the meeting [page 353] a copy of the notice must be published in a daily newspaper circulating generally in the states and territories in which the company has carried on business in the
preceding two years: s 497(2)(d). At the meeting the directors must provide a report as to affairs in accordance with Form 507, verified by all directors in accordance with Form 507A; they must also appoint a director to attend the meeting: s 497(5). That director and a secretary of the company must attend the meeting, and disclose to it the affairs of the company and the circumstances leading up to the proposed winding up: s 497(6). The creditors must appoint one of themselves or the director appointed to attend the meeting to chair the meeting: s 497(8). The Chair must determine whether the meeting has been held at a date, time and place convenient to the majority in value of the creditors in accordance with s 497(2), and that decision is final (s 497(9)); if not, the meeting lapses, and another one must be convened by the company as soon as practicable. Under s 497(10), the meeting is deemed to be a meeting of creditors for the purposes of appointing a committee of inspection under s 548: see 23.10. Under s 498(1), the meeting is given specific power to adjourn, but is not permitted to adjourn for more than 21 days after the original date. Any adjourned meeting must be held at the same place as the original meeting, unless the resolution to adjourn otherwise provides: s 498(2). If the meeting is adjourned for more than eight days, fresh notice of the meeting must be published (but not posted) at least seven days before the adjourned meeting. If the meeting of members of the company is adjourned and the special resolution for winding up passed at that meeting, all resolutions passed at the meeting of creditors have effect as if they were passed immediately after the resolution for winding up (s 498(4)); compare s 546: see 23.9. Under s 499(1), the company is required at its meeting to nominate a person to be the liquidator; the creditors at their meeting may also do this if they wish to. If the creditors do not nominate a person, the liquidator is to be the company’s nominee; if different persons are nominated by the two meetings, the liquidator is to be the nominee of the creditors (s 499(1)); however, an application for the appointment of the company’s nominee or of joint liquidators may be made to the court within seven days: s 499(2). The liquidator’s remuneration is to be fixed at a meeting of the committee of inspection (if any) (see 23.10), or otherwise at a creditors’ meeting: s 499(3). If the office of liquidator (other than one appointed by the court) becomes vacant, it may be filled by resolution at a meeting of creditors, which may be convened by any two creditors: s 499(5). [page 354]
Voluntary winding up generally 23.8 There are a number of provisions of the Corporations Act in relation to meetings that apply to both categories of voluntary winding up. Under s 506(1)(f), the liquidator may convene a general meeting of the company to obtain the sanction of a special resolution in respect of any matter or for any other purpose. By special resolution the company may confer general or particular authority on the liquidator in connection with disposal of property, including arrangements regarding payment for it: s 507(2). A member who does not vote in favour of the special resolution has specified rights, and may be bought out by the liquidator: ss 507(3) and (4). Such a resolution is not invalid if passed before or concurrently with a resolution to wind up voluntarily; however, if winding up by the court eventuates within a year after such a resolution is passed, it will not be valid unless sanctioned by the court: s 507(6). In a creditors’ voluntary winding up the liquidator may only exercise these powers with the approval of the committee of inspection, if any (see 23.10), or the court: s 507(10). Under s 510, an arrangement may be entered into between a company that is about to be, or in the course of being, wound up and its creditors. That arrangement is binding on the company if it is sanctioned by a special resolution, and on the creditors if sanctioned by an ordinary resolution: s 510(1). Under reg 5.6.21, an ordinary resolution at a creditors’ meeting requires a majority both in value and in number, if a poll is demanded (subject to the Chair’s power to resolve a deadlock): see 23.11. The arrangement is subject to appeal to the court within three weeks: s 510(4). Under s 508(1), if the winding up continues for more than a year, a meeting must be convened by the liquidator within three months thereafter: in a members’ winding up, a general meeting; in a creditors’ winding up, a meeting of the company and the creditors. In the latter case, the notices are to be sent by post to members and creditors simultaneously: s 508(2). The liquidator must provide the meeting with a report covering the preceding year; and further annual meetings must be convened within three months of the end of each succeeding year: s 508(1). Under s 509(1), as soon as the company’s affairs are fully wound up the liquidator must call a meeting and submit an account of the winding up to the members (in a members’ winding up), or to the members and creditors (in a creditors’ winding up). The meeting is to be convened by an advertisement in the Commonwealth Gazette at least one month before the meeting, specifying the date, time, place and purpose of the meeting: s 509(2). Notice must also be given
in accordance with reg 5.6.12: see 23.11. The quorum for a meeting of the company is at least two members, while that for a meeting of the company and the creditors is two members [page 355] plus two creditors: s 509(4). The liquidator must lodge a return with ASIC in accordance with Form 523, which states whether a quorum was present, together with a copy of the account: ss 509(3) and (4). The company is dissolved three months later, subject to application to the court: ss 509(5) and (6).
Winding up generally 23.9 In addition to the provisions governing committees of inspection (see 23.10), there are three provisions of the Corporations Act in relation to meetings that apply to all types of winding up. Under s 546, a resolution passed at an adjourned meeting of creditors or contributories is to be treated as having been passed on the date on which it was in fact passed and not an earlier date. This section abrogates the common law rule (see 13.14), and is similar in effect to s 249W(1), which applies to general meetings and class meetings (see 21.25), but not to directors’ meetings: see 22.10. Section 546 is subject to s 498(4), which applies to the initial meetings of members and creditors in a creditors’ voluntary winding up: see 23.7. Under s 547(1), the court has a general power to direct meetings to be convened for the purpose of ascertaining the wishes of creditors and contributories. The meeting must be convened, held and conducted as the court directs; and the court may appoint a person to chair the meeting, and report back to the court: s 547(1). Under s 531, the liquidator is required to keep proper books containing minutes of proceedings of meetings during the winding up; the minutes may be inspected by any creditor or contributory, unless the court orders otherwise. Under ss 542(2) and (3), the liquidator must retain the books of the company for at least five years, unless the court (in a compulsory winding up), the company (in a members’ voluntary winding up) or the committee of inspection or the creditors (in a creditors’ voluntary winding up) agrees to a shorter period. In the case of a voluntary winding up, ASIC’s consent to a shorter period than five years is also required: s 542(4).
Committees of inspection 23.10 Under s 548(1), which applies to all types of winding up, the liquidator must convene separate meetings of creditors and contributories, if requested by any creditor or contributory; the purposes of the meeting are to determine whether a committee of inspection is to be appointed, and, if so, how many members are to represent creditors and contributories [page 356] respectively, and who those members are to be. If the meetings of creditors and contributories do not agree as to these matters, the court may resolve any differences: s 548(2). A member of a committee of inspection must be a creditor or contributory, or the attorney under a general power of attorney of, or a person authorised in writing by, a creditor or contributory: s 548(3). Under s 549(2), meetings of the committee may be convened by the liquidator or any member. The committee may meet at such times and places as its members appoint: s 549(1). The committee must meet in order to act; quorum is the presence of a majority of the members: s 549(3). Section 550 deals with vacancies on the committee. Under s 551, members of the committee are not allowed to accept any benefit from the company, a creditor or any other person in connection with the winding up. Meetings of the committee are otherwise subject to regs 5.6.12–5.6.36A: see 23.11. If there is no committee of inspection, the court may act instead: s 552.
Corporations regulations 23.11 As explained in 23.1 and provided in reg 5.6.11(2), regs 5.6.12– 5.6.36A of the Corporations Regulations apply generally to the various meetings relating to the external administration of a company discussed in 23.2–23.10. The provisions of the regulations must be read subject to the specific requirements of the Corporations Act in relation to those meetings and also the court rules: reg 5.6.11(3). Because of the general application of the regulations and their detailed nature, regs 5.6.11–5.6.36A are reproduced here in full, rather than being paraphrased:
5.6.11 Application (1) In regulations 5.6.12 to 5.6.57, unless the contrary intention appears: proof of debt or claim includes a statement of particulars of a debt or claim submitted in accordance with regulation 5.6.39, as well as a formal proof of debt or claim. (2) Subject to subregulation (3) and subregulation 5.6.24(4), regulations 5.6.12 to 5.6.36A apply to the convening and conduct of, and voting at: (a) a meeting convened under Part 5.3A, 5.4, 5.4B, 5.5 or 5.6 of the Act that is: (i) a meeting of members, creditors or contributories of a company; or (ii) a joint meeting of creditors and members of a company; or (iii) a meeting of a committee of inspection; or (iv) a meeting of a committee of creditors; or
[page 357] (v) a meeting of eligible employee creditors; or (vi) a meeting, on a consolidated basis, of creditors of companies in a group; and (b) a meeting of creditors of a company held under a deed of company arrangement. (3) Regulations 5.6.12 to 5.6.36A do not apply to: (a) a meeting of the directors of a company; or (b) a meeting of the members of a company, other than a meeting mentioned in paragraph (2) (a); or (c) if those regulations are inconsistent with a particular requirement of the Act, these Regulations or the rules — a meeting mentioned in paragraph (2)(a) or (b). 5.6.11A Electronic methods of giving or sending certain notices etc (1) This regulation applies if a person (the notifier) is authorised or required to give or send a notice, or other document, to a person (the recipient) under any of the following provisions: (a) subregulation 5.6.12(1); (b) subregulation 5.6.16(6); (c) paragraph 5.6.48(2)(b); (d) subregulation 5.6.53(1); (e) subregulation 5.6.54(1); (f) subregulation 5.6.55(3); (g) subregulation 5.6.59(1); (h) subregulation 5.6.62(1); (i) paragraph 5.6.65(1)(b); (j) paragraph 5.6.66(1)(d); (k) paragraph 5.6.66(3)(a). (2) If the recipient nominates an electronic address by which the recipient may be notified of the notice or document, the notifier may give or send the notice or document to the recipient by sending it to that electronic address. (3) If the recipient nominates any other electronic means by which the recipient may be notified of such notices or documents, the notifier may give or send the notice or document to the recipient by using that electronic means. (4) If the recipient nominates:
(a) an electronic means (the nominated notification means) by which the recipient may be notified that such notices or documents are available; and (b) an electronic means (the nominated access means) the recipient may use to access such notices or documents; the notifier may give or send the document to the recipient by notifying the recipient (using the nominated notification means): (c) that the notice or document is available; and
[page 358] (d) how the recipient may use the nominated access means to access the notice or document. (5) A notice or document sent to an electronic address, or by other electronic means, is taken to be given or sent on the business day after it is sent. (6) A notice or document given or sent under subsection (4) is taken to be given or sent on the business day after the day on which the recipient is notified that the notice or document is available. (7) Subregulations (2), (3) and (4) do not limit the provisions mentioned in subsection (1). 5.6.12 Notice of meeting (1) The convenor of a meeting must give notice in writing of the meeting to every person appearing on the company’s books or otherwise to be: (a) in the case of a meeting mentioned in subparagraph 5.6.11(2)(a) (i) — a member, creditor or contributory of the company; or (b) in the case of a meeting mentioned in subparagraph 5.6.11(2)(a) (ii) — a member or creditor of the company; or (c) in the case of a meeting mentioned in subparagraph 5.6.11(2)(a) (iii) — a member of the committee of inspection; or (d) in the case of a meeting mentioned in subparagraph 5.6.11(2)(a) (iv) — a member of the committee of creditors; or (e) in the case of a meeting mentioned in paragraph 5.6.11(2)(b) — a creditor of the company; or (f) in the case of a meeting mentioned in subparagraph 5.6.11(2)(a) (v) — an eligible employee creditor; or (g) in the case of a meeting mentioned in subparagraph 5.6.11(2)(a) (vi) — the creditors of a company in a group. Note The effect of regulation 5.6.11A is that if a recipient has, in accordance with that provision, nominated electronic means to receive notices, the notifier may give or send the notice mentioned in this subregulation by the nominated electronic means. (2) The notice must be given to a person: (a) by delivering it personally; or (b) by sending it to the person by prepaid post; or (c) if the person has a facsimile transmission number to which notices may be sent to the person — by faxing it to the person at that number; or (d) if the person has a document exchange number to which notices may be sent to the person — by lodging it with the exchange at, or for delivery to, the person’s receiving facilities identified by that number.
(3) The notice must be given not less than 10 business days before the day of the meeting, except: (a) in the case of a meeting of creditors under section 436E, 439A or 445F, or subsection 449C(4), of the Act; or (b) as provided by subregulation (4) or (5).
[page 359] (4) If a liquidator thinks it appropriate, he or she may convene a meeting of a committee of inspection by giving less than 10 business days’ notice of the meeting in accordance with subregulations (1) and (2). (5) If the administrator of a company under administration thinks it appropriate, he or she may convene a meeting of a committee of creditors or a meeting of eligible employee creditors by giving less than 10 business days’ notice of the meeting in accordance with subregulations (1) and (2). (6) The notice mentioned in subregulation (1) must be: (a) if convening a meeting of creditors under subsection 496(1) of the Act — in accordance with Form 521; or (b) if convening a meeting of creditors under section 436E of the Act — in accordance with Form 529A; or (c) in any other case — in accordance with Form 529. (7) A notice of a joint meeting of the creditors and members of a company must be sent to the creditors of the company at the same time as it is sent to the members of the company. (8) A notice to a creditor must be sent by the person convening the meeting: (a) to the address given by the creditor in his or her proof of debt or claim; or (b) if the creditor has not lodged a proof, to the address given in the report on the affairs of the company; or (c) to any other address known to the person. (9) A notice of a meeting must be sent by the convenor of the meeting: (a) to the address given in the company’s books as the address of that person; or (b) to any other address known to the person convening the meeting. 5.6.13 Proof of notice A statement in writing in accordance with Form 530 by: (a) the person convening a meeting; or (b) a person acting on his or her behalf; that notice of the meeting was sent by prepaid post is, in the absence of evidence to the contrary, sufficient proof of the notice having been sent to a person at the address specified for that person in that notice. 5.6.13A If telephone conference facilities are available If telephone conference facilities are expected to be available at the place where the meeting is to be held and the convenor of the meeting considers that, having regard to all the circumstances, it will be appropriate to use those facilities, the notice of the meeting must: (a) set out the relevant telephone number; and (b) indicate that a person, or the proxy or attorney of a person, who wishes to participate in the
meeting by telephone must give to the
[page 360] convenor, not later than the second-last working day before the day on which the meeting is to be held, a written statement setting out: (i) the name of the person and of the proxy or attorney (if any); and (ii) an address to which notices to the person, proxy or attorney may be sent; and (iii) a telephone number at which the person, proxy or attorney may be contacted; and (iv) any facsimile transmission number to which notices to the person, proxy or attorney may be sent; and (c) indicate that a person, or the proxy or attorney of a person, who participates in the meeting by telephone must pay any costs incurred by the person, proxy or attorney in participating and is not entitled to be reimbursed for those costs from the assets of the company. 5.6.13B Persons, or their proxies or attorneys, participating by telephone (1) If a person, or a person’s proxy or attorney, who wishes to participate in a meeting by means of telephone conference facilities, has given the convenor of the meeting a statement in accordance with regulation 5.6.13A, the convenor must take all reasonable steps to ensure that the person, or the person’s proxy or attorney, is contacted before the start of the meeting on the telephone number provided by that person. (2) If the person, proxy or attorney is contacted, the convenor must take all reasonable steps to ensure that the person, proxy or attorney can hear the proceedings, and can be heard, by means of those facilities, so that the person, proxy or attorney can participate in the meeting. (3) A person who, or whose proxy or attorney, participates in the meeting by telephone in accordance with this regulation is taken to be present in person at the meeting. 5.6.14 Time and place of meeting (1) The convenor of a meeting must convene the meeting at the time and place that he or she thinks are most convenient for the majority of persons entitled to receive notice of the meeting. (2) The convenor must give not less than 5 business days’ notice of the time and place of the meeting, except in the case of: (a) a meeting of creditors under section 436E, 439A or 445F, or subsection 449C(4), of the Act; or (b) a meeting of a committee of creditors; or (c) a meeting of a committee of inspection. (3) Subregulation (1) does not prevent the convenor convening a meeting to take place at separate venues provided that technology is available at the venues to give all persons attending the meeting a reasonable opportunity to participate.
[page 361] 5.6.14A Advertisement of a meeting
(1) The convenor of a meeting must lodge, with ASIC, a notice of the meeting in accordance with subregulation 5.6.75(4). (2) However, subregulation (1) does not apply if (a) the meeting is convened under subsection 445F(2) of the Act; or (b) the meeting is a meeting of eligible employee creditors mentioned in paragraph 444DA(2) (a) of the Act. (3) The notice must state at least the following information: (a) the name of the company; (b) any trading name of the company; (c) the ACN of the company; (d) the section of the Act under which the notice is being given; (e) the time, date and place for the meeting; (f) the purpose for which the meeting is being convened under that section; (g) the time and date by which proofs of debt, and proxies for the meeting, are to be submitted; (h) the name and contact details of the convenor of the meeting. 5.6.14B Meetings not convened in accordance with regulations A meeting may be held if all the persons who are entitled to be present at, and to vote at, the meeting agree, even if it has not been convened in accordance with these regulations. 5.6.15 Costs of convening meetings of creditors etc (1) A person (other than a liquidator or administrator of a company under administration or of a deed of company arrangement) at whose request a meeting of creditors or contributories is convened must: (a) if the liquidator or administrator requires a security for the payment of costs before the meeting is convened — deposit with the liquidator or administrator a sum of money; and (b) pay the costs of convening the meeting. (2) The costs of convening a meeting of a committee of inspection or a committee of creditors must be repaid out of the assets of the company to the person causing it to be convened if: (a) the Court so orders; or (b) the committee by resolution so directs. 5.6.16 Quorum (1) Subject to subregulation (3), a meeting must not act for any purpose except: (a) the election of a chairperson; and (b) the proving of debts; and (c) the adjournment of the meeting; unless a quorum is present.
[page 362] (2) A quorum consists of: (a) if the number of persons entitled to vote exceeds 2 — at least 2 of those persons; or
(3)
(4)
(6)
(7)
(8)
(b) if only one person is, or 2 persons are, entitled to vote — that person or those persons; present in person or by proxy or attorney. A meeting is sufficiently constituted if only one person is present in person at the meeting if the person represents personally or by proxy or otherwise a number of persons sufficient to constitute a quorum. If within 30 minutes after the time appointed for a meeting: (a) a quorum is not present; or (b) the meeting is not otherwise sufficiently constituted; the meeting is adjourned: (c) to the same day in the next week at the same time and place; or (d) to the day (not being less than 7 or more than 21 days after the day on which the meeting is adjourned) and at the time and place that the chairperson appoints. The convenor of the meeting, or a person nominated by the convenor, must immediately give notice of the adjournment to the persons to whom notice of the meeting must be given under regulation 5.6.12. Note The effect of regulation 5.6.11A is that if a recipient has, in accordance with that provision, nominated electronic means to receive notices, the notifier may give or send the notice mentioned in this subregulation by the nominated electronic means. A meeting on the date and at the place to which the meeting is adjourned is not to be taken to be incompetent to act only because of a failure to comply with subregulation (6) unless the Court, on the application of the convenor of the meeting, or of a creditor or contributory, otherwise declares. If within 30 minutes after the time appointed for the adjourned meeting: (a) a quorum is not present; or (b) the meeting is not otherwise sufficiently constituted; the adjourned meeting lapses.
5.6.17 Chairperson (1) If a meeting is convened by: (a) a liquidator; or (b) a provisional liquidator; or (c) an administrator of the company under administration or of a deed of company arrangement; or (d) a liquidator mentioned in paragraph 579L(1)(e) of the Act; that person, or a person nominated by that person, must chair the meeting. (2) In any other case, the persons present and entitled to vote at a meeting must elect one of their number to be chairperson of the meeting.
[page 363] 5.6.18 Adjournment of meeting (1) The chairperson of a meeting: (a) if so directed by the meeting — must; or (b) with the consent of the meeting — may; adjourn the meeting from time to time and from place to place.
(2) A meeting convened under section 439A of the Act must not be adjourned to a day that is more than 45 business days after the first day on which the meeting was held. (3) An adjourned meeting must be held at the place of the original meeting unless: (a) the resolution for adjournment specifies another place; or (b) the Court otherwise orders; or (c) the liquidator or provisional liquidator, or the administrator of a company under administration or of a deed of company arrangement, otherwise orders; or (d) the place of the original meeting is unavailable, in which case the chairperson may appoint another place. 5.6.19 Voting on resolutions (1) A resolution put to the vote of a meeting must be decided on the voices unless, subject to subregulation (5), a poll is demanded, before or on the declaration of the result of the voices: (a) by the chairperson; or (b) by at least 2 persons present in person, by proxy or by attorney and entitled to vote at the meeting; or (c) by a person present in person, by proxy or by attorney and representing not less than 10% of the total voting rights of all the persons entitled to vote at the meeting; or (d) in the case of a meeting of members — by a member or members holding shares in the company conferring a right to vote at a meeting, being shares on which the total sum paid up is not less than 10% of the total sum paid up on all the shares conferring that right. (2) Unless a poll is demanded, the chairperson must declare that a resolution has been: (a) carried; or (b) carried unanimously; or (c) carried by a particular majority; or (d) lost; on the voices (3) A declaration is conclusive evidence of the result to which it refers, without proof of the number or proportion of the votes recorded in favour of or against the resolution, unless a poll is demanded. (4) A demand for a poll may be withdrawn. (5) A vote taken at a joint meeting of creditors and members of a company must be decided on the voices.
[page 364] (6) If a creditor of a company, by contract, surrenders or limits all or some of his or her rights to vote at a meeting of creditors, then the creditor must not vote except in accordance with the contract and any vote which is not in accordance with the contract will not be counted. 5.6.20 Taking a poll (1) Subject to subregulation (2), if a poll is demanded: (a) the manner in which it is to be taken; and (b) the time at which it is to be taken; must be determined by the chairperson.
(2) A poll demanded on the election of a chairperson or on a question of adjournment must be taken at once. 5.6.21 Carrying of resolutions after a poll has been demanded at a meeting of creditors (1) This regulation applies to a poll taken at a meeting of creditors. (2) A resolution is carried if: (a) a majority of the creditors voting (whether in person, by attorney or by proxy) vote in favour of the resolution; and (b) the value of the debts owed by the corporation to those voting in favour of the resolution is more than half the total debts owed to all the creditors voting (whether in person, by proxy or by attorney). (3) A resolution is not carried if: (a) a majority of creditors voting (whether in person, by proxy or by attorney) vote against the resolution; and (b) the value of the debts owed by the corporation to those voting against the resolution is more than half the total debts owed to all creditors voting (whether in person, by proxy or by attorney). (4) Subject to subregulation (4B), if no result is reached under subregulation (2) or (3), then: (a) the person presiding at the meeting may exercise a casting vote in favour of the resolution, in which case the resolution is carried; or (b) the person presiding at the meeting may exercise a casting vote against the resolution, in which case the resolution is not carried; or (c) if the person presiding at the meeting does not exercise a casting vote, the resolution is not carried. (4A) If no result is reached under subregulation (2) or (3), and the meeting is not a meeting of eligible employee creditors, the person presiding at the meeting must include in the minutes of the meeting the reasons for exercising, or not exercising, as the case may be, a casting vote under subregulation (4). (4B) In the case of a meeting of eligible employee creditors mentioned in paragraph 444DA(2)(a) of the Act, if no result is reached under subregulation (2) or (3), the resolution is not carried. (5) In this regulation creditor includes a debenture holder.
[page 365] 5.6.22 Carrying of resolution after a poll has been demanded at a meeting of contributories or members (1) This regulation applies to a poll taken at a meeting of contributories or members. (2) In counting the majority on a poll demanded on the question that a resolution be carried, regard must be made to: (a) the number of votes cast for or against the resolution; and (b) the number of votes to which each member is entitled by the Act or the articles of the company. (3) The chairperson of the meeting has a casting vote in addition to his or her deliberative vote.
5.6.23 Creditors who may vote (1) A person is not entitled to vote as a creditor at a meeting of creditors unless: (a) his or her debt or claim has been admitted wholly or in part by the liquidator or administrator of a company under administration or of a deed of company arrangement; or (b) he or she has lodged, with the chairperson of the meeting or with the person named in the notice convening the meeting as the person who may receive particulars of the debt or claim: (i) those particulars; or (ii) if required — a formal proof of the debt or claim. (2) A creditor must not vote in respect of: (a) an unliquidated debt; or (b) a contingent debt; or (c) an unliquidated or a contingent claim; or (d) a debt the value of which is not established; unless a just estimate of its value has been made. (3) A creditor must not vote in respect of: (a) a debt or a claim on or secured by: (i) a bill of exchange; or (ii) a promissory note; or (iii) any other negotiable instrument or security; held by the creditor unless he or she is willing: (b) to treat the liability to him or her on the instrument or security of a prescribed person as a security in his or her hands; or (c) to estimate its value; and (d) for the purposes of voting (but not for the purposes of dividend), to deduct it from his or her debt or claim. (4) For paragraph 5.6.23(3)(b), a prescribed person is a person whose liability is mentioned in paragraph 5.6.23(3)(a) who: (a) is liable to the company directly; or (b) may be liable to the company on the default of another person with respect to the liability;
[page 366] at the time of voting, but who is not: (c) an insolvent under administration; or (d) a person against whom a winding up order is in force. 5.6.23A Voting status of persons by whom money is advanced to a company (1) For this Part, a person by whom money is advanced to a company as described in section 560 of the Act is entitled to one vote at a meeting of creditors. (2) Subregulation (1) applies whether the person has advanced money to the company: (a) on 1 occasion only; or (b) on more than 1 occasion in respect of the same matter; or (c) on 1 or more occasions in respect of more than 1 matter.
Note Paragraph 560(c) of the Act provides that a person by whom money is advanced to a company in specified circumstances has the same rights as a creditor of the company in relation to matters set out in Chapter 5 of the Act. This includes voting at a meeting of creditors of the company. 5.6.24 Votes of secured creditors (1) For the purposes of voting, a secured creditor must state in the creditor’s proof of debt or claim: (a) the particulars of his or her security; and (b) the date when it was given; and (c) the creditor’s estimate of the value of the security; unless he or she surrenders the security. (2) A creditor is entitled to vote only in respect of the balance, if any, due to him or her after deducting the value of his or her security as estimated by him or her in accordance with regulation 5.6.41. (3) If a secured creditor votes in respect of his or her whole debt or claim, the creditor must be taken to have surrendered his or her security unless the Court on application is satisfied that the omission to value the security has arisen from inadvertence. (4) This regulation does not apply to: (a) a meeting of creditors convened under Part 5.3A of the Act; or (b) a meeting held under a deed of company arrangement. 5.6.26 Admission and rejection of proofs for purposes of voting (1) The chairperson of a meeting has power to admit or reject a proof of debt or claim for the purposes of voting. (2) If the chairperson is in doubt whether a proof of debt or claim should be admitted or rejected, he or she must mark that proof as objected to and allow the creditor to vote, subject to the vote being declared invalid if the objection is sustained. (3) A decision by the chairperson to admit or reject a proof of debt or claim for the purposes of voting may be appealed against to the Court within 10 business days after the decision.
[page 367] 5.6.27 Minutes of meeting (1) The chairperson must, within the period specified in subregulation (7): (a) cause minutes of the proceedings to be drawn up and entered in a record kept for the purpose; and (b) sign the minutes after they have been entered in the record. (1A) However, if the meeting is held on a consolidated basis, subregulation (1) does not require the chairperson to draw up and enter separate minutes for each of the companies to which the meeting relates. (2) A record of the persons present in person, by proxy or by attorney at a meeting must be prepared and kept: (a) if the meeting is of members or contributories — in accordance with Form 531A; and (b) if the meeting is of creditors, eligible employee creditors or debenture holders — in accordance with Form 531B; and
(3)
(4)
(5)
(6)
if the meeting is of a committee of inspection or a committee of creditors — in accordance (c) with Form 531C. The chairperson at a meeting (other than a meeting of holders of debentures) must lodge a copy of the minutes of the meeting certified by him or her to be a true copy within the period specified in subregulation (7). (3A) However, if the meeting is held on a consolidated basis, subregulation (1) does not require the chairperson to lodge separate copies of the minutes for each of the companies to which the meeting relates. If the chairperson: (a) dies without having signed the minutes as required by subregulation (1), or without having lodged a certified copy of the minutes as required by subregulation (3); or (b) becomes incapable, whether through illness or other cause, of signing the minutes as required by subregulation (1), or of lodging a certified copy of the minutes as required by subregulation (3); the convenor of the meeting, if he or she attended the meeting, or a creditor, member or contributory who attended the meeting, may sign the minutes as required by subregulation (1) and may certify and lodge a copy of the minutes as required by subregulation (3). The administrator of a company under administration or of a deed of company arrangement, after a meeting of creditors, must cause: (a) the minutes; and (b) the record of persons present at the meeting; prepared in accordance with this regulation to be made available for inspection by creditors or members at the registered office or principal place of business of the company in this jurisdiction. The liquidator must cause: (a) the minutes; and (b) the record of persons present at the meeting;
[page 368] prepared under this regulation to be made available at the principal place at which he or she practises, for inspection by creditors or contributories. (7) For subregulations (1) and (3), the specified period is: (a) for a meeting other than a meeting convened under section 436E or 439A of the Act — 1 month after the end of the meeting; or (b) for a meeting convened under section 436E or 439A of the Act — 10 business days after the end of the meeting. 5.6.28 Appointment of proxies (1) A person entitled to attend and vote at a meeting may appoint a natural person over the age of 18 years as his or her proxy to attend and vote at the meeting. (2) Subject to subregulation (3) and to regulation 5.6.30, a proxy appointed under this regulation has the same right to speak and vote at the meeting as the person who appointed the proxy. (3) If a person claims to be: (a) the proxy of a person, appointed by an instrument of appointment mentioned in subregulation 5.6.29(2); and
(b) entitled to attend and vote at a meeting; the person is not entitled to speak or vote as proxy at the meeting (except in relation to the election of a chairperson) unless: (i) the instrument; or (ii) a facsimile copy of the instrument; or (iii) a copy of the instrument sent by email or similar electronic means; has been lodged with the person named in the notice convening the meeting as the person who is to receive the instrument, or with the chairperson. (4) If a person claims to be: (a) the proxy of a person, appointed by an instrument completed in a way that allows it to be given by electronic means as described in subregulation 5.6.29(3); and (b) entitled to attend and vote at a meeting; the person is not entitled to speak or vote as proxy at the meeting (except in relation to the election of a chairperson) unless the instrument has been given by electronic means to the person named in the notice convening the meeting as the person who is to receive the instrument, or with the chairperson. 5.6.29 Form of proxies (1) The appointment of a person as a proxy must be by: (a) an instrument in accordance with Form 532, completed in hard copy in compliance with subregulation (2); or (b) if the person convening the meeting offers an electronic address under paragraph 5.6.31(2) (a) for the purpose of the receipt of
[page 369] proxy appointments — a copy of the instrument mentioned in paragraph (a), the copy made in a way that allows it to be given by electronic means (such as by email); or (c) if the person convening the meeting offers other electronic means under paragraph 5.6.31(2)(b) by which a person may give the proxy appointment — an electronic representation equivalent to Form 532 (such as an on-line Form) that may be completed and authenticated in compliance with subregulation (3). (2) If Form 532 is to be completed in hard copy: (a) the person appointing the proxy must sign the instrument of proxy, or, if incapable of writing, attach his or her mark to it; and (b) the proxy of a person who is blind or incapable of writing must not be accepted unless: (i) the person attaches his or her signature or mark to the instrument appointing the proxy after it has been completed; and (ii) the instrument is read to him or her by a witness to his or her signature or mark (not being the person nominated as proxy) who completes the certificate of witness set out in Form 532. Note 1 Form 532 may be lodged by facsimile after being completed in hard copy: see subregulation 5.6.28(3). Note 2 Form 532 may be lodged by email or similar means, in certain circumstances, after being completed in hard copy: see paragraph (1)(b).
If Form 532 is to be completed in a way that allows it to be given by electronic means, the electronic authentication of the appointment of the proxy must include: (a) a method of identifying the person entitled to appoint a proxy; and (b) an indication of the person’s approval of the information communicated. (4) In this regulation, electronic means does not include a facsimile transmission. (3)
5.6.30 Instruments of proxy An instrument appointing a proxy may specify the manner in which the proxy is to vote on a particular resolution, and the proxy is not entitled to vote on the resolution except as specified in the instrument. 5.6.31 Proxy forms to accompany notice of meetings (1) A person convening a meeting must: (a) send a form of proxy with each notice of the meeting; and (b) ensure that neither the name or description of any person is printed or inserted in the body of the form of proxy before it is sent out. (2) The form of proxy may specify: (a) an electronic address for the purpose of the receipt of proxy appointments; and
[page 370] (b) other electronic means by which a person may give the proxy appointment. 5.6.31A Person may attend and vote by attorney (1) A person entitled to attend and vote at a meeting may attend and vote at a meeting by his or her attorney. (2) A person claiming to be the attorney of a person entitled to attend and vote at a meeting is not entitled to speak or vote as attorney at the meeting (except in relation to the election of a chairperson) unless: (a) the instrument by which the person was appointed as attorney has been produced to the chairperson; or (b) the chairperson is otherwise satisfied that the person claiming to be the attorney of the person entitled to vote is the duly authorised attorney of that person. 5.6.32 Liquidator etc may act as proxy A person may appoint: (a) the liquidator; or (b) the provisional liquidator; or (c) the administrator of a company under administration or of a deed of company arrangement; or (d) the chairperson of a meeting; by name or by reference to his or her office, to act as his or her general or special proxy. 5.6.33 Voting by proxy if financially interested
A person acting under a general proxy must not vote in favour of any resolution which would directly or indirectly place: (a) the person; or (b) the person’s partner; or (c) the person’s employer; in a position to receive any remuneration out of assets of the company except as a creditor rateably with the other creditors of the company. 5.6.34 Liquidator etc may appoint deputy If: (a) a liquidator; or (b) an administrator of a company under administration or of a deed of company arrangement; or (c) a trustee for debenture holders; holds a proxy and cannot attend the meeting for which it is given, he or she may in writing appoint a person as a deputy who must: (d) use the proxy: (i) on his or her behalf in the manner he or she directs; or (ii) if the proxy is a special proxy — in accordance with its terms; and
[page 371] (e) if the person has been appointed by a liquidator — comply with regulation 5.6.33 as if the person were the liquidator. 5.6.36 Time for lodging proxies A person named in a notice convening a meeting as the person who is to receive: (a) an instrument appointing a proxy; or (b) any other document relating to the validity of the appointment of a proxy; must not require that instrument or document to be received more than 48 hours before the meeting. 5.6.36A Facsimile copies of proxies (1) A person who, for the purposes of a meeting, lodges a faxed copy of an instrument appointing a proxy or of any document relating to the validity of the appointment, must lodge the original instrument or document in the manner mentioned in subregulation 5.6.28(3) within 72 hours after lodging the faxed copy. (2) A failure by a person to comply with subregulation (1) will not invalidate the meeting or anything done at the meeting unless the Court, on the application of the convenor of the meeting or of a creditor, member or contributory, otherwise declares.
Meetings of debenture holders
23.12 Debenture holders are creditors from whom a company has borrowed money that is often referred to as ‘loan capital’. At common law, a debenture is simply documentary evidence of a debt, in particular a document issued by a company as an acknowledgement of its indebtedness, usually to a named lender, under terms and conditions as specified. Under the Corporations Act a debenture is a chose in action that includes an undertaking by the body to repay as a debt money deposited with or lent to the body, subject to various exceptions: s 9. Debentures may be secured by the creation of a charge on the company’s assets, or may be unsecured; the term ‘unsecured notes’ is sometimes used to describe the latter. There may be only one or a few debenture holders, or there may be many. Holders of shares may additionally hold debentures; thus a member of a company, who is entitled as such to attend and vote at general meetings, may also be a debenture holder of the company, and entitled to attend and vote at separate meetings of debenture holders, if these are held. Chapter 2L of the Corporations Act governs debentures. In addition, the offering of debentures may be subject to the fundraising provisions of Ch 6D, which require disclosure to investors in the prescribed form. Under s 283AA, a body that offers debentures (‘the borrower’) must enter into a trust deed, under which a trustee for the debenture holders is appointed. [page 372] Part 2L.5 contains three sections providing for the calling of meetings of debenture holders by the borrower, the trustee and the court respectively. Under s 283EA(1), the borrower is required to call a meeting of debenture holders to consider the financial statements submitted to the borrower’s last annual general meeting or to give the trustee directions in relation to the exercise of its powers if it receives a direction in writing to do so from debenture holders holding at least 10 per cent of the nominal value of issued debentures. The trustee is required to comply with any directions given to it by a meeting of debenture holders unless it is of the opinion that the direction is inconsistent with the terms of issue of the debentures, the trust deed or the statute, or is otherwise objectionable, and applies to the court for an order setting aside or varying the direction: s 283DA(h). The borrower must give notice of the time and place of the meeting to the trustee, the borrower’s auditor and each debenture holder; in the case of joint holders, notice must be given to the holder named first in the register of debenture holders: s 283EA(2). Notice may be given personally, by post to the
address in the register, by fax or email to any address nominated by the debenture holder, or by any other means permitted by the trust deed or the terms of issue of the debentures: s 283EA(3). Unless the trust deed or the terms of issue of the debentures provide otherwise, notices sent by post are deemed to be given three days after posting, and notices sent by fax or email are deemed to be given on the business day after sending: s 283EA(4). There is no provision in s 283EA for the appointment or election of a Chair of the meeting, or for a quorum. Under s 283EB(1), the trustee is required to call a meeting of debenture holders if the borrower or a guarantor fails to remedy a breach of the terms of issue of the debentures, the trust deed or Ch 2L when required by the trustee. At the meeting, the trustee may inform the debenture holders of the breach, submit proposals for protection of the debenture holders’ interests, and ask for directions from the debenture holders in relation to the matter: s 283EB(1). The trustee may appoint a person to chair the meeting, failing which the debenture holders present may do so: s 283EB(2). There is no provision under s 283EB for the form or manner of notice, or for a quorum. Under s 283EC, the court may exercise its general and specific powers under ss 283HA and 283HB respectively to order a meeting of debenture holders to be held to give directions to the trustee. The terms of the order may direct the trustee to place information before the debenture holders concerning their interests, to place proposals before the debenture holders to protect their interests that the court directs or the trustee considers appropriate, and to obtain the debenture holders’ directions concerning the protection of their interests: 283EC(1). The trustee may appoint a person to chair [page 373] the meeting, failing which the debenture holders present may do so: s 283EC(2). The meeting is otherwise to be held and conducted as the court directs: s 283EC(2). Under s 283DB, debenture holders holding at least 75 per cent of the nominal value of the debentures held by all those debenture holders present and voting in person or (where permitted) by proxy at a meeting of debenture holders may approve the release of the trustee from liability.
Meetings of members of registered
managed investment schemes 23.13 The Corporations Act makes provision in Ch 5C for the registration and regulation of what are termed ‘managed investment schemes’. These are schemes where the investment is not a share or debenture, but some other form of interest; for example, a unit in a unit trust. Each registered managed investment scheme must be operated by a ‘responsible entity’, which is a public company that acts as trustee for the scheme members, and is liable to them for the proper administration of the scheme. Chapter 5C contains four sections that specifically contemplate the holding of meetings of members of registered managed investment schemes. Under s 601FL(1), a responsible entity that wishes to retire from that capacity must call a meeting of scheme members to explain its reason, and to enable the members to choose a new responsible entity. If the scheme is not listed, the new responsible entity must be chosen by extraordinary resolution. An extraordinary resolution requires an absolute majority of the votes of all members of the scheme: s 9; see further 14.16. If the scheme is listed, it would appear the new responsible entity may be chosen by ordinary resolution. If the members do not choose a new responsible entity, or the company they choose does not consent, the current responsible entity may apply to the court for appointment of a temporary responsible entity under s 601FP: s 601FL(3). Under s 601FM(1), the scheme members may pass resolutions to remove the responsible entity and choose a new responsible entity. The resolutions must be passed at scheme meetings called in accordance with Pt 2G.4 Div 1: see below. If the scheme is not listed, both resolutions must be extraordinary resolutions. If the scheme is listed, the resolutions may be ordinary resolutions, notwithstanding the apparent conflict with ss 252B and 252D: MTM Funds Management Ltd v Cavalane Holdings Pty Ltd (2000) 158 FLR 121; 35 ACSR 440. If the members remove the responsible entity, but do not at the same meeting choose a new responsible entity, or the company they choose does not consent, the scheme must be wound up under s 601NE(1)(d): s 601FM(3). [page 374] Under s 601FQ(1), if a temporary responsible entity is appointed by the court under s 601FP, it must call a scheme meeting as soon as practicable and in any event within three months to enable the members to choose a new responsible entity. If the scheme is not listed, the new responsible entity must be chosen by
extraordinary resolution. If the scheme is listed, it would appear the new responsible entity may be chosen by ordinary resolution. The temporary responsible entity may call further meetings within the three months for the purpose of choosing a new responsible entity, and may apply to the court for an extension of that period before its expiry: s 601FQ(2). If a new responsible entity has not been chosen within the required period, the temporary responsible entity must (and ASIC or any scheme member may) apply to the court for an order to wind up the scheme: s 601FQ(5). Under s 601NB, the scheme members may pass an extraordinary resolution directing the responsible entity to wind up the scheme. The resolution must be passed at a scheme meeting called in accordance with Pt 2G.4 Div 1: see below. Part 2G.4 of the Corporations Act makes extensive provision for the convening and conduct of scheme meetings held pursuant to those sections of Ch 5C previously referred to. These provisions are largely based on the sections of Pt 2G.2 that apply to general meetings of public companies: see Chapter 21. The only significant differences are as follows: A registered scheme is not required to have an annual general meeting. Accordingly, Pt 2G.4 does not contain any provisions similar to Pt 2G.2 Div 8. Where in relation to the convening or conduct of general meetings Pt 2G.2 confers powers or imposes duties on the directors of a public company, the equivalent sections of Pt 2G.4 refer to the responsible entity. Hence, for example, under s 252A a meeting of the scheme’s members may be called by the responsible entity. Scheme members may call meetings only to consider and vote on proposed special resolutions and extraordinary resolutions: ss 252B and 252D. An extraordinary resolution requires an absolute majority of the votes of all members of the scheme: s 9; see further 14.16. However, the meeting may still pass ordinary resolutions, for example, in the case of procedural motions: s 253J(2); see also above. There is no explicit requirement that a request by members to call a meeting must be given to the responsible entity, because 252B(2) curiously omits an equivalent provision to s 249D(2)(d). A request for the calling of a meeting may be accompanied by a statement about the proposed resolution provided by the members making the request, and the responsible entity must distribute the statement with the proposed resolution: ss 252B(3) and (7).
[page 375] As with ss 252B and 252D, the court’s power under s 252E to call scheme meetings is confined to ordering meetings to consider and vote on special and extraordinary resolutions, unlike the equivalent power in relation to general meetings under s 249G. The 21-day notice period for scheme meetings under s 252F cannot be shortened in any circumstances, as it can in the case of general meetings under s 249H(2). There is no explicit requirement in s 252J that the information included in the notice of scheme meetings must be worded and presented in a clear, concise and effective manner, as is the case for general meetings under s 249L(3). Nor is there any explicit requirement in Pt 2G.4 Div 4 that scheme meetings only be held for a proper purpose, as there is for general meetings in s 249Q. Section 252S does not include a specific requirement that the Chair of a scheme meeting adjourn the meeting when directed or agreed to by a majority of members present, as s 249U(4) provides for general meetings. However, this is a common law requirement in any case: see 13.5. Neither does s 252W(1) give proxies at scheme meetings an explicit right to join in a demand for a poll, as s 249Y(1)(c) does for general meetings. The note to s 252W(2) suggests that the proxy has this power in any case under s 253L, which provides that a specified number or proportion of ‘members present’ may demand a poll. However, s 253L does not provide that the members present include those not personally present but represented by proxy, as s 252R(3) does in the case of a quorum for scheme meetings. At common law a proxy may not demand or join in demanding a poll, unless expressly permitted to do so in the body’s rules (see 15.2); the note to s 252W(2) would therefore appear to be incorrect. In the case of appointments of proxies lodged by fax or email, under s 252Z(4), the notice of meeting may require the transmission to be verified in a specified way, or the proxy to produce the appointment and any authority at the meeting, and the appointment will be ineffective if these requirements are not complied with. Under s 253C(2), on a poll scheme members have one vote for each dollar of the value of the total interest they have in the scheme, rather than for each share as under s 250E(1)(b). The Chair is not given a casting vote at scheme meetings under s 253C, unlike general meetings under s 250E(3).
The responsible entity and its associates are not permitted to vote on a resolution if they have an interest in it other than as a member, except to replace the responsible entity of a listed scheme: s 253E. [page 376] Section 253F sets out the methods for calculating the value of members’ interests in a scheme. There is no requirement in s 253J that before taking a vote the Chair inform a scheme meeting whether any proxy votes have been received and how the proxy votes are to be cast, unlike the position for general meetings under s 250J(1A). There is no equivalent provision to s 250M as to when and how polls must be taken. The common law rules therefore apply: see 15.6 and 15.7.
[page 377]
24 Companies — Australian Securities Exchange Listing Rules Introduction 24.1 The Australian Securities Exchange Limited, commonly abbreviated to ASX, operates Australia’s primary national stock exchange for equities, derivatives and fixed interest securities. It provides a market for trading in securities, and is responsible nationally for supervising that market. The ASX is a public company limited by shares, which since 13 October 1998 has itself been a listed company. Under the ASX’s constitution and s 92(1), securities include shares, debentures and interests in managed investment schemes, such as units. Entities (principally companies) may apply to the ASX for listing on the ‘official list’. Admission to the official list is subject to the ASX’s ‘listing rules’, under which the ASX prescribes regulatory requirements additional to those of the Corporations Act, intended to set appropriate standards of corporate behaviour for listed companies. The listing rules are binding on the company, both as a contract with the ASX, and under ss 793C and 1101B. The listing rules are available on the ASX website at: . Condition 2 of the requirements for general admission to the official list requires a company’s constitution to be consistent with the listing rules. Applications for admission to the official list must be accompanied by a [page 378] checklist showing that the constitution of the company complies with the listing rules. The listing rules, in particular Chapter 14, contain a number of requirements in
relation to meetings that must be complied with by listed companies as a condition of listing. These requirements are additional to, and intended to complement, the Corporations Act. They are discussed in this chapter in the order that they appear in the listing rules.
Continuous disclosure 24.2 Chapter 3 of the listing rules lays down a regime of ‘continuous disclosure’ for listed companies. Under r 3.13, a listed company is required to inform the ASX of: 1. the date of any general meeting at which directors are to be elected by security holders, at least five business days before the meeting; 2. the result of each motion put to a general meeting, immediately after the meeting has been held; 3. the adjournment of any general meeting, and the result of any motion put to the meeting before the adjournment, immediately after the adjournment; and 4. the contents of any prepared announcement (including address by the Chair) intended to be delivered at a general meeting, no later than the start of the meeting. Under the general requirements of r 3.1, if other material information is released at a general meeting, the company must inform the ASX.
Documents sent to security holders 24.3 Under r 3.17, a listed company must immediately give the ASX a copy of each document that it sends to security holders, including classes of security holders. In addition, Chapter 15 requires drafts to be supplied to the ASX before documents are sent out in certain circumstances: see 24.15.
Voting rights 24.4 Under r 6.8, holders of ordinary securities and holders of preference securities carrying a right to vote must be entitled to one vote each on a motion to be decided on a show of hands. The rule does not affect proxies; whether proxies are entitled to vote on a show of hands will depend on the company’s constitution. In addition, the rule does not apply to registered managed
investment schemes. [page 379] Under r 6.9, holders of ordinary securities and holders of preference securities carrying a right to vote must be entitled to one vote for each fully paid security, and a fraction of a vote for each partly paid security on a motion to be decided on a poll. The fraction is the proportion that the amount paid on the security represents to the total amounts paid and payable. Amounts credited rather than paid are excluded from both amounts. Amounts paid before a call has been made are also excluded. This rule also does not apply to registered managed investment schemes. Under r 6.10, the rights of security holders to vote must not be removed or changed, unless: there are unpaid calls; an appointment of proxy has been lodged other than in accordance with the company’s constitution; the holder became the security holder less than 48 hours before the meeting; or the removal or change is sanctioned by legislation, the ASX or court order.
Rules requiring meetings 24.5 An explanatory note at the beginning of Chapter 14 sets out in tabular form a list of those rules that require meetings to be held, including whether there are particular notice requirements.
Notices of general meeting 24.6 Under r 14.1, information required by the listing rules to be included in a notice of meeting may either be set out in the notice itself or accompany the notice. The ASX Corporate Governance Council has developed detailed guidelines intended to improve shareholder participation through the design and content of notices, and through the conduct of the meeting itself. The guidelines are available on the ASX website at: .
Proxy forms 24.7 Under r 14.2, notices of meeting must include a proxy form. The proxy form must provide for the security holder to vote for or against each proposed resolution or to abstain: r 14.2.1. The form may also provide that, if the security holder does not direct the proxy how to vote, the [page 380] proxy is authorised to vote or abstain from voting in their discretion: r 14.2.1. Under r 14.2.2, if the Chair of the meeting is appointed as proxy (either by default or because the form specifies that the Chair is appointed as proxy if the security holder does not appoint another proxy), the form must also include a statement as to how the Chair intends to vote undirected proxies. Rule 14.2.2 includes the following explanatory note: An entity may wish to include in a proxy form an acknowledgement to the effect that the statement as to how the Chair of the meeting intends to vote undirected proxies necessarily expresses the Chair’s intention at a particular point in time and that, in exceptional circumstances, the Chair’s intention may change subsequently. If there is a change to how the Chair intends to vote undirected proxies, ASX would expect the entity to make an immediate announcement to the market stating that fact and explaining the reasons for the change.
Attendance by CDI holders 24.8 Under r 14.2A, holders of CDIs (CHESS Depositary Interests) must be permitted to attend meetings of the holders of the underlying securities, unless prohibited by the laws of the jurisdiction in which the entity is established. CHESS is the ASX’s Clearing House Electronic Subregister System, and CDIs are beneficial interests in foreign companies incorporated in jurisdictions where CHESS cannot be used for holding legal title to securities.
Nominations for directors 24.9 Under r 14.3, listed companies must accept nominations for the election of directors up to 35 business days before a general meeting at which directors may be elected, and may accept nominations closer to the date of the general meeting in accordance with their constitution. The period is reduced to 30 business days in the case of meetings called by directors at the request of
members under s 249D.
Rotation of directors 24.10 Under r 14.4, directors of listed companies must not hold office without re-election for more than three years or past the third annual general meeting following their appointment, whichever is the longer. Directors appointed to fill casual vacancies or new positions must not hold office without election past the next annual general meeting. Up to one managing director is exempt from these requirements. Under r 14.5, listed companies must hold an election of directors each year. [page 381]
Compliance with requirements of listing rules 24.11 Under r 14.6, notices of meeting must include everything required by the listing rules, and the company must comply with r 14.7, if the approval of security holders is to be effective. Under r 14.7, listed companies must do whatever they state they will do in a notice of meeting that is required by the listing rules, or take all reasonable steps to ensure that the person responsible does it.
Validity of votes 24.12 Under r 14.8, listed companies must appoint their auditor or another person approved by the ASX to rule on the validity of votes at a general meeting, if the ASX requires.
Approval to be by ordinary resolution 24.13 Under r 14.9, where the listing rules require the approval of security holders, this means approval by an ordinary resolution (see 21.22), passed at a general meeting of ordinary share or unit holders, unless otherwise specified.
Voting exclusion statement 24.14 Various listing rules require the notice of meeting to include a ‘voting exclusion statement’, which names those persons who are not entitled to vote on a proposed resolution because of their interest in the matter. Rule 14.11 sets out the form of the statement, and includes a table listing the persons not entitled to vote under the various relevant rules: r 14.11.1. The exclusion does not apply to a person casting a vote as proxy for a person entitled to vote in accordance with directions on the proxy form, or to the Chair as proxy for a person entitled to vote in accordance with a direction on the proxy form to vote as the proxy decides: r 14.11. Under r 14.11.2, the ASX may name additional persons that are not entitled to vote, even if the notice of meeting has been sent out.
Giving draft documents to ASX 24.15 Under r 15.1, listed companies must give the ASX drafts of various documents before they are finalised, including notices of meeting that contain a proposed resolution for the issue of securities: r 15.1.4. The company must not send out the notice until the ASX indicates it has no objection. The ASX is required to reach a decision within five business days or advise that it needs more time.
[page 383]
Appendix I Summary of the FORMAL motions designed to bring discussion to a close Has the May the Is a Is any Chair Para ref FORMAL Motions speaker be seconder discussion discretion interrupted? necessary? allowed? to reject? The Closure: ‘That 12.8 12.9 the question be now Yes Yes No No 12.10 put’. The Previous Question: ‘That the question be not now No, must Yes Yes Yes 12.11 put’ (This is also ‘The wait for close Gag’, whichever way of speech. the motion is decided). Proceed to next No, must business: ‘That the wait for close No No No 12.12 meeting do proceed of speech. to the next business’. Matter lie on the No, must table: ‘That the wait for close No No No 12.13 question does lie on of speech. the table’. See further 12.7: Formal motions may not be moved or seconded by a person who has moved or seconded or spoken to the main motion or an amendment to it. Hence, a person may not move more than one formal motion during the debate on a particular question. There is no ‘right of reply’ in respect of formal motions. Other PROCEDURAL motions
Para ref
Motions
12.16
Withdrawal of motion/amendment The Gag: ‘That the speaker be no longer heard’ ‘That [AB] be now heard’ Refer to a committee Refer back to committee
12.17 12.18 12.19 12.20
May the speaker be interrupted? No Yes No No No [page 384]
Can the Can the formal formal motion motion be be moved on amended? amendments? No
Yes
No
No
No
Yes
No
Yes
Effect of the formal motion If ‘Carried’
If ‘Lost’
Vote is taken immediately on the motion or amendment in Discussion is resumed hand, subject only to right of at the point of the reply of mover of main interruption. motion. Vote is taken on the main motion The matter is disposed of for the meeting and may not be immediately, subject brought forward again until a only to the right of later meeting. reply of mover: see 10.25. Discussion resumed at The matter is set aside for this point of interruption. meeting and may not be This formal motion brought forward again until a may be moved again later meeting. Proceed to next after a suitable interval item on the agenda. (determined by the Chair’s discretion). Defers consideration of the question until, at this or a later meeting, it is resolved Discussion resumed at
that it ‘be taken from the table’.
point of interruption.
The constitution, rules, articles or standing orders of a body may contain provisions that specify procedures to be carried out in the event of certain formal motions. The above table should therefore be regarded as subject to the rules of the body not providing otherwise. For a full explication of the formal motions designed to bring discussion to a close, see Chapter 12. Has the Chair discretion to reject? Yes Yes Not if it has been seconded. No Yes
Is a seconder necessary? Yes Yes No Yes No
Can the formal motion be amended? Yes No Yes No Yes, but preferably Yes, but only as to not. name [AB]. Yes Yes Yes No Is any discussion allowed?
[page 385]
Appendix II Summary of the FORMAL motions designed to bring about adjournment Has the May the Is a Is any Chair Para ref FORMAL Motions speaker be seconder discussion discretion interrupted? necessary? allowed? to reject? Not if it No has been No Yes 13.17 Debate be adjourned. seconded. Yes, unless Meeting be No No the Chair Yes 13.18 adjourned. moved it. The Chair leave the No No No No 13.19 chair. See further 13.17 and 13.18: neither of these motions may be proposed during the election of the Chair of the meeting. Can this formal motion be amended? Yes, but only as to time, date and place of resumed meeting Yes, but only as to time, date and place of resumed meeting
Effect of the formal motion If ‘Carried’
If ‘Lost’
Meeting proceeds to next item of business or, if none, closes the Debate is resumed where it left meeting off. This formal motion may be moved again after a suitable interval (determined by the Meeting adjourned, subject only Chair) to announcement by Chair as to arrangements for resumption Meeting is instantly adjourned
No
(Chair should explain this before putting motion to the vote)
For a full explication of the formal motions designed to bring about adjournment, see Chapter 13.
Index References are to paragraphs Absolute privilege …. 8.27 Abstention from voting …. 14.10 Acclamation voting …. 14.8 Ad hoc committees …. 19.3 Adjournment of debate formal motions …. 12.14, 13.16 adjourn the debate …. 13.17 Chair leave the Chair …. 13.19 parliamentary procedure …. 13.4 procedure, basis of …. 13.3 Adjournment of meeting …. 13.1 absence of quorum …. 13.12 action to bring about …. 13.13 Chair commencement …. 13.6 vacation of …. 13.8 common law …. 13.5 company meetings …. 21.25 continuation of original meeting …. 13.14 defect in notice …. 13.11
definition …. 13.2 directors’ meetings …. 22.10 minutes …. 18.8 new agenda …. 3.11 notice …. 4.20 polls …. 13.7 postponement …. 13.10 public meetings …. 13.9 quorum …. 5.12 recording of in minutes …. 13.15 Administrators creditors’ meetings …. 23.3 Agency proxies …. 16.2 Agenda …. 3.1 adjourned meetings …. 3.11 alteration of order of business …. 3.8 annotated …. 3.12 circulation …. 3.10 form …. 3.5 function …. 3.3 legal status …. 3.2 minutes and matters arising …. 3.6 other or general business …. 3.9 preparation …. 3.4 by secretary …. 2.8
routine business …. 3.7 wording …. 3.5 Alternate directors …. 22.16 Amendments company constitution …. 21.24 special resolutions …. 10.21 Amendments to motions characteristics …. 10.17 debate …. 10.22, 10.23 counter motions …. 10.25 right of reply …. 10.26 definition …. 10.16 lapsing …. 10.16 notice of motion …. 10.20 rejection of …. 10.19 substantive motion …. 10.24 unacceptable …. 10.18, 10.19 voting …. 10.27 withdrawal motion …. 12.16 Annotated agenda …. 3.12 Annual general meeting reports …. 21.6 Annual general meetings agenda annotated …. 3.12
incorporated with notice …. 3.10 companies …. 20.15, 21.4 business of …. 21.6, 21.15 calling of meeting of members by court …. 21.13 election of directors …. 21.7 listed …. 21.15 financial reports …. 4.15, 21.5, 21.6 minutes …. 18.17 notice of …. 21.5 other types …. 21.8 Articles of association …. 20.9, 20.11 Tables A and B …. 20.12 Assemblies unlawful …. 1.21, 7.14 ASX CDI clearing house …. 24.8 overview …. 24.1 ASX listing rules …. 1.10, 20.13 admission to official list …. 24.1 compliance with requirements …. 24.11 continuous disclosure …. 24.2 directors nominations for …. 24.9 rotation of …. 24.10 documents sent to security holders …. 24.3
draft documents given to ASX …. 24.15 meetings approval by ordinary resolution …. 24.13 CDI holders …. 24.8 nominations for directors …. 24.9 notices of …. 24.6 proxy forms …. 24.7 rules requiring …. 24.5 voting …. 24.4 exclusion statement …. 24.14 validity of …. 24.12 Australian Securities and Investments Commission …. 20.3 Australian Securities and Investments Commission Act …. 20.3 Australian Securities Exchange Limited see ASX; ASX listing rules Ballots …. 17.1 elections …. 17.2, 17.7–17.9 exhaustive …. 17.7 general principles …. 17.2 postal …. 10.30, 17.9 procedure …. 14.7 secret …. 17.2, 17.8 voting …. 14.7 Binding precedent …. 1.13 Board meetings …. 2.4
notice for …. 4.10 Board of directors …. 22.2 Bodies corporate see Strata title bodies corporate Breach of the peace …. 7.13 Business alteration of order in agenda …. 3.8 other or general agenda item …. 3.9 inclusion in notice of meeting …. 3.9 routine …. 3.7 scope indicated in notice …. 4.17 whether notice is required …. 4.16 By-laws …. 11.1 Case law meetings …. 1.4 CDI see CHESS Depositary Interests Chair adjournment of meeting …. 13.8, 13.19 commencement …. 13.6 vacation of …. 13.8 appointment …. 6.3 authority of …. 6.5 basic role …. 6.1
calling meeting to order …. 6.13 committee meetings …. 6.16 closing debate …. 6.18 company meetings …. 21.21 role …. 6.9 conduct of meetings …. 7.9 debate closing by …. 6.18 leave the Chair …. 13.19 management …. 6.14 managing …. 6.14 demeanour …. 6.20 directors’ meetings …. 22.9 disagreement over ruling on point of order …. 9.5 discussion groups …. 6.8 duties and powers …. 6.10 election of …. 6.4 casting votes …. 17.3 voting methods …. 17.4 polls …. 15.6 re-election …. 17.3 voting methods …. 17.4 essential to meeting …. 6.1 historical background …. 6.2 involvement in proceedings …. 6.16, 6.17 liability for defamation …. 8.12 minutes draft, alteration …. 18.2
recording of point of order …. 9.7 satisfied with accuracy …. 18.1 signing …. 18.14 verification …. 18.2 motions declaration of …. 10.3 dissent from ruling …. 9.6 moving of …. 6.16, 6.17 rejection of …. 10.5, 10.6 rejection of amendment …. 10.19 stating …. 10.11 submission to …. 10.9 withdrawal …. 10.15 nature of meeting …. 6.7 origin of term …. 6.2 paying attention during meeting …. 6.15 point of order disagreement over ruling …. 9.5 points of order …. 9.4, 9.5 dissent from ruling …. 9.6 preparation prior to meeting …. 6.12 procedural motions …. 12.6 closure …. 12.8 matter to lie on table …. 12.13 previous question …. 12.11 proceed to next business …. 12.12 withdrawal or amendment …. 12.16 public meetings …. 6.19
actions by …. 7.15 qualities and characteristics required …. 6.11 removal of …. 6.6 removal of person from meeting …. 7.15 ruling on point of order …. 9.4 speakers, control of …. 7.9 submission of motion …. 10.9 voting casting vote …. 14.12 declaration by …. 14.11 Chair of the board of directors …. 6.9 Chair of the company …. 6.9 CHESS Depositary Interests …. 24.8 Circulating resolutions …. 10.30, 11.8, 18.18 Class meetings …. 21.12 Clear days notice of meeting …. 4.12 Co-operative societies conduct of meetings …. 1.6 procedures and requirements …. 1.6, 1.9 special resolutions …. 14.17 Committee meetings …. 2.4 Chair …. 6.16
closing debate …. 6.18 defamation …. 8.11 executive minutes …. 19.14, 19.17 notice for …. 4.10 practical guidelines …. 19.23 proceedings …. 19.8 co-opting other persons …. 19.12 general principles …. 19.9 proxies and alternates …. 19.11 quorum …. 19.10 quorum …. 19.10 recommendations and reports …. 19.16 veto powers …. 19.15 Committees …. 19.1 ad hoc …. 19.3 co-option of members …. 19.12 definition …. 19.2 delegation general considerations …. 19.19 legal principles …. 19.20 practical guidelines …. 19.21 directors’ meetings …. 22.15 establishment initial considerations …. 19.4 size of …. 19.5 terms of reference …. 19.6, 19.7
executive …. 19.3, 19.14 joint …. 19.3 non-executive …. 19.15 of one …. 19.3 in practice general observations …. 19.22 practical guidelines …. 19.23 proceedings general characteristics …. 19.8 general principles …. 19.9 proxies and alternates …. 19.11 quorum …. 19.10 recommendations and reports …. 19.16 minority report …. 19.18 minutes as report …. 19.17 resignation from …. 19.13 role in two-way communication …. 19.22 selection of members …. 19.22 standing …. 19.3 types of …. 19.3 vacancies …. 19.13 value of …. 19.24 of the whole …. 19.3 Committees of inspection winding up …. 23.10 Common law …. 1.12 absence of quorum …. 5.4 adjournment of meeting …. 13.5
defamation …. 8.1, 8.2 fair comment …. 8.26 honest opinion …. 8.26 innocent dissemination …. 8.25 libel and slander …. 8.15 protected reports …. 8.28 public documents …. 8.28 qualified privilege …. 8.17–8.21 polls …. 15.2 precedent …. 1.13 binding …. 1.13 definition …. 1.13 persuasive …. 1.13 proxies …. 16.2, 16.4 public meetings …. 1.20 unlawful meetings …. 1.20 voting casting …. 14.10 Chair’s casting vote …. 14.12 declaration by Chair …. 14.11 proxies …. 14.13 show of hands, by …. 14.12 Community work …. 1.3 Companies see also ASX listing rules annual general meetings …. 20.15, 21.4 business of …. 21.6, 21.15 calling of meeting of members by court …. 21.13
election of directors …. 21.7 listed …. 21.15 applicability of general meeting procedure …. 20.2 articles of association …. 20.11 rules of the body …. 1.11 Tables A and B …. 20.12 ASX listing rules …. 1.10 constitution …. 20.9 constitution, amendments to …. 21.24 corporation, contrast with …. 20.5 definition …. 20.4 directors see Directors holding …. 20.8 legislation …. 1.5 limited by guarantee …. 20.6 limited by shares …. 20.6 listed companies see Listed companies memorandum of association …. 20.11 no liability …. 20.6 overview …. 20.1 proprietary …. 20.7 public …. 20.7 registered charities …. 20.14 related …. 20.9 replaceable rules …. 20.10 role of Chair …. 6.9 soliciting of company votes …. 16.11 subsidiary …. 20.8
types of …. 20.6–20.8 unlimited with shares …. 20.6 winding up …. 23.9 Companies Act …. 20.3 Company meetings see also General meetings adjournment …. 13.5, 21.25 absence of quorum …. 13.12 resumption …. 13.14, 21.25 annual general meeting …. 21.4 auditors’ report …. 21.6 business of …. 21.6, 21.15 directors’ report …. 21.6 election of directors …. 21.7 extension of time to hold …. 21.4 financial report …. 21.6 notice …. 21.5 applicable companies …. 20.3 articles of association …. 20.12 business of …. 21.15 notice of …. 4.16 calling of by Court …. 21.13 by directors …. 21.9 by members …. 21.11 at request of members …. 21.10 Chair …. 6.9, 21.21 class meetings …. 21.12
classes of …. 21.8 common law …. 20.2 conduct of …. 7.2 constitution, amendment of …. 21.24 creditors’ see Creditors’ meetings directors’ see Directors’ meetings doctrine of unanimous assent …. 21.2, 21.20 extraordinary …. 21.8 function of …. 1.2 general …. 20.15, 21.1 members necessity …. 21.2 registered charities exempt …. 21.3 legal requirements …. 1.8 ASX listing rules …. 1.10 rules of the body …. 1.11 statutory …. 1.9 members …. 21.2 calling of …. 21.11 request for …. 21.10 resolutions …. 21.15 voting …. 21.26 minutes …. 21.29 permanent retention …. 18.20 verification …. 18.12 writing up …. 18.11 notice of business …. 4.16, 21.6, 21.15 notice of meeting …. 4.1, 21.14 accidental omission …. 4.8, 21.17
authority to issue …. 4.3 date, time and place …. 4.9 period of …. 4.11 waiver of …. 4.7 one person …. 1.15 ordinary …. 21.8 polls …. 15.2, 15.11, 21.27 show of hands …. 15.3 proxies …. 21.28 appointment …. 16.2, 21.28 document …. 16.5 exercise of vote …. 16.9, 16.10 lodgment of document …. 16.6 soliciting votes …. 16.11 quorum …. 1.15, 19.10, 21.20 conflict of interest …. 5.10 not specified …. 5.4 one person …. 5.7 power to fix …. 5.5 present throughout …. 1.15, 5.11, 21.20 replaceable rules …. 20.12 representative of corporation …. 21.18 requirements …. 1.5, 20.1 resolutions …. 21.22, 21.23 circulating …. 11.8 extraordinary …. 11.5 members’ rights …. 21.15 special …. 11.5, 21.24
without meetings …. 21.30 secretaries see Secretaries special notice …. 21.16 statutory …. 21.8 statutory requirements …. 20.1 technology, use of …. 21.19 types …. 20.15 validation …. 21.31 voluntary winding up …. 23.8 by creditors …. 23.7 by members …. 23.6 voting …. 21.26 Company secretary see Secretaries Compulsory winding up …. 23.4 Conduct of meetings action by Chair to remove person …. 7.15 co-operative societies …. 1.7 control by Chair …. 7.9 Corporations Act …. 1.5 debate outline …. 7.5 relaxation of …. 7.6 rules …. 7.3 rules of …. 7.4 historical origins …. 7.1 injunction served to prevent …. 7.16
legal requirements …. 1.8 maintenance of order …. 7.10 not-for-profit organisations …. 1.6 parliamentary procedure …. 7.2 participation of outsiders …. 7.8 principles and precedents …. 1.8 public …. 7.11 actions by Chair …. 7.15 breach of the peace …. 7.13 trespass …. 7.12 unlawful assemblies …. 7.14 right to speak …. 7.7 strata title bodies corporate …. 1.6 Conflict of interest quorum …. 5.10 Constitution corporations power …. 20.3 Contingent notice …. 4.21 Convening of meeting by directors …. 22.4 by secretary….2.6 Corporations company, contrast with …. 20.5 defamation …. 8.4 proxies, appointment of …. 16.16
representative at company meeting …. 21.18 Corporations (Commonwealth Powers) Act …. 20.3 Corporations Act company meetings see Company meetings conduct of meetings …. 1.5 creditors’ meetings see Creditors’ meetings directors’ meetings see Directors’ meetings legislative history …. 20.3 voluntary administration …. 23.3 winding up …. 23.4, 23.9 compulsory …. 23.4 by Court …. 23.5 liquidators, appointment of …. 23.4 voluntary …. 23.6–23.8 Corporations Regulations …. 20.3 Courts company meeting, calling of …. 21.13 points of order …. 9.8 winding up by …. 23.4, 23.5 Creditors’ meetings …. 2.4 compromises, arrangements and reconstructions …. 23.2 Corporations regulations …. 23.11 debenture holders …. 23.12 overview …. 23.1 registered managed investment schemes …. 23.13
voluntary administration …. 23.3 voluntary winding up …. 23.8 by creditors …. 23.7 by members …. 23.6 winding up …. 23.4, 23.9 committees of inspection …. 23.10 by Court …. 23.5 Debate adjournment of formal motions …. 13.1, 13.16, 13.17 misuse of term …. 13.2 parliamentary procedure …. 13.3, 13.4 closing by Chair …. 6.18 interruption see Procedural motions management by Chair …. 6.14 motions …. 10.1, 10.4 amendments to …. 10.22–10.26 one speech only rule …. 10.14 outline …. 7.5 relaxation of …. 7.6 rules of …. 7.3, 7.4 Debenture holders creditors’ meetings …. 23.12 Debentures …. 23.12 Declarations
without directors’ meeting …. 22.14 Defamation common law …. 8.1 criminal proceedings …. 8.32 further reference …. 8.33 general principles definition …. 8.2 groups …. 8.7 identifying victim …. 8.6 imputations …. 8.3 innuendo …. 8.9 publication key to liability …. 8.10 truth …. 8.5 unintentional …. 8.8 who may defame and be defamed …. 8.4 libel …. 8.15 publication …. 8.10 failure to act …. 8.12 liability for …. 8.11 protected reports …. 8.14 re-publication and repetition …. 8.13 qualified privilege …. 8.16 common law …. 8.17 derivative privilege …. 8.23 imputed malice …. 8.22 loss of …. 8.19–8.21 uniform defamations Acts …. 8.18
remedies …. 8.31 slander …. 8.15 uniform defamation Acts defences …. 8.24–8.29 qualified privilege …. 8.18 resolution without litigation …. 8.30 Defences defamation …. 8.1 absolute privilege …. 8.27 fair comment …. 8.26 honest opinion …. 8.26 innocence …. 8.6, 8.8 innocent dissemination …. 8.25 protected reports …. 8.28 public documents …. 8.28 qualified privilege …. 8.16–8.23 triviality …. 8.29 truth …. 8.5 uniform defamation Acts …. 8.24–8.29 Definitions absolute majority …. 14.16 adjournment …. 13.2 agenda …. 3.1 amendment to motion …. 10.16 board …. 22.2 clear days …. 4.12 committee …. 19.2
common law …. 1.7, 1.12 company …. 20.4 consensus …. 1.1 debentures …. 23.12 defamation …. 8.2 dilatory motion …. 12.4 discussion groups …. 6.8 general meeting …. 1.17 joint meeting …. 1.18 lapsed meeting …. 5.16 malice …. 8.21 meeting …. 1.14 minutes …. 18.2 motion …. 10.2, 10.3 ordinary resolution …. 11.4 point of order …. 9.1 precedent …. 1.13 private meeting …. 1.19 procedural motion …. 12.2 proxy …. 16.1 public documents …. 8.28 public meeting …. 1.20 question …. 10.4 quorum …. 5.1 reasonable force …. 7.15 resolution …. 11.1 secretary …. 2.3 simple majority …. 14.15
special resolution …. 10.21, 21.23 summit …. 1.1 trespass …. 7.12 unlawful assembly …. 1.21 unlawful meeting …. 1.21 veto …. 19.15 Delegation committees general considerations …. 19.19 legal principles …. 19.20 practical guidelines …. 19.21 directors powers to committee …. 21.15 Dilatory motions …. 12.1, 12.4 Directors appointment of …. 22.1 calling general meeting …. 21.9 at request of members …. 21.10 delegation of powers to committee …. 21.15 duties of …. 22.1 election of …. 21.7 listed companies nominations for election …. 24.9 rotation …. 24.10 nominations, listed companies …. 24.9 proprietary companies …. 22.1 public companies …. 22.1
Directors’ meetings adjournment …. 22.10 alternate directors …. 22.16 board of directors …. 22.2 Chair …. 22.9 committees …. 22.15 conduct of …. 22.3 convening of …. 22.4 declaration without meeting …. 22.14 disclosure of interest …. 22.12 minutes …. 22.13 notice of …. 22.5 notice of business …. 22.6 overview …. 22.1 quorum …. 22.8 resolution without meeting …. 22.14 technology, use of …. 22.7 validation …. 22.17 voting …. 22.11 interested directors …. 22.12 Disclosure of interest directors’ meetings …. 22.12 Discussion groups …. 6.8 Doctrine of precedent see Precedent Elections ballots …. 17.2
exhaustive …. 17.7 postal …. 17.9 secret …. 17.8 Chair …. 17.3 voting methods …. 17.4 declaration …. 17.10 voting methods exhaustive balloting …. 17.7 ‘first past the post’ …. 17.5 postal ballots …. 17.9 preferential system …. 17.6 proportional representation …. 17.7 secret ballots …. 17.2, 17.8 Employer organisations …. 1.9 Evidence minutes, as …. 18.16 Executive committee …. 19.3 Exhaustive balloting …. 17.7 Extraordinary resolutions …. 11.5 Fair comment …. 8.26 Financial reports annual general meeting …. 21.5, 21.6 ‘First past the post’ voting system …. 17.5
Formal motions see Procedural motions General assemblies …. 1.17 General business agenda …. 3.9 notice of meeting …. 4.18 General meetings see also Company meetings defamation …. 8.1 definition …. 1.17 special …. 11.6 types …. 2.4 voting …. 14.10 Holding company …. 20.8 Honest opinion …. 8.26 Incorporated associations majorities …. 14.17, 14.18 special resolutions …. 14.17 Injunctions …. 7.16 Innocent dissemination …. 8.25 Inquorate meeting …. 5.15 Joint committee …. 19.3 Joint meetings …. 1.18
Joint powers of attorney …. 16.13 Lapsed meeting …. 5.16 Lapsing of motions …. 10.13 Large proprietary company …. 20.7 Legislation companies …. 1.5 other types …. 1.6 Libel defamation …. 8.2 distinction between slander abolished …. 8.15 Liquidators see Winding up Listed companies …. 24.1 approval of listing rules by ordinary resolution …. 24.13 compliance with ASX rules …. 24.11 continuous disclosure …. 24.2 directors nominations for election …. 24.9 rotation …. 24.10 documents to security holders …. 24.3 giving draft documents to ASX …. 24.15 meetings attendance by CDI holders …. 24.8 nominations for directors …. 24.9 notices of …. 24.6
rules …. 24.5 proxies …. 24.4 forms …. 24.7 voting …. 24.4 exclusion statement …. 24.14 Local government see Municipal councils Majorities absolute …. 14.16 effect of decisions made by …. 14.18 simple …. 14.15, 14.16 special …. 14.17 Malice fair comment defence …. 8.26 imputed …. 8.22 loss of qualified privilege …. 8.21 Managed investment schemes …. 23.1 creditors’ meetings …. 23.13 Meetings see also Notice of meetings case law …. 1.4 company see Company meetings conduct see Conduct of meetings creditors’ see Creditors’ meetings date, time and place stated in notice …. 4.9 definition …. 1.14 forms of …. 1.1
function of …. 1.1, 1.2, 7.5 general see General meetings key role in organisations …. 1.2 legal requirements and priorities …. 1.8 ASX listing rules …. 1.10 common law …. 1.12 doctrine of precedent …. 1.13 rules of body …. 1.11 statutory …. 1.9 of one person …. 1.15 overview …. 1.1 principles and precedents …. 1.7 procedure, basis of …. 1.4 public see Public meetings qualified privilege …. 8.16–8.21 role of people …. 1.3 by telephone or video …. 1.16 types general …. 1.17 joint …. 1.18 private …. 1.19 public …. 1.20 unlawful …. 1.21 validity …. 1.22 Members company meetings …. 21.2 calling for …. 21.11
request for …. 21.10 resolutions …. 21.115 notice of meeting entitlement to vote …. 4.6 must be given to …. 4.4 unwilling or unable to attend …. 4.5 Memorandum of association companies …. 20.9, 20.11 Minority report …. 19.18 Minutes adjourned meetings …. 18.8 agenda order …. 3.6 altering drafts …. 18.13 annual general meetings …. 18.17 books …. 18.19 Chair draft, alteration …. 18.2 recording of point of order …. 9.7 satisfied with accuracy …. 18.1 signing …. 18.14 verification …. 18.2 circulation of …. 18.17 as committee report …. 19.17 company meetings …. 21.29 contents of …. 18.7 definition …. 18.2
directors’ meetings …. 22.13 drafting …. 18.21 headings …. 18.25 note-taking …. 18.22 numbering …. 18.26 periods of time …. 18.28 procedural motions …. 18.24 sequence …. 18.23 style …. 18.27 evidence, as …. 18.16 executive committees …. 19.4, 191.7 form of …. 18.4 movers and seconders …. 18.10 parliamentary procedure …. 18.10 permanent retention …. 18.20 preparation after meeting …. 18.1 prepared by secretary after meeting …. 2.12 recording of adjournment of meeting …. 13.15 recording of motions …. 10.29 recording of point of order …. 9.7 reports, contrast with …. 18.5 reports, distinguished from …. 18.5 requirement to keep …. 18.3 resolutions …. 18.6 circulating …. 18.18 recording …. 18.9 signing of …. 18.14 types of …. 18.6
verification of …. 18.12 later amendment …. 18.15 signing …. 18.14 writing up …. 18.11 Motion of dissent …. 9.6 Motions …. 10.1 amendments characteristics …. 10.17 debate on …. 10.14, 10.22–10.26 definition …. 10.16 notice of motion …. 10.20 right of reply …. 10.26 special resolutions …. 10.21 unacceptable …. 10.18, 10.19 circulating resolutions …. 10.30 debate on …. 10.14, 10.22–10.26 definition …. 10.2, 10.3 desirable characteristics …. 10.5 invalid …. 10.7 lapsing …. 10.13 minutes …. 10.29 not formally moved …. 10.10 notice of …. 10.8 omnibus motions …. 10.28 postal ballots …. 10.30 procedural see Procedural motions question …. 10.4
rescission of resolution form of …. 11.14 notice of …. 11.13 resolution …. 10.3 seconding …. 10.12 stating …. 10.11 submission to Chair …. 10.9 unacceptable …. 10.6 voting …. 10.27 withdrawal …. 10.15 Municipal councils …. 20.5 functions of meeting …. 1.2 notice of business …. 4.16 resolutions determining meaning …. 11.3 rescission …. 11.16 Newspaper advertising of meetings …. 4.14 No liability company …. 20.6, 20.12 Non-executive committees …. 19.15 Not-for-profit associations procedures and requirements …. 1.6 Notice of business municipal councils …. 4.16 Notice of meeting see also Meetings
accidental omission …. 4.8 adjourned meeting …. 4.20 ASX listed companies …. 24.6 authority to give …. 4.3 Board and committee meetings …. 4.10 business to be transacted …. 4.16 calculation of time …. 4.12 clear days …. 4.12 company meetings …. 21.14 company, annual general meeting …. 21.5 contingent …. 4.21 date, time and place stated …. 4.9 defect in …. 13.11 directors’ meetings …. 22.5 evidence of …. 4.22 form of …. 4.15 inability to cancel …. 4.19 indication of scope of business …. 4.17 members not entitled to vote …. 4.6 members unwilling or unable to attend …. 4.5 must be given to each member …. 4.4 newspaper advertisement …. 4.14 other or general business …. 4.18 period of …. 4.11 proper notice to persons …. 4.1 quorum …. 5.6 rules should be complied with …. 4.2 service by post …. 4.13
waiver of …. 4.7 Notice of motion …. 10.8 amendment to …. 10.20 secretary’s duties …. 2.6 Notices of general meeting listed companies …. 24.6 Omnibus motions …. 10.28 Ordinary resolutions …. 11.4 Organisations see Co-operative societies; Not-for-profit associations; Strata title bodies corporate; Voluntary organisations Other business agenda …. 3.9 notice of meeting …. 4.18 Outsider participation in meetings …. 11.2 private …. 7.8 Parliamentary procedure adjournment of debate …. 13.4 conduct of meetings …. 7.2 debate …. 13.3, 13.4 minutes …. 18.10 motions lapsing …. 10.13 question …. 10.4
seconding …. 10.12 stating the question …. 10.11 point of order …. 9.5 preferential voting …. 17.6 procedural motions …. 12.6 closure …. 12.8–12.10 previous question …. 12.11 withdrawal of motion …. 12.16 quorum …. 5.13 Speaker …. 6.2 direction of voting …. 14.3 dissent of ruling …. 9.5 standing orders …. 9.5 voting …. 14.3 division …. 14.12 exhaustive balloting …. 17.7 preferential voting …. 17.6 proportional representation …. 17.7 by show of hands …. 14.5 Speaker’s directions …. 14.3 by voices …. 14.4 Parliamentary quorum …. 5.13 Participation in meetings outsiders …. 7.8, 11.2 personal rewards and satisfaction …. 1.3 People
participation in meetings …. 1.3 Persuasive precedent …. 1.13 Pious resolutions …. 11.9 Points of order Court challenge to ruling …. 9.8 definition …. 9.1 disagreement with Chair’s ruling …. 9.5 minutes …. 9.7 motion of dissent …. 9.6 ruling by Chair …. 9.4 validity of …. 9.2 who, when and how may be raised …. 9.3 Polls adjournment of meeting …. 13.7 Chair, election …. 15.6 common law …. 15.2 company meetings …. 21.27 conduct of …. 15.7 date of resolution …. 15.10 definition …. 15.1 demand for …. 15.2 effect of …. 15.4 time for …. 15.3 withdrawal of …. 15.5 entitlement to vote …. 15.8
suggested procedures …. 15.11 time for holding …. 15.6 voting …. 14.6 entitlement to …. 15.8 method of …. 15.9 Postal ballots …. 10.30, 17.9 Postal service notice of meeting …. 4.13 Postponement of meetings …. 13.10 Powers of attorney proxies appointment …. 16.3, 16.12 document …. 16.15 joint …. 16.13 revocation of …. 16.14 scope of powers …. 16.12 termination of …. 16.14 Precedent …. 1.13 binding …. 1.13 definition …. 1.13 persuasive …. 1.13 Precedents conduct of meetings …. 1.8 Preferential voting system …. 17.6
Private meetings …. 1.19 defamation …. 8.10 Privilege see Absolute privilege; Qualified privilege Procedural motions closure …. 12.7, 12.8 guillotine closure …. 12.9 kangaroo closure …. 12.10 conduct of proceedings gag …. 12.17 other types …. 12.15 referred back to committee …. 12.20 referred to committee …. 12.19 that person be now heard …. 12.18 withdrawal or amendment …. 12.16 definition …. 12.2 dilatory motions …. 12.1, 12.2 drafting for minutes …. 18.24 formal motions …. 12.1 adjournment motions …. 12.14 matter to lie on table …. 12.13 previous question …. 12.11 procedure, basis of …. 12.6 proceeding to next business …. 12.12 types …. 12.5 Proportional representation …. 17.7
Proprietary companies directors …. 22.1 types …. 20.7 Proxies agency principles …. 16.2 appointment …. 16.1, 16.2 corporations, by …. 16.16 eligibility …. 16.4 joint …. 16.5 powers of attorney …. 16.12– 16.15 ASX listed companies …. 24.7 committees …. 19.11 common law principles …. 16.4 company meetings …. 21.28 counted to make up quorum …. 5.8 definition …. 16.1 document …. 16.5 lodgment of …. 16.6 powers of attorney …. 16.15 exercise of vote …. 16.9 obligation to exercise …. 16.10 general principles …. 16.3 listed companies …. 24.4 forms …. 24.7 powers of attorney appointment …. 16.3, 16.12–16.14 document …. 16.15
procedure on receipt …. 16.17 revocation of …. 16.7 soliciting of votes …. 16.11 voting …. 14.13 voting by principal …. 16.8 Public companies …. 20.7 directors …. 22.1 Public documents …. 8.28 Public meetings …. 1.20 adjournment of meeting …. 13.9 common law …. 1.20 role of Chair …. 6.19 Publication defamation …. 8.10 excessive …. 8.19 failure to act, by …. 8.12 liability for …. 8.11 protected reports …. 8.14 re-publication or repetition …. 8.13 Publishers defamation …. 8.10 truth of material …. 8.5 Qualified privilege defence …. 8.1, 8.6, 8.11, 8.16
common law …. 8.17, 8.22 derivative privilege …. 8.23 loss of …. 8.19–8.22 malice …. 8.21 protected reports …. 8.14 uniform defamation Acts …. 8.18 Question …. 10.4 Quorum absence at common law …. 5.12 adjourned meeting …. 5.12 adjournment of meeting, absence of …. 13.12 committees …. 19.10 company meetings …. 21.20 conflict of interest by member …. 5.10 counting of proxies …. 5.8 counting of secretary and other officers …. 5.9 definition …. 5.1 determining size …. 5.17 directors’ meetings …. 22.8 historical origins …. 5.2 lapsing of meeting …. 5.16 loss of …. 5.14 one person as …. 5.7 others may rely on decisions of inquorate meeting …. 5.15 parliamentary practice …. 5.13 present throughout meeting …. 5.11 proper notice still required …. 5.6
rules should specify …. 5.3 unincorporated associations …. 5.4 when not specified …. 5.4 where power to fix …. 5.5 Registered organisations procedural requirements …. 1.9 Regulations …. 11.1 Related company …. 20.8 Remedies defamation …. 8.31 Removal of person from meeting …. 7.15 Reports annual general meeting …. 21.6 committees …. 19.16 minority report …. 19.18 minutes as report …. 19.17 minutes, distinguished from …. 18.5 protected …. 8.14, 8.28 Resolutions circulating …. 10.30, 18.18 company meetings …. 21.22, 21.23, 21.30 definition …. 11.1 further reading on drafting …. 11.23 general meetings, members …. 21.15
interpretation of …. 11.3 legal advice …. 11.22 minutes …. 18.6 recording …. 18.9 motions …. 10.3 municipal councils determining meaning …. 11.3 rescission …. 11.16 recommittal of motion …. 11.21 rescission appropriate meeting …. 11.15, 11.16 examples of appropriate rules …. 11.19 form of motion …. 11.14 meaning …. 11.11 notice of motion …. 11.13 procedure …. 11.17, 11.18 rescission of rescission …. 11.20 whether desirable …. 11.12 riders …. 11.10 special …. 10.21, 11.5, 11.6 co-operative societies …. 14.17 incorporated associations …. 14.17 strata title bodies corporate …. 14.17 types circulating …. 11.8 extraordinary …. 11.5 ordinary …. 11.4 pious …. 11.9
special …. 11.5, 11.6 unanimous …. 11.7 validity of …. 11.2 without directors’ meeting …. 22.14 Riders …. 11.10 Right of reply motions …. 10.26 Rules of debate …. 1.7 Rules of the body …. 1.11 quorum …. 5.3, 5.10, 5.17 Secret ballots …. 17.2, 17.8 Secretaries …. 2.1 differing types of meetings …. 2.4 duties …. 2.6 after meeting …. 2.11 agenda, preparation of …. 2.8 making general arrangements …. 2.7 materials to be taken along …. 2.10 minutes, preparation of …. 18.1 post-meeting minutes, preparation of …. 2.12 preliminary considerations …. 2.9 functions of …. 2.2 historical development …. 2.3 qualities and attributes …. 2.13
quorum checking throughout meeting …. 5.14 counting …. 5.9 responsibilities …. 2.5 role in making a quorum …. 5.9 Secretaries of state …. 2.3 Serving of notices …. 4.13 Show of hands voting …. 14.5, 14.12 ‘Sine die’ adjournment …. 13.17 Slander defamation …. 8.2 distinction between libel abolished …. 8.15 Small proprietary company …. 20.7 Speakers control of by Chair …. 7.9 right to participate …. 7.7 Special general meetings …. 11.6, 21.9 Special resolutions …. 11.5, 11.6 amendments …. 10.21 amendments to …. 10.21 co-operative societies …. 14.17
companies amendment of constitution …. 21.24 matters done by …. 21.23 definition …. 21.23 incorporated associations …. 14.17 strata title bodies corporate …. 14.17 Standing committee …. 19.3 Strata title bodies corporate …. 1.9 conduct of meetings …. 1.6 procedures and requirements …. 1.6, 1.9 special resolutions …. 14.17 Subsidiary company …. 20.8 Technology, use of company meetings …. 21.19 directors’ meetings …. 22.7 Telephone meetings …. 1.16 Trade unions …. 1.9 Trespass …. 7.12 Triviality …. 8.29 Unacceptable amendments …. 10.18 Unacceptable motions …. 10.6
Unanimous resolutions …. 11.7 Uniform defamation Acts defences …. 8.24–8.29 Unincorporated associations absence of quorum …. 5.4 defamation …. 8.4, 8.7 liability for publication …. 8.11 Unlawful assemblies …. 1.21, 7.14 Unlawful meetings …. 1.21 common law …. 1.20 Unlimited companies …. 20.6 Validity of meetings …. 1.22 notice of …. 4.1 defect in …. 13.11 lack of …. 4.2 waiver of …. 4.7 Veto powers …. 19.15 Video meetings …. 1.16 Voluntary administration creditors’ meetings …. 23.3 Voluntary organisations functions of meetings …. 1.2
Vote of thanks …. 14.9 Voting …. 14.1 acclamation, by …. 14.8 ASX listed companies …. 24.4 validity of …. 24.12 ballot, by …. 14.7 Chair casting vote …. 14.14 election of …. 17.4 common law casting …. 14.10 declaration by Chair …. 14.11 proxies …. 14.13 show of hands, by …. 14.12 company meetings …. 21.26 directors’ meetings …. 22.11 interested directors …. 22.12 elections exhaustive balloting …. 17.7 ‘first past the post’….17.5 postal ballots …. 17.9 preferential system …. 17.6 proportional representation …. 17.7 secret ballots …. 17.2, 17.8 listed companies …. 24.4 exclusion statement …. 24.14 validity …. 24.12
majorities absolute …. 14.16 effect of decisions made …. 14.18 simple …. 14.15 special …. 14.17 methods …. 14.2 parliamentary procedure …. 14.3 poll see Polls proxies see Proxies show of hands, by …. 14.5, 14.12 voices, by …. 14.4 vote of thanks …. 14.9 Waiver of notice …. 4.7 Winding up …. 23.9 compulsory …. 23.4 by Court …. 23.5 liquidators, appointment of …. 23.4 voluntary …. 23.8 by creditors …. 23.7 by members …. 23.6