How to call shareholder meetings for a private Australian company
21 April 2020
You’ll need to know how to call a shareholder meeting if you are running an Australian company.
Below is a guide for how to call meetings and some other things you'll need to know.
This guide covers the rules in the Corporation Act 2001 - legislation that governs Australian companies and to avoid any confusion, we are covering private companies.
In a hurry, jump ahead.
So, let’s start with notice.
Shareholder Meeting Notice
Section 249H of the Corporations Act states that you need to give shareholders at least 21 days notice of a meeting.
Despite this, if you have a constitution that has a longer minimum notice period, you will need to give the notice in the constitution.
Shorter shareholder meeting notice
A company may call give a shorter notice period for these meetings:
- Annual General Meeting (AGM) - if all members able to attend and vote agree; and
- Other general meetings - if shareholders with at least 95% of votes that may be cast agree.
Removing an auditor
A company board will need to give 21 days notice for a company meeting where there's a resolution to remove an auditor: section 249H(4) of the Corporations Act 2001.
How to give meeting notice
The rules for meeting notice are in section 249J of the Corporations Act 2001 and our outlined below.
Notice of a meeting of company shareholders needs to be given individually to each shareholder that’s entitled to vote at the meeting and to each director.
For joint shareholders - notice only needs to be given to 1 shareholder, usually the name that appears first in the shareholder register. Now because this is a replaceable rule, you can have a different rule in your constitution e.g. one that allows for both joint shareholders to get notice.
So how exactly do you need to give meeting notice? we'll cover that below.
How to give meeting notice
A company may give the notice of a meeting to a shareholder either:
- Personally - e.g. handing it to the person;
- By sending it by post to the address for the shareholder in the register of shareholders;
- Sending it by fax - yes, fax!;
- Sending it by other electronic means e.g. in an email etc or even sending a link to the notice in an email; and
- Any other way the company constitution allows (if there is a constitution).
When notice is given
Now, the timing for when notice is given matters in certain situations.
For example, if a shareholder was to complain they did not get 21 days notice for the removal of an auditor.
So here’s the rule for the time when notice is given:
- Notice is taken to be given to a shareholder on the business day after the day the shareholder is told the notice of meeting is available: section 249J(5) Corporations Act 2001.
And, what happens if there's a dispute about the notice content? Let's see what the court's say below.
Disputes and the court’s view
Disputes sometimes occur.
For example, a shareholder may complain about insufficient detail in the meeting notice.
Here’s the court’s perspective about notice and disclosure:
- Fraser v NRMA Holdings Ltd (1995): full and fair disclosure needs to be balanced with presenting a document that’s intelligible to shareholders. The disclosure needs to assist and not confuse.
- Jenasuare Pty Ltd v Lembrib Pty Ltd (1993): clear language is important along with a full summary of the meeting agenda. From the agenda the recipients must be able to decide whether to attend the meeting or not; and
- ENT Pty Ltd v Sunraysia Television Ltd (2007): full and fair disclosure does not mean giving every piece of information that might affect their voting.
So, what goes into the notice of meeting of shareholders?
Contents of notice of meeting of shareholders
Here’s what’s included in a notice of a meeting of company shareholders:
- Place, date and time of the meeting;
- General nature of meeting business;
- For special resolutions - set out an intention to propose the special resolution and state the nature of the resolution;
- For proxies - if a shareholder is entitled to appoint a proxy, a statement with this information:
- Statement that shareholder has a right to appoint a proxy;
- If the proxy needs to be a shareholder; and
- That a shareholder entitled to cast 2 or more votes may appoint 2 proxies and may state the proportion or number of votes each proxy is entitled to exercise.
- The notice must be clear, concise and effective.
Finally, what about meeting delays?
If the meeting is adjourned, a new notice of the resumed meeting must be given if the meeting is adjourned for 1 month or more: section 249M Corporations Act 2001.
And, this is a replaceable rule, so you can agree to another rule in your constitution or adopt this one.
I wish you success in all your ventures!