This article appeared in the July 2017 issue of Club Life.
With another round of Annual General Meetings (AGMs) coming up in August through to November, I thought it timely to write about some of the questions I often get asked concerning AGMs.
When does a club have to hold an AGM?
The 90 plus percent of clubs that are companies under the Corporations Act (virtually all clubs are public companies limited by guarantee) must hold their AGM within five months of the end of their financial year. Even though the Corporations Act allows the five-month period, it is important to read the club’s constitution. If a club’s constitution has a provision that requires the club to hold its AGM earlier than five months from the end of the financial year, then the club must comply with this provision.
If your club’s constitution has such a provision I would strongly recommend that members be asked to vote on a change to bring the constitution into line with the five-month period in the Corporations Act. Otherwise a club may find itself in an unusual position of complying with the Corporations Act but not complying with its constitution. This can be a problem for the club if it habitually breaches its constitution.
Does a club have to provide a notice of the AGM to all of its members?
No, a club must only provide notice to members that are entitled to attend and vote at the AGM and to each director and to the auditor. The entitlement of members to attend and vote at the AGM is determined by the constitution of the club. Members cannot opt out of receiving the notice. Except for members who elect to receive notices of meetings electronically, a club must send a paper copy of the notice to each member. A club cannot send an electronic copy of the notice to a member, unless the member has elected to receive notices in this way.
Can a club require its members to submit their questions before the AGM?
No, the Corporations Act requires a club to allow its members a reasonable opportunity to ask questions or make comments about the management of the club at the AGM. However a club does not need to answer each and every question asked by its members. A club may treat questions as a comment about the management of the club.
Can employees vote at the AGM or any member meeting?
No, the Registered Clubs Act prohibits this.
Does someone have to read out the entire resolution at the meeting?
No, but strictly speaking the chair of the meeting should ask the members to approve a motion that the motion/resolution be taken as read.
How many Life members can be elected at an AGM and what percentage is needed to vote in favour of Life membership?
Neither the Registered Clubs Act nor the Corporations Act say anything about these issues. You need to look at the club’s constitution but there is no set rule. I would say most constitutions say nothing on the issue and therefore there is no limit on the number of members that can be elected to Life membership in any one year. However some constitutions have specific restrictions, for example no more than two per year and some have a total limit of no more than a certain number at any one time. So the answer is: check your club’s constitution.
The same applies to the percentage needed to approve a nomination for life membership. If the constitution is silent on the issue or says a simple majority is required then the nomination needs to be approved by at least 50 percent of those eligible members who vote at the meeting. If the constitution says that a higher percentage is required then this amount is required. For example, if the constitution specifies that a special resolution is needed then the approval needed is at least 75 percent of those that attend and vote at the meeting.
Can one half of the Board be elected for two years and the other half for one year so there is a half Board election every year?
The Registered Clubs Act only allows registered club boards to be elected in one of three ways: the whole board is elected every year; the whole board is elected every two years; or the board is elected in accordance with the triennial rule which involves a third of the board retiring each year and directors being elected for three-year terms.
Good luck with your Annual General Meetings.
For more information contact Bruce Gotterson on b.gotterson@pigott.com.au
This article is intended to provide general information in summary form on a legal topic, current at the time of publication. The contents do not constitute legal advice and should not be relied on as such. Formal legal advice should be sought in specific circumstances.