Depending on whether you are an incorporated association or a company limited by guarantee (Organisation), the annual general meeting (AGM) should be held at a time in accordance with the constitution.
However, the Associations Incorporation Act provides for six months, and the Corporations Act provides for five months after the end of the financial year. Often, the agenda for AGMs include provisions for motions to be put forward by members. In my view, this is a little old fashioned and suggests that the members, not the management committee or board (Boards) should be making the decisions as to the operation and management of the Organisation.
For motions to be put forward, the motion must be competent. An example of a competent motion is a motion to remove a member of a management committee or a director. However, the motion must be properly drafted and meet the constitution’s requirements and the relevant legislation. In particular, the Corporations Act is highly prescriptive as to the method for removing a director (s. 203D).
In reality, there are very few matters where the members have authority to make determination. These include:
- voting and elections;
- removing directors / members of the management committee;
- approving changes to the constitution;
- authorising the winding up of the Organisation; and
- any issues where the powers are reserved to the members, e.g., the approval of members required to sell an asset or to incur an expenditure over a certain amount.
Other than the five points above, matters such as the price of beer or a pie are not matters where the members have authority to make decisions, but even if members think they do, the Board can immediately thereafter pass a resolution to change the price.
Matters which we are seeing increasingly regularly are motions to remove all of the Board in total and a vote of no confidence in the Board or an individual member of the Board. These are incompetent motions. Whilst there may be a vote of no confidence in parliament, there is no such concept in Organisations. If you wish to remove a director, both types of Organisations have the facility to do that. However, the motion to remove each director is a separate motion. The motion to remove the whole Board is not a competent motion.
There are other matters in relation to member’s ability to requisition meetings outside of general matters and as to the timeframes for such motions to be put. Both members and Organisations should seek advice as to the competency of motions as good governance requires Organisations to ensure that a motions put forward is in fact competent.
In today’s world, Boards are elected to govern and in some cases, manage the Organisations. The role of the members is to elect appropriate persons to sit on Boards to achieve an outcome and if they are not satisfied with the job these people are doing, to remove them or vote them out at the next election.
One phenomena we are seeing is more incompetent motions being submitted and an enormous amount of time and money being wasted arguing the merits of such motions.
In a recent matter, one of Australia’s leading law firms was writing long letters claiming a motion was competent when it was not and no perceived status of that firm nor the verbosity of their correspondence made it so and the motion was not put to the meeting.
