Published on: Nov 20, 2013
Guest speaker: Kevin Prendergast, Head of Advocacy and Assessment at the ODCE
Mark: This page is just my hastily scribbled notes from the meeting. Please don’t take anything here as Gospel, Kevin hasn’t read it or reviewed it. It’s just a summary of the meeting for anyone who couldn’t attend.
Kevin has been helping us for several years in his previous communications and advocacy role. His first foray into management companies was in writing the guidebook to companies law for OMCs (link to follow).
The ODCE can help people or companies who have problems relating only to Company law. However, not everything in the company laws is enforceable through the courts. Sometimes it says something is suggested but not mandatory. Not following these suggestions is not necessarily a criminal act but it does call into question the running of the company.
The ODCE tries to help people avoid a situation where High Court action is necessary. It does not give legal advice and does not necessarily help one side over another in a dispute – they either sort it out amongst themselves or go to court. The only court with jurisdiction over company disputes, no matter how small, is the High Court which is hopelessly expensive. (The MUD Act goes some way towards changing this for apartment owners.)
The ODCE cannot enforce anything in the MUD act.
Annual meeting for shareholders to meet, discuss issues and hold directors to account for their actions. During the year, the directors have the right and responsibility to run the company as they see fit. The AGM is the only time in the year when a shareholder can question how the company is being run, direct the company to be run in a certain way or access certain information. Shareholders don’t have access to board meetings, etc.
The meeting should be as inclusive as possibe. The more the members take out of the meeting, the better the company will be. The more involved the members get, the better the company will be. Without shareholder control, there is no one to blame if the directors take a different direction.
Company law states that AGMs must be held at least mode per calendar year, no more than every 15 months apart and must be held in the state. At least 21days notice must be given and if the financial accounts are to be discussed, they must be given to the owners with the AGM notice. These are enforceable by the ODCE.
Any meetings held which did not meet the legal requirements is invalid and any decisions taken are invalid. However, to take effect, a shareholder must go to the High Court to get an injunction.
If an important decision needs to be made / a vote taken about a decision (called special business), it must be included in the notice which is delivered to the members in advance. Ordinary business is anything which happens at every meeting (reviewing accounts, reappointing directors and auditors). AOB allows a member to raise other issues at the meeting.
Additional requirements may be added by company documents. For example, a reasonable time and location. These are decided by the members at the AGM. They are not enforceable by the ODCE, only the High Court. However be careful about having too much rigidity in your documents. For example, requiring a minimum number of directors could leave the company unable to function if too many directors resign.
None of this is mandated by the law. The law only makes suggestions about the format of the proxy, how it is executed, notice period. It is only covered by company documents and enforceable by the High Court. Company documents generally say that they must be received 48 hours before the meeting and members have a right to view them at the company offices.
This is special business (see above). It must be in the notice to the members in advance of the meeting. This happens at the decision of the directors. It may happen at the decision of the shareholders but requires someone to notify the directors with 28 days notice. However, the directors must agree to hold the meeting or get 10% of the shareholders to agree to a meeting. This is very uncommon and so legal advice is a must.
Votes are normally taken by a show of hands, any one present can ask for a poll. A show of hands is counted by people present, a poll is counted by people present plus proxies.
Some company documents say that a member cannot vote if they owe any money to the company. This is not law, specific to the company. This generally means any money owed on the date of the meeting, not money owed for the period that the accounts are being reviewed.
Chairing the meeting
Normally done by one of the directors. Some companies use the managing agent but this might not be allowed by the company documents because they’re not a member of the company.
They have a right to attend but don’t have to. They must receive notice of the AGM at the same time as the owners.
Only the members can change the auditor, not the directors. You must notify the auditors association if an auditor is being replaced.
ODCE only enforce criminal law. For everything else, either sort it out yourself or find a solicitor qualified in the area of company law (very few solicitors actually are) and spend lots of money in the High Court.