Can a member request motions to be included in the AGM Agenda?
Members of Australian associations incorporated as companies limited by guarantee have the right to participate in governance through general meetings and proposing resolutions.
Kathy Nguyen, Senior Lawyer from Governology explains the rules and concepts – and limitations on these rights.
Companies limited by guarantee are a common legal structure for not- for-profit organisations and associations in Australia. Members play an important governance role in holding the Board accountable. To this end, members hold certain rights, including the right to call general meetings and to propose resolutions.
Under section 249D of the Corporations Act 2001 (Cth), members holding at least 5% of the votes within a company limited by guarantee may request that the directors call a general meeting and propose certain resolutions to be considered by the general meeting.
Members are also entitled to propose resolutions for consideration at a general meeting. For example, if there is an annual general meeting (AGM) coming up, members may give notice of resolutions they wish to propose at the AGM. Under Section 249N of the Corporations Act, members with at least 5% of the votes that may be cast on a resolution, or at least 100 members who are entitled to vote at a general meeting, may give the company notice of a resolution that they propose to move at a general meeting.
The constitution may provide additional powers to members to call a general meeting or to propose resolutions at a general meeting.
The Corporations Act outlines specific requirements for member requests or notices. Non-compliance with these requirements may result in the Board declining a request to call a general meeting or rejecting a proposed resolution. Disputes often arise from technical deficiencies in these documents or failure of members to meet the minimum threshold.
Importantly, not all resolutions proposed by members are valid for a general meeting. Resolutions relating to the appointment or removal of directors, approval of the auditor’s appointment, changes to the constitution, and winding up or deregistration of the company may be validly put to a general meeting.
The company’s constitution generally states that the Board of directors holds ultimate responsibility for managing the company. While the Board may delegate operational tasks to a CEO, members usually do not have the right to direct the Board on how to exercise its management powers.
Subject to contrary provision in the constitution, the Board is therefore not compelled to put resolutions to a general meeting if those resolutions relate to management issues.
This structure ensures the Board can effectively manage the company without undue interference. This allows for greater efficiency and preserves the Board’s fiduciary duty to act in the best interests of the company as a whole.
Associations incorporated under Australian state or territory Associations Incorporation Acts and charities will have different requirements and members of these organisations should check the organisation’s constitution and the relevant state legislation for incorporated associations to determine the rights of members.
For further assistance with understanding your governance obligations to members, please contact Governology via kathy@governology.org.
Disclaimer: This article provides summarised information for general knowledge only. It does not constitute legal advice and should not be relied upon as such. Circumstances vary, so please consult a legal professional for guidance on your specific situation.