The procedural requirements of voting at general meetings by members of a company are governed by the Corporations Act 2001 (Cth) (Act), and a company’s constitution.
Companies should ensure that voting procedures at general meetings strictly comply with the requirements for each type of resolution which is being proposed.
Who is entitled to vote?
A member’s entitlement to vote is determined by the Act or by the company’s constitution. Where a company has share capital on issue, subject to any rights or restrictions attaching to a class of shares, each member will generally be entitled to at least one vote where the vote is conducted by a show of hands, or one vote for each share that a member holds where the vote is conducted by way of poll.
Where the company has no share capital on issue, e.g. where the company is a company limited by guarantee, each member’s voting entitlement will be determined under the Act (i.e. one vote per member on a show of hands or one vote for each share a member holds on a poll) or as otherwise specified in the company’s constitution.
Where shares are held on trust, the registered owner of the shares will cast the vote, however the beneficial owner of those shares may have the right to direct the registered owner how to vote. Companies should note that the vote will be valid even where it is not cast in accordance with the beneficial owner’s directions.
Methods of voting
Where a resolution is put to a vote, voting is normally conducted by show of hands unless a poll is demanded. However, the company constitution may dictate how a vote is to be conducted, and may for example, stipulate that all votes must be conducted by way of poll.
Subject to the provisions of a company’s constitution, a poll may be demanded on any resolution by:
- at least five members entitled to vote on the resolution; or
- members with at least 5 per cent of the votes that may be cast on the resolution on a poll; or
- the chairperson.
A company’s constitution may provide that fewer members, or members with a smaller percentage of the votes, may demand a poll.
Voting by proxy
Where a member cannot attend a meeting of the company, but wishes to vote on a resolution, the member may elect to appoint a proxy. A proxy is a person appointed in writing to act and vote on behalf of, or as the agent of, the appointor at a company meeting. A company’s constitution will generally provide that a member who is entitled to attend and cast a vote at a meeting of a company’s members may appoint a proxy to attend and vote on the member’s behalf at that meeting.
The person appointed as the proxy may, depending on the applicable rules, be an individual or a body corporate.
The member appointing the proxy will often inform their proxy how they are to vote on an issue put to resolution. However, where a member fails to inform their proxy as to how they should vote, the terms of the appointment may allow the proxy to may elect to vote for or against the resolution or may even abstain from voting.
Subject matter of resolution
The subject matter of a resolution, the Act and the company constitution will dictate what majority is required for the particular resolution.
Ordinary resolutions
Subject to specific requirements of the Act or the company’s constitution, all resolutions to be passed by the company will be ordinary resolutions and will generally require a ‘simple’ or ‘bare’ majority of the votes cast. A simple or bare majority means that in order to pass the resolution over fifty percent of the votes cast at a meeting by members present in person or by proxy and entitled to vote at that meeting, must be cast in favour of that resolution at the meeting. This is different to the requirement for an absolute majority which requires that over fifty percent of the votes that attach to all issued voting shares in the relevant class are cast in favour of the resolution.
This means that, for a simple or bare majority, members who are entitled to vote, but do not in fact vote, would not be counted when calculating the majority.
Circumstances in which a member may be entitled to vote, but fails to do so may be where:
- the member does not attend the meeting and is not represented by a proxy at that meeting; or
- the member either present in person or by proxy abstains from voting.
A member abstains from voting if he or she elects not to vote on a particular issue. Where a vote is conducted by way of poll, it will be evident where a member wishes to abstain from voting as they will have to elect to do so on the voting ballot. However, it may not be so evident where a member abstains from voting at a vote that is being conducted by a show of hands. Companies must ensure that, in calculating whether or not a simple or bare majority has been reached, that they have taken into account members who have abstained from voting.
Special resolution
The Act or the company constitution will specify those matters where a special resolution is required (e.g. changing the name of the company or amending the constitution). Where a special resolution is required, notice must be given to the members in accordance with s249L(1) of the Act and a majority of at least seventy-five percent of the votes cast by members entitled to vote on the resolution must be obtained.
The constitution of every company is different. In relation to shareholder voting requirements, considering the requirements of the Act together with the requirements of a company’s constitution is paramount to ensure that the correct procedures are identified and followed.
For further information, please contact your usual PricewaterhouseCoopers adviser or:
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Andrew Wheeler
Partner, PwC Legal
Corporate and Commercial
Tel +61 2 8266 6401 |
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Kathleen Ward
Senior Associate, PwC Legal
Corporate and Commercial
Tel +61 2 8266 6540 |
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Kimberley Purcell
Solicitor, PwC Legal
Corporate and Commercial
Tel +61 2 8266 6104 |
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