Company title companies are corporations for the purposes of the Corporations Act 2001. The Corporations Act sets out a number of requirements regarding the governance of corporations in Australia. Some of these requirements include regard to meeting procedure. Well-managed company title board meetings are essential to the proper and smooth management and running of company title buildings.

Proper Procedures For Company Title Board Meetings

Company title buildings, as corporations are required by law to follow certain sections of the Corporations Act. The Corporations Act also introduced a set of “replaceable rules”. These replaceable rules form the Constitution for newly incorporated companies who do not adopt their own constitution. In this way there are “replaceable”. Company title buildings who renew their constitution after 2001, may adopt these rules as part of their constitution. Even for companies that are not bound by the replaceable rules, they provide a good guide on what is required for proper procedure.

Provisions under the Corporations Act relevant to meeting procedure of directors’ meetings

Chair

Replaceable rule section 248E sets out the procedure for nominating a Chair for directors’ meetings:

  1. The directors may elect a director to chair their meetings. The directors may determine the period for which the director is to be the chair.
  2. The directors must elect a director present to chair a meeting, or part of it, if:
    (a) a director has not already been elected to chair the meeting; or
    (b) a previously elected chair is not available or declines to act, for the meeting or the part of the meeting.

In our experience, it is preferable to nominate a Chair for a considerable period, such as 12 months, and then potentially renominate that person for an additional period if appropriate. Establishing a longstanding Chair is preferable as that person will become proficient in that role and builds a trust rapport with lot owners and members.

If the Chair is not present at a specific directors meeting or even EGM or AGM, it will be necessary for the directors to nominate another director to take the role of Chair for the purposes of that meeting. There must be a Chair of any formal meeting under the Corporations Act.

Quorum

Replaceable rule section 248F establishes that the replaceable rule quorum is two directors. It is common for company’s constitution to set a quorum. A directors’ meeting has not begun until there is a quorum and the quorum must be maintained throughout the meeting.

For example, your constitution sets a quorum of three directors. The meeting is scheduled for 7pm. Two directors arrive at 7:05pm and discuss and resolve on a number of matters. Director C arrives at 7:20pm and Director D arrives at 7:30pm. At 7:55pm Director A and C both need to leave. Director B and D continue to discuss and resolve on more matters.

In the above example a quorum was established at 7:20pm and was broken up at 7:55pm, as such, the meeting in effect ran between these times and decisions made or discussions had outside these times do not constitute part of the meeting.

Directors should be aware of the quorum requirements in their constitution. The time at which a quorum was formed should be noted on the minutes of the meeting. The meeting would be drawn to a close if a quorum will be broken. The end of the meeting should also be noted in the minutes.

Calling of directors’ meeting

Individual constitutions may prescribe a required notice period for the calling of directors’ meetings and may also prescribe a required form of notice, for example written notice four days in advance of the proposed meeting time.

The replaceable rule at section 248C requires that a director calling a meeting give “reasonable” notice. Reasonable would be whatever would be ordinarily considered reasonable in the circumstances. For example a few hours notice would not generally be considered reasonable, but if there was something incredibly urgent to attend to, it may be in such circumstances.

Alternate directors

In replaceable rules section 201K, a director may appoint an alternate director to exercise some or all of their powers. If your company does not have such a power in the constitution, directors will not have this power. This can be a helpful power for directors, especially in a building with a small number of directors, if they are overseas for a period or otherwise unable to attend meetings and their other duties as a director, and may wish to delegate their power to another for a period. Directors who are unavailable for an extended period should consider resigning.

If your company has the replaceable rules or a power by directors to appoint alternate directors, this should be done in accordance with the requirements set out. Usually these requirements are that this appointment be in writing, the appointment can be revoked by the appointing director and the appointment must be at the approval of other directors. ASIC must also be notified of such an appointment under section 205B(2) and (5).

Good governance principles for meeting procedures

Externally to any requirements under the Company’s constitution and the Corporations Act, meetings should be run in a consistent and organised manner. It is a good idea for directors to establish a clear meeting procedure that can be stuck to for all directors meetings.

Agenda

At the time when the notice of a directors’ meeting is distributed, the director calling the meeting or the Chair should circulate an agenda for the meeting. This agenda may be short or in dot point form but will structure the meeting and provide the directors with an opportunity to prepare for the meeting in advance. Depending on how the Board dynamic works, the agenda may include who will lead each discussion. An example is set out below:

Meeting Agenda for Phillip Garden Pty Ltd
Monday 24 January 2019
7:00pm – Phillip Garden

  1. Quorum and approval of minutes from previous meeting (Zoe Chair)
  2. Discussion re upcoming maintenance in common area lobby (Catherine)
  3. Upcoming tenancy of lot 6 (Thomas)
  4. Update of House Rules (Lara)
  5. Update on finances (Jordan)
  6. Other Business (Zoe Chair)

This will ensure meetings are kept to time and do not go off topic, issues that need to be discussed are managed and can be progressed.

Directors who wish to add to the agenda can circulate any additions or amendments in advance of the meeting.

The Chair will then be in charge of directing the meeting and ensuring agenda items are worked through chronologically.

Civility and efficiency in Board meeting

Unfortunately, poorly managed Boards can become inefficient and dysfunctional. It is the role of the Chair to ensure meetings are run with civility.

If you need further clarification on company title, call JFMLAW on 02 9331 0266 for assistance.