Booklet: Company Title Essentials (Chapter 3 – Governance and management)

Company Title Essentials booklet

Below is Chapter 3 of our ‘Company Title Essentials’ booklet. To read the other chapters of our booklet, click the links below:

Governance and management

The board

The board is a group of directors responsible for the governance of the company.  

The constitution will enable the board to exercise certain powers and hold regular meetings to pass resolutions for the governance of the organisation.  

Depending on its size, the board may be divided into smaller subcommittees for the purposes of managing specific issues.  For example, there may be a specific renovations subcommittee.  

These subcommittees will generally be composed of a subset of board members and will provide reports to the board.  The board will make the final decision on any issues raised in those reports.  

In practice, sub-committees should only be used in larger buildings.  

Board meetings

Board meetings must be conducted on a regular basis.  They are moderated by the chair, who will seek to facilitate a constructive, respectful, and efficient meeting that runs in accordance with the agenda.  

It is often a good idea to develop a board code of conduct to ensure that meetings are civil, inclusive and productive. 

Board meeting agenda items

Typically, items on the agenda will include: 

  • Approval of the minutes of the previous meeting;  
  • Disclosure of any conflicts of interest and their management;  
  • Discussion of any ongoing or proposed maintenance or building works;  
  • Discussion of any health and safety or property damage hazards within the building, such as fire safety matters, damp, mould and physical obstructions in hallways;  
  • Report by the Treasurer as to the accounts and financial position of the company;  
  • Discussion of any complaints made or issues raised by shareholders;  
  • Discussion of any contracts that are up for renewal; and  
  • Discussion about any reports prepared by subcommittees or external experts.  

General meetings

A company may hold two types of general meeting.  They are the Annual General Meeting (AGM) and Extraordinary General Meetings (EGMs).  

The Annual General Meeting (AGM)

The AGM is a meeting of all the shareholders in the company held within six months of the end of each financial year.  

Specific procedural and quorum requirements for the AGM will be contained in the constitution.  

Generally, the AGM will comprise the presentation of various reports from office holders, such as the chair and the treasurer, followed by an election of directors and office holders for the next year.

The board may seek to pass a number of ordinary resolutions at the AGM.  For example, an ordinary resolution may be passed to appoint a Company Manager.  Such resolutions usually require the support of 50% of the company’s shareholders.  

Notice of General Meetings of Members

It is important that members receive a written notice of a general meeting at least 21 days before it takes place.  The notice should outline the resolutions that the shareholders will be asked to consider at the meeting.  It should provide a concise explanation of the resolutions, the reasons why they are being proposed and the risks or detriments associated with their passage.  This purpose of the outline is to assist members to determine whether to vote in favour of proposed resolutions.  

If the directors propose a resolution, they may wish to include a recommendation that the members vote in favour of it.  

Proxies

Some constitutions permit members to vote at general meetings by proxy. If so, it is important that a proxy form be sent to each of the members with the notice of the meeting.  The form should specify the date by which proxy forms need to be returned to the chair for their votes to be counted.  

Ordinarily, a member may appoint a directed or general proxy. If a member appoints a directed proxy, he or she must vote in the way that the member directs him or her to vote.  If a member appoints a general proxy, he or she can decide which way he or she will vote. 

Resolution of Directors

Any director may propose a resolution.  Ordinarily, directors can pass resolutions on most matters which might concern the management or operation of a company.  Such resolutions can be passed by either:  

  • A majority of the directors who are present at a quoram meeting voting in favour of the resolution; or  
  • All of the directors indicate that they are in favour of a resolution by signing a document which sets out the resolution.  

It is important to ensure that all resolutions are recorded either in the minutes of a meeting or in a separate record of resolution.  That record should be signed by the chair and confirmed at the next meeting of directors.  

Resolution of Members

A general meeting of members can ordinarily pass resolutions on major issues, such as the sale of the company’s property or the amendment of its constitution, and on issues relating to the company’s directors and governance, such as the election of the board, the approval of the financial reports and the ratification of contracts with directors.  Some matters require ordinary resolutions, while others require special resolutions.  In certain circumstances, the constitution may require a unanimous resolution.  

For example, an ordinary resolution may be passed to elect new directors, adopt reports, or appoint auditors.  Such ordinary resolutions must be passed by a majority of the members who are present at the meeting.  

Similarly, a general meeting of members can pass a special resolution to repeal, replace, or amend the constitution of the company or to alter the rights of a class of shareholders.  Such ordinary resolutions must be passed by over 50% of the members who are present at the meeting.  

There are a number of ways in which members can vote.  Typically, members should vote by a show of hands unless one of them demands a secret ballot.  

It is important to be clear about what resolutions can be validly passed by the members.  Generally, most of the things that occur in the day-to-day management of the company can be handled by the directors without the involvement of the shareholders.  If the shareholders attempt to pass a resolution on one of the things that are within the exclusive powers of the directors, it may be invalid. 

Good meeting procedures

The chair is required to ensure that a general meeting is conducted efficiently and effectively. A failure to do so can cause a meeting to get out of hand and can give rise to disputes as to whether resolutions were validly passed.  

To ensure that a meeting is carried out effectively, the chair should take all reasonable steps to ensure the following: 

  • That an attendance roll is taken prior to the commencement of the meeting, noting any absences or apologies; 
  • Only one person speaks at any given time;  
  • A person who wishes to speak on a particular topic or a particular resolution speaks only on that topic or resolution and does not stray into other matters; 
  • Shareholders do not act offensively or aggressively towards, or bully, other shareholders;  
  • The meeting runs to time, including by limiting the time for which a person can speak on a particular topic or resolution; 
  • The precise wording of all resolutions are formally proposed and seconded before a vote is held; 
  • That he or she has received, and determined the validity of, all appointments of proxies prior to the meeting; and 
  • That he or she is prepared to hold a ballot if a person calls for one.  

Extraordinary General Meetings (EGMs)

An EGM is a meeting of all the shareholders in the company that will be called if the board wishes to put a specific proposal to the shareholders.  For example, an EGM may be called to amend the constitution. Such a move will require the company to pass a special resolution supported by 75% of the company’s shareholders.  EGMs may also be called to sell company assets or decide whether to convert the building to strata title.  

Before an EGM, boards should prepare an explanatory statement to inform shareholders how any proposed resolutions will benefit the company  

The Office Holders

Company title boards have a number of office holders. They include the chair, the treasurer, the secretary, and in some cases, company managers.  

The Chair

The chair presides over board and company meetings, and seeks to ensure that they are conducted efficiently and effectively.  He or she is often tasked with managing board recruitment and succession, and may have additional functions that are conferred under the constitution.

The Secretary

The secretary is required to ensure that all board and company meetings are properly called, that relevant information is collated and distributed prior to meetings, and that accurate minutes of meetings are kept and approved.  

It is worthwhile establishing clear position descriptions to assist in board renewal and to avoid duplication of responsibilities.  Board Meeting Agenda Items.

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The information contained in this post is current at the date of editing – 3 April 2024.