Special Resolution

A ‘special resolution’ is defined in section 9 of het Corporations Act as one that is passed by at least three quarters (75%) of the votes cast by shareholders (eitheron a show of hands at the meeting or by inclusion of proxies if on a poll) being in favour of the resolution.

Requirement for Special Resolution

Items requiring a special resolution include:

amending or changing the constitution (sec.136)

adopting a new company name (sec.157)

changing the company type (sec.162)

any changes to share capital and/or shareholders’ rights

being matters where either the Act or a company’s constitution require a special resolution for any change; and

usually, also, any change to a formal shareholder/s agreement (even though such may not specifically relate to or be covered by provisions of the Act or the constitution).

Wording of Special Resolution

A notice of meeting which includes any special resolution must, under sec.249L(c), specifically set out the intention to propose the special resolution and state the actual words of the resolution.

However, in a recent situation where lawyers drafted the AGM Notice they included the introductory words to a resolution: “To consider and, if thought fit, pass the following Special Resolution with or without amendments:”. I challenged the lawyers on this, suggesting it was outside the scope of sec.249L(c) and they responded “……..the introduction of the words ‘with or without amendments’ into the resolution is

intended to provide the Company with the flexibility to make any adjustments to the resolution as may be required in the meeting, to enable it to be approved by shareholders. It will not however, as foreshadowed by you, enable the Company to amend the substantive part of the resolution. However, we shall remove it in this instance………”. So, am I right?

Other Matters

The resolution wording is, of course, in addition to the other information required to be provided in a notice of a meeting including the place, date and time of the meeting, the general nature of the meeting’s business and information about proxy votes where applicable – sec.249L(a), (b) & (d).

Shareholders voting ‘on a show of hands’ at a meeting may include those attending as proxy, attorney or corporate representative – unless specifically not allowed by the constitution.

In most cases, the passing of a special resolution must be lodged with ASIC on Form 205 Notification of Resolution or Form 2205 Notification of Resolutions Regarding Shares.

*Originally written by Company Secretary, an Australian virtual company secretary service.

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