Question

The constitution of Tropical Fruit Juice Pty Ltd presently states that the remuneration of members of the board of directors is to be approved at general meetings. The board of directors of Tropical Fruit Juice Pty Ltd want to change the company’s constitution to allow a remuneration committee to recommend the amount of remuneration to be paid to board members. The board calls a general meeting to pass a special resolution to change the company’s constitution in this way. Joan (who owns 25% of the shares in the company) receives a verbal notice of the meeting (via an online messaging application) 5 days before the meeting, but she did not end up attending the meeting because she was on holiday in rural Queensland and she did not have internet access. The resolution is passed by all shareholders present at the meeting. Joan objects to the change in the company's constitution because she thinks that director remuneration should be monitored by members at general meetings, and she wants to know whether the special resolution can be challenged.

The company constitution does not contain any rules about the amount of notice that members must be given before a meeting or the type of notice that is required.

Advise Joan whether she can challenge the special resolution, and if so, how?

Answer 1

Joan can challenge the special resolution passed at the general meeting because of the following reasons:

1. As the notice was received 5 days before the meeting only, The minimum duration for the receival of notice for general meeting was 7days before the meeting.

2. Notice form - The notice should be in the form of post, email etc; but here it was in voice which is not a valid for call for general meeting.

3. The Agenda - the notice should contain the agenda of the general meeting i.e the items to be discussed in the meeting which were not mentioned in the verbal notice.

Since she was holding 25% of shareholding was not a criteria because the special resolution must be accepted by majority of share holders.