General Meeting called under Clause 8.3 (b) cannot proceed at this time.

On the 1st of December this year the WIA announced that, under clause 8.3 (b) of the Constitution, it had begun the process of calling a general meeting of members to consider motions for the removal of four WIA Directors. The WIA Secretary then received questions from members about the number of members required to call the general meeting, and if the requirements under the Corporations act for 5% of the membership to call a general meeting would take precedence over the WIA’s own Constitution.

The Secretary received further motions from a member proposing the resignation of an additional three Directors, and the appointment of two members as WIA Directors. It was unclear if these extra motions could be put to the same meeting.

These questions were referred to the WIA’s solicitor and were subsequently referred to a Barrister. The Barrister also considered the validity of the call for a general meeting and found that, on the information he had been given by the WIA Secretary, that the “Directors are not obliged to hold a meeting under Clause 8.3 (b)”.

A significant number of requests were incomplete.

Additionally, the Barrister advised that, should three or more Directors be removed, the WIA Board would fall below the minimum required under clause 12.1 of the Constitution and the provisions of clause 12.5 (c) would come into effect. In that case, the remaining Directors would not be able to act other than to call an additional general meeting to appoint new Directors, or in emergencies.

The WIA Board is yet to consider the Barrister’s advice. However, on the information available, the WIA is not required to proceed with the general meeting called under 8.3 (b).

The Barrister offered suggestions for an effective way of overcoming the problem, for Director positions to become vacant at a future date and new Directors to be elected through a postal ballot, which really is deferring the issue to the normal WIA election process that has already commenced, with the result of the ballot to be published early next year.

The other questions were also answered.

The Barristers letter is below. The Board cannot offer any legal comment.

From: Christopher Smale
Date: Fri, Dec 16, 2016 at 2:05 PM
Subject: RE: Update and Urgent Questions
To: Phil Wait, Hanscombe Bill
Cc: Jim Linton

Dear Phil

I refer to your email below in which you ask questions about the constitutionality of certain proposals set out in that email. The issues all revolve around an attempt by certain members of the Institute to require the directors to call a general meeting of members pursuant to clause 8.3 of the Constitution of the Institute. That clause, so far as is relevant provides:

8.3 Convening of general meetings

(a) The Directors may whenever they think fit and must upon a requisition made in
accordance with clause 8.3(b) convene a general meeting of the Institute.

(b) The Directors must call and arrange to hold a general meeting of the Institute upon

the request of at least 100 Members who are entitled to vote at the general meeting.

(c) The request must:

(i) be in writing; and

(ii) state any resolution to be proposed at the meeting; and

(iii) be signed by the Members making the request; and be given to the Secretary

(d) Separate copies of a document setting out the request may be used for signing by

Members if the wording of the request is identical in each copy.

I have in the past been instructed that the requirement for 100 members to make the request in accordance with clause 8.3 had been met in accordance with that clause. However yesterday I received an email from the secretary to the Institute in which he said inter alia:

I note that the same signed letter, and in about 20 cases the signature page only and not the 4 motion page, have been received.

I take that to mean that in the cases of at least 20 of the purported requests the requirements of the Constitution were not met in that contrary to clause 8.3 (d) the wording of the request was not identical in each of the copies received.

If I have understood correctly this means that the directors are not obliged to hold a meeting under clause 8.3 (b). However under clause 8.3 (a) the directors may, by resolution passed by majority, call a meeting if they think fit to deal with the substance of the motions that have been put forward and referred to in the email below.

An effective way of doing this might be to call a meeting at which resolutions are considered to declare all directorships vacant as at a future date. Separate resolutions could be proposed in respect of the office of each of the present directors. The date selected would be chosen so as to allow a postal ballot to be called for the election of new directors to take office as at the proposed date the current directorships become vacant.

This would give effect to the substance of the motions that all current directors be removed. It would also provide a mechanism for the election of replacement directors.

Unless a mechanism such as this is adopted there is a danger that at any meeting three or more directors would be removed with immediate effect thus reducing the number of directors below the minimum of five required by clause 12.1 of the Constitution if that happens the provisions of clause 12.5 (c) would come into effect:

(c) .....If however the number of Directors falls below the minimum number fixed under this Constitution,

the Directors may only act:

(i) for the purpose of increasing the number of Directors to the minimum by

summoning a general meeting of the Institute; or

(ii) in emergencies,

but for no other purpose.

The course I have proposed would obviate this problem.

THE TWO QUESTIONS

I now turn to consider the two questions asked in the email below and answer them on the assumption that the request for a meeting has in fact been validly requisitioned which, as I've indicated is a proposition attended by considerable doubt.

QUESTION 1

Section 249D of the Corporations Act provides that the board of a company must call a general meeting of members upon the requisition of at least 5% of the members. That provision is not a replaceable rule. However the Constitution of WIA provides in clause 8.3 (b) that the directors must call a general meeting upon the requisition of at least 100 members. Complying with the provisions of clause 8.3 be does not contravene the provisions of section 249D of the Act. In my opinion the company by adopting its present Constitution has elected to impose a lower threshold for the requisitioning of general meetings by members than that imposed by the Act.

QUESTION 2

I see nothing in the Constitution which would preclude the additional motion to remove three additional members being considered at the general meeting requisitioned by the requisitioners referred referred to in question 1. There is nothing in the Constitution which indicates that only resolutions specifically set out in the requisition can be considered in a general meeting of members. Such a resolution would be dealt with under clause 14.2 which provides:

14.2 Removal of Directors

(a) Subject to clause 14.2 (b), the Institute in general meeting may by resolution remove any Director from office.

(b) No resolution for the removal of a Director from office is to be put to a general meeting unless notice signed by a Member duly qualified to vote at that meeting and signifying the intention of that Member to propose that resolution is received by the Institute not less than 28 clear days before the date appointed for holding the meeting.

It may be that that clause contradicts section 203D of the Corporations Act which provides:

203D Removal by members—public companies
Resolution for removal of director
(1) A public company may by resolution remove a director from office despite anything in:
(a) the company’s constitution (if any); or
(b) an agreement between the company and the director; or
(c) an agreement between any or all members of the company and the director.

However in my opinion the proposed resolution seeking to nominate a candidate for election at the general meeting to be held in accordance with the purported requisition could not be placed on the notice paper of a general meeting called in response to the requisition because as at this time there are no vacancies for which an election can be conducted.

Please let me know if you wish me to clarify or amplify any of the above

Regards
Chris Smale
Barrister

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From: Phil Wait
Sent: Wednesday, December 14, 2016 1:56 PM
To: Hanscombe Bill; Christopher Smale
Cc: Jim Linton
Subject: Update and Urgent Questions

Dear Bill, Chris

Unfortunately this is urgent.

The mediation session on the weekend was not successful. We are now heading towards a general meeting called by 100 members to force the resignation of four WIA Directors, (including myself).

There are two urgent items we need advice on prior to sending out the notice of meeting this weekend.

The WIA Board has requested me to ask the following questions.

Question 1

The Secretary has received the communication below from a concerned member about the number of members required to call a Special general meeting.

The WIA Constitution 8.3 requires only 100 members to call a general meeting, which is different to the requirements in the Corporations act.

The question is: Noting 4.1 in the WIA Constitution, should the WIA follow the requirements of its own Constitution and allow the meeting to be called by 100 members, or by the replaceable rules in the Corporations act which requires 5% of the membership or just over 200 members?

Question 2

The secretary has received additional motions to be put to the General Meeting which call for the resignation of the other three Directors, and the appointment of two other members as Directors.

The question is: Can these motions be put to the same meeting and should they be included in the notice of meeting to go out to members?

Thanks for the assistance. We must get the notice of meeting out this weekend, so the pressure is on.

I have attached the WIA Constitution.

regards
Phil Wait

President, WIA

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