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HG Corporate Advisory Alert: Preparing for your upcoming Annual General Meeting 22 August 2014

Listed companies are required to hold their Annual General Meeting (AGM) within five months of the end of their financial year.  For the majority of listed companies, this will require their Notice of AGM, accompanying Explanatory Memorandum and Proxy Form (Meeting Materials) to be prepared, printed and sent to shareholders with sufficient time to hold the AGM by no later than 30 November 2014.

In this Alert, Partner Michele Muscillo and Solicitor Luke Dawson outline some practical considerations for companies preparing for their AGM. 

Timing

There are a number of relevant timing considerations which a listed company should be aware of leading up to its AGM.  For example, depending on the content of the Meeting Materials, they may be required to be lodged with ASX and ASIC for their review. 

However, at a high level, the process, order and timing for the AGM can be summarised as follows:

  • preparation of Meeting Materials;
  • lodgement of Meeting Materials with ASX (if required) (ASX have up to five business days to review);
  • lodgement of Meeting Materials with ASIC (if required) (ASIC have up to 14 days to review, subject to any abridgement);
  • printing of Meeting Materials;
  • postage of Meeting Materials (depending on the company’s constitution, the Meeting Materials will be deemed to be received by shareholders within a specified period of time after they are sent - this is typically between one and three days); and
  • at least 28 days clear notice of the AGM must be given to shareholders.

Resolutions to consider

We have set out below a number of common resolutions which companies may wish to consider for this year’s AGM:

Re-election of directors - companies should consider which of the company’s directors require re-election at this year’s AGM;

Two strikes resolution - the Corporations Act requires that a company put a resolution to its members to approve its remuneration report at the company’s AGM.  If more than 25 percent of the eligible votes cast were against the remuneration report at last year’s AGM, a specific resolution (along with accompanying explanatory text) and specific amendments to the proxy form for this year’s AGM must be included in the Meeting Materials;

Approval or renewal of employee share and option plan/performance rights plan - an employee share and option plan or a performance rights plan must be refreshed every three years in order for a company to rely on exception 9 in ASX Listing Rule 7.2.  The result of refreshing any plans is that securities issued under them do not count towards a company’s 15 percent capacity under ASX Listing Rule 7.1 and, if applicable, the additional 10 percent capacity under ASX Listing Rule 7.1A;

Listing Rule 7.1A approval – certain small and mid-cap companies are able to seek shareholder approval to issue an additional 10 percent of their issued capital over a 12 month period pursuant to ASX Listing Rule 7.1A (over and above their usual ASX Listing Rule 7.1 capacity).  If approval under Listing Rule 7.1A has previously been obtained, and a company wishes to obtain the approval again at this year’s AGM, Listing Rule 7.3A.6 requires specific information to be included in the Meeting Materials;

Ratification of allotments not previously approved by shareholders - companies should consider whether any securities were allotted during the previous 12 months which were not approved by shareholders.  By having the previous issue of any securities ratified by shareholders, a company is able to issue up to the full 15 percent of its issued capital without shareholder approval during the 12 months from the date of this year’s AGM under ASX Listing Rule 7.1;

Proportional takeovers resolution - companies may have a provision in their constitution relating to proportional takeovers.  At its most basic level, this allows a company to refuse to register a transfer in relation to a proportional takeover bid (being a bid where the bidder seeks a certain percentage of each shareholder's parcel) until such time as the bid is considered by shareholders.  However, the Corporations Act requires this provision to be renewed every three years (and must be approved by a 75 percent majority), otherwise it ceases to apply. 

Closing thoughts

There are important consequences that can flow from the resolutions considered at a company’s AGM.  It is important that all listed companies are aware of these consequences and the timing requirements outlined above in the lead up to this year’s AGM.  If you would like further advice about your company’s AGM obligations, or assistance in the review or preparation of your company’s AGM Meeting Materials, please contact a member of HopgoodGanim’s Corporate Advisory and Governance team.

HopgoodGanim is a legal firm of trusted experts. Founded in Brisbane 40 years ago, the HopgoodGanim of today remains fiercely independent and proud of our sustained growth and ongoing success. We deliver exceptional commercially-focused legal advice to clients throughout Australia and internationally and in addition to our corporate and commercial teams, we also house one of Australia’s most highly regarded family law practices.