Bellanhouse News & Insights

Annual General Meeting Requirements 2018

Annual General Meeting requirements

Authors: Deanna Carpenter and Maddison Cramer

We would like to take this opportunity to remind you of the requirement for listed companies with a 30 June year end to hold their Annual General Meeting (AGM) by 30 November 2018 and to set out some of the considerations that should be taken into account in preparing the notice of AGM.

Timing for Annual General Meetings

The notice of AGM, accompanying explanatory memorandum and proxy form (Meeting Materials) need to be prepared, printed and sent to shareholders with sufficient time to hold the AGM by no later than 30 November 2018.

A brief summary of the process, order and timing for the AGM is set out below, but this may be longer or shorter depending on the number and type of resolutions to be approved and whether ASX and/or ASIC approval is required:

STAGE PROCESS TIMING
1 Preparation of Meeting Materials ~1 week
2 Lodgement of Meeting Materials with ASX (if required) Up to 5 business days*
3 Lodgement of final Meeting Materials with ASIC (if required)** Up to 14 days, subject to any abridgement
4 Printing Meeting Materials 1 – 2 business days
5 Posting Meeting Materials Generally 1 – 3 days***
6 Notice of the AGM to be given to Shareholders At least 28 days

 

* Additional time should be allowed to obtain any ASX waivers required.

** The Corporations Act requires final Meeting Materials to be lodged with ASIC, not draft documents.

*** 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.

If you haven’t already, we recommend you start preparing your Meeting Materials now, with the aim of having a final draft by the end of September at the latest.

Recent changes

The following changes have occurred since listed companies held their 2017 AGM, which should be taken into consideration this year:

1. ASIC fee increases for director remuneration approval

Since 1 July 2018, ASIC fees to review Meeting Materials relating to related party benefits (e.g. approvals under Chapter 2E of the Corporations Act) have increased significantly from $39 to $802, with abridgements of the 14 day review period now costing $3,487, also up from $39.

If you require shareholder approval to issue financial benefits to related parties, final (not draft) Meeting Materials should be provided to ASIC as soon as possible. The good news is that these can now be lodged electronically.

2. Amended voting exclusion statements

In December 2017, ASX Listing Rule 14.11 was amended so that excluded persons are only precluded from voting in favour of a resolution and are now entitled to vote against the resolution. This change applies to all voting exclusions statements under the Listing Rules, so companies will need to ensure that their Meeting Materials contain the updated wording.

Further, the definition of “associate” has been expanded so that it applies to groups of entities under common control, regardless of whether the controller is an individual, a body corporate or some other type of entity.

Resolutions to consider for Annual General Meetings

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

DIRECTOR RESOLUTIONS

a) Re-elect directors

Consider whether any directors appointed to fill a casual vacancy are required to be elected by shareholders and which directors are required to be re-elected by rotation.

b) Increase non-executive director fee pool

Consider the current maximum total aggregate amount of fees payable to non-executive directors and whether this amount needs to be increased – if it does, shareholder approval will be required under Listing Rule 10.17.

c) Issue securities to directors

Consider whether any securities are to be issued to directors under Listing Rule 10.11 (general issues to related parties) or Listing Rule 10.14 (issues under an employee incentive scheme such as an ESOP or PRP), and whether the company will seek shareholder approval under Chapter 2E or rely on an exception (e.g. arm’s length terms or reasonable remuneration). Please note that if the company intends to issue securities to directors in lieu of cash director fees, an ASX waiver may be required.

SECURITIES RESOLUTIONS

a) Ratify previous security issues

Consider obtaining shareholder approval to ratify any securities issued during the previous year without shareholder approval. Shareholder approval will “refresh” the company’s placement capacity under Listing Rule 7.1 by allowing the company to issue up to its full 15% placement capacity during the 12 months from the date of the AGM. Ratification can also be obtained for issues made under the expanded 10% placement capacity under Listing Rule 7.1A.

b) Approve imminent capital raisings

Consider obtaining shareholder approval under Listing Rule 7.1 for any capital raisings likely to occur in the 3 months following the AGM so as not to use up the company’s 15% placement capacity under Listing Rule 7.1 or 10% placement capacity under Listing Rule 7.1A (if applicable).

c) Approve 10% placement facility

Certain small and mid-cap companies can seek shareholder approval to issue an additional 10% of their issued capital over a 12 month period pursuant to Listing Rule 7.1A. This approval must be sought at each AGM for issues for the following year. Note details of all securities issued since last approval must be included, even if they have already been ratified or were issued with shareholder approval.

d) Approve/renew employee incentive schemes

Employee incentive schemes such as share option plans (ESOP) and performance rights plans (PRP) must be refreshed every 3 years in order for issues made under those schemes not to be counted towards the company’s 15% capacity.

e) Consolidate securities

Consider the company’s capital structure and whether it is appropriate to undertake a share consolidation.

OTHER RESOLUTIONS

a) Two strikes resolution

Consider whether a specific resolution is required for a “two strikes” resolution – will be necessary if more than 25% of the eligible votes cast were against the remuneration report at last year’s AGM.

b) Proportional takeovers resolution

If there is a provision in the company’s constitution regarding proportional takeovers, this must be renewed every 3 years by special resolution. A proportional takeovers provision allows a company to refuse to register a transfer in relation to a proportional takeover bid (i.e. a bid where the bidder seeks a certain percentage of each shareholder’s parcel) until such time as the bid is considered by shareholders.

c) New constitution

Consider how old the company’s current constitution is and whether to replace it with an up-to-date constitution incorporating changes to the Corporations Act and Listing Rules (e.g. dividend payments, fees for registration of off-market transfers, and minimum shareholdings).

Please contact us if you have any queries in relation to AGM requirements or if you need any assistance drafting or reviewing your company’s Meeting Materials for this year’s AGM.

Deanna Carpenter

dc@bellanhouse.com

+61 8 6355 6888