Corporations Act. Australia
specifies the consequences of a contravention of subsection (1) of this section. Also, section 1324 provides for injunctions to enforce subsection (1) of this section.
(2) A board limit resolution has effect until immediately before the start of the first AGM of the company after the general meeting by which the resolution was passed.
(3) A board limit resolution does not prevent the appointment of a person as a director of the company by the other directors of the company between general meetings of the company.
(4) However, if a person is appointed by the other directors as a director of the company while a board limit resolution has effect, the company must confirm the appointment by resolution at the company’s next AGM. If the appointment is not confirmed, the person ceases to be a director of the company at the end of the AGM.
(5) Subsections (1), (2) and (4) have effect despite the company’s constitution.
Note: Although subsection (4) is like subsection 201H(3) in many ways, it is not a replaceable rule like subsection 201H(3).
201Q Requirements for explanatory statement to members
The statement accompanying the notice of a general meeting stating an intention to propose the board limit resolution must be in writing and set out clearly, concisely and effectively:
(a) the directors’ reasons for proposing the board limit resolution; and
(b) all other information that:
(i) is reasonably required by members in order to decide whether or not it is in the company’s interests to pass the proposed board limit resolution; and
(ii) is known to the company or to any of its directors.
Note: Section 1309 creates offences where false and misleading material relating to a corporation’s affairs is made available or furnished to members.
201R Records of voting on board limit resolution if poll demanded
(1) This section applies if a poll is duly demanded on the question that the board limit resolution be passed.
(2) For each member of the company who votes on the poll in person, the company must record in writing:
(a) the member’s name; and
(b) how many votes the member casts for the resolution and how many against.
Note: Failure to comply with this subsection is an offence: see subsection 1311(1).
(3) For each member of the company who votes on the poll by proxy, or by a representative authorised under section 250D, the company must record in writing:
(a) the member’s name; and
(b) in relation to each person who votes as proxy, or as such a representative, for the member:
(i) the person’s name; and
(ii) how many votes the person casts on the resolution as proxy, or as such a representative, for the member; and
(iii) how many of those votes the person casts for the resolution and how many against.
Note: Failure to comply with this subsection is an offence: see subsection 1311(1).
201S Notice of resolution to be lodged
The company must lodge a notice setting out the text of the board limit resolution within 14 days after the resolution is passed.
201T Declaration by court of substantial compliance
(1) The Court may declare that a requirement set by section 201Q, 201R or 201S has been satisfied if the Court finds that it has been substantially satisfied.
(2) A declaration may be made only on the application of an interested person.
201U Consequences of setting board limit in breach of section 201P
Application
(1) This section applies if the directors of the company set a board limit in contravention of subsection 201P(1).
Board limit etc. ineffective
(2) The board limit and anything done in reliance on it have no effect for the purposes of:
(a) the company’s constitution; or
(b) this Act, except this section.
Note: If a board limit resolution is not passed, the number of directors of a company that can be appointed (for example by a general meeting) depends on the maximum number of directors specified by the company’s constitution. This is so even if the directors purport to set a board limit despite the fact the board limit resolution was not passed.
(3) If:
(a) one or more directors are appointed by one or more resolutions passed at a particular general meeting of the company; and
(b) because of the board limit, the general meeting was not given the opportunity to pass one or more resolutions appointing a number of directors such that the number of directors of the company would (if those resolutions had been passed) have exceeded the board limit;
every appointment of director made by a resolution passed at the general meeting is invalid.
Note: This subsection does not apply if a shortage of persons consenting to be appointed director was the reason the general meeting was not given the opportunity to pass one or more resolutions appointing a number of directors such that the number of directors of the company would (if those resolutions had been passed) have exceeded the board limit.
(4) Subsections (2) and (3) have effect despite anything else in the company’s constitution or in this Act, except sections 128, 129 and 201M.
Note: Sections 128 and 129 deal with assumptions a person dealing with the company may make, including assumptions about the due appointment of directors. Section 201M deals with effectiveness of acts by a director in circumstances where the director’s appointment is invalid for certain reasons.
Company and candidates for directors may seek compensation
(5) Subsection (6) applies if either of the following (the suffering party) suffers loss or damage because of the setting of the board limit in contravention of subsection 201P(1):
(a) the company;
(b) a person for whom both the following conditions are met:
(i) the person had given the company a written indication that he or she would be a candidate to be appointed director at a general meeting;
(ii) because of the board limit, the general meeting was not given the opportunity to consider passing a resolution to appoint the person as director.
(6) The suffering party may institute a proceeding in the Court for the contravention.
Note: Section 1325 deals with the orders the Court may make to compensate the suffering party for the loss.
Contravention does not give rise to an offence
(7) A person is not guilty of an offence because of the contravention.
Division 2 — Remuneration of directors
202A Remuneration of directors (replaceable rule — see section 135)
(1) The directors of a company are to be paid the remuneration that the company determines by resolution.
Note: Chapter 2E makes special provision for the payment of remuneration to the directors of public companies.
(2) The company may also pay the directors’ travelling and other expenses that they properly incur:
(a) in attending directors’ meetings or any meetings of committees