Frequently Asked Questions
What is a quorum?A quorum is the minimum level of attendance by the Shareholders, in person or represented by proxy, that must be present at all times in order for a meeting to proceed.
The Corporations Act sets this level at two shareholders but this is a replaceable rule which can be amended by your Company Constitution. Depending on the shareholdings in your Company at any given time, two shareholders could amount to 100% of the votes or much less.
By instead using a percentage of votes to establish a quorum, you can ensure that a simple majority of votes (51%) or a stronger majority (e.g. 75%) is always required to conduct a meeting. What difference does it make if a company has a sole member/director?The replaceable rules in the Corporations Act do not apply to companies where the sole member, or shareholder, is also the sole director. In those circumstances meetings are not necessary and resolutions are passed by the sole member signing the record in the minute book.What is remote communication?Remote communication means participating in a meeting by means of phone or video conferencing. If permitted, Shareholders connecting remotely are counted as attending the meeting.
Remote communication is beneficial where it may be impractical for some participants to attend due to distance.What is a voting trust?A voting trust is where Shareholders agree to give their voting shares to a third party (the trustee) who holds the shares and will vote the shares in accordance with a voting trust agreement.What is a cumulative voting?Cumulative voting may be used when shareholders vote to elect a board of directors. It prevents a majority shareholder from being able to elect all the Directors of a company by allowing a minority shareholder to apply all their cumulative votes to one Director.
Where cumulative voting is allowed, the number of votes allowed for each shareholder will be calculated by multiplying the number of voting shares they are entitled to cast by the number of Directors being elected. The shareholder may then cast their total votes for a single Director or may distribute them among two or more Directors.