AYB230 · Corporations Law
Members, Meetings & Remedies
This Topic 3 chapter is about the owners of a company — how you become a member, how decisions are made at members' meetings, and what a minority member can do when wronged. Two threshold ideas dominate the exam: the resolution majorities (ordinary >50% vs special ≥75%) and the ≥5% requisition power to call a meeting, plus the oppression remedy (s232/s234). It is examined as an ILAC problem: identify who can call a meeting and what majority is needed, or whether conduct is oppressive, citing the section and case.
What this chapter covers
- 01Becoming a member: written consent + name on the register (s231); transmission on death/bankruptcy
- 02Share transfer (s1070A) and restrictions in unlisted companies
- 03Separation of ownership and management (s198A): Automatic Self-Cleansing Filter Syndicate v Cunninghame
- 04Members' meetings: AGM (s250N), general meetings and class meetings
- 05Who can call a meeting: director (s249C), members ≥5% request (s249D) or self-call (s249F), court (s249G)
- 06Notice (s249L) and proper purpose (s249Q); ordinary (>50%) vs special (≥75%) resolutions
- 07Dividends (s254T–W): paid out of profits at the directors' discretion
- 08Members' remedies: oppression (s232/s234), the statutory derivative action, and winding up
Calling a members' meeting & removing a director (ILAC, s249D/F)
- +1Issue: Can the 6% group compel or convene a general meeting, and what resolution is needed to remove the director?
- +2Law: Directors must call a meeting on the written request of members with at least 5% of the votes (s249D), and members with at least 5% may call one themselves at their own expense (s249F). The meeting must be for a proper purpose (s249Q); removing a director is a proper purpose (Re Molopo Energy). For a public company, removal of a director is by ordinary resolution — more than 50% (s203D) — on notice (s249L).
- +1Application: The 6% group exceeds the 5% threshold, so they can require the board to call the meeting (s249D) or convene it themselves (s249F). Removing a director is a proper purpose, so the meeting is valid; the director is removed if more than 50% of votes are cast in favour.
- +1Conclusion: Yes — the members can requisition the board (s249D) or call the meeting themselves (s249F) and remove the director by ordinary resolution (>50%).
Key terms
- Member / register of members (s231)
- A person becomes a member by giving written consent and having their name entered on the register of members (s231) — through registration, allotment, transfer, options, or transmission on death or bankruptcy. The register is proof of membership (s176; Re Clifton Springs Hotel Ltd).
- Separation of ownership and management (s198A)
- Under the replaceable rule s198A the directors have broad powers to manage the business; members generally cannot interfere with day-to-day management — Automatic Self-Cleansing Filter Syndicate Co v Cunninghame [1906] 2 Ch 34. Members' control is exercised through their meeting powers, not by directing the board.
- Member requisition threshold (≥5%)
- Members holding at least 5% of the votes can require the directors to call a general meeting (s249D), or can call one themselves at their own expense (s249F). It is the key lever a minority uses to put an issue — such as removing a director — to a vote.
- Notice of meeting (s249L)
- Notice of a members' meeting must state the place, date and time, the general nature of the business, the details of any proposed special resolution, and proxy information. Defective notice can invalidate the meeting; the chair (s250S) must allow members a reasonable opportunity to ask questions.
- Oppression remedy (s232/s234)
- A member (or removed member, transmittee, or ASIC) with standing under s234 can seek relief under s232 where the company's conduct is contrary to the members' interests as a whole, or oppressive or unfairly prejudicial to a member. The tests look at the reasonableness of the directors' management (Wade v NSW Rugby League) and members' reasonable expectations (Boyd v Feeney); remedies under s233 include a buy-out, regulating conduct, or winding up.
- Dividends (s254T–W)
- Payments made to shareholders out of the company's profits; the directors decide the amount, timing and method. A dividend may only be paid where the company's assets exceed its liabilities and the payment is fair and reasonable and does not materially prejudice creditors.
Members, Meetings & Remedies FAQ
What majority do I need — ordinary or special resolution?
An ordinary resolution passes on more than 50% of the votes cast and is the default — including removing a director of a public company (s203D). A special resolution needs at least 75% and is reserved for higher-stakes acts such as changing the constitution (s136) or a selective capital reduction. Identifying the correct threshold is one of the most common things the exam tests, so confirm the type of act first.
Can a minority of members force a meeting?
Yes, if they hold at least 5% of the votes. Members with at least 5% can require the directors to call a general meeting (s249D), and if the board does not act they can call the meeting themselves at their own expense (s249F). The court can also order a meeting (s249G). The meeting must still be for a proper purpose (s249Q).
When is conduct 'oppressive' under s232?
When it is contrary to the interests of the members as a whole, or oppressive to, unfairly prejudicial to, or unfairly discriminatory against a member. The courts ask whether a reasonable director would have acted that way (Wade v NSW Rugby League) and whether the conduct defeats the members' reasonable expectations (Boyd v Feeney). Classic examples are diverting profits into directors' fees while starving the minority of dividends, or excluding a member from decisions.
Can members tell the directors how to run the company?
Generally no. Under the replaceable rule s198A the directors have broad management powers and members cannot interfere with day-to-day management (Automatic Self-Cleansing Filter Syndicate v Cunninghame). Members' control is exercised through their collective meeting powers — appointing and removing directors, changing the constitution, and remedies such as oppression — not by issuing instructions to the board.
Exam move
Lock in the numbers first — they decide most meeting questions: ordinary resolution >50%, special resolution ≥75%, member requisition ≥5% (s249D/F). Build a one-page meeting flow: who can call it (s249C director / s249D members request / s249F members self-call / s249G court) → proper purpose (s249Q) → notice (s249L) → the right resolution majority. For the remedies arm, memorise the oppression structure: standing (s234), the s232 grounds, the two tests (Wade reasonableness; Boyd reasonable expectations), and s233 remedies (buy-out, regulate, wind up). Always cite the section and the case, and on a removal-of-director question remember it is an ordinary resolution, not a special one.
