Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011 (42 of 2011)

Schedule 1  

Part 1   Remuneration

13   At the end of Part 2G.2

Add:

Division 9 - Meetings arising from concerns about remuneration reports

250U Application

This Division applies in relation to a listed company if:

(a) at an AGM (the later AGM ) of the company, at least 25% of the votes cast on a resolution that the remuneration report be adopted were against adoption of the report; and

(b) at the immediately preceding AGM (the earlier AGM ) of the company, at least 25% of the votes cast on a resolution that the remuneration report be adopted were against adoption of the report; and

(c) a resolution was not put to the vote at the earlier AGM under an earlier application of section 250V.

Note: Subsection 250R(2) requires a resolution to adopt a remuneration report for a listed company to be put to the vote at the company’s AGM.

250V Resolution to hold fresh elections for directors at special meeting to be put to vote at AGM

(1) At the later AGM, there must be put to the vote a resolution (the spill resolution ) that:

(a) another meeting (the spill meeting ) of the company’s members be held within 90 days; and

(b) all the company’s directors who:

(i) were directors of the company when the resolution to make the directors’ report considered at the later AGM was passed; and

(ii) are not a managing director of the company who may, in accordance with the listing rules for a prescribed financial market in whose official list the company is included, continue to hold office indefinitely without being re-elected to the office;

cease to hold office immediately before the end of the spill meeting; and

(c) resolutions to appoint persons to offices that will be vacated immediately before the end of the spill meeting be put to the vote at the spill meeting.

(2) Subsections 250R(4), (5), (6), (7), (8), (9) and (10), and other provisions of this Act so far as they relate to any of those subsections, apply in relation to the spill resolution in the same way as they apply in relation to a resolution that a remuneration report be adopted.

(3) To avoid doubt, section 203D does not apply in relation to the spill resolution.

250W Consequences of spill resolution being passed

(1) This section applies if the spill resolution is passed.

Deadline for holding spill meeting

(2) The company must hold the spill meeting within 90 days after the spill resolution was passed.

(3) Nothing in subsection (2) authorises any person to disregard:

(a) section 249HA (Amount of notice of meetings of listed company); or

(b) if a person intends to move a resolution relating to the appointment of a director of the company - any provision of the company’s constitution that requires a minimum period of notice for such a resolution.

Note: Division 3 (which includes section 249HA) deals with giving notice of the spill meeting. Division 5 contains rules relevant to holding the spill meeting.

If relevant directors cease to hold office before deadline

(4) The company need not hold the spill meeting within 90 days after the spill resolution was passed if, before the end of that period, none of the company’s directors described in paragraph 250V(1)(b) remain as directors of the company.

Consequences of failure to hold spill meeting in time

(5) If the company does not hold the spill meeting within 90 days after the spill resolution was passed, each person who is a director of the company at the end of those 90 days commits an offence.

Note: A person who is a director at the end of those 90 days may commit an offence even if he or she was not a director when the spill resolution was passed.

(6) An offence against subsection (5) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code.

(7) Subsection (5) does not apply if the company need not hold the spill meeting because of subsection (4).

Note: A defendant bears an evidential burden in relation to the matter in subsection (7): see subsection 13.3(3) of the Criminal Code.

(8) Subsection (5) does not apply to a person who was not a director of the company at any time during the period:

(a) starting when the spill resolution was passed; and

(b) ending at the last time notice of the spill meeting could have been given to hold the spill meeting within 90 days after the spill resolution was passed and comply with section 249HA (Amount of notice of meetings of listed company).

Note: A defendant bears an evidential burden in relation to the matter in subsection (8): see subsection 13.3(3) of the Criminal Code.

Cessation of relevant directors and commencement of newly-appointed directors

(9) All the company’s directors described in paragraph 250V(1)(b) cease to hold office immediately before the end of the spill meeting and the directors appointed by the meeting commence to hold office at the end of that meeting. This subsection has effect despite anything else in this Act and the company’s constitution.

250X Ensuring there are at least 3 directors after spill meeting

(1) This section applies if there would be fewer than 3 directors of the company immediately after the spill meeting apart from this section.

Note: Subsection 201A(2) requires the company to have at least 3 directors.

(2) Enough directors to ensure that the company has 3 directors immediately after the spill meeting are taken to have been appointed, by resolution passed at the spill meeting, from the persons who:

(a) gave the company signed consents to act as directors of the company in anticipation of being appointed by such a resolution; and

(b) were not appointed as directors by such a resolution apart from this section.

Note: The number of directors taken under subsection (2) to have been appointed is the difference between 3 and the number of directors holding office immediately after the spill meeting apart from this section.

(3) The persons taken to have been appointed are those with the highest percentages of votes favouring their appointment cast at the spill meeting on the resolution for their appointment (even if less than half the votes cast on the resolution were in favour of their appointment).

Example: Suppose that, under subsection (2), 2 directors are taken to have been appointed, and the percentages of votes favouring appointment were 50% for Jean, 40% for Karl and 30% for Lionel. Jean and Karl would both be taken to have been appointed directors, but Lionel would not.

(4) For the purposes of this section, if 2 or more persons have the same percentage of votes favouring their appointment, the one of those persons chosen by the director or directors who hold office apart from this subsection is taken to have a higher percentage than the rest of those persons.

Note: A director who holds office apart from subsection (4) could make a series of choices if 3 or more persons all have the same percentage of votes favouring their appointment and it is necessary to work out which 2 of those persons are taken to be appointed as directors.

(5) If a person is taken to have been appointed because of a choice under subsection (4), 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.

(6) This section has effect despite anything else in this Act and the company’s constitution.

250Y Term of office of director reappointed at spill meeting

If a director who ceased to hold office immediately before the end of the spill meeting is appointed as director by resolution passed at the spill meeting, his or her term of office runs as if the cessation and appointment had not happened.

Note: This section is subject to subsection 250X(5).