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GET THE NUMBERS RIGHT – REQUIREMENTS FOR A QUORUM

Most people realise that meetings of organisations, clubs, societies, bodies corporate and companies etc. need a quorum (i.e. a minimum number of members/directors/shareholders etc. in attendance) before the meeting can be started. However, in this article, we draw your attention to a few general rules, statutory provisions and common law principles that might not be so well known.

The starting point for determining whether or not a meeting is “quorate” is the relevant organisation‟s constitution, as it will most likely set out the number of attending people required for a quorum. It may be a fixed number of people or sometimes a percentage or fraction of the total number making up the relevant organisation, board or committee. Where the constitution does not supply the answer, the following statutory provisions and common law principles determine the numbers required for a quorum as follows:

  1. Companies (Companies Act 1993):
    (a) Shareholder meetings – enough shareholders or their proxies present or having cast postal votes who are between them able to exercise a majority of the votes to be cast on the business to be transacted by the meeting;
    (b) Director meetings – a majority of the Directors.
  2. Bodies Corporate (Unit Titles Act 2010):
    (a) General – the persons entitled to exercise the voting power in respect of not less than 25% of the principal units or their proxies, provided that if the body corporate contains 2 or more members a quorum must be at least 2 members.
    (b) Timeshare resorts – the timeshare owners of not less than 5% of the timeshare entitlements or their proxies.
  3. Others – a majority of the membership or members of the relevant committee, but the quorum for a sub-committee is all members of that sub-committee.

Subject to the particular statutory provisions relating to company shareholders and Bodies Corporate referred to above, unless the constitution provides otherwise, a person represented by proxy does not count towards a quorum. For companies, directors who have declared an interest in a specific matter can still be included in the „quorum count‟, but for other organisations, a person who declares an interest in a vote may not be included. A person who is in financial default may not be included in the quorum count. It is therefore important for all organisations to realise that, although there may be sufficient “bodies in the room”, there may not actually be enough „qualifying‟ people to constitute a quorum.

If at any time before the start of, or during, a meeting, a “call for a quorum” is made, it takes precedence over any other business at that meeting. If the meeting is “inquorate” then unless absent members can be brought back, the meeting must be closed and the reason for the closure noted in the Minutes. Any business carried out in an inquorate meeting is invalid but, if the constitution so permits, that business may be subsequently validated at the next meeting – otherwise, the business will need to be processed again at that next meeting. For meetings of shareholders, the Companies Act 1993 provides that, if no quorum is present within 30 minutes after the start time of the meeting, then, if the meeting is a special meeting of shareholders, it is dissolved, and if the meeting is an ordinary meeting of shareholders, it is adjourned to the same day, time and place in the following week (or to a different date, time and place as the directors of the company may appoint). If a quorum is not present within 30 minutes of the start time of the adjourned meeting then, unless the constitution provides otherwise, the shareholders/proxies who are present shall constitute a quorum.

There is case law preventing members from abusing the principle that there must be a quorum present in order for business to be conducted – anyone intentionally leaving a meeting in order to ensure that a quorum is no longer present is not subsequently permitted to challenge the business conducted at that meeting on the basis that the meeting was inquorate.

If you have any queries in relation to the requirements for a quorum or the interpretation of a constitution etc, please do not hesitate to contact us – we are happy to help.