Associations Incorporation Act, rules of association, and common law (decisions made by courts about notice procedures).
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- Noah Cooper
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1 Notice of Meetings 4.01 What Is A Notice? Preparing notices of meetings is an important task which is often delegated to the secretary. If the notice is not correctly prepared and served, then the subsequent meeting may be invalid. The Associations Incorporations Act section 57 requires that: The members of the Management Committee of an incorporated association must ensure that the association complies with its rules about the calling and holding of meetings. The burden of this responsibility usually falls on the secretary. A secretary should pay particular attention to detail in the preparation and distribution of notices of meeting. Secretaries have to be attentive to: 1. the content of the notice (paragraph 4.03), 2. time of service (paragraph 4.04), 3. method of service (paragraph 4.05), 4. persons to be served (paragraph 4.06). The legal requirements of notices will be found in the: Associations Incorporation Act, rules of association, and common law (decisions made by courts about notice procedures). We will examine the provisions of the current model rules that many associations have adopted. Secretaries should be careful to establish exactly what the rules of their association provide in respect of notices. Section 1B of the act added in 2007 should not be disregarded. That is, if a rule of an association is inconsistent with the Act (as are many old rules), the Act prevails to the extent of the inconsistency. This is now addressed in some detail What Are Your Rules? There are some serious traps for secretaries in establishing exactly what are the association s rules. If your association has adopted the model rules set out in the regulations to the Act, then your rules are the MODEL RULES IN FORCE AT THE TIME OF ADOPTION. The Act has amended the text of the model rules several times over the years and going to the latest version of the rules may not be the rules AT THE TIME YOU ADOPTED THEM. You must check that you are working with the model rules at the time you adopted them - in most cases this is at the time of your incorporation. After the inclusion of section 1B of the Act in 2007 (see above) the Department recommends that old model rules be updated as soon as possible. If you have your OWN RULES then you should consider section 47 AIA. Section 47 AIA says that if you have not provided for a matter in your own rules and that matter is provided for in the model rules, then that provision will be part of your own rules UNLESS you can find a provision in your own rules which says that the section 47 AIA is not to apply to your association s rules. 1
2 For example, if your own rules do not specify how much notice has to be given to members of a general meeting and your own rules do not exclude the operation of section 47 AIA, then, Clause 35 (2) of the model rules is added to your own rules to specify that at least 14 days notice is necessary Content Of Notices The generally accepted principle is that the notice of meeting should contain matters specified in the: (a) (b) (c) (d) Associations Incorporation Act (e.g. section 3 AIA about special resolutions); rules of the association; by-laws and applicable resolutions of the association, and that which is necessary for those receiving it to know what is proposed to be done at the meeting so that they can decide whether or not to attend Associations Incorporation Act The Associations Incorporation Act only makes reference to the content of special resolutions. The rules, by-laws and the common law deal with other content issues. Section 3 AIA sets out the requirements for a special resolution and makes particular mention of the notice. A special resolution is required by sections 35, 48, 74, 80, 81, 89 92,105B, 105J and 105M, and an association s own rules may require other resolutions to be only passed by special resolution. Clause 43 of the current model rules requires a special association resolution passed at a general meeting to alter the model rules. Section 3 AIA states: 3(1) Written notice of a proposed special resolution, and of the time and place of the general meeting at which it is proposed to move the resolution, must be given, as required under the association s rules, before the general meeting to each member of the association who has a right to vote on the resolution. (2) The notice must state the terms of the proposed special resolution. (3) A special resolution about which notice has not been given under this section has no effect. (4) A declaration by the person presiding at a general meeting that a resolution has been passed at the meeting by the votes of three quarters of the members who are present and entitled to vote on the resolution is conclusive evidence of the fact, unless a poll is demanded at the meeting. As far as the content of a special resolution notice is concerned, it needs to: be in writing, include the time and place of the meeting, and state the terms of the special resolution (that is, the resolution s exact wording). Unless this content is included in a special resolution notice, the special resolution (even if it passes at the meeting) will have no effect. As a matter of good practice, the notice for a special resolution may also contain further information clarifying the purpose of the special resolution. This is discussed below. 2
3 Model Rules The model rules by inference require some matters to be included in a notice for various meetings. Clause 25 (4) specifies that notice of a special meeting of the management committee (that is one called by the appropriate number of management committee members) must state (a) and the day, time and place of the meeting; and (b) the business to be conducted at the meeting. Clause 32(2) of the model rules requires that at every annual general meeting of certain types of associations, the following business must be transacted: (a) receiving the association s financial statement, and audit report, for the last reportable financial year; (b) presenting the financial statement and audit report to the meeting for adoption; (c) electing members of the management committee; (d) for a level 1 incorporated association appointing an auditor or an accountant for the present financial year; (e) for a level 2 incorporated association, or a level 3 incorporated association, to which section 59 of the Act applies appointing an auditor, an accountant or an approved person for the present financial year. Note section 70(2) of the AIA states that the management committee must report about the need for public liability insurance at the AGM. Clause 35(6) requires the notice of a general meeting to state the business to be conducted at the meeting. Unlike the law of companies, neither the Association Incorporation Act nor the model rules require a proxy form to be attached to a notice of meeting. It is considered good secretarial practice to attach a proxy form with the notice of the meeting, if proxy voting is permitted under your association s rules By-laws and Applicable Resolutions of the Association The model rules allow the management committee (clause 23(1)) and sub committees (clause 27(5)) to make their own notice specifications for their meetings rather than a general meeting of members. It is usual to do this through the passing of a by-law or a resolution of the management committee or sub-committee. The specification of contents varies dramatically with the type of association and the formality of meetings Common Law Requirements The courts have for many years worked on the basis that a notice of meeting must include that which is necessary for those receiving it to know what is proposed to be done at the meeting so that they can decide whether or not to attend. They take a robust point of view of an ordinary member who scans the document quickly. The notice should not mislead a member and be a full and fair disclosure of the matters to be discussed at the meeting. Matters which will always be necessary in a notice of meeting will be: Name of the association Clear identification that the document is a notice Type of meeting Place Date 3
4 Time General nature of the business to be transacted Date of service of notice By what authority the notice is served In appropriate circumstances the notice may also include: text of resolutions to be considered at meeting (essential if the resolution is a special resolution); comments by the management committee and even perhaps comments by dissenting members of the management committee on the proposed business; disclosure of the interest of any management committee member in the business (e.g. conflict of interest); proxy form and explanation; directions to the meeting venue; and contact details of the secretary Time Of Service It is usual for the notice of meeting to be given to the participants before the meeting. In some instances this is specified; where it is not, a reasonable amount of time in the circumstances should be given Management Committee The management committee and management committee sub-committees are able under the model rules to decide for themselves the amount of time between the giving of the notice and the holding of the meeting [clauses 23(1) and 27(5)] General Meeting The model rules provide for at least 14 days notice of a general meeting [clause 35(2)]. This would include the Annual General Meeting Special General Meeting A special general meeting notice must be sent out within 14 days of the secretary being instructed to do so by the management committee, a valid member s requisition for such a meeting, or a notice in writing of an intention to appeal an application for or termination of membership (clause 39). Clause 39 (3) requires a special general meeting to be held within 3 months after the initiating events. If the secretary is unable or unwilling to call the meeting then clause 39(4) gives power to the president to do so Time Measurement There can also be confusion in the measuring of time. If your association has its own rules, there may be specific provisions as to how time is to be measured. The model rules do not have provisions as to how days are to be measured. 4
5 It is commonly accepted in meeting notice provisions that you exclude the day of service of the notice and the day on which the meeting is to be held (see Acts Interpretation Act 1954 (Qld), Section 38). So if a notice is given to a member on 1 January (notice should be dated that day), you would count 14 days from 2 January and the meeting could be held at the earliest on 16 January. The best policy is to allow a couple of extra days to be safe Postal Time If the post is used to serve a notice, again the model rules are silent, but the commonly accepted rule is that the notice time begins the day after the letter would have been delivered in the ordinary course of post (section 39 A, Acts Interpretation Act (Qld). Australia Post can supply such times to you on request. Again, the best policy is to allow a couple of days to be safe Method Of Service The model rules leave the manner of service to be determined by the management committee (Clause 23(4); 35(4)), except in membership or termination appeals where it must be in writing (Clause 35(5)). The method of service of special resolution notices is set out in section 3 of the Associations Incorporation Act and is dealt with separately below. The method of service of an ordinary notice varies greatly depending on the type of association and formality of its meetings. Some require a posted notice to each financial member of the association, others require a newspaper advertisement in a local paper, or to merely place a notice in their regular newsletter or on a club notice board. In an association of any size, it is best practice to ensure that each financial member receives an individual notice of the annual general meeting or a special meeting. This prevents a claim of members being unaware of a meeting Special Resolutions Section 3 of the Associations Incorporation Act sets out the requirement for a special resolution as discussed above. It is important that notice of special resolution be given in accordance with section 3 or the resolution will have no effect. Section 3(1) requires that: 3(1) Written notice of a proposed special resolution, and of the time and place of the general meeting at which it is proposed to move the resolution, must be given, as required under the association s rules, before the general meeting to each member of the association who has a right to vote on the resolution (emphasis added). Thus the requirements are: 1. The notice is given personally as required under the association s rules; AND 2. The notice is received by each member of the association who has a right to vote on the resolution, before the general meeting. As we have seen above, the model rules do not set out how notice is given. This issue is left to the management committee to decide through its by-laws or appropriate resolution (Clause 23(4); 35(4)). Associations that have their own rules may well have provisions in their rules about such matters. In either case, the provision must be strictly complied with if 5
6 the special resolution is to be valid. There is a further issue to be considered in respect of service by post. Section 39A of the Acts Interpretation Act 1954 (Qld) deals with what service by post means when it is used in a statute such as the Associations Incorporation Act. The section states: 39A (1) If an Act requires or permits a document to be served by post, service (a) (b) may be effected by properly addressing, prepaying and posting the document as a letter; and is taken to have been effected at the time at which the letter would be delivered in the ordinary course of post, unless the contrary is proved. (2) If an Act requires or permits a document to be served by a particular postal method, the requirement or permission is taken to be satisfied if the document is posted by that method or, if that method is not available, by the equivalent, or nearest equivalent, method provided for the time being by Australia Post. (3) Subsections (1) and (2) apply whether the expression deliver, give, notify, send or serve or another expression is used. The issues to note from this section are that the posted notice must be properly addressed, stamped and posted. Subsection 2 of section 39A does not apply to the Associations Incorporation Act as particular postal methods such as certified or registered mail are not specified in the applicable sections. The time of service (section 39A(1)(b) Acts Interpretation Act 1954 (Qld)) was discussed above Persons To Be Served The model rules of an association refer to the members of the association receiving notice for general meetings (clause 35(2)). The members of the association, as recorded in the membership register (which is required to be kept pursuant to clause 13 of the model rules), would all receive the notice. In associations that have their own rules, often the rules allow for only financial members or some other special membership class to receive notice of meetings. Special resolution notices by virtue of section 3(1) AIA must be sent to each member of the association who has a right to vote on the resolution. Management committee members and sub-committee members would also require to receive notice of their meetings. This applies even though they may be out of the country, ill or unable to attend the meeting Issue of Adjourned Meetings Infrequently, general meetings are adjourned to a later date for some reason (for example, lack of a quorum) and the question arises as to whether a new notice of meeting is required. Model rules clause 36(8) requires that the notice of meeting be served again if the meeting is adjourned for more than 30 days. 6
7 What to Do When the Validity of a Notice is Challenged If the notice to the meeting is invalid because of some defect, then the proceedings of the meeting and any resolutions may be void. Legal advice is appropriate before proceeding any further. Whether the alleged defect is something which would void the meeting can be a difficult legal issue. It will depend on the seriousness of the defect, the context of the meeting, and the importance of the proposed business on the members of the association. It may be possible for an association with model rules to use clause 22(2) to make a ruling on the issue and have this accepted by members. Clause 22(2) allows the management committee to interpret the meaning of the model rules and any matter on which the rules are silent, but any interpretation must have regard to the Act and regulations. Further, the act prevails if the association s rules are inconsistent (Section 1B). The invalidity may be overcome if all the members entitled to attend the meeting waive the defect. This is a device the courts have recognised as curing defects in the notice. Note that there must be consent from all the members entitled to attend the meeting. A consensus to waive a defect may be easily arranged with a management committee meeting or sub-committee meeting, but becomes increasingly difficult to have in a general meeting, a special general meeting or an annual general meeting. There has been no case to be used as an authority as to whether such unanimous consent to a defective special resolution notice under the Associations Incorporation Act would overcome the statutory force of section 3(3) AIA which makes a special resolution passed on defective notice of no effect. One method of partially getting around notice difficulties is to continue to hold the invalid meeting (if those present agree) and keep records of the decisions. At the next validly convened meeting a motion can be put adopting the decisions of the invalidly held meeting. Until the validation, the decisions of the invalid meeting have no standing or effect. This technique is usually only used where there is unlikely to be any disputation Sample Notice XYZ Club Inc. Notice of Annual General Meeting The Annual General Meeting of the XYZ Club Inc. will be held on 1 January 20xx, at 7.30pm at 1 Street, Suburb, City. Business 1. President's opening remarks 2. Apologies 3. Minutes of Previous Meeting 4. Business Arising from the minutes 5. President s Report (attached) 6. Treasurer s Report (attached) 7. The presentation of the statement of income and expenditure, assets and liabilities and mortgages, charges and securities affecting the property of the association for the last financial year 8. The presentation of the auditor s report on the financial affairs of the association for the last financial year 9. The presentation of the audited statement to the meeting for adoption 10. The election of members to the Management Committee 7
8 11. The appointment of an auditor 12. Public liability insurance report 13. Special Business It is proposed that The name of XYZ CLUB INC. be changed to ZYX CLUB INC. This is a special resolution and must be passed by three quarters of the members who are present at the meeting and entitled to vote on the resolution in accordance with section 3 of the Associations Incorporation Act Management Committee Comment The management committee unanimously believes that a change of the club s name is in the best interests of all members. This is to prevent the club from being mistaken for another well known club in the eyes of the public. 14. General Business 15. Close T.Bag, Secretary by authority of the Management Committee Proxies A member entitled to attend and vote at the general meeting may appoint a person to attend and vote at the meeting as the member s proxy. A proxy need not be a member. A proxy may be appointed by returning the duly completed attached proxy form to the secretary at the club s registered office 1 Street, Suburb, City, 24 hours prior to the commencement of the meeting. Inquiries All inquiries should be directed to the secretary, Ms T. Bag, XYZ Club Inc., 1 Street, Suburb, City, telephone , facsimile , <t.bag@xyz.org.au> Notice Checklists For Model Rules Management Committee Meeting Ordinary Management Committee Meeting References: AIA section 63, Model Rules clauses 18(4), 19(2) and Check the association s bylaws or resolutions for specific requirements 2.0 Generally, does the notice have all the information which is necessary for those receiving the notice to know what the meeting is about so that they can decide whether or not to attend? For example: 2.1 Content - name of the association - type of meeting 8
9 - date, time and place - nature of business to be discussed - date of service of notice - authorised by 3.0 Time of service - check by-laws and resolutions; - otherwise must be reasonable in the circumstances 4.0 Method of service - check by-laws and resolutions 5.0 Persons to be served - all management committee members Special Management Committee Meeting References: Model Rules clause 25 As above ( ) plus 6.0 Clearly state the reasons why such a special meeting is being convened 7.0 Clearly state the nature of the business to be conducted at the meeting 9
10 General Meetings References: AIA section 3, Model Rules, clauses 19(2), 35, 36, Content 1.1 Generally: - Has all the information which is necessary for those receiving the notice to know what the meeting is about so that they can decide whether or not to attend 1.2 Specifically: - name of the association - type of meeting - date, time and place - nature of business to be discussed (if a special resolution, refer to extra requirements at ) - date of service of notice - authorised by - proxy notice 2.0 Time of service - Not less than 14 days notice before the meeting (excluding day of notice and day of meeting) - if posted by mail, add the usual delivery time 3.0 Method of service - Check by-laws and management committee resolutions - Check that not a special resolution, membership appeal or termination (if yes, refer to extra requirements on paragraph ) 4.0 Persons to be served - All members of the association who have a right to vote (refer to the association s membership register) Special General Meeting References: Model Rules clause 39 As above ( ) plus 5.0 Clearly state the reasons why such a special meeting is being convened 6.0 Clearly state the nature of the business to be conducted at the meeting 10
11 Annual General Meeting References: AIA section 55, 59 59B, Model Rules, clauses 18(3)19, Content 1.1 As for general meeting (4.08.2) plus - the receiving of the statement of income and expenditure assets and liabilities and mortgages, charges and securities affecting the property of the association for the association for the last financial year Note: the content of the AGM will depend on the size of your association. Under the AIA, a level 1 association has more than $100,000 in revenue and $100,000 current assets, a level 2 association is between level 1 and level 3 and a level 3 association has less than $20,000 in revenue and $20,000 in current assets. For a level 1 association or those associations required to have an audit* by law: - the receiving of the financial statement and the audit report for the last reportable financial year - the presenting of the financial statement and audit report to the meeting for adoption - the election of the members to the management committee - for a level 1 association: the appointment of an auditor and for those required by law to have an audit: the appointment of an auditor, accountant or approved person For a level 2 association: - the receiving of the association s financial statement for the last reportable financial year - the presenting of the financial statement and signed statement to the meeting for adoption - the election of the members to the management committee - the appointment of an auditor, accountant or an approved person for the present financial year For a level 3 association: - the receiving of the financial statement and signed statement for the last reportable financial year - the presenting of the financial statement and signed statement to the meeting for adoption 11
12 - the election of the members to the management committee *Those required by law to have an audit are usually required to do so under the Collections Act 1966 (Qld) or the Gaming Machine Act 1991 (Qld) 2.0 Time of service As for general meeting (4.08.2) but - must be within 6 months after the end of the association s financial year (but check your association s rules for shorter time periods) 3.0 Method of service As for general meeting, Persons to be served As for general meeting, If a special resolution is involved refer to paragraph Meetings with Special Resolutions (Also for meetings to appeal rejection or termination of membership or valid member s requisition) References: AIA section Content - must be in writing - name of the association - type of meeting - date, time and place - nature of business to be discussed - the exact wording of the special resolution - date of service of notice - authorised by - proxy notice 2.0 Time of service - Secretary must send out the notices within 14 days of being instructed to do so - Secretary must allow 14 days notice of the meeting as for a general meeting 3.0 Method of service - The notice is given personally as required under the 12
13 association s rules 4.0 Persons to be served - The notice is received by each member of the association who has a right to vote on the resolution First General Meeting Reference: Model Rules, clause Content - Same as General Meeting with provision for appointment of an auditor if required 2.0 Time of service - Same as General Meeting (paragraph ) 3.0 Method of service - Same as General Meeting (paragraph ) 4.0 Persons to be served - Same as General Meeting (paragraph ) 5.0 If a special resolution is involved refer to paragraph
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