Topic 5 - Decision Making: Board of Directors and Members Meeting Flashcards
What is the function of the board?
- Sets the direction of company and holding management liable
What determines the powers of the Board?
- RR and Consti + Corps Act
What is the typical power of Shareholders?
- Appoint or replace directors
What are one of the Board’s most important functions?
- Appointing CEO (and removing if needed)
What is Management?
- Management is VESTED in board –> board members may DELEGATE powers to others, but ult control remains within board
Can shareholders override the board in Public Companies?
No
Are shareholder’s resolution binding to the directors?
NO THEY ARE NOT –> unless constitutional
What is difference between ‘Ownership’ and ‘Management’
Ownership = shareholders
Management = Directors + higher-ups
What is the Agency Problem?
Directors may act in their PERSONAL interests and NOT the companies
What is a Quorum?
- Meeting held with at LEAST 2 directors, unless sole director
What is the difference between ‘Resolutions at Meetings’ and ‘Resolutions without Meetings?’
Resolutions AT Meetings = passed by majority of directors + directors acting in good faith + directors VOTE together
Without Meetings = passed in writing if ALL directors sign the resolution
When will Board Meetings be invalid?
- Directors NOT receive reasonable notice
- Directors NOT fully aware of info
- Directors MUST be fully present –> NOT VALID if acting as proxy
How quickly should we notify ASIC if appointing a director?
28 days
How can shareholders appoint a director for Priv and Pub?
Public: Resolution at a general meeting
Priv: ‘Signing a record’
What are the 3 ways in which ppl are disqualified from Managing a Corp?
- Convicted of certain criminal offences
- Becoming a bankrupt
–> if person was officer who failed 2 or more companies in 7yrs
- Disqualified by a foreign court or under foreign law
(at least 5 yrs from release)
What is Leave to Manage?
- Disqualified person MAY apply to court to manage –> must prove risks are low + conduct since disqualification is appropriate
What can liquidators do against officers managing whilst disqualified?
- Set company’s debt on the officer’s fault
Purpose of disqualifying?
- Protect shareholders
- Punish offenders
- Deter improper conduct
Factors impacting Judges duration of disqualification
- Financial losses and its amount
- Likelihood of re-committing
- Dishonesty or fraud?
- Lack of remorse
- Previous breaches
Can Directors resign if it would leave company w 0 directors?
NO
Can Directors resign to avoid liability?
NO
In a public company, how can directors be removed?
- Shareholders –> Directors CANNOT remove other directors
In Priv Company, how can directors be removed?
- Majority vote by Shareholders or director resolution (more than 50% of votes)
