Failure of directors to call general meeting

– section 249E of the Corporations Act 2001

Failure of directors to call general meeting
If Directors have failed to call a general meeting, certain members are entitled to call a general meeting. It is an offence for Directors not to provide a copy of the register of members to the members holding the general meeting. It is also an offence for Directors not to pay the reasonable expenses of holding a general meeting.

Examples of Failure of Directors to Call General Meeting
  • The board of Directors have failed to call a general meeting. Members entitled under s 249D to call a general meeting attempt to call a meeting but are not provided with a register of all of the members.
  • Members entitled to call a general meeting hold a meeting but they are not reimbursed for the cost of printing the agendas for the meeting.
What are some of the possible defences to a charge of Failure of Directors to Call General Meeting?
  • You are a Director in a company and took reasonable steps to provide the members with the register.
  • You are a Director in a company and took reasonable steps to reimburse the members who organised the meeting.

There are other possible defences, depending on the circumstances surrounding the alleged offending. Each matter is unique and requires an individual approach and strategy.

Questions in cases like this
  • Why was there failure to call a General meeting?
  • Did you know that a registrar of members was not provided?
  • Did you know that members were not reimbursed for holding a general meeting?

Court that deals with this charge

This charge will generally be heard in the Magistrates’ Court.

“Did you fail to assist members calling a general meeting?”
What is the legal definition of Failure of Directors to Call General Meeting?

It is an offence for Directors of a company not to provide a copy of the register of members to the members holding the general meeting. It is also an offence for Directors not to pay the reasonable expenses of holding a general meeting.

Legislation

The section that covers this offence is section 249E of the Corporations Act 2001.1

 


[1] Corporations Act 2001 – Section 249E

(1) Members with more than 50% of the votes of all of the members who make a request under section 249D may call and arrange to hold a general meeting if the directors do not do so within 21 days after the request is given to the company.
(2) The meeting must be called in the same way–so far as is possible–in which general meetings of the company may be called. The meeting must be held not later than 3 months after the request is given to the company.
(3) To call the meeting the members requesting the meeting may ask the company under section 173 for a copy of the register of members. Despite paragraph 173(3)(b), the company must give the members the copy of the register without charge.
(4) The company must pay the reasonable expenses the members incurred because the directors failed to call and arrange to hold the meeting.
(4A) An offence based on subsection (3) or (4) is an offence of strict liability.
(5) The company may recover the amount of the expenses from the directors. However, a director is not liable for the amount if they prove that they took all reasonable steps to cause the directors to comply with section 249D. The directors who are liable are jointly and individually liable for the amount. If a director who is liable for the amount does not reimburse the company, the company must deduct the amount from any sum payable as fees to, or remuneration of, the director.