Week 7 tutorial questions: MembershipMembership and members’ rights1) A group of environmentalists have purchased shares in a mining company.Some 200 members of the group are now shareholders and holding variousamounts of shares. The members of the group who have purchased shares arenot against profits being made by their company, but are concerned thatappropriate health and safety standards are not implemented by the company,and further that appropriate environmental safeguards are implemented whenextracting a mineral, transporting it and manufacturing the final product.What rights do members have to question directors at a meeting regarding thecompany’s environmental practices?What are the rights of members to actually call an extraordinary meeting in orderto discuss a particular environmental issue that has arisen since the lastmeeting of members was held?Suggested answerMembers have the right to put resolutions to a meeting where at least 100 membersor those holding 5% of the voting power, can give notice to the company of a proposedresolution (with appropriate procedures complied with). Note that there are somerestrictions on what can be proposed, e.g. word limits and must not be defamatory.See textbook 10.40.Members have the right to ask questions at an AGM, to make comments andparticipate in a meeting; it is the chairman’s job to allow reasonable opportunity formembers to ask questions. See textbook 10.39.Members have the right under the Corporations Act to call an extraordinary meetingwhere at least 100 members or those holding 5% of the voting power actually call forthe meeting to be held. The members need to give a written request to the directors,it needs to be signed by members, and the meeting must be for an appropriatepurpose. If a company believes that the meeting is only to waste time or annoy thedirectors, then a court may legitimately refuse to hold that meeting: S 249D(1) CA.The power to do this is on the threat that the directors themselves may have to pay forthe meeting if they refuse to call the meeting in time, or act unreasonably in notpermitting the meeting. See textbook 10.44.In other instances the members could call their own meeting s 249F(1) at their ownexpense, (paragraph 10.45), or ask a court for a direction to call a meeting at therequest of a member: s 249G(2). See textbook 10.46.
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