NZSA Best Practice

CHALLENGING THE AGENDA

The agenda of an AGM is usually set by the Chairman or the Board, prior to the meeting. Approval of the agenda should be the first issue addressed at a meeting, but is usually presented in a way that avoids discussion. It usually reflects management’s views of priorities, which may not be shared by shareholders. Accordingly, it is important to shareholders that they be aware of what rights they may have to challenge the agenda. There may be merit in promoting their concerns up the agenda, to a time people may be willing to consider them, rather than see them buried at the end of what is often a long and sometimes tedious meeting. The following is a guide to the relevant rules regarding attacking the agenda.

Pursuant to s.124 Companies Act 1993, the 1st Schedule of the Act applies unless varied by the Constitution.

^{The 1st Schedule provides at clause 13 that except as provided elsewhere in the schedule and subject to the Constitution of the Company, the meeting of shareholders may regulate its own procedure.}

^{The only relevant provision of the 1st Schedule is that by clause 1, voting is by voice unless a poll is demanded.}

^{The Constitution of the Company must be checked for any specific provisions regarding the conduct of the meeting. For instance, Air NZ at 18.3 of its constitution provides that the chairman may regulate the proceedings at meetings of shareholders. This means that the chairman has the only say as to the order in which matters are dealt with. It is not a matter to vote on, in such an instance.}

^{A challenge to the order of the agenda is a point of order. A point of order can be raised at any time. The chairman can not refuse to receive the point of order. It does require a seconder. As it addresses the order of the agenda it is not debatable.}

^{If the shareholders meeting can regulate its proceedings, the point of order must be put to the vote. If the chairman regulates the proceeding, he simply rules on it.}

^{Accordingly, it is critical to determine in advance whether any particular meeting is regulated by the shareholders, or by some other procedure spelt out in the Constitution (such as in the example of Air NZ, by the chairman).}

^{It is likely, for sound practical reasons, that most public listed companies will have a constitutional provision in terms of the one found in Air NZ (which is a reasonably standard form constitution). However, this is not invariably the case, and needs to be checked in relation to each Company.}

^{If the chairman determines the order, any attack on the agenda will have to take on the chairman directly, and appeal to him rather than to all members. In terms of advocating a particular point of order, it is important to bear in mind whether you are trying to appeal to the sweet reason of the chairman, or to stir up the wrath of the shareholders. What you say, and how you say it, will be rather different depending on who your target audience is.}

^{Be aware that point 5 only requires the chairman to hear out the point of order being made, not to rule in favour of that point.}

^{The comments in the foregoing guide are based on the provisions of the Companies Act 1993, the Stock Exchange Listing Rules 1996 and by reference to a standard form of Constitution.}

^{The comments also rely on additional detailed rules available in the standard rules for public meetings found in the Local Authority Standing Orders (NZS 9202:1992) and the Public Bodies Standing Orders (NZMP 9204:1993). These are themselves based on the Standing Orders of the House of Representatives. These additional sources are not binding on a company, but if a matter was ever taken to Court, are likely to be regarded as highly persuasive regarding the correct procedure to follow. There is no definitive set of similar detailed rules for public company meetings, as the Companies Act largely leaves it to each Company to determine how to govern itself. Accordingly, most do not develop detailed procedural rules.}

^{R M Dillon}

^{Director - Advocacy}