Appendix 4

Committee: Report on the Provisions of the Wool International Privatisation Bill 1999

Appendix 4

WoolStock Australia Limited
Summary of Voting Requirements

This document sets out:

  • The different types of voting systems which will apply in WoolStock Australia Limited;
  • How voting rights are exercised by shareholders; and
  • The special provisions which will apply to TrusteeCo.

These rules come both from the Corporations Law and from the terms of the proposed constitution of WoolStock Australia Limited.

There are 3 ways in which the votes of members of WoolStock Australia can be used. These are:

  • Ordinary resolutions;
  • Special resolutions; and
  • Postal ballots.

Part 1 of this document sets out when and the circumstances in which each type of voting is used.

Part 2 of this document sets out how the voting rights of shareholders are counted for each of an ordinary resolution, a special resolution and a postal ballot.

Part 1

TYPE REQUIREMENT REQUIRED FOR
ORDINARY RESOLUTION An ordinary resolution is passed if at a general meeting of shareholders a majority of the votes (cast by the shareholders entitled to vote on the resolution and actually voting at the meeting) are in favour of the resolution.

Votes may be cast at a meeting by the shareholder in person or by proxy on the shareholder's behalf.

"A majority" is at least 50% of the votes cast plus at least 1 more vote (the resolution will be defeated if exactly 50% vote in favour of the resolution).

 An ordinary resolution is to be used for all resolutions in a general meeting except where a special resolution is required.

For example:

  1. Election of directors (rules 2.3 and 2.5)
  2. Removal of directors (rule 2.12)
  3. Increasing maximum number of directors beyond 7 (rule 2.1)
  4. Fixing of aggregate amount of directors fees (rule 9.2)
  5. Adjourning a general meeting (rule 13.6)
  6. Authorising a member to inspect company documents (rule 20.5)
  7. Approving a sale of all or substantially all of the company's assets (rule 4.3)
  8. Approving a sale without an offer of securities in the buyer entity being made to shareholders (rule 4.4)
  9. Spending more than $3 million on investigations into the feasibility of a wool marketing or processing company (rule 1.5)
  10. Approving a reduction in share capital which applies equally to all shareholders (Corporations Law section 256C(1))
TYPE REQUIREMENT REQUIRED FOR
SPECIAL RESOLUTION A special resolution is passed if at a general meeting of shareholders at least 75% of the votes (cast by the shareholders entitled to vote on the resolution and actually voting at the meeting) are in favour of the resolution.

Votes may be cast at a meeting by the shareholder in person or by proxy on the shareholder's behalf.

"At least 75%" is at least 75% of the votes cast plus at least 1 more vote (the resolution will be defeated if exactly 75% vote in favour of the resolution).

 Under the Corporations Law, a special resolution is required to make certain substantial modifications to the company. These are all mandatory requirements of the Law. For example a special resolution is required:

1. To change the company's name (section 157);

2. To adopt or modify the constitution (sections 136 and 137);[note: In the case of WoolStock, there is the additional requirement, which applies only to a modification to rules 1.2, 1.3 or 1.4, of approval by postal ballot by shareholders holding more than 50% of all shares – see below].

3. To voluntarily wind up the company (section 491);

4. To provide financial assistance to a person for that person to acquire shares in the company (section 260C);

5. To make a selective reduction in share capital (ie. where the share capital of the company is reduced and the reduction affects certain shareholdings only, rather than affecting all shareholdings pro rata) (section 256C(2));

6. If the selective reduction of capital involves a cancellation of some shares, the reduction must also be approved by a special resolution at a meeting of the shareholders whose shares are to be cancelled (section 256C(2));

7. To extend the powers of any liquidator of the company (sections 506(1B), 507(6) and 506(11));
TYPE REQUIREMENT REQUIRED FOR
SPECIAL RESOLUTION (CONTINUED)   8. To issue preference shares* (section 254A);

9. To convert ordinary shares into preference shares* (section 254G);

10. To create different dividend rights for shares in the same class of shares* (section 254W);

11. To approve the terms of a selective buy-back agreement (meaning the buying back of shares in the company from certain shareholders only, rather than offering this to all shareholders). An additional requirement here is that when no votes are cast in favour of the resolution by any person whose shares are proposed to be bought back or any associate of that person) (Corporations Law section 257D); or

12. To divide the assets of the company between the members in kind on liquidation of the company (and to value them for that purpose) or vest the assets of the company in a trustee for the benefit of the members, on liquidation of the company (Rule 28.1 of the Constitution).

* The constitution of WoolStock Australia Limited does not currently permit any of these things to be done. Therefore a further special resolution would be needed in order to amend the constitution to provide for them.

TYPE REQUIREMENT REQUIRED FOR
POSTAL BALLOT Approval by postal ballot will be given if shareholders entitled to vote in the ballot, who between them account for more than 50% of the total votes capable of being cast at a general meeting, indicate (in the ballot) that they approve the resolution.

"More than 50%" means 50% plus at least 1 more (if 50% exactly only are in favour, the resolution will be defeated).

"Capable of being cast" means that the 50% plus majority figure is calculated with reference to all of the issued shares in the company (including those owned by TrusteeCo). However, TrusteeCo is not entitled to actually take part in a postal ballot (Rule 15 5 of the constitution).

 A postal ballot is a further or special requirement in WoolStock Australia Limited as a condition before a special resolution to remove the constitutional restrictions on the company's activities is effective. It is required by Rule 1.4 of the constitution. The postal ballot may take place either before or after the special resolution, but the special resolution in question will not take effect until approved by the postal ballot.

The types of special resolutions which need confirmation by postal ballot are listed in Rule 1.4 of the Constitution. They are resolutions which:

1. Amend the restrictions in the constitution on what the company can do (see Rule 1.2 of the Constitution).

2. Amend the extent to which the company can investigate the feasibility of a wool marketing and processing company (see Rule 1.4 of the constitution)

3. Amend the restrictions in Rule 1.4 of the constitution on the amendment of Rules 1.2 and 1.3.

It should also be noted that TrusteeCo cannot vote:

(a) in the postal ballot; or

(b) on any special resolution to amend Rule 1.2, 1.3 or 1.4 of the constitution.

Part 2

This Part explains how shareholders vote for or against resolutions (ordinary or special) at general meetings.

The basic rule is that a resolution is decided by a show of hands of the shareholders entitled to vote who are present or represented at the meeting, unless a poll is demanded (see rule 15.2 in the constitution, which follows section 250E of the Corporations Law).

Voting on a show of hands

Each member entitled to vote on the resolution has 1 vote on a show of hands. This means that, for an ordinary resolution 50% plus one more of the shareholders present at the meeting (in person or by proxy) and deciding to vote need to vote in favour of the resolution for it to be passed. For a special resolution, 75% plus one more of the shareholders present (in person or by proxy) and voting must vote in favour.

Voting on a poll

On a poll, if one is demanded, one vote attaches to each share (not one vote per member), and the method of calculating percentage rates of votes is calculated by reference to the number of votes cast in the poll not by the total number of shares in the company (ie 50/75% of votes cast plus one).

A poll can be demanded at any general meeting by any of the means set out in Rule 16.2 of the Constitution):

  • At least 5 members present at the meeting who are entitled to vote;
  • At least 5% of the votes that could be cast on the poll; or
  • The Chairman of the meeting.

A poll must be carried out in the manner determined by the chairperson of the meeting.

Proxies

A correctly appointed proxy has the same rights as the member would have had if present, subject to the terms of the proxy's appointment (eg. a proxy can be appointed with instructions to vote in a particular way, or can be appointed to vote in the manner the proxy chooses) (Corporations Law section 250A). Under the Corporations Law every shareholder is entitled to appoint a proxy and the notice of meeting must remind all shareholders of this fact (sections 249L and 249X(1)).

Proxies must be received by WoolStock 48 hours before the meeting (rule 14.3).

Postal ballots

A postal ballot is to be carried out in the manner determined by the directors of the company (Rule 1.4 of the constitution).

Specific provision is made in section 136(3) of the Corporations Law permitting a company to include in its constitution an additional requirement before a special resolution to amend the constitution becomes effective. The requirement for an absolute majority of votes held by all shareholders ascertained by postal ballot is such an additional requirement.

Who can vote?

Subject to the exceptions set out below, all shareholders have the right to attend all general meetings and vote either in person or by proxy.

The exceptions are:

(a) TrusteeCo cannot vote in a postal ballot to approve a resolution to remove the constitutional restrictions on the company's activities (ie rules 1.2, 1.3 and 1.4);

(b) TrusteeCo cannot vote on the actual special resolution to modify or repeal the constitutional restrictions on the company's activities;

(c) In certain other circumstances the Corporations Law prohibits shareholders from voting on certain resolutions (for example shareholders who would benefit from a special resolution in relation to a selective reduction of capital).