A member of a company is often called a shareholder. Members of a company have certain rights and responsibilities.
- What is a member?
- What is the role of a member?
- Becoming a member of a company
- Notifying ASIC about changes to member and share structure details
- Accessing company information
What is a member?
A member of a company must be a person (e.g. John Citizen), a body corporate (e.g. XYZ Company Pty Ltd), or a body politic (e.g. State of Queensland). A member is an entity that can own property, sue or be sued. A business name is not a legal entity and therefore cannot be a member. Estates and trusts cannot hold shares in their own right – they must nominate an executor or a trustee.
The Corporations Act 2001 (Corporations Act) does not specify a minimum age for a member of a company. However, a company may make its own determination regarding a minimum age for a member.
All companies must have at least one member. Proprietary companies must have no more than fifty members that aren’t employees of the company. There is no limit on the number of members of a public company. ASIC may apply to a court to have a company wound up if it does not have any members.
What is the role of a member?
The members of a company own the company, but the company has a separate legal existence and the company’s assets belong to the company.
As a member you are not liable (in your capacity as a member) for the company’s debts. Your only financial obligation is to pay the company any amount unpaid on your shares if you are called on to do so. If the company is not a company limited by shares, in some circumstances members may have to contribute to the costs of winding up the company (and any incidental costs).
You can make decisions about the company by passing resolutions, usually at a meeting: see ‘Meetings’ below.
Becoming a member of a company
There are a number of ways you can become a member of a company. You can:
be listed as a member at the time of registration of the company. You must have given your written consent to be a member before the application for registration is made. The names and addresses of all persons who have consented to be members form part of the application for registration as an Australian company
agree to become a member of a company that is already registered with us. After you have given written consent and your name is entered on the register of members, the company is responsible for notifying us of changes to the register of members, or
already be a member of a company limited by guarantee when it converts to a company limited by shares.
Notifying ASIC about changes to member and share structure details
Proprietary companies and public companies have different responsibilities for notifying us about changes:
Proprietary companies must tell us of any changes to member details and the share structure, including the issue or cancellation of shares and share conversion or division.
Public companies are only required to tell us of changes to the share structure, including the issue or cancellation of shares and share conversion or division. They are not required to tell us of changes to member details.
Accessing company information
The share register is usually held at the company’s registered office and contains the name and address of each member, the number of shares held, share classes and the amount paid and unpaid on the shares.
Anyone has a right to inspect a copy of a company’s share register. As a member, you may inspect the register free of charge. However, the company may charge other people to inspect the register. The inspection fee is set out in Sch 4 of the Corporations Regulations 2001 (Corporations Regulations).
Anyone has a right to request a copy of a company’s share register. A company must provide a copy of the register to you within seven days of you requesting the copy. The maximum fee for supplying a copy of the register is set out in Sch 4 of the Corporations Regulations.
When requesting a copy, you must provide your name, address and the purpose of your request. You cannot obtain a copy of a register for an improper purpose, such as:
soliciting a donation from a member
soliciting a member of a company as a stockbroker or sharebroker
gathering information about the personal wealth of a member, or
making an unsolicited offer to purchase financial products such as shares or units off-market
if the company keeps the register on a computer, the company must provide the copy in the format set out in Part 2C.1 of the Corporations Regulations.
If you are a member, the company must send a copy of its constitution to you within seven days of you making a written request. The company may charge the fee for this service set out in Sch 4 of the Corporations Regulations.
Any changes to the constitution of a public company must be made by a special resolution: see ‘Voting’ below. A copy of the resolution must be lodged with us within 14 days of the special resolution being passed.
Financial statements of the company
Members with at least 5% of the votes in a small proprietary company or a small company limited by guarantee may give a direction to the company to:
prepare a financial report and directors report for a financial year, and
send them to all members.
The direction must be:
signed by the members giving the direction, and
made no later than 12 months after the end of the financial year concerned.
The direction may specify all or any of the following:
that the financial report does not have to comply with some or all of the accounting standards
that a directors’ report or a part of that report need not be prepared, and
that the financial report is to be audited.
Unless a member specifically requests not to receive the report, public companies must prepare and send a copy of their financial accounts to all members at least 21 days before the annual general meeting and within four months of the end of the financial year. Financial reports may be made available on a website and hard copies supplied only to members that request one. Alternatively, the company can continue to distribute hard copy reports to members.
A company must keep a written record (minutes) of the members’ resolutions and meetings. Members are entitled to inspect, free of charge, the minute books of a company at its registered office address or principal place of business. However, if a member requests a copy of minutes, the company may charge the fee for this service set out in Sch 4 of the Corporations Regulations.
Some companies pay dividends to their shareholders. Directors may determine by what method a dividend is payable. The method of payment may include the payment of cash, the issue of shares, the granting of options and the transfer of assets. The company's constitution may detail an agreed method of payment for a dividend, including by electronic transfer, cash or cheque. If the method in the constitution is not adhered to this is a contractual matter between yourself and the company.
Meetings may be held regularly or to resolve specific questions about the management or business of the company. The process to be followed in calling meetings, conducting meetings, and voting at meetings is in Pt 2G.2 of the Corporations Act.
A proprietary company can pass a resolution without a physical meeting being held, if all members entitled to vote on the resolution sign a document stating that they are in favour of the resolution. This does not apply to a resolution to remove a company auditor.
How is a meeting of members called?
Company directors have the power to call meetings of all members or meetings of only those members who hold a particular class of share (a company may have different classes of shares to which different rights and restrictions are attached).
Members who hold at least 5% of the votes that may be cast at a general meeting of the company have the power to:
call and hold a meeting themselves, or
require the directors to call and hold a meeting.
What is a quorum?
A quorum is the minimum number of members required to be present to legally transact business. For a meeting of company members, a quorum of at least two members must be present for the full meeting (unless otherwise specified in the company’s constitution).
Different classes of shares may have different rights to vote at meetings of members. Unless specified by the company’s constitution, each member has one vote in a show of hands and, in a poll, each member has one vote for each share held.
If a company has only one member, that member may pass a resolution by recording and signing their decision.
A member of a company that is entitled to attend and cast a vote at a meeting of members may appoint a person as their proxy to attend and vote for them at the meeting. If you do something by proxy, you appoint someone else to do it on your behalf.
An ordinary resolution must be passed by a majority (normally, more than 50%) of the votes cast by members entitled to vote on the resolution and who vote at the meeting in person or by proxy (if proxies are allowed).
A special resolution must be passed by at least 75% of the votes cast by members entitled to vote on the resolution and who vote at the meeting in person or by proxy (if proxies are allowed).
This is Information Sheet 47 (INFO 47), reissued in February 2014. Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.