Where a company’s constitution provides that a resolution may be passed by either a show of hands or on a poll, the chair of a general meeting does not have an unlimited discretion as to whether or not to demand a poll. The chair must act in good faith and impartially for the purpose of discovering the true will of the company’s members. Directors should be mindful of this in the upcoming AGM season.
Print Mail Logistics Ltd (Print Mail) called an extraordinary general meeting to amend its constitution (to authorise the issue of convertible preference shares). Landav Pty Ltd and Lance Bear Pty Ltd (the plaintiffs) were members of Print Mail and appointed the chair of Print Mail as their proxy, instructing him to vote against the resolution.
When the extraordinary general meeting took place, the chair did not call for a poll and the resolution was passed unanimously on a show of hands. The resolution would have been defeated had the plaintiffs' shares been voted on a poll because the plaintiffs held 26% of the shares and the chair would have been obliged to vote in accordance with the proxy direction.
The Court reaffirmed the principle that the chair of a general meeting is under a legal duty to demand a poll whenever it is necessary to discover the “true will of the membership”. This principle applies even where a chair’s power to call a poll is conferred in apparently unfettered terms.
The failure of the chair to demand a poll prevented the plaintiffs’ proxy being voted and meant that the special resolution that was passed on a show of hands was invalid and of no legal effect.
See the case.