The Quorum for Meetings

There are often misunderstandings about the rules which apply to the quorum for a meeting (the minimum number of members that must be present at a meeting).

General principles

As it may be difficult to attract a majority of members to the meetings of some organisations, the quorum is commonly set at a fraction (less than half) of the membership, or at a fixed number of members. However, for an organisation’s executive committee it is common to find the quorum set at one more than half the number on the committee.  When a subcommittee is established the quorum will be all members of that subcommittee, unless a different quorum is prescribed in the rules or when the subcommittee is constituted.  A public meeting, of course, has no quorum.

At any time during a meeting, any member, or the meeting chairperson, may question whether a quorum is present. Such a “call for a quorum” takes precedence over all other business.  If there is no longer a quorum the meeting is said to be “inquorate” and unless absent members can be called back into the meeting must be closed and the reason for the closure noted in the minutes.

The Local Government Act 2002 and other statutes have special rules for statutory bodies, but for community organisations reference should be made to their constitution, which will give guidance.

Common law principles

Subject to what is in the constitution, the Courts have established some quite straightforward principles:

  •  A meeting of an organisation or a committee cannot commence, continue or make lawful decisions unless the required quorum is present:

–  If no quorum is prescribed for general and committee meetings in an organisation’s constitution, at common law, the quorum is a majority (just over half) of the membership of the organisation or committee (McColl v Horne (1888) 6 NZLR 590).

–  A meeting cannot start unless the quorum is present in person (proxies not being counted) when it is said to be “quorate,” nor can it continue if the quorum is lost during the meeting (Re Greymouth Point Elizabeth Railway and Coal Company Limited [1904] 1 Ch 32).

–  Unless the rules provide otherwise, a member represented by a proxy (proxies being the subject of my next article) or declaring an interest is not counted in the quorum (nor are members who are in default financially).

–  The business conducted at a meeting held without a quorum being present is invalid (Re Dannevirke Motor Co. Limited [1920] GLR 266). The decisions of such a meeting may be validated at a subsequent meeting if that is permitted by the rules or any standing orders. Otherwise the business must be expressly dealt with again at the subsequent meeting.

–  However, anyone who deliberately withdraws from a meeting to remove the quorum will not be entitled to challenge the resulting lack of a quorum (Ball v Pearsall (1987) 10 NSWLR 700). Further, if a chairperson leaves as a way of trying to close the meeting, as long as a quorum is still present, a member who disagrees with the chairperson’s action may immediately seek the election of a replacement chairperson (Meek v Dunn (1893) 12 NZLR 342, Arcus v Castle [1954] NZLR 122 (FC) and Wishart v Henneberry (1962) 3 FLR 171).

  • A New Zealand judgment (Body Corporate 199883 v Clarke Family Associates Ltd (2005) 5 NZ ConvC 194,087 (High Court)) makes it clear that proxies are not counted when checking the quorum (although the rules could provide otherwise):

The purpose of the quorum provisions is to ensure a minimum number of registered proprietors are personally present at any such meeting. If “voting power” in this context included proxy votes then all such meetings would require only one person, not necessarily a registered proprietor, holding seven proxy votes to constitute a quorum.

Proxies for individuals, corporate entities, and partnerships

In organisations where there are only individual members, providing for proxies is important only to enable absent members to vote at meetings and rules may make detailed provisions relating to proxies. Particularly in societies where companies and partnerships may be members, quite apart from allowing proxies to attend on behalf of members who cannot be present in person, providing for proxy voting resolves other problems:

  • As corporate legal entity can act and make decisions only through human individuals, a company cannot attend a meeting other than by appointing a proxy, but can do so only if that is allowed by the society’s rules.
  • A partnership is, by definition, a group of two or more individuals (and a corporate entity may also belong to a partnership). A member that is a partnership can exercise only one vote, so it also needs to appoint a proxy to enable it to vote. (If only one partner attends it is probably safe to assume that such a person is authorised to vote, but strictly speaking a proxy should be provided).

Accordingly, where a number of society members may be companies or partnerships (and where couples run a business which is a member they are likely to use a company or partnership structure), providing for proxy voting and attendance at meetings is important as, otherwise, they will be precluded from influencing or participating in making society decisions.

Preventing proxy vote stacking

To prevent potential abuse of proxy voting (especially vote stacking) the rules may expressly provide that “No financial member shall hold more than one proxy at any General Meeting.” Drafting proxy and quorum rules to meet the needs of a particular society’s membership requires considerable care, and the interpretation and application of such rules is often difficult.

 

This is one of a series of articles on societies and charitable trusts (originally published in the NZ Lawyer magazine) by Mark von Dadelszen, a Hastings lawyer and author of Law of Societies, 3rd Edition, 2013. If any reader has examples of issues that have arisen or questions about societies or charitable trusts that might be a suitable subject for one of these articles please contact Mark at mark.vondadelszen@bvond.co.nz.