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The Road Ahead : October 2014
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roadahead.com.au 60 The road ahead OCT/NOV 2014 Special Business 15 Members are being asked to consider the adoption of a new constitution for the Company (New Constitution) at this year’s AGM. 16 The Existing Constitution has not been amended or received a significant review since 27 May 2008. Since that time there have been a number of changes to the Corporations Act and also to ‘best practices’ in corporate governance. 17 The Company has also started the process for facilitating a full membership review (as further explained in the explanatory notes to Resolution 5). Part of that process includes implementing a constitution which provides flexibility for the future, whilst still retaining the Company ’s member focused values. 18 Accordingly, the directors have undertaken a full review of the Existing Constitution and recommend the adoption of the New Constitution. 19 The New Constitution is being presented to members as two resolutions, as follows: (a) Resolution 3 proposes the adoption of the New Constitution (with the exception of the rule referred to in 19(b) below) in place of the Existing Constitution. (b) Resolution 4 proposes the inclusion of an additional provision in the New Constitution (following adoption under Resolution 3) to provide for a change of ownership approval procedure. (c) Resolution 3 is not conditional on Resolution 4 being passed, but Resolution 4 will only be voted on if the New Constitution is adopted following member approval under Resolution 3. Adoption of New Constitution – Resolution 3 20 The New Constitution is available to members via the RACQ website at racq.com.au/agm. Members may also request a hard copy of the New Constitution from the Group Company Secretary in advance of the AGM and further copies will be available for members attending the AGM in person. 21 In many respects the New Constitution is on similar terms to the Existing Constitution, but with modernised and more flexible terminology, to reflect updates to the Corporations Act and current market practices, together with necessary changes to ensure consistency and clarity of the terminology used in the New Constitution. There are certain key changes that have been made in the New Constitution, which are further explained below. 22 To assist members to understand the differences between the New Constitution and the Existing Constitution, the table below sets out a summary of the key provisions in the New Constitution and provides an explanation on the reasoning for any differences.1 1 Rules references in the table are to rules in the New Constitution. Definitions and interpretation (rule 1) Definitions in the New Constitution have been simplified and streamlined to ensure the document is expressed in plain English and provide for consistent use of defined terms. For example, the definition of ‘Eligible Member’, although reflecting the essence of the term in the Existing Constitution, has now been shortened. The New Constitution does not include certain definitions from the Existing Constitution which are no longer relevant. For example, the definition of ‘Immediate Past Chairman’ and ‘Seal’ are not included in the document, as explained further below. The New Constitution also includes simplified wording around the exclusion of the ‘Replaceable Rules’, at rule 1.3, which do not apply to the Company (as the Company has a constitution). Objects and powers (rule 2) A new objects clause is included in the New Constitution to make clear, in general terms, the aims and objectives of the Company (e.g. operating as a mutual to benefit members and to promote the interests of members). Distribution to members prohibited (rule 3) A new rule is included in the New Constitution, derived from the by-laws, to confirm that the Company may not pay a dividend or make any other kind of distribution to members. This reflects the position at law (which was recently clarified by amendments to the Corporations Act). 14583_AGM TRA 12pp_0814_v5_050914.indd 3 23/09/2014 11:32:24 Membership classes (rule 4) Membership categories for the future have been simplified in the New Constitution, so that the two key membership classes going forward, following implementation of system changes, are ‘ordinary voting members’ (who are entitled to vote at general meetings) and ‘ordinary non-voting members' (who are not entitled vote at general meetings). This will ensure simplicity as the Company moves to an expanded membership base (as further explained in Resolution 5). Work is still underway to determine when the system changes described above will occur. ‘Honorary membership’ and ‘honorary life membership’, together with the process for the approval of such members, have also been retained in the New Constitution. Other existing classes of membership are recognised and retained by rule 4.6, to ensure no members are prejudiced during the transition to a more streamlined membership base, comprising primarily of ordinary voting members and ordinary non-voting members. Rule 4.7 also provides that the board has a discretion to create new classes of membership and that this will not result in a variation of the rights of existing members. Wording has also been included to make clear that applications for joint membership may be accepted by the Company. The ability for the Company to appoint a patron has also been retained. By-laws, rules and regulations The New Constitution is no longer directly linked to the Company’s by-laws, to ensure that the New Constitution and by-laws are distinct and independent documents. The board has a general discretion to create and amend any rules and regulations from time to time (rule 10.1(b)). Rights vs. privileges The New Constitution has been simplified to ensure the rights of members of the Company are clear. Essentially, the rights of an Eligible Member are the right to vote at, attend, and receive notice of, general meetings (which includes the Company’s AGM). The rights of members are now clearly set out in rule 4. Other ‘privileges’ of membership, currently set out in the Company’s by-laws are not constitutional rights, and so the New Constitution does not include reference to privileges (to avoid any confusion). The board has also taken the opportunity to codify historic rights of members (e.g. the right to vote for directors only in the zone in which a member resides, subject to the modification to allow for the appointment of directors not representing a zone, explained further below). Members’ liability (rule 5) A new rule is included in the New Constitution to reflect the wording previously set out in the Company’s by-laws, to provide details on the liability of members if the Company is wound up (i.e. an amount not exceeding $2.00 for each member). The New Constitution also prohibits any distribution to members on a winding up. General meetings (rule 6) The New Constitution includes modernised provisions to provide further flexibility for general meetings. For example, the ability to hold meetings in multiple venues using audio-visual equipment. The quorum for a general meeting is still ten Eligible Members present. 14583_AGM TRA 12pp_0814_v5_050914.indd 4 23/09/2014 11:32:24 77373 RA OCT NOV 2014 58-69 AGM.indd 60 23/09/14 3:07 PM
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