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September 2, 2010

Meeting chairman’s powers

In Alliance Craton Explorer Pty Ltd V Quasar Resources Ltd [2010] SASC 266 the Supreme Court of South Australia was asked to decide whether the tape recording of Management Committee meetings of a Joint Venture was lawful, whether the ruling of the chairman to prohibit the electronic recording of the meetings was ultra vires, and whether the Management Committee itself has the power to decide such a question.

Judge Sulan decided that it was not unlawful for the meeting to be recorded but then decided that it was within the power of the chair and the meeting itself to decide whether a recording was permissible:

"Although the chairman’s role is facilitative, it is clear that the duty and function of the chairman is to preserve order and to ensure that the proceedings are conducted in an orderly and proper manner. I consider that the chairman’s decision to prevent the tape-recording of a meeting is procedural in nature. It does not deal with matters of substance discussed at the meeting. For example, if a chairman were to prevent a member at the meeting from raising substantive issues about a relevant topic, then that would be more than a mere matter of procedure. There was no attempt in this case by the chairman to limit the discussion on any topic relevant to the joint venture. I consider that a ruling made bona fide to prevent a meeting from being tape recorded is within the scope of the chairman’s powers. ..

The chairman exercised his powers to adjourn the meeting because Alliance expressed the intention that it was not prepared to abide by the chairman’s ruling and resolution of the Management Committee in relation to preventing the tape-recording of meetings. I conclude that it was a valid exercise of the chairman’s powers to adjourn the meetings in circumstances where he was exercising procedural control over the meetings and where the failure of Alliance to comply with the ruling and resolution prevented the continuation of business at the meetings...

a properly convened meeting has the inherent power to regulate its own affairs in the absence of express provisions to the contrary. Such regulation will include matters which are incidental to the manner in which meetings are conducted, including whether or not the proceedings of a meeting can be tape recorded. Any disagreement between the participants should necessarily be resolved by a vote of those entitled to vote at the meetings.

I find that the committee, in the absence of an express provision in the JVA to the contrary, had the inherent power to make a majority ruling on matters incidental to the manner in which meetings are conducted. This extends to the power to preclude a party from taking an electronic recording of the meeting. "

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Posted 2nd September 2010 by David Jacobson in Corporate Governance, Corporations Act