Q&A with Governance Institute

1. What processes and systems are companies using to assist with the verification of public documents, storage of verification materials and reporting on verification processes? Are there systems available?

Some companies use spreadsheets to track verification of documents. However, there are now a range of proprietary systems available including Atticus, Informed 365, WDesk hosted by Workivain and Tangelo. Some companies use one of these systems and then use the internal audit team to review the verification.

2. Is it possible for a director to give a directed proxy to be used at a board meeting, if permitted by a company’s constitution?

The most recent edition of Horsley’s Meetings comments that there ‘is no provision in the Corporations Act for directors to vote by proxy, although the constitution of the company could allow for this. Instead, s 201K contemplates the appointment of alternate directors.’ [1] No authority is quoted.

The more common situation used for a director who is unable to attend a board meeting is to appoint an alternate director. Appointment as an alternate director needs to be notified to ASIC and if they are not already a director, they must provide their consent in writing prior to the appointment and obtain a director ID.

While constitutional provisions permitting a director to appoint a proxy for a board meeting do exist, they are unusual. The granting of a proxy by a director raises some questions about the duties of the directors involved. For example, the director who has given the proxy and may have indicated support or rejection of a proposal is not in a position to modify their thinking based on the discussion at the board. Would this amount to a breach of care and diligence? Similarly with the director to whom the proxy is given, how do they in good faith listen to the discussion and then decide how the other director would vote? An additional complication would be where a constitution states that directors have one vote how could a director having two votes be justified? Another question is whether the constitution covers the situation relating to the proxy being part of the quorum if necessary?

While it is theoretically possible for a director to give a directed proxy to be used at a board meeting there are a number of practical issues to consider.

[1] See Horsley’s Meetings Procedure, Law and Practice, 7^th Edition, A D Lang, para 22.11. Section 201 of the Corporations Act is a replaceable rule.