Corporations Act 2001

The directors must not set a board limit unless:

a resolution (a board limit resolution) approving the proposal to set the limit specified in the resolution has been passed by a general meeting of the company; and

the notice of the meeting set out an intention to propose the board limit resolution and stated the resolution; and

the notice was accompanied by a statement explaining the resolution and meeting the requirements in section 201Q.

Subsection 249L(3) requires information in the notice of meeting to be presented clearly, concisely and effectively.

Section 201U specifies the consequences of a contravention of subsection (1) of this section. Also, section 1324 provides for injunctions to enforce subsection (1) of this section.

A board limit resolution has effect until immediately before the start of the first AGM of the company after the general meeting by which the resolution was passed.

A board limit resolution does not prevent the appointment of a person as a director of the company by the other directors of the company between general meetings of the company.

However, if a person is appointed by the other directors as a director of the company while a board limit resolution has effect, the company must confirm the appointment by resolution at the company’s next AGM. If the appointment is not confirmed, the person ceases to be a director of the company at the end of the AGM.

Subsections (1), (2) and (4) have effect despite the company’s constitution.

Although subsection (4) is like subsection 201H(3) in many ways, it is not a replaceable rule like subsection 201H(3).