The recent amendments to the Corporations Act and Regulations have caused some minor changes to voting at corporate insolvency meetings.
A chairperson has had the right to use a casting vote for some years. The regulation governing resolutions by poll (regulation 5.6.21) have been amended so that the minutes of the meeting must include the reasons for exercising or not exercising that casting vote.
“(4A) If no result is reached under subregulation (2) or (3), and the meeting is not a meeting of eligible employee creditors, the person presiding at the meeting must include in the minutes of the meeting the reasons for exercising, or not exercising, as the case may be, a casting vote under subregulation (4).”
It has also been determined that the chairperson should use their casting vote unless there is some good reason not to do so. Ausino International Pty Ltd v Apex Sports Pty Ltd (2007) 25 ACLC 415.
Historically a person (typically a liquidator or one of their staff) was not allowed to use a proxy in their name to vote for a resolution that would financially benefit them. This could have been inconsistent with the wishes of the creditor appointing someone as their proxy, only to have them not be able to use that vote.
The position has changed so that a person acting under a general proxy only must not vote in favor of any resolution which would place the person in a position to receive any remuneration out of assets of the company. This limitation now does not apply to a special proxy that specifically authorizes the person to vote in a certain way.
The most practical application is that a Chairperson will be able to use a special proxy to vote for their remuneration if that creditor authorizes that vote.
Lastly, a proposal is being considered that will allow liquidators to use postal votes on some resolutions. The Bankruptcy Act has had these provisions for some time and they have proved to be very useful. We believe that this would be a good move for corporate insolvencies too.