A quorum is the number of members in a company that must be present in a meeting in order to transact any business.
A meeting cannot be convened or start any business without having a quorum or the minimum number of voting members present. Any business that is transacted where a quorum is not present is considered null and void. The only business that can be transacted where a quorum is not present is to adjourn the meeting.
A quorum is required to prevent a minority number of shareholders from making decisions without the consent of the majority. A quorum is usually set proportionate to the number of members. The quorum in the model constitution is two. This means that for a business to be transacted at a meeting, at least two shareholders or members must be present. If there is only one shareholder then that shareholder alone can transact business.
Companies should want to avoid having business transacted in the absence of a minimum number of members but at the same time do not want to set a quorum too high such that it gets too difficult to pass matters.
Companies can and should alter the quorum requirements in the company’s constitution as the number of members grows.
When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.
The editorial team at ACRA Filing Agent
For more useful articles and videos, visit the ACRA Filing Agent Useful Article page.
If you would like to submit a question or would like us to do an article on certain topics, please email us at [email protected].