Responding to shareholder activism: when can directors properly delay an EGM?

Section 249F of the Corporations Act allows shareholders with 5% of a company's capital to 'call and arrange to hold' an Extraordinary General Meeting (EGM).

Whether directors can postpone such a meeting has been uncertain. Courts have upheld postponement decisions in limited circumstances, but faced criticism that this undermines shareholder rights.

These matters were considered and clarified in Wun v CellOS Software Ltd [2018] FCA 1947 (Wun v CellOS),¹ a decision which provides important guidance to directors and shareholders.

In short, the validity of a postponement decision depends on:

• an express constitutional power;
• the surrounding context; and
• most importantly, evidence about the reasons for the directors' decision to postpone an EGM.