The 46th Annual General Meeting of Ford Co-operative Credit Society Limited ABN 74 087 651 456 trading as Geelong Bank (the Bank) will be held on Thursday, 29 October 2020 commencing at 6.00 pm (AEDT). 

Given the social distancing requirements and in the interests of the health and safety of our Members and team, the Geelong Bank Board has decided to hold the 2020 AGM in a virtual format only.  There will not be a physical meeting that Members can attend.  Please register your attendance to the virtual AGM by emailing us at info@geelongbank.com.au or calling 1300 361 555.  Login details will be provided prior to the AGM.

Notes in relation to the Annual General Meeting are included within this Notice.  Please read these notes carefully.

AGENDA

1. Financial Statements and Reports

To receive and consider the Bank’s Financial Report, the Directors’ Report, and the Auditor’s Report for the financial year ended 30 June 2020.

2. Directors Remuneration

To consider and, if thought fit, pass the following as an ordinary resolution:

That the maximum aggregate Directors’ remuneration be set at $60,000 per financial year commencing with the financial year ending 30 June 2020.

3. Election of Directors

To elect four Directors to the Board in accordance with the Bank’s Constitution:

  • Peter Bone, Timothy Boyd and Scott Randall retire as Directors at the end of the 2020 AGM;
  • Retiring Directors Timothy Boyd and Scott Randall offer themselves for re-election;
  • Director Allison Batten filled the casual vacancy of former Director Christopher MacDonald who retired at the Board meeting held on 25 June 2020 and offers herself as a Member elected Director; and
  • Board appointed Director Mark Burrowes offers himself as a Member elected Director.  

To consider and if thought fit to pass the following as separate resolutions:

  1. That Timothy Boyd be appointed as Director until the end of the 2023 Annual General Meeting.
  2. That Scott Randall be appointed as Director until the end of the 2023 Annual General Meeting.
  3. That Allison Batten be appointed as Director until the end of the 2023 Annual General Meeting.
  4. That Mark Burrowes be appointed as Director until the end of the 2023 Annual General Meeting.

4. Amendments to the Constitution

To consider and, if thought fit, to pass the following as a special resolution:

That the Constitution tabled at the Meeting and signed by the Chair of the Meeting for the purposes of identification, be approved and adopted as the Constitution of the Bank in place of the current Constitution, with effect from the close of the Meeting.

Note: The differences between the Bank’s proposed new Constitution and its existing Constitution are described in the Explanatory Notes attached to this Notice.  A copy of the proposed new Constitution is available here.  Alternatively, Members may request a copy by contacting the Bank by emailing info@geelongbank.co.au or by calling 1300 361 555. 

Voting by Proxy

If you are unable to attend the virtual meeting and wish to vote, you may appoint a proxy to participate in and vote at the meeting on your behalf by completing and lodging a proxy form.  Your proxy does not have to be a member of Geelong Bank.

An Appointment of Proxy form is available here or alternatively you can obtain an Appointment of Proxy form by emailing info@geelongbank.com.au, calling 1300 361 555 or from Geelong Bank’s office at 107 Gheringhap Street, Geelong. 

To be valid, your Appointment of Proxy form must reach Geelong Bank no later than 5.00 pm (AEDT) on Tuesday, 27 October 2020.

By Order of the Board

Stephen Allinson

Company Secretary

Geelong Bank, 107 Gheringhap Street, Geelong, Victoria, 3220

1 October 2020

 

Explanatory Notes

Agenda Item 1. Financial Statements and Reports

Section 317 of the Corporations Act 2001 requires that the Financial Report, Directors’ Report and the Auditor’s Report be presented at the AGM.  Receiving and considering these reports at the Annual General Meeting is an important way to engage with Members on important issues affecting Geelong Bank. A copy of the 2020 Annual Report is available here.

Agenda Item 2. Directors Remuneration

Directors’ remuneration is determined annually at the Annual General Meeting (AGM). At the first meeting of the Board after the AGM the Board determines the annual remuneration level for each position or office held by a Director.

Agenda Item 3. Election of Directors

Directors of the board are Member elected. The Board may also appoint one Director as per Geelong Bank’s Constitution.  The nominations process aims to present for election candidates who are fit and proper, appropriately qualified for the task, and who are likely to add to the skills base of the board.  In this way, the Board will have done its utmost to achieve a Board covering a range of appropriate skills to properly manage Geelong Bank, in the best interest of its Members.

Agenda Item 4.  Replacing Constitution

This special resolution will replace the Bank’s existing Constitution with a new Constitution.  The Bank has undertaken an extensive review of its Constitution with the intention of simplifying it while addressing legal and regulatory developments and providing the Bank with greater flexibility.

The main changes made to the Constitution are:

  • removal of the subscription price for new member shares;
  • allowing the Bank to issue a new type of shares called Mutual Capital Instruments (MCIs);
  • providing greater flexibility in accepting new customers and in the procedures for accepting new Members and terminating memberships for cause;
  • changes to the procedures for holding general meetings and other shareholders’ meetings;
  • changes relating to the board structure and the appointment, maximum time in office, removal and remuneration of Directors;
  • variations to rules on conducting board meetings and passing board resolutions.

These changes are described in more detail below.

Your Directors unanimously support this special resolution and recommend that you vote FOR it.

Removal of Subscription Price for Member Shares

Currently the Bank issues member shares for a $10 subscription price, the paid-up amount of which is repayable when the membership ends and the member share is redeemed.  New Members under the age of 18 only pay $2 on joining with the remaining $8 payable on turning 18.  There is little benefit to the Bank in receiving the $10 subscription price, and it creates a barrier to persons becoming Members.

Under the new Constitution the subscription price for a new member share will change to $nil.

The changes made to the Constitution will also allow existing Members to have their $10 (or $2 for minors) repaid now on application, rather than waiting until they cease to be a member.  Under the changes existing Members can apply for their member share to be redeemed, the paid-up amount of subscription price on the member share to be repaid to them, and a new member share with a $nil subscription price issued to them in substitution.  This will not involve termination of membership which will be treated as a single continuing membership despite the substitution of member shares.

Mutual Capital Instruments (MCIs)

The amendments to the Bank’s Constitution include changes to allow for the issue of Mutual Capital Instruments (MCIs).  MCIs are a new bespoke type of share provided for by law that can only be issued by mutual entities.  MCIs allow mutual entities to raise capital without jeopardising their mutual status or structure.  The ability to issue MCIs gives mutual entities access to a broader range of capital raising and investment options than they previously had, to help innovate, grow and compete.

The Bank is a mutual entity as defined in the Corporations Act (each member has no more than 1 vote in general meeting for each capacity in which a person is a member) and thus is eligible to issue MCIs.  However, the Bank’s Constitution must first be amended to allow it to issue MCIs.  This special resolution will amend the Bank’s Constitution to address the specific legal requirements for MCIs, by:

  • stating that the Bank is intended to be an MCI mutual entity;
  • ensuring that rights attaching to MCIs or a class of MCIs can only be varied or cancelled by a special resolution of the Bank and either:
    • a special resolution of all persons holding the same class of MCI; or
    • obtaining written consent of 75 per cent of the holders of the class of MCI;
  • specifying that MCIs can only be issued as a fully paid share;
  • stating that dividends in respect of the MCI are non-cumulative;
  • setting out the rights attached to the MCI with respect to participation in surplus assets and profits.

Currently the Bank is only able to issue member shares and Tier 1 shares, including Mutual Equity Instruments (MEIs).  The Bank does not have any Tier 1 shares or MEIs on issue.  The existing Constitutional conditions for Tier 1 shares and MEIs were designed at the time adopted to meet requirements for particular capital instruments under Prudential Standards issued by the Australian Prudential Regulation Authority (APRA).  MCIs on the other hand are defined under the Corporations Act and are subject only to the conditions described above.  This provides the flexibility for MCIs to be issued on different terms as set by the Board of Directors that may assist the Bank to raise capital in ways that are commercially and regulatory effective.  MCIs can be issued on terms that meet APRA’s current requirements for MEIs. 

Given this flexibility, the proposed amendments will replace the Bank’s existing ability to issue Tier 1 shares including MEIs, with the ability to issue MCIs.  In addition to the matters described above the key features and rights of MCIs will be as summarised below:

  • the terms of issue, including rights attaching to, MCIs will be as determined at the time by the board;
  • the Bank may issue different classes of MCIs with different rights;
  • the Bank may issue other types of securities on terms that they will or may convert to MCIs;
  • MCIs may carry a right to dividends;
  • MCIs may carry a right in the event of the winding-up of the Bank to payment of their subscription price, but cannot otherwise carry any right to share in surplus assets – by default this payment can only made after the subscription price on all member shares has been paid, however classes of MCIs may be issued on terms that give them priority to payment of subscription price before member shares and other MCIs;
  • MCIs may carry a right to vote in general meeting and in the election of Directors, but capped at 1 vote per MCI holder – if an MCI holder is also a member that person cannot cast more than 1 vote in total;
  • MCIs may carry rights that are preferred, equal, or deferred to the rights of Members and any other class of MCIs.

The amendments seek to provide the board with flexibility as to the terms of issue of MCIs to be best placed to address commercial and regulatory requirements for capital raising purposes.  Whether or not MCIs carry any of the above permitted rights is a matter for the board to determine if and when it decides to issue MCIs.  At this time the board has no plans to issue any MCIs.  

The new Constitution also includes consequential amendments in recognition that the Bank may have shareholders other than Members (i.e. MCI holders), and that MCI holders, not just Members, may be entitled to vote in general meetings and in the election of Directors.

Flexibility in accepting new customers and new Members, and terminating memberships for cause

The new Constitution will allow the Bank to provide loans to such non-Members as determined by the board (individually or as a class) from time to time.  This allows the Bank to lend to customers to whom it may not be practical or desirable to provide membership.

The changes will also allow:

  • greater flexibility in the way the Bank can accept a new membership application (such as over the telephone), by removing the need for a written application;
  • Bank employees to be delegated the board’s authority to accept or reject membership applications – currently the board can only delegate the power to admit new Members to officers, and cannot delegate authority to reject applications;
  • the board to delegate its existing power to terminate a membership for cause (such as due to conduct detrimental to the Bank or membership acquired via misrepresentation) and remove the current requirement to allow the affected member to attend the board meeting at which the termination is to be voted on.

These changes provide for more practical and flexible ways for the Bank to manage what are largely administrative matters.

Procedures for holding and voting at shareholders’ meetings

The Constitution will include new provisions allowing for shareholders’ meetings to be conducted using technology, by allowing for attendance via electronic means such as online virtual attendance, or by conducting the meeting at more than 1 venue linked by technology.  The current COVID-19 pandemic has reinforced the benefits of allowing for electronic means of attending meetings.

In addition, the new Constitution allows for the Bank to implement electronic means of voting on resolutions before or during a shareholders’ meeting.  This allows the Bank to provide a means for Members to vote directly even if they are not attending the meeting (whether personally or via technology).

The current quorum (number of Members) required for a shareholders’ meeting is 7 Members present in person.  For general meetings this will change to a quorum of 17 Members, but will now include Members attending via electronic means, or via proxy, attorney or representative.  This ensures a reasonable number of Members must attend for a general meeting, while recognising attendance other than physical attendance in person.  For shareholders’ meetings other than general meetings the quorum will be 2 eligible shareholders, subject to the terms of issue of the relevant shares.

The Constitution will also be changed to remove the prescriptive standing orders setting out procedures that must be followed at shareholders’ meetings.  Instead the Constitution will include rules clarifying that the chair of the meeting is responsible for setting meeting procedures and managing the conduct of the meeting.  This provides greater flexibility for dealing with meetings including Members attending via different means.

Changes to Board structure

Currently the Bank must have not more than 7 Directors elected by Members and not more than 1 Director appointed by the board, which could include an employee.  Under the new Constitution the board must consist of at least 5 Directors comprising of:

  • such number of elected Directors as determined by the board from time to time;
  • not more than 3 board appointed Directors, each appointed for a term of office not exceeding 3 years.

In addition to the above, the board will also be able to appoint the Chief Executive Officer as a Director for a term expiring when they cease to be Chief Executive Officer or such earlier date as determined by the board.

The majority of Directors must be elected Directors.

These rules provide the flexibility to allow the board to change its composition to address changes to the Bank’s business, size and circumstances and to take steps to ensure the board comprises Directors with appropriate skills and experience, while ensuring a majority of Directors are elected by Members.

Director Eligibility Criteria

In addition to existing Director eligibility criteria, the new Constitution will prohibit Members who are existing employees, or were employees of the Bank in the previous 3 years, from being appointed as elected Directors.  This assists the Bank to meet its regulatory requirement to have a majority of independent Directors.

For board appointed Directors, the above new prohibitions about being employees or prior employees will not apply.  Also, board appointed Directors will not have to be Members.  However, all other existing Director eligibility criteria will apply.

Maximum time in office as Director

A new rule will be added limiting the total period of time a person can remain a Director of the Bank for (whether or not held continuously).  This assists the Bank to achieve board renewal.  The new rule:

  • prevents a person from being appointed as an elected Director if they have already been a Director for 9 years or more;
  • prohibits the board from appointing a person (other than the Chief Executive Officer) as Director for a term that would result in the person having been a Director for more than 12 years in total;
  • gives the board the option of extending the above maximum time periods by no more than 12 months but only in relation to an existing Director who is the Chair or Deputy Chair of the board – this provides some flexibility to assist with a smooth transition on the board.

Procedures for Election of Directors

The Constitution currently contains a highly prescriptive Director election procedure, which requires the election to be conducted at the AGM via a ballot using ballot papers.  These procedures will be removed to provide the Bank with greater flexibility as to the means and timing of its elections.  Instead, where an election is required (that is, when the number of candidates exceeds the number of vacancies to fill), it will be conducted by ballot, either sometime before or during the AGM, in accordance with board approved procedures.  This could include a vote by electronic means or postal ballot. 

In addition, the nomination process will be simplified and modified.  The Bank will no longer be required to give a call for nominations and the close of nominations will change from 35 days before the AGM to 60 days before the AGM, to better allow for the possibility of a ballot conducted before the AGM.  Rules dealing with candidate declarations and fit and proper assessments will be removed and left to board approved procedures.

Automatic Removal from Office Changes

Existing provisions that cause a Director to automatically cease to hold office if assessed as not fit and proper to hold office or if they fail to provide information requested in order to make that assessment, will be removed.  There is a technical issue about the enforceability of such provisions, so their removal avoids the potential for dispute.  This does not affect the existing rules preventing a person from being appointed or re-appointed as Director if they are not assessed as fit and proper.

Directors’ Remuneration

The current requirement for member approval for aggregate Directors’ remuneration will be limited to the remuneration of elected Directors.  The remuneration of board appointed Directors will be determined by the board as additional and separate amounts.  This provides flexibility to allow for board appointments outside of the AGM cycle (when Members could approve increases to aggregate remuneration) and to recognise that appointed Directors may be appointed due to having particular skills or expertise to add to the board. 

Also, the approval will relate to annual remuneration of elected Directors, rather than remuneration in a financial year, to better reflect the situation that changes to Directors’ remuneration are approved at, and have effect from, the AGM, rather than the start of a financial year.

Variations to rules on conducting board meetings and passing board resolutions

New rules will:

  • expressly allow the board to conduct board meetings via telephone or other electronic means;
  • allow a single Director to call, or require the secretary to call, a board meeting (currently requires 2 Directors);
  • change the quorum for board meetings from half the Directors, to the greater of a majority of Directors or 3 Directors;
  • clarify that if the total number of Directors is less than the quorum number then the board can still pass resolutions in board meeting in an emergency, to fill a casual vacancy up to the number required for a quorum or to call a general meeting;
  • expressly allow the board to appoint a Director as a Deputy Chair;
  • remove the current right of the chair of board meetings to a casting vote;
  • vary and expand the existing right of Directors to pass a circulating resolution without a board meeting, by requiring approval from only a majority of Directors rather than from all Directors, and allowing circulating resolutions to be approved by Directors by electronic communication or over the telephone, not just by signed written consent.

Other Changes

The new Constitution includes some other differences from the existing Constitution that are largely administrative or of no binding legal effect.  These include:

  • removal of rules setting out the requirement for, and role of, the nominations committee in assessing Directors, candidates and officers for fitness and propriety – as the nominations committee is a board committee, its role and procedures are best addressed by board policies and procedures;
  • removal of rules about the use of a company seal, as there is no legal requirement for a seal;
  • removal of a couple of non-binding objects of the Bank that relate to promoting and furthering broader social and community interests;
  • adopting the term ‘Bank’ instead of ‘credit union’ to described the company;
  • removal of transitional rules that are no longer relevant;
  • modification to wording for clarity;
  • reorganising existing sections for a more logical flow.